THE PR COMMISSIONER OF INCOME TAX vs. M/S. STAR PVG EXPORTS

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 24TH DAY OF JUNE 2020 PRESENT

THE HON’BLE MR. JUSTICE S.G. PANDIT

AND

THE HON’BLE MR. JUSTICE V. SRISHANANDA

M.F.A.NO.100029 OF 2018 (MV) C/W M.F.A.NO.102301 OF 2018 (MV)

IN M.F.A.NO.100029 OF 2018 (MV)

BETWEEN

THE DIVISION CONTROLLER NEKSRTC DEPOT KOPPAL, R/O. KOPPAL, TQ & DIST:KOPPAL, BY ITS CHIEF LAW OFFICER. ... APPELLANT (BY SRI. S. C. BHUTI, ADVOCATE)

AND

2 AGED ABOUT 29 YEARS, OCC:STUDENT, R/O. KOTI AREA, KOPPAL, TQ & DIST:KOPPAL-583231

(BY SRI. D. M. MALTI, ADVOCATE FOR R1-R3; SRI. LINGARAJ MARADI, ADV., FOR R4 AND R5; R1- NOTICE SERVED)

THIS MFA IS FILED U/S.173(1) OF MOTOR VEHICLES ACT, 1988, AGAINST THE JUDGMENT AND AWARD DATED

3 28.09.2017 PASSED IN MVC NO.223/2015 ON THE FILE OF THE SENIOR CIVIL JUDGE AND MEMBER, ADDITIONAL MOTOR ACCIDENT CLAIMS TRIBUNAL, KOPPAL, AWARDING COMPENSATION OF Rs.27,50,636/- WITH INTEREST AT 8% P.A. FROM THE DATE OF PETITION TILL ITS REALISATION.

IN M.F.A.NO.102301 OF 2018 (MV)

BETWEEN

(BY SRI. D. M. MALTI, ADVOCATE)

AND

4 2. DIVISION CONTROLLER, NEKSRTC DEPOT KOPPAL R/O. KOPPAL, TQ:DIST:KOPPAL-583231.

... RESPONDENTS (BY SRI. S. C. BHUTI, ADV., FOR R2; SRI. LINGARAJ MARADI, ADV., FOR R3 AND R4; R1- NOTICE DISPENSED WITH)

THIS MFA IS FILED UNDER SECTION 173(1) OF THE MOTOR VEHICLES ACT, 1988, AGAINST THE JUDGMENT AND AWARD DATED 28.09.2017 PASSED IN MVC NO.223/2015 ON THE FILE OF THE SENIOR CIVIL JUDGE AND MEMBER, ADDITIONAL MOTOR ACCIDENT CLAIMS TRIBUNAL, KOPPAL, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

THESE MFAs COMING ON FOR ADMISSION, V. SRISHANANDA, J DELIVERED THE FOLLOWING:

5 JUDGMENT These two appeals are preferred by NWKRTC (for short “Corporation”) and the claimants questioning the validity of the judgment and award dated 28.09.2017 in MVC No.223/2015 passed by the Senior Civil Judge and Additional M.A.C.T., Koppal (hereinafter referred to as “the Tribunal” for short). 2. The brief facts, which are necessary for disposal of these appeals are as under: A claim petition was filed by the claimants under Section 166 of the Motor Vehicles Act stating that on 15.12.2014 at about 11.30 p.m. one Basavaraj was standing in front of Depot Manager Room at Koppal bus stand and at that juncture, the driver of the bus bearing No.KA-37/F-408 drove the bus in a rash and negligent manner and dashed against Basavaraj, due to which Basavaraj sustained grievous injuries and was shifted to District Hospital, Koppal and ultimately he succumbed to the injuries in hospital. It is further contended that he was

6 working as a mechanic in KSRTC and was earning Rs.41,538/- as monthly salary and the claimants being dependants have lost the bread earner of their family and hence, sought for compensation in a sum of Rs.60,00,000/-. On issuance of notice, the driver of the offending bus as well as the Divisional Controller, NWKRTC appeared before the Tribunal. The second respondent/corporation filed written statement denying the claim petition averments in toto. It is contended that the accident did not occur on account of negligent driving of the offending bus by the first respondent and has occurred on account of negligent act of the deceased in not taking proper care and caution while standing near the Depot Manager Room. It is also contended that the deceased being mechanic, he was not expected to stand in front of the bus, which was under repair and was meant for testing. The respondent/corporation has denied that the deceased was having monthly income of Rs.41,538/- and was aged

7 52 years as on the date of the accident. It is contended that the second respondent/corporation has paid a sum of Rs.3,00,000/- as an interim compensation and Rs.5,000/- towards funeral expenses and hence, prayed for dismissal of the claim petition. Based on the rival contentions of the parties, the Tribunal framed the following issues: 1. Whether the petitioner proves that deceased Basavaraj died in the motor vehicle accident that occurred on 15.12.2015 at about 11.35 p.m. on KSRTC Depot Koppal due to rash and negligent driving of Bus bearing No.KA- 37/F-408 by respondent No.1?

8 documentary evidence, which were marked vide Ex.P.1 to Ex.P.15. On behalf of the respondents, the first respondent was examined as R.W.1 and another witness as R.W.2. They also relied on documentary evidence, which were marked vide Ex.R.1 to Ex.R.10. After recording evidence and hearing the parties, the Tribunal considered the entire material on record cumulatively and allowed the claim petition in a sum of Rs.27,50,000/- with interest @ 8% per annum from the date of petition till realization on following heads. 1. Loss of financial dependency Rs.25,50,636/- 2. Loss of love and affection Rs.1,00,000/- 3. Loss of consortium Rs.20,000/- 4. Loss of estate Rs.50,000/- 5. Funeral expenses Rs.30,000/-

Total Rs.27,50,636/-

9 4. The learned counsel for Corporation argued that the Tribunal has erroneously adjudged the compensation in a sum of Rs.27,56,636/-. He also contends that as per the legal principles enunciated by the Hon’ble Apex Court in the case of National Insurance Company Ltd vs. Pranay Sethi and others, reported in AIR 2017 Supreme Court 5157, the Tribunal ought to have awarded maximum amount of Rs.70,000/- on conventional heads but has grossly erred in awarding Rs.2,00,000/- on conventional heads as against Rs.70,000/-. He further contends that the Tribunal lost sight to deduct the income tax from the salary of the deceased while assessing the monthly income of the deceased. He further contends that having regard to the age of the deceased and remaining service of 6 years, the Tribunal ought to have applied a split multiplier instead of applying multiplier “11” uniformly. 5. The learned counsel for corporation also contends that the son of the deceased has been given

10 compassionate appointment and the corporation has paid Rs.3,00,000/- to the claimants as interim compensation and Rs.5,000/- towards funeral expenses and the son of the deceased has given an undertaking letter, which is marked at Ex.R.5 and as such the claimants are not entitled for any compensation and hence, sought for dismissal of the claim. 6. Per contra, the learned counsel for the claimants contends that the adjudged compensation is on the lower side. It is contended that the Tribunal has not considered addition of 15% of the assessed income towards future prospects and on this count, the compensation should be enhanced. It is further contended that on the ground of love and affection the Tribunal has granted only Rs.1,00,000/- and thus, the claimants sought for increase of the same. It is further contended that the Tribunal was justified in not applying split multiplier.

11 7. In view of rival contentions of the parties, the points that would arise for our consideration are as under: i) Whether the Tribunal is erred in adjudging the compensation by applying multiplier “11” instead of applying a split multiplier? ii) Whether the claimants have made out a case for enhancement of compensation? 8. We answer both the points in affirmative for the following: REASONS 9. On record, there is cogent material available to hold that the accident has occurred solely on account of rash and negligent driving of the offending bus by the first respondent, due to which Basavaraj got seriously injured and ultimately succumbed to accidental injuries in Government Hospital at Koppal. 10. It is not in dispute that a sum of Rs.3,00,000/- was paid as interim compensation and Rs.5,000/- towards funeral expenses by the Corporation to the claimants. The

12 driver of the offending bus/first respondent has been charge-sheeted by the police vide Ex.P.5. None of the respondents have challenged the filing of charge-sheet against the first respondent, who was the driver of the offending vehicle. The Tribunal, after considering the oral and documentary evidence on recorded, recorded a finding that the accident had occurred due to rash and negligent driving of the offending bus bearing No.KA-37/F-408 by the first respondent resulting in death of Basavaraj. 11. Even after re-appreciation of the entire evidence on record, we do not find any serious infirmity in Tribunal recording a finding that because of rash and negligent driving of the offending bus by first respondent, Basavaraj sustained grievous injuries and ultimately succumbed to the injuries. 12. The learned counsel for appellant/corporation contends that the son of the deceased was given a compassionate appointment and the corporation has also paid a sum of Rs.3,00,000/- as interim compensation and

13 Rs.5,000/- towards funeral expenses of the deceased, and the son of the deceased also gave an undertaking letter, which is marked at Ex.R.5 and as such the claimants are not entitled for any compensation. 13. We are unable to appreciate the said argument canvassed on behalf of the appellant/corporation for the simple reason that the appointment on compassionate ground would not deprive the legal representatives of the deceased to claim the compensation for the accidental death of Basavaraj. Even otherwise if Basavaraj died a natural death during his service, one of the family members were entitled for appointment on compassionate ground as per the prevailing rules and regulations. As such, the right of the claimants seeking compensation for the accidental death of Basavaraj would not get extinguished by the fact that one of the sons of deceased Basavaraj having been given compassionate appointment. Moreover, in the case on hand, claimants 1, 4 and 5 are the wife and parents of the deceased, whereas claimants 2

14 and 3 are major sons. The Tribunal has held that wife and parents are entitled for compensation at 60:20:20, respectively. As such, the said contention is bereft of merits and cannot be countenanced in law. 14. The argument advanced by the learned counsel for the Corporation having regard to the fact that the deceased was aged 54 years as on the date of the accident and was left with only 6 years service, application of split multiplier in the present case has to be considered by this Court. 15. In support of his contentions, the learned counsel as to the application of split multiplier drew our attention to the judgment passed in MFA No.20727/2010 C/w MFA No.20728/2010 & MFA Crob No.771/2010, dated 08.12.2016. It is also argued on behalf of the learned counsel for the corporation that, while rendering the said judgment, the Division Bench of this Court has taken into consideration the legal principles enunciated in K.R. Madhusudhan v. Administrative Officer (2011

15 ACJ 743) and in Puttamma and others v. K. L. Narayana Reddy (2014 ACJ 526). 16. On contrary, the learned counsel for the claimants submitted that in order to apply split multiplier, there must be a finding recorded by the Tribunal. Since no material was available before the Tribunal for application of split multiplier, the judgment and award passed by the Tribunal need not be disturbed. 17. It is needless to emphasize that this Court being the first Court of Appeal, this Court can always revisit the finding of recorded by the Tribunal from the available materials on record. 18. In the present case the deceased was aged 54 years and was left with only 6 years of service. On close scrutiny of the legal principles enunciated in the case cited supra wherein the Division Bench of this Court has taken note of K.R. Madhusudhan’s case and Puttamma’s case and has come to a definite conclusion

16 that in a matter of this nature, application of split multiplier has to be adopted. 19. In a given case, where the service left for the deceased is only for a short period, application of uniform multiplier depending upon the age of the deceased as is enunciated in Sarla Verma and Others vs. Delhi Transport Corporation and Another (AIR 2009 SC 3104) cannot be made applicable ignoring the fact of remaining service being very short. 20. It is the duty of the Court to arrive at a just compensation in every case. While calculating the loss of dependency, it is needless to say that the net salary should be considered for the period of remaining service of the employee and post retirement there must be 50% reduction in the monthly salary. The above principle of applying split multiplier has now gained recognition through various judicial pronouncements right from the case of Union and others v. K. S. Lakshmi Kumar and

17 others reported in ILR 2000 KAR 3809 till up to Puttamma’s case supra. 21. Subsequent to Puttamma’s case, the Division Bench of this Court has consistently applied split multiplier in a matter of this nature. In order to what are the legal principles in Puttamma’s case, it is just and necessary for this Court to cull out few paragraphs of the judgment of Puttamma’s case, which reads as under: “32. For determination of compensation in motor accident claims under Section 166 this Court always followed multiplier method. As there were inconsistencies in selection of multiplier, this Court in Sarla Verma, 2009 ACJ 1298 (SC), prepared a table for selection of multiplier based on age group of the deceased/victim. The Act, 1988 does not envisage application of split multiplier. 33. In K.R. Madhusudhan and others vs. Administrative Officer and another, (2011) 4 SCC 689 this Court held as follows: “14. In the appeal which was filed by the appellants before the High Court, the High Court instead of maintaining the amount of

18 compensation granted by the Tribunal, reduced the same. In doing so, the High Court had not given any reason. The High Court introduced the concept of split multiplier and departed from the multiplier used by the Tribunal without disclosing any reason therefor. The High Court has also not considered the clear and corroborative evidence about the prospect of future increment of the deceased. When the age of the deceased is between 51 and 55 years the multiplier is 11, which is specified in the 2nd column in the Second Schedule to the Motor Vehicles Act, and the Tribunal has not committed any error by accepting the said multiplier. This Court also fails to appreciate why the High Court chose to apply the multiplier of 6. 15. We are, thus, of the opinion that the judgment of the High Court deserves to be set aside for it is perverse and clearly contrary to the evidence on record, for having not considered the future prospects of the deceased and also for adopting a split multiplier method.” 34. We, therefore, hold that in absence of any specific reason and evidence on record the

19 Tribunal or the Court should not apply split multiplier in routine course and should apply multiplier as per decision of this Court in the case of Sarla Verma (supra) as affirmed in the case of Reshma Kumari, 2013 ACJ 1253 (SC).” 22. The same was relied upon by the Division Bench of this Court in MFA No.20727/2010 c/w MFA No.20728/2010 and MFA Crob.No.771/2010 dated 08.12.2016, wherein the Division Bench of this Court after surveying the case law on the point held as under: “20. Therefore, on considering the judgments referred to above what can be noticed very much is that for applying the split multiplier method, reasons must be given. Without assigning any reasons, the compensation towards “loss of dependency” cannot be determined by splitting the multiplier. In fact, this is the ratio laid down by the Hon’ble Supreme Court in the case of K. R. Madhusudhan and in the case of Puttamma, the same has been reiterated.”

20 23. On considering the legal principles enunciated in the above referred cases vis-à-vis facts involved in the case on hand, we also deem it just and proper to apply split multiplier in the present case in adjudging the compensation. 24. Before the Tribunal, the claimants have produced salary certificate of the deceased for the month of July-2014, which is marked at Ex.P.10, which shows the income of the deceased at Rs.41,536/- per month. But while adjudging the compensation amount, the Tribunal taken into account that the deceased was having gross salary of Rs.25,764/- per month as per Ex.R.1/salary certificate of the deceased, which is produced by the respondent/corporation for the month of November-2014. 25. In paragraph 13 of the impugned judgment, the Tribunal has recorded a finding that on scrutinizing Ex.R.1, the deceased was drawing monthly salary of Rs.25,764/- and not Rs.41,536/- as is found in Ex.P.10

21 and assessed the monthly income of the deceased at Rs.25,764/-. 26. However, the Tribunal did not deduct any amount towards income tax and professional tax. It is needless to emphasize that from the gross salary, what is compulsorily deductable is income tax and professional tax. The latest pronouncement of the Hon’ble Apex Court in the case of National Insurance Company Limited v. Birendar and others reported in AIR 2020 Supreme Court 434, has clearly and categorically reiterated the settled proposition of law. The relevant paragraphs are culled out for ready reference, which reads as under: “19. Reverting to the determination of compensation amount, it is noticed that the Tribunal proceeded to determine the compensation amount on the basis of net salary drawn by the deceased for the relevant period as Rs.16,918/- per month, while taking note of the fact that her gross salary was Rs.23,123/- per month (presumably below taxable income).

22 Concededly, any deduction from the gross salary other than tax amount cannot be reckoned. In that, the actual salary less tax amount ought to have been taken into consideration by the Tribunal for determining the compensation amount, in light of the dictum of the Constitution Bench of this Court in paragraph 59.3 of Pranay Sethi (AIR 2017 SC 5157) (supra). 20. xxxxx 21. xxxxx 22. Considering the above, respondent Nos. 1 and 2 would be entitled for compensation to be reckoned on the basis of loss of dependency, due to loss of gross salary (less tax amount, if any) of the deceased and future prospects and deduction of only one- third (1/3rd) amount towards personal expenses of the deceased. As regards the multiplier ‘13’ applied by the Tribunal and the High Court, the same needs no interference. As a result, on the facts and in the circumstances of this case, the amount payable towards compensation will have to be recalculated on the following basis: Loss of dependency due to loss of income

23 calculated at Rs.31,26,229.60/ [(Rs.23,123/ x 12 x 13) + (30% future prospects) – (1/3rd deduction for personal expenses)]. In addition, the claimants would be entitled for a sum of Rs.70,000/ towards conventional heads in terms of dictum in paragraph 59.8 of Pranay Sethi (AIR 2017 SC 5157) (supra). Thus, a total sum of Rs.31,96,230/ (Rupees thirty one lakhs ninety six thousand two hundred thirty only), as rounded off, is payable to the claimants. However, this amount along with interest at the rate of 9% per annum from the date of filing of the claim petition till payment, will be 21 payable subject to the outcome of the application made by the respondent Nos. 1 and 2 to the competent authority for grant of financial assistance under the 2006 Rules. If that application is allowed and the amount becomes payable towards financial assistance under the said Rules to the specified legal representatives of the deceased, commensurate amount will have to be deducted from the compensation amount along with interest component thereon. The respondent Nos. 1 and 2, therefore, can be permitted to withdraw the

24 compensation amount only upon filing of an affidavit cum declaration before the executing Court that they have not received nor would claim any amount towards financial assistance under the 2006 Rules and if already received or to be received in future on that account, the amount so received will be disclosed to the executing Court, which will have to be deducted from the compensation amount determined in terms of this order. The compensation amount, therefore, be paid to the respondent Nos. 1 and 2 subject to the above and upon giving an undertaking before the executing Court to indemnify the insurance company (appellant) to that extent.” 27. As could be seen from salary certificates of the deceased exhibited vide Ex.P.10 and Ex.R.1, except professional tax of Rs.200/- no other tax was deducted. Hence, applying the above principles, we deem it just and proper to deduct Rs.200/- towards professional tax in the salary of Rs.25,764/- and after deducting Rs.200/- towards professional tax, the re-assessed monthly income of the deceased would be Rs.25,564/-.

25 28. In view of the principles enunciated by the Hon’ble Apex Court in Pranay Sethi’s case, the claimants are entitled for adding of 15% of the assessed income towards future prospects. After adding 15% of the assessed income towards future prospects, the income of the deceased would be Rs.29,398/-. Since there are five claimants, who are depending on the deceased and as per the decision of the Apex Court in the case of Sarla Verma’s case, 1/3rd of the income needs to be deducted towards personal expenses of the deceased. After deducting 1/3rd of the assessed income, the income of the deceased would be Rs.19,598/- per month. 29. The deceased died at his age of 54 years and the applicable multiplier is “11”. Since there was only 6 years of remaining service for the deceased, split multiplier needs to be adopted. 30. Therefore, multiplier ‘11’ will have to be split into two, i.e. multiplier “5” has to be applied upto the date of superannuation of the deceased taking the above

26 assessed income of Rs.19,598/- and multiplier “6” has to be applied to the income after retirement. 31. The monthly income before superannuation of the deceased is assessed at Rs.19,598/- and as discussed above, it needs to be multiplied by applying multiplier “5” and thus, the claimants would be entitled for Rs.11,75,880/- (Rs.19,598 x 12 x 5 = Rs.11,75,880/-) towards loss of dependency including future prospects upto the date of superannuation of the deceased. 32. The income of the deceased after his retirement is assessed at 50% of Rs.25,764/-, which would be Rs.14,814/- and after deducting 1/3rd of the same towards personal expenses of the deceased, it would come to Rs.9,876/-. As stated above, after applying multiplier “6” to the income after retirement, the claimants would be entitled to Rs.7,11,072/- (Rs.9876 x 12 x 6 = Rs.7,11,072/-) towards loss of dependency. Accordingly, the claimants would be entitled to Rs.18,86,952/- (Rs.11,75,880 + Rs.7,11,072 = Rs.18,86,952/-).

27 33. It is the submission of the learned counsel for appellant/corporation that the Tribunal has erred in awarding a sum of Rs.2,00,000/- on conventional heads. 34. On contrary, it is contended by the learned counsel for claimants that the Tribunal has not awarded any amount towards loss of filial and parental consortium. 35. It is pertinent to note that the Tribunal did not award any amount towards filial and parental consortium as per the legal principles enunciated in the case of Magma General Insurance Company supra. Therefore, instead of awarding compensation towards filial and parental consortium, we deem it proper to maintain the amount of Rs.2,00,000/- awarded by the Tribunal on conventional heads. 36. Accordingly, the claimants would be entitled to the modified compensation of Rs.18,86,952 + Rs.2,00,000 = Rs.20,86,952/- as against Rs.27,50,636/- awarded by the Tribunal.

28 37. The rate of interest @ 8% awarded by the Tribunal from the date of filing of the petition till realization in our considered opinion is correct and needs no interference. 38. For the foregoing reasons, we answer point No.(i) and (ii) in the affirmative and proceed to pass the following: ORDER Both the appeals are allowed in part. Accordingly, the claimants would be entitled to the modified compensation of Rs.18,86,952 + Rs.2,00,000 = Rs.20,86,952/- as against Rs.27,50,636/- awarded by the Tribunal. The above said modified compensation shall carry interest at the rate of 8% per annum from the date of petition till realization.

29 The corporation is directed to deposit the modified compensation with up-to-date interest within a period of six weeks from the date of receipt of certified copy of this award. The amount in deposit, if any, made by the corporation is ordered to be transmitted to the Tribunal forthwith. The apportionment and deposit ordered by the Tribunal would be in the same proportion. Draw the modified award accordingly.

Sd/- JUDGE

Sd/- JUDGE

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