THE COMMISSIONER OF INCOME TAX vs. M/S. SATYAM ISPAT

JUDGMENT Date : 15-03-2018 Heard Mr. S. Dutta, learned Counsel appearing for the appellant. Also heard Mr. T. Islam, learned Counsel appearing for the respondents No. 1, 2 and 3 and Mr. A. K. Deka, learned Counsel for respondent No.

Page No.# 4/8 hundred and forty six only). By applying the ratio of the case of Rajesh & Ors. Vs. Rajbir Singh and Ors. 2013) ACJ 1403, income of 15% was added on account of future prospects. 1/3 rd of the salary was deducted towards the personal and living expenses of the deceased and therefore, the compensation was computed as follows: Total monthly salary :Rs.37,654.00 Less Professional Tax :Rs.208.00 Total : Rs.37,446.00 Total Annual Salary (Rs.37,446/- x 2) :Rs.4,49,352.00 Salary minus standard I.T. deductions: (Rs.4,49,352/- – Rs.1,80,000/-) : Rs.2,69,352.00 Income Tax 10%

:Rs.26,935.20 Total Annual Salary (Rs.37,446/- x12) :Rs.4,49,352.00 Less Income Tax :Rs.26,935.20 : Rs.4,22,416.80 Add 15% : Rs.63,362.52

: Rs.4,85,779.32 Less 1/3rd (Rs.4,85,779.32 ÷ 3 x 2) : Rs.1,61,926.44 Total : Rs.3,23,852.88 Multiplier : 9 Total loss of dependency (Rs.3,23,852.88 x 9) : Rs.29,14,675.92 Add: Funeral Expense : Rs.25,000.00 Add: Loss of consortium : Rs. 1,00,000.00 Add: Loss of estate : Rs.5,000.00 Add: Transportation of body : Rs.5,000.00 Total : Rs.30,49,700.00

Thus, the award of Rs.30,49,700/- (Rupees Thirty lakh forty nine thousand and seven hundred only) was directed to be paid to the respondents No.1 to 3 i.e. the claimants

Page No.# 5/8 with interest at the rate of 6% on and from the date of filing the claim petition till its realization. 10) The learned counsel for the appellant, by pressing all the grounds for the appeal, has specifically submitted that the age of the deceased at the time of his death was 56 years. He would have otherwise retired at the age of 60 years. Therefore, prior to his retirement he would have received his full salary, but after the date of his retirement, the family would be entitled to pension and, as such, the loss of dependency would come down to the extent of the pension, which the family of the deceased would have otherwise received, and therefore, it is submitted that this is a case where spilt multiplier should be applied, one for the period prior to the normal date of retirement and the other multiplier for the post retirement period. It is also submitted that in the event this court is inclined to enhance any income considering the future prospect, the respondents No. 1, 2, and 3 would not be entitled to any interest on such enhanced income and therefore, interest was required to be disallowed on the compensation payable on account of future prospects, if such a relief is at all granted. 11) It is further submitted that the issue of additional compensation on account of other conventional heads like (i) funeral expenses, (ii) loss of consortium, and (iii) loss of estate, has been settled by the Hon’ble Apex Court in the case of National Insurance Co. Ltd. Vs. Pranay Sethi and Ors. MANU/SC/1366/2017: (2017) 8 Supreme 107, and it is submitted that this court is required to follow the ratio laid down by the Apex Court in the case of Pranay Sethi (supra). 12) The learned Counsel for the respondents No. 1, 2 and 3 has made his submissions in support of the judgment. He has opposed the arguments of the learned Counsel for the appellant on the application of spilt multiplier in this case. He has submitted that the Hon’ble Apex Court in the case of Sarla Verma (supra) as well as Pranay Sethi (supra) had settled the issue of the applicable multiplier and, as such, there was no scope of applying spilt multiplier as per the judgment passed by this court in the case of Oriental Insurance Company Ltd. Vs. Gunamani Bora, (2009) 5 GLR 282: 2008 (3) GLT 733. 13) It is submitted that the principle of split multiplier was first applied by this court in the case of Gunamani Bora and Ors. (supra). However, in view of the subsequent decision of the Page No.# 6/8 Hon’ble Apex Court in the case of Sarla Verma (supra) and Pranay Sethi (supra), The decision of this court in the case of Gunamoni Bora (supra) must be held to be prospectively overruled. The learned Counsel for respondents No. 1, 2 and 3 with his usual fairness has submitted that in so far as the additions on account of conventional heads of funeral expenses, loss of consortium and loss of estate is concerned, this court may be bound by the ratio laid down in the case of Pranay Sethi (supra). However, it is submitted that in the present case, as the victim had died prior to the decision of Pranay Sethi (supra) this court may not interfere with the compensation granted on account of the conventional heads. 14) In view of the submission made by the learned Counsel for both sides, the only question is to be decided is - Whether the impugned judgment or award is liable to be interfered with on account of (i) failure to apply split multiplier, (ii) on account of non- awarding of interest on the enhanced award, and (iii) quantification of compensation on account of conventional heads? 15) It appears from the argument made by the learned Counsel of both sides that there is no dispute as regards the death of the deceased in a motor vehicular accident involving the offending vehicle insured by the appellant. There is also no dispute as regards the monthly income and the age of the deceased. In so far as the enhancement of income on account of future prospects is concerned, it appears that the Hon’ble Apex Court in the case of Pranay Sethi (supra) had laid down the ratio in paragraph 61(iii) that in case the deceased was at the age of 50-60 years, addition for future prospects should be 15%. Therefore, in the present case, it is held that the respondent No. 1 to 3 were entitled to enhancement of the income of the deceased on account of future prospects which as per the case of Sarla Verma (supra) is held to be 15% (for age group of 50-60 years). In the case of Pranay Sethi (supra) it has been held that actual salary should be read as salary less tax. Thus, there appears to be no scope for enhancing the award on the ground of any error in computing addition of income on account of future prospects as the enhancement was done at the rate of 15%. 16) In respect of the application of split multiplier, while the said principle was applied in the case of Gunamoni Bora (supra), but the Hon’ble Apex Court in the case of Sarla Verma (supra) as well as in the case of Pranay Sethi (supra), had fixed and/or standardized the rates of applicable multipliers. Therefore, if a split multiplier principle is applied in the present case

Page No.# 7/8 in hand, it would be contrary to the judgment of the Hon’ble Apex Court rendered in the case Pranay Sethi (supra) and Sarla Verma (supra). Hence, it appears to this Court that it is bound by the judgment by the Hon’ble Apex Court in the case of Pranay Sethi (supra) and Sarla Verma (supra) and, as such, the principle laid down in the case of Gunamoni Bora (supra) cannot be applied, as it would run counter to the principle of standardization of multiplier as enunciated by the Hon’ble Apex Court. 17) However, in so far as the issue of interest on the enhanced amount is concerned, the said Devi & Ors., MAC Appeal No. 96/2009, decided on 23.04.2014, wherein interest was not allowed on addition of future prospects. This court is bound by the ratio laid down in the said case and therefore, interest is disallowed on the addition of income on account of future prospects. 18) As regards the additions under conventional heads are concerned, the Hon’ble Apex Court in the case of Pranay Sethi (supra) has laid down in paragraph 61(viii) of the said judgment that reasonable figures on conventional heads, loss of estate, loss of consortium and funeral expenses should be Rs.15,000/-, Rs.40,000/-, and Rs.15,000/-respectively. In this connection, this court is of the view that as the present appeal is decided today, this court is bound to apply the ratio of Pranay Sethi (supra) and this court cannot take a contrary view and therefore, the compensation of conventional heads as awarded by the learned Tribunal is scaled down to be in consonance with the ratio laid down in the case of Pranay Sethi (supra). Therefore, the submissions made by the learned Counsel for the respondents No. 1, 2 and 3 to the effect that as in this case the award was passed prior to the decision rendered in the case of Pranay Sethi (supra), the award already passed not to be interfered with cannot be acceded to. 19) Therefore, in view of the discussions above, this appeal stands appeal partly allowed to the extent as indicated above and the impugned judgment and award stands modified as below:

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