2020 (1) TMI 1730 - SC - Indian Laws

Entitlement to claim compensation - major sons of the deceased who are married and gainfully employed can claim compensation under the Motor Vehicles Act 1988 (the Act) as legal representatives of the deceased - legal representatives are entitled only for compensation under the conventional heads or not - amount receivable by the legal representatives of the deceased under the 2006 Rules is required to be deducted as a whole or only portion thereof. Whether the major sons of the deceased who are married and gainfully employed or earning can claim compensation under the Motor Vehicles Act 1988? - HELD THAT - The legal representatives of the deceased could move application for compensation by virtue of clause (c) of Section 166(1). The major married son who is also earning and not fully dependant on the deceased would be still covered by the expression legal representative of the deceased. This Court in Manjuri Bera 2007 (3) TMI 836 - SUPREME COURT had expounded that liability to pay compensation under the Act does not cease because of absence of dependency of the concerned legal representative. Notably the expression legal representative has not been defined in the Act. It is thus settled by now that the legal representatives of the deceased have a right to apply for compensation. Having said that it must necessarily follow that even the major married and earning sons of the deceased being legal representatives have a right to apply for compensation and it would be the bounden duty of the Tribunal to consider the application irrespective of the fact whether the concerned legal representative was fully dependant on the deceased and not to limit the claim towards conventional heads only. The evidence on record in the present case would suggest that the claimants were working as agricultural labourers on contract basis and were earning meagre income between Rs.1, 00, 000/ and Rs.1, 50, 000/ per annum. In that sense they were largely dependant on the earning of their mother and in fact were staying with her who met with an accident at the young age of 48 years. Whether such legal representatives are entitled only for compensation under the conventional heads? - HELD THAT - Reverting to the determination of compensation amount it is noticed that the Tribunal proceeded to determine the compensation amount on the basis of net salary drawn by the deceased for the relevant period as Rs.16, 918/ per month while taking note of the fact that her gross salary was Rs.23, 123/ per month (presumably below taxable income). Concededly any deduction from the gross-salary other than tax amount cannot be reckoned. In that the actual salary less tax amount ought to have been taken into consideration by the Tribunal for determining the compensation amount. This Court in Pranay Sethi 2017 (10) TMI 1276 - SUPREME COURT adverted to the dictum of this Court in Sarla Verma (Smt.) Ors. vs. Delhi Transport Corporation Anr. 2009 (4) TMI 1030 - SUPREME COURT with approval wherein it is held that if the dependant family members are 2 to 3 as in this case the deduction towards personal and living expenses of the deceased should be taken as one third (1/3rd). In other words the deduction towards personal expenses to the extent of 50% is excessive and not just and proper considering the fact that the respondent Nos. 1 and 2 alongwith their respective families were staying with the deceased at the relevant time and were largely dependant on her income. The High Court without reversing the said finding proceeded to include the amount of Rs.7, 000/ per month received by the deceased as pension amount after demise of her husband. We are in agreement with the view taken by the Tribunal and for the same reason have to reverse the conclusion recorded by the High Court to include the said amount as loss of dependency. That could not have been taken into account as the same was payable only to the deceased being widow and not her income as such for the purpose of computing the amount of compensation. Whether the amount receivable by the legal representatives of the deceased under the 2006 Rules is required to be deducted as a whole or only portion thereof? - HELD THAT - The respondent Nos. 1 and 2 would be entitled for compensation to be reckoned on the basis of loss of dependency due to loss of gross salary (less tax amount if any) of the deceased and future prospects and deduction of only one third (1/3rd) amount towards personal expenses of the deceased - The respondent Nos. 1 and 2 therefore can be permitted to withdraw the compensation amount only upon filing of an affidavit cumdeclaration before the executing Court that they have not received nor would claim any amount towards financial assistance under the 2006 Rules and if already received or to be received in future on that account the amount so received will be disclosed to the executing Court which will have to be deducted from the compensation amount determined in terms of this order. The compensation amount therefore be paid to the respondent Nos. 1 and 2 subject to the above and upon giving an undertaking before the executing Court to indemnify the insurance company (appellant) to that extent. Conclusion - i) Major married and earning sons as legal representatives are entitled to claim compensation including loss of dependency under the Motor Vehicles Act 1988. ii) Compensation is not limited to conventional heads; loss of dependency must be considered on facts of dependency. iii) Deduction from compensation of amounts receivable under the 2006 Rules is permissible only to the extent of financial assistance equivalent to pay and allowances actually received or receivable not family pension or other benefits; such deduction should be made only upon proof of receipt or eligibility. iv) Personal expenses deduction should be one-third where dependents are two to three and living with the deceased. v) Compensation calculation should be based on gross salary less tax with future prospects included. Appeal allowed in part.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

(i) Whether major sons of the deceased, who are married and gainfully employed, can claim compensation under the Motor Vehicles Act, 1988 (the Act) as legal representatives of the deceased?

(ii) Whether such legal representatives are entitled only to compensation under the conventional heads or also for loss of dependency?

(iii) Whether the amount receivable by the legal representatives under the Haryana Compassionate Assistance to the Dependants of Deceased Government Employees Rules, 2006 (the 2006 Rules) is to be deducted in full or only partially from the compensation awarded under the Act?

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Entitlement of Major Married and Earning Sons to Compensation under the Act

Relevant legal framework and precedents: Section 166(1)(c) of the Motor Vehicles Act, 1988, permits "all or any of the legal representatives of the deceased" to file an application for compensation arising out of a motor vehicle accident causing death. The Act does not define "legal representative." The Court referred to the definition of "legal representative" under Section 2(11) of the Civil Procedure Code (CPC) and Section 2(1)(g) of the Arbitration and Conciliation Act, 1996, which is broad and inclusive, covering persons who represent the estate of the deceased, including heirs and administrators.

The Court relied on the precedent in Manjuri Bera v. Oriental Insurance Co. Ltd., which held that liability to pay compensation does not cease due to absence of dependency of the claimant on the deceased. The Court also referred to Gujarat SRTC v. Ramanbhai Prabhatbhai, which clarified that a legal representative entitled to compensation need not be limited to immediate family members.

Court's interpretation and reasoning: The Court emphasized that major married and earning sons, as legal representatives, have the right to apply for compensation under Section 166(1)(c). The right to apply is distinct from the entitlement to compensation, which is determined based on facts. The compensation forms part of the estate of the deceased and thus the legal representatives inherit the right to claim it.

Key evidence and findings: The claimants, though major and earning, were agricultural labourers earning a meagre income and living with the deceased mother, who was the primary breadwinner. Thus, they were largely dependent on her income.

Application of law to facts: The Court held that the claimants' status as major and earning persons does not disentitle them from claiming compensation for loss of dependency. The Tribunal was correct in considering their claim beyond conventional heads.

Treatment of competing arguments: The appellant insurance company argued that major earning sons are not entitled to compensation for loss of dependency, relying on Manjuri Bera and other precedents. The Court distinguished the facts, noting that the claimants were dependent to a significant extent and were legal representatives entitled to claim.

Conclusions: Major married and earning sons, as legal representatives, can claim compensation under the Act, including for loss of dependency, depending on factual dependency.

Issue (ii): Entitlement to Compensation beyond Conventional Heads

Relevant legal framework and precedents: The Court referred to the scheme of the Act and the principles laid down in Pranay Sethi v. National Insurance Co. Ltd., and Sarla Verma v. Delhi Transport Corporation regarding computation of compensation, deductions for personal expenses, and inclusion of future prospects.

Court's interpretation and reasoning: The Court held that legal representatives who are major and earning are not limited to claim only conventional heads (such as funeral expenses, loss of estate). They can claim loss of dependency if they were dependent on the deceased's income.

Key evidence and findings: The Tribunal and High Court had assessed the deceased's salary and applied multipliers and deductions for personal expenses. The Tribunal took net take-home salary, whereas the High Court considered gross salary and added future prospects.

Application of law to facts: The Court held that the Tribunal should have considered the gross salary less tax (not net take-home salary) for compensation calculation, in line with Pranay Sethi. The deduction for personal expenses should be one-third rather than 50%, as the claimants lived with and were dependent on the deceased.

Treatment of competing arguments: The claimants argued for one-third deduction; the insurance company supported 50%. The Court found 50% excessive and unjust, favoring one-third deduction consistent with established jurisprudence.

Conclusions: Legal representatives who are major and earning but dependent on the deceased are entitled to compensation for loss of dependency calculated on gross salary less tax, with appropriate deductions and future prospects.

Issue (iii): Deduction of Amount Receivable under the 2006 Rules from Compensation

Relevant legal framework and precedents: The 2006 Rules provide financial assistance equivalent to pay and allowances to dependents of deceased government employees for a specified period. Rule 5(1) provides for this assistance; Rule 5(2) stipulates that family pension is payable only after the financial assistance period ends. The Court relied on the three-Judge Bench decision in Reliance General Insurance Co. Ltd. v. Shashi Sharma, which clarified that compensation under the Motor Vehicles Act cannot include amounts already paid or payable under the 2006 Rules to avoid double recovery.

Court's interpretation and reasoning: The Court clarified that only the amount equivalent to pay and allowances receivable under Rule 5(1) of the 2006 Rules should be deducted from compensation to avoid double payment. Other benefits such as family pension, life insurance, provident fund are not deductible as they are distinct and payable subsequently.

The Court noted that the High Court erred in deducting 50% of the financial assistance amount without establishing that the claimants were eligible or had received such assistance. The High Court's reliance on a prior decision (Ajmero) was found to be a misreading, as that decision did not consider the eligibility criteria or timing of family pension under the 2006 Rules.

Key evidence and findings: There was no evidence that the claimants had applied for or received financial assistance under the 2006 Rules. The eligibility criteria under Rule 3 of the 2006 Rules exclude major sons and married daughters, which was not addressed by the High Court.

Application of law to facts: The Court held that the High Court should not have deducted any amount without proof of eligibility or receipt of financial assistance. Instead, the compensation should be paid subject to the claimants filing an affidavit that they have not and will not claim financial assistance under the 2006 Rules. If they later receive such assistance, the amount must be deducted from the compensation with interest.

Treatment of competing arguments: The insurance company argued for full deduction of the financial assistance amount; the claimants argued against deduction or for only one-third deduction. The Court adopted a balanced approach, allowing payment subject to indemnity and future adjustment.

Conclusions: Deduction from compensation of amounts receivable under the 2006 Rules is permissible only to the extent of financial assistance equivalent to pay and allowances actually received or receivable. Deduction without proof of receipt or eligibility is impermissible. Family pension and other benefits are not deductible.

3. SIGNIFICANT HOLDINGS

"The major married son who is also earning and not fully dependant on the deceased, would be still covered by the expression 'legal representative' of the deceased."

"Liability to pay compensation under the Act does not cease because of absence of dependency of the concerned legal representative."

"The legal representatives of the deceased have a right to apply for compensation. Even the major married and earning sons of the deceased being legal representatives have a right to apply for compensation and it would be the bounden duty of the Tribunal to consider the application irrespective of the fact whether the concerned legal representative was fully dependant on the deceased and not to limit the claim towards conventional heads only."

"The amount receivable by the dependants of the deceased government employee under Rule 5(1) of the 2006 Rules towards financial assistance equivalent to the loss of pay and wages of the deceased employee for the period specified cannot be paid for the second time to the claimants."

"The family pension receivable by the family would be payable only after the period during which the financial assistance is received is completed and cannot be deducted from the claim amount for determination of just compensation under the Act."

"The High Court committed manifest error in assuming that the respondent Nos. 1 and 2 would be eligible to receive financial assistance under the 2006 Rules."

"The compensation amount shall be paid to the claimants subject to their filing an affidavit-cum-declaration before the executing Court that they have not received nor would claim any amount towards financial assistance under the 2006 Rules and if already received or to be received in future, the amount so received will be disclosed to the executing Court, which will have to be deducted from the compensation amount determined."

"The deduction towards personal expenses should be one-third and not 50%, where the dependents are two to three in number and living with the deceased."

"The compensation for loss of dependency should be calculated on gross salary less tax, not net take-home salary."

Final determinations:

(i) Major married and earning sons, as legal representatives, are entitled to claim compensation including loss of dependency under the Motor Vehicles Act, 1988.

(ii) Compensation is not limited to conventional heads; loss of dependency must be considered on facts of dependency.

(iii) Deduction from compensation of amounts receivable under the 2006 Rules is permissible only to the extent of financial assistance equivalent to pay and allowances actually received or receivable, not family pension or other benefits; such deduction should be made only upon proof of receipt or eligibility.

(iv) Personal expenses deduction should be one-third where dependents are two to three and living with the deceased.

(v) Compensation calculation should be based on gross salary less tax, with future prospects included.