The National Insurance Company Limited vs M. Pappa and Others

S. Manikumar, J.—National Insurance company is the appellant in this Civil Miscellaneous appeal. The only point raised in this Civil

Miscellaneous Appeal is that the Tribunal had committed a manifest error in taking into consideration the gross salary of the deceased as the base

for computing the dependency compensation, instead of net salary drawn by him at the time of accident. Mr. C.R. Krishnamoorthy, learned

Counsel for the appellant, submitted that when P.W.1 in his cross-examination has admitted that the net salary drawn by the deceased was Rs.

5854/-. The Tribunal has erred in taking the gross salary for the purpose of computing the loss of future income. The respondent is on record.

The issue as to whether the gross salary of the deceased should be taken or not has already been decided by this Court in a decision in The

Manager, National Insurance Company Limited v. Padmavathy and Ors. reported in 2007 1 TN MAC 507, wherein this Court in para 13 held as

follows:

Income tax, Professional tax which are deducted from the salaried person goes to the coffers of the Government under specific head and there

is no return. Whereas, the General Provident Fund, Special Provident Fund, L.I.C., Contribution are amounts paid specific heads and the

contribution is always repayable to an employee at the time of voluntary retirement, death or for any other reason. Such contribution made by the

salaried person are deferred payments and they are savings. The Supreme Court as well as various High Courts have held that the compensation

payable under the Motor Vehicles is statutory and that the compensation payable under the Motor Vehicles Act is statutory and that the deferred

payments made to the employee are contractual. Courts have held that there cannot be any deductions in the statutory compensation, if the Legal

Representatives are entitled to lump sum payment under the contractual liability. If the contributions made by the employee which are otherwise

savings from the salary are deducted from the gross income and only the net income is taken for computing the dependency compensation, then the

Legal Representatives of the victim would lose considerable portion of the income. In view of the settled proposition of law, I am of the view, the

Tribunal can make only statutory deductions such as Income tax and professional tax and other contribution, which is not repayable by the

employer, from the salary of the deceased person while determining the monthly income for computing the dependency compensation. Any

contribution made by the employee during his life time, form part of the salary and they should be included in the monthly income, while computing

the dependency compensation.

Similar view was also expressed by the Andhra pradesh High Court in a decision S. Narayanamma and Ors. v. Secretary to Government of

India, Ministry of Telecommunications and Ors. reported in 2002 ACC 582, wherein in para 14,it is held as follows:

In this background, now we will examine the present deductions made by the Tribunal from the salary of the deceased in fixing the monthly

contribution of the deceased to his family. The Tribunal has not even taken proper care while deducting the amounts from the salary of the

deceased, at least the very nature of deductions from the salary of the deceased. My view is that the deductions made by the Tribunal from the

salary such as recovery of housing loan, vehicle loan, festival advance and other deductions, if any, to the benefit of the estate of the deceased

cannot be deducted while computing the net monthly earnings of the deceased. These advances or loans are part of his salary. So far as House

Rent Allowance is concerned, it is beneficial to the entire family of the deceased during his tenure, but for his untimely death the Claimants are

deprived of such benefit which they would have enjoyed if the deceased is alive. On the other hand, allowances, like Travelling Allowance,

allowance for newspapers/periodicals, telephone, servant, club-fee, car maintenance, etc., by virtue of his vocation need not be included in the

salary while computing the net earnings of the deceased. The finding of the Tribunal that the deceased was getting Rs. 1,401/- as net income every

month is unsustainable as the deductions made towards vehicle loan and other deductions were also taken into consideration while fixing the

monthly income of the deceased. The above finding of the Tribunal is contrary to the principle of ''just compensation'' enunciated by the Supreme

Court in the judgement in Helen''s case(supra). The Supreme Court in Concord of India Insurance Company v. Nirmaladevi and Ors. 1980 ACJ

55(SC) held that determination of quantum must be liberal and not niggardly since law values life and limb in a free country ''in generous scales''.

The judgment of this Court and the Andhra pradesh High Court have been approved by the Supreme Court in National Insurance Company

Limited v. Indira Srivastava and Ors. reported in 2008 1 TN MAC 166(SCC) at para Nos. 17,19, 23 it is held as follows:

The amounts, therefore, which were required to be paid to the deceased by his employer by way of perks, should be included for computation

of his monthly income as that would have been added to his monthly income by way of contribution to the family as contra-distinguished to the

ones which were for his benefit. We may, however, hasten to add that from the said amount of income, the statutory amount of tax payable

thereupon must be deducted.

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.

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.

Before the Tribunal, wife of the deceased, examined as P.W.1. has deposed that at the time of accident, her husband was a jeep driver in

Health Department, Government of Tamil Nadu and earned Rs. 9434/-p.m. In support of her contention, she has marked Ex.P7-Salary

Certificate. On the basis of the entry in Ex.P2-Postmortem Certificate, the Tribunal has determined the age of the deceased as 55. On a perusal of

Ex.P7-Salary Certificate, the Tribunal has found that there was no deductible head, such as Income Tax or Professional Tax from the salary of the

deceased. The appellant Insurance Company also did not adduce any documentary evidence or able to elicit from the witness of any statutory

deduction. Computing the annual income on the basis of Ex.P7, the Tribunal found that there was liability to pay Income Tax. There was no

dispute over the multiplier. Therefore, the Tribunal, by applying proper multiplier to the gross salary and after deducting one third towards the

personal expenses of the deceased, estimated the loss of dependency at Rs. 6,03,776/-.

In view of the decision of the Supreme Court, I see no illegality in the method of computation of dependency compensation. Excepting the

above, no other points have been urged in this Civil Miscellaneous Appeal.

In the result, the award of the Tribunal is confirmed