Oriental Insurance Company Ltd. vs Smt. Mamta Kalura and Others

Dev Darshan Sud, J.—This writ petition has been preferred by the Insurance Company against the award of the learned Motor Accident Claims Tribunal Fast Track Court, Shimla awarding a sum of Rs. 22,20,000/- to the claimants, who are the wife, daughter, son and father of deceased Shri D.P. Singh, who died in the motor accident belonging to respondent Faqueer Chand. The deceased was employed as General Manager in Hotel Ashiana Regency, Chhota Shimla. It was pleaded that his salary was Rs. 15000/- per month, out of which he spent Rs. 2000/- on himself. In addition, he was provided free meals and accommodation etc. by his employer. It was pleaded that on 19.5.2003 the deceased was travelling in Tata Sumo vehicle belonging to respondent No. 1. It was driven by respondent Rakesh Kumar in a rash and negligent manner resultantly it went of the road and caused fatal injuries to the deceased, who died on the spot. Since the facts with respect to the accident and age of the deceased are not disputed, I am not adjudicating those facts.

Dr. Lalit Sharma, learned Counsel appearing for the petitioner, urges that the claim allowed is against the law. The first point urged is that the salary of the deceased could not be taken to be Rs. 15000/- per month as it was admitted by the wife of the deceased that her husband used to pay her Rs. 13,000/- per month in cash. This is the amount which he was drawing. According to him, even if the statement of the wife of the deceased is taken into consideration as the gospel truth, he was only paying Rs. 13,000/- at home. The learned Tribunal has acted in gross dereliction of the directions of the Hon''ble Supreme Court issued in Smt. Sarla Verma and Others Vs. Delhi Transport Corporation and Another, . Learned Counsel submits that deduction has to be made in terms of what is stated in judgment in which it is held:

Though in some cases the deduction to be made towards personal and living expenses is calculated on the basis of units indicated in U.P. State Road Transport Corporation and Others Vs. Trilok Chandra and Others, , the general practice is to apply standardized deductions. Having considered several subsequent decisions of this Court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependent family members is 4 to 6, and one-fifth (1/5th) where the number of dependent family members exceeds six.

Where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself Even otherwise, there is also the possibility of his getting married in a short time, in which event the contribution to the parentis) and siblings is likely to be cut drastically. Further, subject to evidence to the contrary, the father is likely to have his own income and will not be considered as a dependant and the mother alone will be considered as a dependant. In the absence of evidence to the contrary, brothers and sisters will not be considered as dependants, because they will either be independent and earning, or married, or be dependent on the father.

Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large-number of younger non-earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third.

In the present case, the family of the deceased consisted of himself, his wife, two minor children and his father. In other words, the dependent family members were four and in this event, 1/4th is required to be deducted from his salary.

In Santosh Devi Vs. National Insurance Company Ltd. and Others, , the Supreme Court taking into consideration the ratio in Sarla Verma'' case supra, holds:--

We find it extremely difficult to fathom any rational for the observation made in paragraph 24 of the judgment in Sarla Verma''s case that where the deceased was self-employed or was on a fixed salary without provision for annual increment, etc, the Courts will usually take only the actual income at the time of death and a departure from this rule should be made only in rare and exceptional cases involving special circumstances. In our view, it will be naive to say that the wages or total emoluments/ income of a person who is self-employed or who is employed on a fixed salary without provision for annual increment, etc., would remain the same throughout his life.

The rise in the cost of living affects everyone across the board. It does not make any distinction between rich and poor. As a matter of fact, the effect of rise in prices which directly impacts the cost of living is minimal on the rich and maximum on those who are self-employed or who get fixed income/emoluments. They are the worst affects people. Therefore, they put extra efforts to generate additional income necessary for sustaining their families.

The salaries of those employed under the Central and State Governments and their agencies/instrumentalities have been revised from time to time to provide a cushion against the rising prices and provisions have been made for providing security to the families of the deceased employees. The salaries of those employed in private sectors have also increased manifold. Till about two decades ago, nobody could have imagined that salary of Class IV employee of the Government would be in five figures and total emoluments of those in higher echelons of service will cross the figure of rupees one lakh.

Although, the wages/income of those employed in unorganized sectors has not registered a corresponding increase and has not kept pace with the increase in the salaries of the Government employees and those employed in private sectors but it cannot be denied that there has been incremental enhancement in the income of those who are self-employed and even those engaged on daily basis, monthly basis or even seasonal basis. We can take judicial notice of the fact that with a view to meet the challenges posed by high cost of living, the persons falling in the latter category periodically increase the cost of their labour. In this context, it may be useful to give an example of a tailor who earns his livelihood by stitching cloths. If the cost of living increases and the prices of essentials go up, it is but natural for him to increase the cost of his labour. So will be the cases of ordinary skilled and unskilled labour, like barber, blacksmith, cobbler, mason etc.

Therefore, we do not think that while making the observations in the last three lines of paragraph 24 of Sarla Verma''s judgment, the Court had intended to lay down an absolute rules that there will be no addition in the income of a person who is self-employed or who is paid fixed wages. Rather, it would be reasonable to say that a person who is self-employed or is engaged on fixed wages will also get 30 per cent increase in his total income over a period of time and if he/she becomes victim of accident then the same formula deserves to be applied for calculating the amount of compensation.

(at pp 428-429)

It is in this context that the dependency of the deceased has to be considered. Therefore, taking the basic salary as Rs. 13,000/- per month to which 30% is required to be added as the loss of future earnings. Out of this, l/4th is required to be deducted as the family size of the deceased is between 4 to 6. Thus Rs. 4225/- are required to be deducted for his personal expenses. The remainder of Rs. 12675 is required to be multiplied by 12 which comes to be Rs. 1,52,100/- and after adopting the multiplier of 16, the total amount works to Rs. 24,33,600/-. The award passed by the learned Tribunal is restricted to Rs. 22,20,000/-.

Learned Counsel, Dr. Lalit Sharma, submits that the salary of the deceased at Rs. 13,000/- per month cannot be accepted as the basis for calculating the dependency of the deceased as he was earning much less. I cannot accept this submission for the reason that it is pleaded on record and established by evidence that the deceased was provided free meals and accommodation which, if considered in its true perspective, would only come to reduce the standard deduction which is made. Therefore, no interference is called for in this writ petition which is disposed of accordingly.