2007 (12) TMI 538 - SC - Indian Laws

Connotation of the term income for the purpose of determination of just compensation envisaged under Section 168 of the Motor Vehicles Act 1988 (the Act) - Inclusion of various allowances and perks in the computation of income for compensation - dictionary meaning of the word income - HELD THAT - Section 168 of the Act uses the word just compensation which in our opinion should be assigned a broad meaning. We cannot in determining the issue involved in the matter lose sight of the fact that the private sector companies in place of introducing a pension scheme takes recourse to payment of contributory Provident Fund Gratuity and other perks to attract the people who are efficient and hard working. Different offers made to an officer by the employer same may be either for the benefit of the employee himself or for the benefit of the entire family. If some facilities are being provided whereby the entire family stands to benefit the same in our opinion must be held to be relevant for the purpose of computation of total income on the basis whereof the amount of compensation payable for the death of the kith and kin of the applicants is required to be determined. If the dictionary meaning of the word income is taken to its logical conclusion it should include those benefits either in terms of money or otherwise which are taken into consideration for the purpose of payment of income-tax or profession tax although some elements thereof may or may not be taxable or would have been otherwise taxable but for the exemption conferred thereupon under the statute. Yet again in New India Assurance Co. Ltd. v. Charlie Anr the same view was reiterated. However therein although the words net income has been used but the same itself would ordinarily mean gross income minus the statutory deductions. We must also notice that the said decision has been followed in New India Assurance Co. Ltd. v. Kalpana (Smt.) Ors.. The expression just must also be given its logical meaning. Whereas it cannot be a bonanza or a source of profit but in considering as to what would be just and equitable all facts and circumstances must be taken into consideration. Thus the appeal is to be allowed in part in so far as the High Court had directed deduction of medical reimbursement and tax elements on the entire sum which according to the statute constitute income. But we decline to do so for two reasons. Firstly the accident had taken place as far back as on 1st September 1997 and secondly the Tribunal as also the High Court failed to take into consideration rise in income of the deceased by way of promotion or otherwise. Hence we are not inclined to interfere with the impugned judgment. This appeal is therefore dismissed.

Summary

Issues Involved:
1. Connotation of the term 'income' for determining 'just compensation' u/s 168 of the Motor Vehicles Act, 1988.
2. Inclusion of various allowances and perks in the computation of income for compensation.
3. Deduction of statutory taxes and non-repayable contributions from the income.

Summary:

Issue 1: Connotation of the term 'income' for determining 'just compensation' u/s 168 of the Motor Vehicles Act, 1988.

The Supreme Court examined the connotation of 'income' for determining 'just compensation' u/s 168 of the Motor Vehicles Act, 1988. The appeal arose from a judgment by the High Court of Judicature at Allahabad, which had partly allowed the compensation claim. The High Court held that the claimants were entitled to compensation calculated at Rs. 19,53,224/- along with interest @ 9% from the date of presentation of the claim petition till its realization, excluding travelling reimbursement from the computation of net income.

Issue 2: Inclusion of various allowances and perks in the computation of income for compensation.

The appellant contended that only the basic pay should be considered for compensation, excluding other allowances. However, the Supreme Court emphasized that 'income' should include all perks beneficial to the family, such as contributions towards Provident Fund, Life Insurance, gratuity, etc. The Court noted that 'just compensation' should be assigned a broad meaning, considering societal changes and the benefits provided by private sector companies.

Issue 3: Deduction of statutory taxes and non-repayable contributions from the income.

The Court held that while computing the monthly income for compensation, statutory deductions like income tax must be deducted. However, contributions that are repayable to the employee or beneficial to the family should be included. The Court referred to precedents where it was held that only statutory deductions should be made, and contributions like Provident Fund, LIC, etc., should be included in the monthly income for computing dependency compensation.

Conclusion:

The Supreme Court allowed the appeal in part, directing that medical reimbursement and tax elements on the entire sum should be deducted. However, the Court declined to interfere with the High Court's judgment due to the time elapsed since the accident and the failure to consider potential income rises. The appeal was dismissed with no order as to costs.