(Per : HONOURABLE MR.JUSTICE JAYANT PATEL) 1. The short facts of the case are that on 3.2.2002 at about 3.30 p.m., when deceased Hirabhai Gokulbhai Patel was going on his motorcycle from Dukhdi to Undavada, as per the claimants, one Maruti Car bearing No.GJ-7 XA 1692, being driven in rash and negligent manner, dashed with the motorcycle from front side, as a result thereof, the deceased fell down from the motorcycle and he received injuries and ultimately succumbed to the injuries. Such accident gave rise to the claim petition, being Motor Accident Claim Petition No.469 of 2002 for compensation of Rs.30 lakhs. The Tribunal for the reasons recorded in the judgment, awarded Rs.21,56,688/- with interest at the rate of 6% per annum from the date of the application. Under the circumstances, the present appeal is before this Court.
2. We have heard learned counsel Mr. Dakshesh Mehta appearing for the appellant and Mr. Hiren Modi appearing for the original claimants. The other parties to the proceedings are served but none has appeared on their behalf. We have considered the judgment and the reasons recorded by the Tribunal. We have also considered the record and proceedings.
3. Learned counsel Mr. Mehta at the outset declared before the Court that the appeal is preferred also on the ground of negligence, namely apportionment of the contributory negligence to the deceased, but he does not press the said contention for negligence as no evidence was led on behalf of the Insurance Company or the owner of the insured vehicle before the Tribunal. Hence, we find that the said aspect of negligence need not be examined by us.
4. Learned counsel Mr. Mehta appearing for the appellant contended that the quantum of compensation awarded by the Tribunal is on much higher side. In his submission, the Tribunal has committed manifest error, viz. that the Tribunal has not averaged out the income for the purpose of assessment of the economic loss and has applied general principles of prospective income and the second error, as per the learned counsel, is that the deduction towards income tax is not at all considered by the Tribunal. He, therefore, submitted that if the said aspects are considered, the quantum of compensation shall substantially get reduced.
5. Whereas learned counsel Mr. Modi for the respondents- original claimants submitted that the Tribunal has correctly assessed the compensation and if total length of service of the deceased as per the evidence was considered, the compensation amount would have been much higher and therefore, this Court may not reduce the compensation. He also submitted that it is true that the aspect of deduction of income tax is not considered but, if total amount of compensation is just and reasonable, quantum of compensation may not be reduced by this Court.
6. It is true that the evidence has come on record that had the deceased continued in service, his salary would have been Rs.18,676/- and the last salary was Rs.11,013/-. But, it has also come on record that the deceased was aged 38 years and if he would have been alive and continued in service, he would have retired in the year 2021, as the age of retirement for a teacher was 58 years. If actual age of retirement is taken into consideration, span for loss of income would be for 20 years and if actual salary is calculated, such may be higher than the assessment made by the Tribunal. The Tribunal has gone by well settled principles of law about consideration of the prospective income as per the decision of the Apex Court in the case of Sarla Verma (Smt) and Ors. Vs. Delhi Transport Corporation and Anr. reported in (2009)6 SCC 121. The contention that when there was specific evidence available, the Tribunal ought to have averaged out the income of the last salary and the highest salary at the time of retirement, in our view does not deserve to be accepted for two reasons, one is that the criteria of prospective income of 1.5 times is to be accepted and applied for assessment of the economic loss in a case where it has come on record that the deceased was a salaried employee. It is also true that if the specific evidence has come on record for larger economic loss, the same may also be considered by the Court, but that does not mean that if evidence for regular salary of the deceased has come on record, prospective income by applying criteria of 1.5 times cannot be taken into consideration. Further, as observed earlier, span of service was 20 years, whereas the Tribunal has considered multiplier of only 16 since the deceased was 38 years. Keeping in view the aforesaid circumstances, we find that the assessment of the income at Rs.16,521/- by applying criteria of 1.5 times keeping in view the prospective income could not be considered as erroneous approach on the part of the Tribunal nor it could be said that the same would not meet with the principle of “just compensation” if the total span of service of 20 years is taken into consideration. Therefore, the said contention fails.
7. Contention that the Tribunal has not considered the aspect towards income tax deduction deserves consideration. At this stage, we may state that similar aspects came up for consideration before this Court in the case of United India Insurance Co. Ltd. Vs. Hemlataben in First Appeal No.2449 of 2006, decided 11.6.2012. While dealing with the said contention for consideration of deduction towards income tax, it was observed in para 15 and 16 as under:-
“15. However, there is a considerable force in the submission of the learned Counsel for the Insurance Company for no deduction considered by the Tribunal towards income tax as was also observed by the Apex Court in the case of Sarla Verma (supra) and more particularly at paragraph 20, which reads as under:-
“20. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. The question is whether actual income at the time of death should be taken as the income or whether any addition should be made by taking note of future prospects.”
16. Therefore, it can be said that the Tribunal has committed error in not considering the deduction towards income tax or the income tax liability of the deceased from the income, which he would have earned, had he survived and continued in service. It is hardly required to be recorded that the case on hand is of the year 1996 when the deceased expired. Therefore, the taxation limit at the relevant point of time was different and it is revised from time to time namely that in such financial period of 1996- 97 etc., standard deduction was permissible to the salaried employee, which has been not continued in the last few years, but the exemption limit has been enhanced and the permissible investment for exemption from tax has also been revised from time to time. We find that the actual income tax liability of the deceased also cannot be finalized and the matter may be in the arena of uncertainty, inasmuch as the liability could be avoided had the investment been made by the deceased up to the permissible limit. Keeping in view the aforesaid overall facts and circumstances that span of service was from 1996 to 2014, wherein various exemption limits have been provided and also there has been revision in the investment for tax exemption by way of deduction or otherwise, it would be appropriate to consider the flat deduction towards income tax at the rate of 10%, but such has to be considered, keeping in view that no income tax was and is payable up to a particular limit. The yearly compensation, as assessed by the Tribunal, is approximately Rs.1,44,000/- and if the exemption at the minimum level of Rs.50,000/- for the income exceeding Rs.50,000/-, we find it appropriate for deduction towards income tax at the rate of 10% flat. Accordingly, out of the amount of Rs.21,60,000/- as assessed by the Tribunal, Rs.7,50,000/- towards exemption limit is considered (Rs.50,000/- x 15), the remaining amount would come to Rs.14,10,000/- and 10% of the said amount would come to Rs.1,41,000/-. Under these circumstances, we find it appropriate to deduct the amount of Rs.1,41,000/- towards income tax and accordingly the net amount of compensation towards dependency benefits would come to Rs.20,20,000/- as against the amount of Rs.21,60,000/- as awarded by the Tribunal.”
As such similar view deserves to be taken in the present case, but the distinguishing feature on facts is that in the above-referred decision of United India Insurance Company Ltd. (supra), the accident was in the year 1996, whereas in the present case, the accident is in the year 2002. Exemption limit for the period of 1996 to 2014 was considered by the Court in that case and therefore, the basis was taken as that of Rs.50,000/- p.a. In the present case, exemption limit is to be considered for the period from 2002 onwards till 2018 since multiplier has been given of 16. Therefore, we find it appropriate to consider no income tax liability upto income of Rs.1 lakh. However, for the income exceeding Rs. 1 lakh, we find it appropriate to consider deduction towards income tax at the rate of 10% flat.
8. Accordingly, out of the yearly income towards the economic loss as assessed by the Tribunal of Rs.1,32,160/- p.a., the amount exceeding Rs. 1 lakh shall be Rs.32,160/- and 10% of the said amount would come to Rs.3216/-. Since multiplier given is of 16, the total amount would come to Rs.51,456/- towards income tax deduction. Under the circumstances, out of the compensation of Rs.21,14,688/-, aforesaid amount of Rs.51,456/- towards income tax deduction will be required to be considered and net amount of compensation towards future loss will be Rs.20,63,232/-. Compensation under the other heads for loss of expectation of life, consortium and future expenses does not deserves to be interfered with.
9. On the aspect of withdrawal and investment, we find it appropriate to observe that out of the aforesaid amount of compensation with interest accrued and costs, 20% shall be permitted to be withdrawn to the original claimants and remaining 80% of the amount shall be invested by the Tribunal with nationalized Bank for a period of four years with condition that the original claimants shall be entitled to interest as and when it becomes due from time to time. The Tribunal shall adjust the available amount after calculating the compensation with accrued interest as per the present judgment and the surplus amount shall be refunded to the appellant Insurance Company preferably within three months from the receipt of the order of this Court.
10. In view of the aforesaid observations and discussion, the original claimants shall be entitled to compensation of Rs. 21,05,232/- with interest as awarded by the Tribunal, as against Rs.21,56,688/-, with interest at the rate of 6% per annum as awarded by the Tribunal.
The appeal is partly allowed to the aforesaid extent. Considering the facts and circumstances, there shall be no order as to cost.
Sd/-
(JAYANT PATEL, J.) omkar Sd/-
(C.L. SONI, J.)