Case Law Details
Reliance General Insurance Co. Ltd Vs Smt Pasupuleti Sarada Kadapa District And 4 Others (Andhra Pradesh High Court)
Gross Salary Can Be Considered for Motor Accident Compensation; Andhra Pradesh HC Enhances MACT Compensation by Granting Consortium to All Dependents; Andhra Pradesh HC Refuses Income Tax Deduction Claim in Motor Accident Compensation Dispute.
In a motor accident compensation appeal before the Andhra Pradesh High Court, the Insurance Company challenged both the liability fixed by the Motor Accident Claims Tribunal (MACT) and the compensation awarded to the family of a deceased government employee.
The case arose out of an accident that occurred on 07.09.2007 near the Suzuki showroom on the Kadapa-Rajampet main road. The deceased, P. Venkata Ramana, was travelling on a TVS-50 moped along with another person when an auto bearing Registration No. AP 04 W 0435, allegedly driven in a rash and negligent manner, hit the vehicle. The deceased suffered grievous injuries, was initially treated at RIMS Hospital, Kadapa, later shifted to C.M.C. Vellore, and ultimately died on 11.09.2007.
The claimants, consisting of the wife and children of the deceased, contended that the deceased was around 50 years old, employed as a Drilling Supervisor in the Groundwater Department, and was contributing his income to the family. They sought compensation for the loss suffered due to his death.
Before the MACT, the Insurance Company disputed the accident, negligence, income, dependency, and also argued that the driver of the offending vehicle did not possess a valid driving licence. However, the MACT relied on the testimony of the first claimant, the eye-witness evidence, and the crime records to conclude that the accident occurred due to the negligence of the auto driver. The Tribunal also held that the insurance coverage stood established through the policy details produced by the claimants.
The MACT considered the salary certificate of the deceased, which showed a gross monthly salary of Rs.22,879 and a net salary of Rs.16,819. Since the deceased was over 50 years old, no future prospects were added by the Tribunal. After deducting personal expenses, the Tribunal calculated the loss of dependency at Rs.20,13,352 and awarded additional amounts towards funeral expenses and consortium, arriving at a total compensation of Rs.20,28,352.
In appeal, the Insurance Company argued that the driver lacked a valid driving licence, the gross salary should not have been adopted for calculation, and the compensation was excessive. The claimants, on the other hand, contended that the compensation should have been enhanced further in accordance with Supreme Court guidelines.
The High Court examined the evidence regarding liability and found that the Insurance Company had failed to produce material proving absence of a valid driving licence. The Court noted that apart from oral assertions by the Insurance Company witness, no documentary evidence was placed on record. It also observed that during cross-examination, the Insurance Company suggested that the offending vehicle was entrusted to an unlicensed driver, but did not specifically challenge the existence of the insurance policy before the witness. Accordingly, the Court upheld the liability imposed on the Insurance Company.
On the issue of compensation, the Court considered the Insurance Company’s argument that income tax should have been deducted from the salary while computing compensation. Referring to the Supreme Court judgment in Shyamwati Sharma vs. Karam Singh, the Court held that deductions such as GPF, insurance premiums, and loan repayments should not be excluded from income calculation, and only income tax deductions could be considered.
The Court observed that the gross salary of Rs.22,879 included deductions such as GPF and APGLI, which were not liable to be excluded. It further noted that future prospects at 10% could have been added under the principles laid down in National Insurance Company Ltd. vs. Pranay Sethi. Since no future prospects had been added by the Tribunal, the Court held that the non-deduction of approximately 10% towards income tax did not prejudice the Insurance Company. Therefore, the compensation under the head of loss of dependency was affirmed.
The High Court, however, enhanced compensation under conventional heads. It awarded Rs.15,000 towards loss of estate, Rs.15,000 towards funeral expenses, and Rs.40,000 each to the wife and three children towards consortium. The total compensation was consequently increased from Rs.20,28,352 to Rs.22,03,352 with interest at 6% per annum from the date of petition till realization.
The appeal filed by the Insurance Company was dismissed. The Court directed the Insurance Company to deposit the enhanced compensation within two months and specified the apportionment among the wife and children of the deceased.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
1. Respondent No.2 / Insurance Company in M.V.O.P.No.750 of 2008 on the file of the Chairman, Motor Accident Claims Tribunal-cum-Principal District Judge-Kadapa-cum-1st Additional District Judge, Kadapa (FAC) (for short “the learned MACT”), filed the present appeal, questioning the liability and quantum of compensation awarded in favour of the claimants therein under order and decree dated 08.07.2011.
2. Respondent Nos.1 to 4 herein are the claimants and respondent No.5 herein is the respondent No.1 before the learned MACT and is the owner of the Auto bearing Registration No. AP 04 W 0435 (hereinafter referred to as “the offending vehicle”).
3. For the sake of convience, parties will be hereinafter referred to as the claimants/petitioners and the respondents with reference to their status before the learned MACT.
Case of the claimants:
4(i). One P. Venkata Ramana (hereinafter referred to as “the deceased”) along with one P. Sreeramulu, was proceeding on a TVS-50 bearing No.AAD 7315 on 07.09.2007 at about 09:00 p.m. near Suzuki showroom, on Kadapa-Rajampet main road, Kadapa City, within the limits of Chinna Chock Police Station. At that time, the offending vehicle, driven in a rash and negligent manner, came in the opposite direction and dashed the TVS moped on which the deceased was travelling, causing grievous injuries all over the body. He was shifted to RIMS Hospital, Kadapa and from there to C.M.C. Vellore, but, on 11.09.2007, the deceased succumbed to the Injuries.
(ii). The deceased was hale and healthy, he was aged about 50 years and was working as a Drilling Supervisor in Groundwater Department and contributing his entire income to the family. The claimants, being the family members and dependents, lost every hope of life due to his sudden demise on account of the accident. Hence, they are entitled for just and reasonable compensation.
Case of the respondents
5. Respondent No.1 remained ex parte before the learned MACT.
Case of respondent No.2 / Insurance Company:
6.The petitioners shall prove the pleaded accident, negligence of the driver of the offending vehicle, age, occupation, income of the deceased and dependency of the claimants as well as absence of negligence on the part of the rider of the moped. Further, it is also claimed by the Insurance Company that the driver of the offending vehicle did not possess valid and effective driving licence.
Findings of the learned MACT:
7 (i). The learned MACT, by relying on the evidence of the claimant No.1 (P.W.1), the crime record as well as the evidence of P.W.2, the eye-witness to the accident, found that the negligence of the auto/ offending vehicle is the cause for the accident. The driver of the auto is the cause for the accident. The denial of coverage of policy issued by respondent No.2 for the offending vehicle is not acceptable. In view of the evidence placed by the claimants with policy numbers etc. coverage of the case is established. Therefore, the claimants are entitled for compensation.
(ii) The income of the deceased is Rs.22,879/- per month as per Ex.A5-Salary Certificate, which is the gross salary and the net salary is Rs.16,819/- per month. The deceased was aged about 51 years by the date of accident. There need not be any addition to the income as the person is beyond 50 years. Therefore, the income can be taken at Rs.22,879/- per month. Upon deduction of the income towards personal expenditure, etc., the entitlement of the claimants for compensation under the head of loss of dependency comes to Rs.20,13,352/-. They are also entitled for Rs.5,000/- towards funeral expenditure and Rs.10,000/-towards loss of consortium to the first petitioner. For want of evidence, no compensation will be awarded for medical expenditure.
(iii) The learned MACT found that, in all the claimants are entitled for Rs.20,28,352/-.
Arguments in the appeal:
For the appellant / Insurance Company:
8 (i). The driver of the offending vehicle did not possess valid and effective driving licence.
(ii) Adopting gross salary is not correct.
(iii) Compensation awarded is excessive.
For the claimants:
9.The liability is properly imposed on both respondents and the quantification is also rational. However, the claimants are entitled for more compensation and the learned MACT failed to award compensation under all heads in tune with the directives of the Hon’ble Supreme Court.
10. Perused the record. Thoughtful consideration is given to the arguments advanced by both sides.
11. The points that arise for determination in this appeal are:
1) Whether the liability imposed on respondent No.2 (appellant) and the quantification of compensation done by the learned MACT under the impugned orders dated 08.07.2011 are sustainable in law and on facts or require any interference, if so, on what grounds and to which extent?
2) What is the result of the appeal?
Point No.1:
Liability:
12 (i). The appellant Insurance Company is disputing the liability on the ground of want of driving licence to the driver of the offending vehicle. Except the oral evidence of R.W.1, there is no material placed by respondent No.1. In one breath, respondent No.1, disputed the liability on the ground of want of policy itself. However, the learned MACT, with reference to the policy copy, found that the coverage of insurance is shown by the claimants.
(ii) The evidence of R.W.1 requires analysis to answer the contention of the appellant Insurance Company. Except simply asserting that the policy referred to was not issued by respondent No.2, nothing more is stated by the R.W.1.
(iii) During cross-examination done on P.W.1, it was suggested on behalf of the Insurance Company that the offending vehicle did not involve in the accident and that the vehicle was entrusted to an unlicensed driver. But, absence of policy with policy number etc. is not even suggested to P.W.1.
(iv) Further, it is relevant to note that no evidence is adduced as to the absence of a driving licence, which is the prime objection of the Insurance Company.
(v) Upon considering the material available on record, the liability imposed on the appellant Insurance Company is found acceptable and no merits are found in that regard.
Quantum:
13 (i). Learned counsel for appellant further argued that the tax payable by the deceased should have been deducted while taking the income into consideration. Rs.22,879/- per month will come to Rs.2,74,548/- per annum.
(ii). Whether the income of Rs.2,74,548/- per annum falls under the taxable limit during the year 2010 and whether the net income or gross income shall be taken is the point that arises in the context of argument. It is found relevant to note the observations of Hon’ble Supreme Court in Shyamwati Sharma and others vs. Karam Singh and others1, vide para 9, which reads as follows:
9. In this case as the annual income has been worked out as Rs. 2,48,292, appropriate deduction has to be made towards income tax. The rate of income tax is a varying figure, with reference to taxable income after permissible deductions and the year of assessment. The High Court has assessed the deduction as 30% and on the facts, we do not propose to disturb it. We however make it clear that while ascertaining the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayments of loans, etc. should not be excluded from the income. The deduction towards income tax/surcharge alone should be considered to arrive at the net income of the deceased.
As per the observations of the Hon’ble Apex Court in Shyamwati Sharma and others vs. Karam Singh and others (1 supra), while taking the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayment of loans etc. should not be excluded from the income.
(iii). Now, in the present case, the Salary Certificate-Ex.A5 indicating the gross salary at Rs.22,879/-, which is inclusive of the GPF, APGLI, etc., which need not be deducted in terms of observations of the Hon’ble Apex Court in the case cited i.e. Shyamwati Sharma and others vs. Karam Singh and others (1 supra). Therefore, the acceptance of the income by the learned MACT need not be found fault with. However, what is the taxable income and what shall be the standard deductions during the year, 2010 are all matters not brought on record. During the financial year 2009-2010, up to Rs.1,60,000/- income, no tax is payable. From Rs.1,60,001/- to Rs.3,00,000/- income tax chargeable is at 10%. Even otherwise, in terms of the observations of the Hon’ble Apex Court in National Insurance Company Ltd. vs. Pranay Sethi and Others2, 10% addition can be there in respect of persons aged above 50 years towards future prospects. After excluding the standard deduction, the taxable income and the percentage of tax on such taxable income at the first level is around 10%. Since future prospects to the tune of 10% are not added, the absence of deduction of around 10% towards income tax may not cause prejudice to the appellant Insurance Company. Therefore, there can be no grievance to the appellant.
Therefore, the quantum of compensation arrived at under the head of loss of dependency need not be found fault with.
(iv) Further, the claimants are entitled for compensation under the conventional heads i.e. Rs.15,000/- towards funeral expenses, Rs.15,000/- towards loss of estate and Rs.40,000/- each to claimant Nos.1 to 4 towards loss of consortium viz. claimant No.1-spousal consortium and claimant Nos.2 to 4-parental consortium.
(v) Even in the absence of an appeal, the same is fit to be allowed and just
compensation can be awarded, which is the settled proposition of law as per the observations of the Hon’ble Supreme Court in Surekha and Others vs. Santosh and Others3 and the Division Bench of this Court in National Insurance Company Limited vs. E. Suseelamma and others4.
In view of the reasons and evidence referred above, the entitlement of the claimants for reasonable compensation in comparison to the compensation awarded by the learned MACT is found as follows:
| Head | Compensation awarded by the learned MACT | Fixed by this Court |
|
| (i) | Loss of dependency | Rs.20,13,352/- | Rs.20,13,352/- |
| (ii) | Loss of estate | -Nil- | Rs.15,000/- |
| (iii) | Loss of Consortium | Rs.10,000/- @ towards claimant No.1 | Rs.1,60,000/- @ Rs.40,000/- each to claimant Nos.1 to 4 |
| (iv) | Funeral expenses | Rs.5,000/- | Rs.15,000/- |
| Total compensation awarded | Rs.20,28,352/- | Rs.22,03,352/- | |
| Interest (per annum) | 6% | 6% | |
14. In view of the discussion made above, point framed is answered concluding that the liability imposed on both respondents in appellant is justified is proper and no interference is necessary. However, quantum of compensation awarded require modification and the claimants are entitled for compensation of Rs.22,03,352/- with interest at the rate of 6% per annum from the date of petition till the date of realization. The order and decree dated 08.07.2011 passed by the learned MACT in M.V.O.P.No.750 of 2008 require modification accordingly.
Point No.2:
15. In the result,
(i) The appeal is dismissed.
(ii) However, the compensation awarded by the learned MACT in M.V.O.P.No.750 of 2008 at Rs.20,28,352/- with interest at the rate of 6% per annum is modified and enhanced to Rs.22,03,352/- with interest at the rate of 6% per annum from the date of petition till the date of realization.
(iii) Apportionment:
(a) Claimant No.1 / wife of the deceased is entitled for Rs.10,03,352/- with proportionate interest and costs.
(b) Claimant Nos.2 to 4 / children of the deceased are entitled for Rs.4,00,000/- each with proportionate interest.
(iv) Respondents before the learned MACT are liable to pay the compensation. However, Respondent No.2 is liable in view of the insurance policy.
(v) Time for payment /deposit of balance amount is two months.
(a) If the claimants furnish the bank account number within 15 days from today, respondent No.2 / Insurance Company shall deposit the amount directly into the bank account of the claimants and file the necessary proof before the learned MACT.
(b) If the claimants fail to comply with clause (v)(a) above, the respondents shall deposit the amount before the learned MACT and the claimants are entitled to withdraw the amount at once on deposit.
(vi) There shall be no order as to costs, in the appeal.
16. As a sequel, miscellaneous petitions, if any, pending in the appeal shall stand closed.
Notes:
1 (2010) 12 SCC 378
2 2017(16) SCC 680
3 (2021) 16 SCC 467
4 2023 SCC Online AP 1725
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