Allowed

N.P. Simi v. M/S. Nair Brothers Carriers Pvt. Ltd.

Kerala HC7 Oct 2022MACA/1241/2012

Case brief

AI extract

What is this about?

The Kerala High Court allowed an appeal against a Motor Accident Claims Tribunal award. While acknowledging the standardization principle in Sarla Verma and Pranay Sethi, the Court relied on Hem Raj and Suresh Chandra Bagmal Doshi to permit a 100% increase for future prospects based on strong evidence of the deceased's career trajectory. The Court reworked the compensation quantum, enhanced it by

What did the court decide?

Compensation quantum reworked with enhanced future prospects (100% increase), corrected income deduction for tax/living expenses, increased multiplier from 11 to 17, and abolition of awards for pain a

N.P. Simi Vs M/S. Nair Brothers Carriers Pvt. Ltd. — Motor Accident Claims | Kerala HC (2022)

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'C.R.'

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN

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FRIDAY, THE 7^TH DAY OF OCTOBER 2022 / 15TH ASWINA, 1944

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MACA NO. 1241 OF 2012

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AGAINST THE ORDER/JUDGMENT DATED 30.6.2011 IN OPMV 636/2004 OF MOTOR ACCIDENT CLAIMS TRIBUNAL ,ERNAKULAM

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APPELLANTS/PETITIONERS:

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1 SIMI, W/O.BIJU P.VARGHESE, PALLATHANAM HOUSE, CANGALAM SOUNTH P.O. CHANGALAM VILLAGE, KOTTAYAM TALUK AND DISTRICT. 2 P.C. VARGHESE, F/O. BIJU P. VARGHESE -DO- -DO3 P.C. MOLLY, M/O. BIJU P. VARGHESE -DO- --DO4 SARIN ANN BIJU (MINOR) D/O.BIJU P.VARGHESE, REPRESENTED BY NEXT FRIEND MOTHER N.P. SIMI, -DO- -DOBY ADVS. SRI.P.V.BABY SRI.A.N.SANTHOSH

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RESPONDENTS/RESPONDENTS:

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1 M/S. NAIR BROTHERS CARRIERS PVT. LTD. DIRECTOR K.K.NAIR, GODOWN NO.3 &4, KHALSA COMPOUND, RAHNAL VILLAGE, THANA DISTRICT, MAHARASHTRA - 400 602. 2 ABDUL SAMAD, S/O.KAUAM ROOM NO.4/3, NEAR ESCORTS CLOTH MILL, VAGLA ESTATE, RAYIKKADU TALUK, THANA DISTRICT MAHARASHTRA-400 602. 3 UNITED INDIA INSURANCE CO. LTD., DIVISIONAL OFFICE ERNAKULAM, COCHIN-16. BY ADVS. SRI.P.JACOB MATHEW SRI.MATHEWS JACOB SR.

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THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 07.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

MACA 1241/2012

'C.R.'

C.JAYACHANDRAN, J.

MACA No.1241 of 2012

------------------------------------Dated this the 7^th day of October, 2022

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J U D G M E N T

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An intriguing question, which surface in this appeal is whether a percentage higher than that indicated in Sarla Verma v. Delhi Transport Corporation [(2009) 6 SCC 121] , as approved in National Insurance Co. Ltd. v. Pranay Sethi and others [(2017) 16 SCC 680] , can be reckoned towards future prospects, if there exists satisfactory evidence in proof of such higher percentage.

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The widow, parents and daughter of one Biju P.Varghese, who met with an accident on 27.12.2003 are the appellants herein. He succumbed to the injuries and the appellants herein were the claimants in O.P.(M.V.)No.636/2004 before the Motor Accidents Claims Tribunal, Ernakulam.

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Heard Sri.A.N.Santhosh, learned counsel appearing for the appellants and Sri.Mathews Jacob,

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assisted by Smt.Preethy R.Nair, learned counsel for the third respondent/insurance company. Perused the records.

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According to the learned counsel for the appellants/claimants, sufficient evidence regarding the future prospects of the claimants has been adduced before the Tribunal, wherefore, future prospects should have been reckoned at the rate of 100%; and not 50%, as adopted by the Tribunal. The standardization as regards the percentage of income towards future prospects made in Sarla Verma (supra) and Pranay Sethi (supra) does not stand in the way of adducing appropriate evidence as regards future prospects and acting upon the same, once the evidence adduced is found sufficient by the Tribunal/Court. In support of the above argument, learned counsel relied upon two judgments of the Honourable Supreme Court. The first is Hem Raj v. Oriental Insurance Company Ltd and Others [2018 ACJ 5] and the second is Suresh Chandra Bagmal Doshi and Another v. New India Assurance Company Ltd. and Others [2018 ACJ 1434] . In these two decisions, the

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precise issue as to, whether a percentage more than the standard percentage stipulated in Sarla Verma (supra) and Pranay Sethi (supra) could be taken, if there exists satisfactory evidence, is addressed and answered in favour of the appellant. On facts, learned counsel pointed out that, going by Ext.A11, a person who entered the service in the same cadre as the deceased is now earning a salary of Rs.91,640/-. Of course, the said person, Arun Kumar, had exhibited exemplary performance, for reason of which, he was given promotion within three years. However, the evidence of PW1 (Deputy General Manager) indicates that, any person having an Engineering degree will be given a promotion at least once in 5 years. Even on such a modest reckoning, the income of the deceased will be atleast doubled or more, going by the index available in Ext.A11. Therefore, the petitioner/ claimant is entitled to 100% future prospects is the contention. The evidence tendered by PW1, the Deputy General Manager, as regards the monthly and annual salary of the deceased is also relied upon by the learned counsel. Learned counsel emphatically

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pointed out that, no serious cross examination has been there, especially, with respect to the income component of the deceased, as also, the income component of a person who entered service on the same day, in the same cadre as the deceased.

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Per contra, learned Senior counsel for the insurance company submitted that the purpose behind standardization of future prospects as a definite percentage of the income, as stipulated in Sarla Verma (supra) and as confirmed in Pranay Sethi (supra), has to be borne in mind, while appreciating the above contention of the appellant. Learned counsel invited the attention of this Court to paragraph no.24 of Sarla Verma (supra) to point out that there was huge difference in the percentage of future prospects being reckoned by various Tribunals and High Courts, and it is to do away with this uncertainty and to bring in a uniform and standard procedure that the Supreme Court evolved a pattern, while assessing the percentage of future prospects. While doing so, the Honourable Supreme Court should have definitely taken into account two

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possibilities, the first being a case where evidence lacks, but the claimant gets the benefit of the standard percentage fixed in the judgment. The second is a case where the evidence is forthcoming indicating a higher percentage, but for the sake of standardization and uniformity, the Supreme Court fixed a definite percentage of the income towards future prospects. This variation is implicit in every standardization. The purpose behind the same cannot be given a go-bye based on individual facts and circumstances. Learned Senior counsel invited the attention of this Court to the following observation of the Honourable Supreme Court in Sarla Verma (supra) in paragraph no.24 of the judgment.

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“Though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different method of calculations being adopted.”

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According to the learned Senior counsel, this observation of the Honourable Supreme Court concludes the issue, in cases where evidence

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indicates a higher percentage of income towards future prospects. In the light of the above authoritative pronouncement in Sarla Verma (supra), confirmed by the larger Bench in Pranay Sethi (supra), the decisions of the Hon'ble Supreme Court in Hem Raj (supra) and Suresh Chandra Bagmal Doshi (supra) are per incurium and not liable to be taken stock of, is the concluding argument of the learned Senior counsel for the third respondent.

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In the first blush, the argument advanced by the learned Senior counsel for R3 insurance company is quite impressive. This Court notices that the dictum as regards standardization of future prospects on the basis of a fixed percentage of the established income laid down in Sarla Verma (supra) has been approved by a larger Bench of the Hon'ble Supreme Court consisting of five Judges of the Hon'ble Supreme Court in Pranay Sethi (supra), as could be seen from the observations in paragraph nos.44, 45, 53, 55 and 57 of the judgment. The Hon'ble Supreme Court deals with the issue of future prospects in paragraph no.53 of the judgment. The

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following observations by which paragraph no.55 is concluded are significant and extracted herein below:-

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“.....In such an adjudication, the duty of the tribunal and the Courts is difficult and hence, an endeavour has been made by this Court for standardization which in its ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardization keeping in view the principle of certainty, stability and consistency. We approve the principle of "standardization" so that a specific and certain multiplicand is determined for applying the multiplier on the basis of age.”

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(underlined for emphasis)

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The seal of approval by the larger Bench is again reflected in the observations in paragraph no.57 in Pranay Sethi (supra). It is important to note that no deviation from the standardization method, even in exceptional cases is seen culled out by the larger Bench in Pranay Sethi (supra), which, however, is stipulated in Sarla Verma (supra). In paragraph no.24, towards the end, the Hon'ble Supreme Court held as follows:

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“......Though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or was on a fixed salary (without provision for annual increments, etc.), the courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances.” (underlined for emphasis)

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The standardization method propounded in Sarla Verma (supra) finds further reiteration in United India Insurance Co. Ltd. v. Satinder Kaur [AIR 2020 SC 3076] .

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In the above state of affairs, one will be persuaded to fall in line with the arguments of the learned Senior counsel for the third respondent/insurance company as regards the binding effect of the standardized percentage of income towards future prospects.

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However, it is quite relevant to notice that in Hem Raj (supra) and Suresh Chandra Bagmal Doshi

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(supra), two different two Judges Bench of the Hon'ble Supreme Court specifically referred to the larger Bench decision in Pranay Sethi (supra) and held that if factual evidence is led to the satisfaction of the Tribunal/Court, the standardized percentage is capable of being varied. In Hem Raj (supra), it was contended that in standardization, the increase is built on presumption, but when actual evidence is led that future prospects was higher than the standard percentage, there is no bar in awarding higher compensation on that basis. This contention has been accepted; and a contrary course adopted by the High Court was set aside. Suresh Chandra Bagmal Doshi (supra) relied upon Hem Raj (supra) to hold that the standardised percentage is capable of being varied, if the evidence is so led. On such premise, the Hon'ble Supreme Court upheld grant of 100 percentage increase towards future prospectus awarded by the claims Tribunal.

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As per the law of precedents, if a judgment of the Hon'ble Supreme Court is interpreted by a subsequent judgment of the Hon'ble Supreme Court,

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such interpretation is binding upon the High Courts. The argument that the decisions referred in Hem Raj (supra) and Suresh Chandra Bagmal Doshi (supra) are per incurium cannot be sustained, inasmuch as both the decisions refer to the dictum laid down in Pranay Sethi (supra) and then held that taking a higher percentage, based on satisfactory proof, is not forbidden. Further, in our adversarial system of adjudication, the right to adduce evidence in support of one's plea is a vested/settled right of a litigant. To borrow the concept employed in the celebrated case of Dhulabhai & Others v. The State of M.P [AIR 1969 SC 78] , such right to adduce evidence is a 'fundamental principle of judicial procedure', which cannot be denuded of under the garb of standardisation. Following Hem Raj (supra) and Suresh Chandra Bagmal Doshi (supra), this Court therefore concludes the legal issue holding that a higher percentage of income towards future prospects can be reckoned than the one specified in Pranay Sethi (supra), provided actual proof satisfactory to the court/Tribunal is adduced.

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MACA 1241/2012

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Coming to facts, Ext.A8 is the salary certificate of deceased Sri.Biju P.Varghese issued by Kochi Refineries Ltd. The total salary comes to Rs.22,988/-, rounded to Rs.23,000/-. The fact that the deceased was a permanent employee and that the salary details are the one available at the time of his death are indicated in Ext.A8. The claimants have also produced Ext.A11 issued by M/s.Bharat Petroleum Corporation Ltd., which took over Kochi Refineries Ltd., showing the details of the salary of an employee, by name Arunkumar C.R., who joined service in Kochi Refineries on 1.10.1999 as Project Engineer, the same date and cadre in which the deceased joined service. Ext.A11 is issued on 10.11.2010. The accident occurred on 27.12.2003. Sri.Arunkumar C.R, who joined service as Project Engineer at the Grade 'JG A' has been promoted to the grade of 'JG C'. Page no.2 of Ext.A8 salary certificate explains the grades, wherein 'A' pertains to the designation 'Engineer' and 'C' pertains to the designation 'Deputy Manager'. It could thus be seen that Sri.Arunkumar C.R had secured promotion from the post of Engineer (Grade

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MACA 1241/2012

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A) to Deputy Manager (Grade C). His gross income shown in Ext.A11 is Rs.91,640/- as on 10.11.2020. The following comparative table would depict the increase in the salary from Grade-A to Grade-C, a sure pointer to reckon the future prospects.

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Sl.	Particulars	Biju P.Varghese	Arunkumar C.R
No.		Amount (Rs.)	Amount (Rs.)
1	Date of joining	01/10/99	01/10/99
	Joining Cadre	Projects Engineer Grade-A	Projects Engineer Grade-A
2		Passed away on 27.12.2003	Promoted as Deputy Manager (Gr.C)
3	Scale ofpay	12,000-17,500/-	32,900-58,000/-
4	Basic pay	13,635/-	43,680/- (as on 30.9.2010)
5	Dearness Allowance	5,999/-	17,385/-
6	Other	R&IA : 818/-	HRA : 8,736/-
	allowances	CCA : 180/-	Other Allowance and perks : 21,840/- (50% of basic pay)
		Company contribution to PF : 2356/-	-
7	Gross monthly income	22,988/- (rounded to 23,000/-)	91,640/-

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13 . The above comparative table would show that there has been an increase of more than three times

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MACA 1241/2012

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in the salary upon promotion from Grade-A to Grade-C. Of course, this Court specifically notice the facts elicited in cross examination of PW1, the Deputy General Manager, who produced Ext.A11 before the Court. It has been brought out that Sri.Arunkumar C.R was given promotion within three years due to his exemplary performance, whereas Sri.Biju P.Varghese, though had completed four years, was not so promoted. However, PW1/Dy.General Manger specifically deposed that employees having Engineering degree will not be retained in the same grade for a period more than five years. The same indication is available in page no.2 of Ext.A8 salary certificate, wherein it is stated that an officer on completion of five years of service in the Grades A, B, C, D and E is eligible to be considered for promotion to the next higher grade. There is nothing on record to show that the performance of the deceased was poor, though not exemplary. As already noticed, there has been an increase of more than three times in the salary of Arunkumar C.R, when compared to the last drawn salary of the deceased. Ext.A11 salary details of

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Arunkumar C.R has been proved by examining PW1, the Deputy General Manager, who issued it. In such circumstances, it is only just and reasonable to consider future prospects at the rate of double the salary of the deceased at least, thereby meaning 100% increase, as was adopted by the Hon'ble Supreme Court in Hem Raj (supra) and Suresh Chandra Bagmal Doshi (supra). Point concluded accordingly.

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The next contention is with respect to the income of the deceased reckoned by the Tribunal. Ext.P8 salary certificate reflects a monthly income of Rs.23,000/-, whereas the Tribunal had reckoned Rs.19,000/- only, taking into account the basic pay and D.A alone, excluding other heads. The course adopted by the Tribunal is in the teeth of the judgments of the Hon'ble Supreme Court in National Insurance Company v. Indira Srivastava & Ors [AIR 2008 SC 845] and Shyamwati Sharma & Ors. v. Karam Singh & Ors. [(2010) 12 SCC 378] . This Court is therefore of the opinion that the income as shown in Ext.P8 salary certificate, i.e. Rs.23,000/-, has to be reckoned as the monthly income.

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15 . An incidental issue which pops up is with respect to computation of tax. Learned counsel for the appellant pointed out that, flat deduction of 25% of the income towards income tax is grossly erroneous. According to the learned counsel, the basic exemption limits for the financial year 200405 (previous year 2003-04) was Rs.50,000/-. For income from Rs.50,001/- to Rs.60,000/-, the tax was 10% and for Rs.60,001/- to Rs.1,50,000/-, the tax was 20% and for income above Rs.1,50,000/-, tax was levied @ 30%. The annual income of the deceased calculated in terms of Ext.P8 salary certificate is Rs.2,76,000/- (23000x12). Tax computed on the said income as per the rates afore mentioned is Rs.56,800/-. There is a surcharge of 10% for income above Rs.1,50,000/-, which comes to Rs.5,680/- in the case of the deceased. Thus, the total tax liability is Rs.62,480/-. It is this amount which is liable to be deducted from the annual income of the deceased.

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The rates of tax, as also, the computation as canvassed by the learned counsel for the appellant

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is not disputed by the learned Senior Counsel for the insurance company. Therefore, the said computation is accepted.

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17 . Another ground of challenge is with respect to deduction on account of personal living expenses. When the deceased had four dependents, deduction of 1/3^rd of the income is wrong and 1/4^th ought to have been deducted is the argument. This Court finds merit in the said argument as well and hence accepted.

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Learned counsel for the appellant then contended that loss on account of 'consortium' was reckoned only at Rs.20,000/-, apart from compensation for loss of 'love and affection', again at Rs.20,000/-. The claimants, being the widow, parents and daughter of the deceased, are entitled to consortium @ Rs.40,000/- each is the submission. The submission is again liable to be accepted, simultaneous with obliterating Rs.20,000/- each given under the heads of 'loss of consortium' and 'loss of love and affection'. Going by the judgment

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of the Hon'ble Supreme Court in Oriental Insurance Company Ltd. v. Kahlon [AIR 2021 SC 3913] , the compensation of Rs.5,000/- given towards pain and suffering in the case of death is also illegal and therefore, to be excluded.

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Under the conventional heads of 'funeral expenses' and 'loss of estate', no amount is seen granted by the Tribunal in respect of the former; and Rs.5,000/- only is seen awarded in respect of the latter. Going by the judgment in Pranay Sethi (supra), the claimants are entitled to Rs.15,000/each under the said heads. Ordered accordingly.

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The final aspect argued by the learned counsel for the appellants is with respect to the multiplier adopted by the Tribunal. The Tribunal applied the multiplier of '11', as against the correct multiplier of '17'. The course adopted is illegal and hence liable to be corrected.

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Learned counsel for the third respondent/ insurance company submitted that the finding in the impugned award permitting recovery of the amount

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paid by the insurance company from respondent nos.1 & 2 may be retained. Inasmuch as there is no challenge to that direction in the instant appeal, the said finding is not interfered with and retained as such.

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In the circumstances, this MACA is allowed and the quantum of compensation payable to the claimants is re-worked as indicated in the tabular statement given herein below:

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Sl. No.	Head of claim	Amount awarded by the Tribunal(Rs)	Total amount after enhancement in appeal (Rs.)
1	Compensation for loss of dependency and estate	1943766	*54,44,760
2	Transportation expenses	2000	2000
3	Funeral expenses	3000	15000
4	Pain and sufferings	5000	nil
5	Loss of love and affection	20000	nil
6	Loss of consortium	20000	160000
7	Loss of estate	5000	15000
	Total	19,98,766 (Erroneously shown as 1980766/- by the Tribunal)	56,36,760/-
Am	ount enhanced=Rs.36,37,9	94/-(56,36,760	– 19,98,766)

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[Loss of dependency : 2,76,000(annual income)-62,480(income tax)x(200/100)x(3/4)x17]

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The Insurance Company shall pay interest for the amounts awarded by the Tribunal at the rate directed in the impugned award; and for the enhanced amounts at the rate of 5% from the date of petition. If any amount has already been paid, the same shall be granted set off. Since there was a delay of 52 days in filing the appeal, the interest for the enhanced quantum shall not run for the said period as directed in order dated 15.12.2021 in C.M.Appl.No.1/2012. The claimants shall produce the details of the Bank account before the Insurance Company/Tribunal within one month from the date of receipt of a certified copy of this judgment and amount shall be transferred to the Bank account directly through NEFT/RTGS mode, within a period of one month thereafter. If the Bank account is not furnished within the time stipulated, it is made clear that no interest shall run on the enhanced amount after the period stipulated by this Court. However, if the Insurance Company fails to deposit the amount as directed, interest on enhanced amount

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shall also run at the rate ordered by the Tribunal from the date of petition.

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Sd/C.JAYACHANDRAN JUDGE

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N.P. Simi v. M/S. Nair Brothers Carriers Pvt. Ltd.

Case brief

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N.P. Simi v. M/S. Nair Brothers Carriers Pvt. Ltd.

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