Gross income of deceased to be considered to calculate compensation in accident cases: HC

Read Judgement: Charanjit and others v. Bhupinder Singh and others 

LE Correspondent

Chandigarh, July 16, 2021: Enhancing the compensation awarded to the family of an accident victim, the Punjab and Haryana High Court has held that the gross income of the deceased has to be taken into consideration for the calculation of compensation in accident cases.

A Bench of Justice Rajbir Sehrawat ruled this while hearing a petition challenging an award dated 08.12.2005, passed by the Motor Accident Claims Tribunal, Hoshiarpur, to an accident victim on the ground that compensation granted by the court was inadequate and needed to be enhanced.

The brief facts of the case are that on 05.03.2004 at about 2.00 p.m., Jagjit Kumar met with an accident and later died due to the rash driving of a truck driver.

With these assertions, the dependent/legal heir of the decease filed the claim petition before the MACT asserting therein that the deceased was employed as Junior Engineer with the Punjab State Electricity Board and

was drawing a salary of Rs 12,455 per month. The deceased was aged 32 years at the time of his death and he was un-married. Accordingly, an enhanced compensation was prayed for by the claimants.

After taking into consideration the evidence led by the respective parties, the Tribunal assessed the income of the deceased to be Rs 9,200/- per month after deducting the allowances being paid to him. The multiplier of 6 was applied by taking the age of the deceased’s mother as the relevant factor. Accordingly, a total amount of Rs 3,36,000 was awarded as compensation to the victim’s family, which according to them was inadequate in their plea before the high court.

On the other hand, the counsel representing the insurance firm submitted that the amount of compensation has rightly been calculated by the Tribunal. The income of the deceased was liable to be reduced on account of income tax, as well as some personal allowances have to be deducted while calculating the loss of dependency.

Deciding the matter, the Bench stated that it finds substance in the argument of the appellants. Since the income of the deceased has been proved to be Rs12,455/- per month, therefore, the gross income of the deceased has to be taken at this level only.

“As per the judgment of the Supreme Court in the case of National Insurance Company Ltd. versus Pranay Sethi and others, except the deduction on account of income tax, no deduction is to be made from the salary qua other allowances etc. Hence, the income of the deceased has to be taken to be Rs 12,455/- per month minus the applicable income tax,” the HC said. 

“Still further, as per the above said judgment of the Supreme Court, the claimants are entitled to the compensation on account of loss of future prospects of the deceased @ 50% of the assessed income. The multiplier is also required to be applied as per the age of the deceased. Hence, the award passed by the Tribunal is modified to that extent and appellant No.1 is now held entitled to a total amount of compensation of Rs. 16.36 Lakh. Appellant No.1 shall be entitled to interest @ 6% per annum from the date of filing of the petition till its realization on the amount of enhanced compensation,” the bench ruled.

The HC further said the interest awarded on the amount of compensation determined by the Tribunal shall remain as it is. It further ordered that the enhanced amount of compensation, along with interest, shall be paid to appellant No.1 in her bank account through RTGS by the Insurance Company within a period of six weeks.