Sahitya housing Privte Limited vs. Commissioner of Income Tax -III,

1 A.F.R. Reserved on 11.03.2019 Delivered on 19.07.2019 Case :- FIRST APPEAL FROM ORDER No. - 310 of 2013 Appellant :- United India Insurance Co. Ltd. Respondent :- Smt. Uma Tripathi And Others Counsel for Appellant :- Amaresh Sinha Counsel for Respondent :- V.K.Shukla AND Case :- FIRST APPEAL FROM ORDER No. - 4322 of 2012 Appellant :- Smt. Uma Tripathi And Others Respondent :- Ishampal And Another Counsel for Appellant :- Vidya Kant Shukla Counsel for Respondent :- Amresh Sinha Hon'ble Saral Srivastava,J. 1. Heard learned counsel for the parties. 2. Since, these two appeals are arising out of same accident and issues involved are common, therefore, these two appeals are being decided together by common judgement. 3. The F.A.F.O. No. 310 of 2013 has been preferred by the insurance company challenging judgement and order dated 17.10.2012 passed by Motor Accident Claims Tribunal/Additional District Judge, Court No.11, Kanpur Nagar in M.A.C.P. No.954 of 2010. F.A.F.O. No. 4322 of 2012 has been preferred by the claimants for enhancement of compensation.

2 4. The brief facts giving rise to the present appeals are that one Krishna Gopal Tripathi on 24.07.2010 was riding motorcycle No. U.P-78-CB-0080 from office to his home and at about 12:45 pm when he reached near Anjali Nursing Home, a truck No. DL-1GB- 1720 driven by its driver rashly and negligently dashed with the motorcycle. As a result of the said accident, Krishna Gopal Tripathi suffered multiple injuries and died. The deceased was stated to be employed as Chief Field Manager, Royal Five Branch Office Sahara Group Company, Kidvai Nagar, Kanpur and was earning about Rs. 65,000/- per month. In the aforesaid backdrop, a claim petition No.954 of 2010 was instituted by dependents of Late Krishna Gopal Tripathi praying for a compensation of Rs. 64,36,000/-. 5. The owner of the truck Isham Pal filed written statement denying the averments of the claim petition. He further pleaded that truck was insured with the United India Insurance Company Ltd. and was driven by a duly licenced driver. It was further pleaded that truck was plied with valid permit and fitness certificate and the liability to pay compensation, if any, is of the insurance company. 6. The insurance company also filed written statement contending therein that claim petition has been instituted on incorrect facts. It further pleaded that the owner of the truck has breached the terms and conditions of the insurance policy and the compensation prayed for is highly excessive and without any basis. On the basis of pleadings of the parties, Tribunal framed as many as four issues. 7. In the appeal preferred by the insurance company, learned counsel for the appellant has assailed the finding of the Tribunal on issue no.1 in respect of negligence of driver of truck and issue no.4 in respect of quantification of compensation. The learned counsel for the appellant has also assailed the finding of the Tribunal in the issue no.4 whereby Tribunal held that there was no valid fitness certificate

3 of the truck on the date of the accident, and as there is reference of permit and driving licence in Section 149 (2) of the Motor Vehicles Act, 1988 but there is no reference of fitness certificate, therefore, the defence of breach of policy to the insurance company that truck was being plied without valid fitness certificate is not available and consequently, it held the liability of insurance company to pay the compensation. 8. On the issue of negligence, the Tribunal noticed the statement of PW-2 Babu Shankar Yadav, eye witness of the accident, who has categorically stated that deceased was riding the motorcycle on the right side of road and truck came in wrong direction and hit the motorcycle and, therefore, the accident was the outcome of the sole negligence of driver of truck. The Tribunal, thereafter, noticed the site plan of the accident and also the contents of F.I.R. and found that the contents of F.I.R. and site plan of the accident which clearly reveals that the accident was the outcome of the sole negligence of driver of truck is corroborated by the testimony of PW-2 and accordingly, it came to the conclusion that the accident had occurred due to the sole negligence of driver of truck. 9. The Tribunal while determining the issue no.4 in respect of quantification of compensation has found that the fitness certificate filed by the owner of the truck was valid upto 16.07.2010 whereas the accident had occurred on 24.07.2010, but it absolved the owner on the ground that the defense of breach of policy on the ground of fitness is not contemplated under Section 149 of the Motor Vehicles Act and, therefore, it fixed the liability upon the insurance company to pay the compensation. 10. The Tribunal while computing the compensation has taken the income of the deceased after deducting the income tax shown in the Income Tax Return of the last three years, and, thereafter, Tribunal calculated the average of the three years income of the deceased

4 which came to be Rs. 24,667/-. However, for the purpose of computing the compensation, the Tribunal was of the opinion that with the advancement of the age of deceased, his working capacity would also be affected and as such, his income would also reduce and accordingly, Tribunal took Rs. 20,000/- to be the income of the deceased for computing the compensation. Thereafter, Tribunal deducted 10% from the said amount towards income tax and took Rs.2,16,000/- as annual income for the purpose of computing compensation. The Tribunal, thereafter, deducted 1/3rd from the said amount towards personal expenses and by applying the multiplier of 11 held Rs. 15,84,000/- to be the loss of income. Besides the said amount, Tribunal also awarded Rs. 5,000/- towards loss of consortium, Rs.2,000/- towards funeral expenses, thus, in total Tribunal awarded Rs.15,91,000/- as compensation. 11. Challenging the award, learned counsel for the insurance company has contended that present is a case where two vehicles namely motorcycle and truck were coming from opposite direction and had collided, therefore, there was some negligence of the deceased in the accident, and as such, Tribunal should have reduced the compensation to the extent of negligence of deceased in the accident. 12. He further contends that the Tribunal in deciding the issue no.4 has recorded a specific finding that fitness certificate was filed by the owner which clearly reveals that it was valid upto 16.07.2010 and thus, on the date of accident i.e. 24.07.2010, there was no valid fitness certificate of the truck and consequently, the owner has committed breach of terms and conditions of the insurance policy and Tribunal has erred in fastening the liability upon the insurance company to pay the compensation. 13. He further submits that plying of vehicle without a valid fitness certificate is a fundamental breach of insurance policy and,

5 therefore, insurance company cannot be held liable to pay compensation. In support of his aforesaid contention, he has relied upon the judgement of Kerala High Court in the case of Pareed Pillai Vs. Oriental Insurance Company Ltd.. Laws (KER) 2018 10 124 and another judgement of this Court in the case of Chandresh Kumar Agarwal Vs. Yogendra Kumar Srivastava and another 2005 (2) TAC (6) All.) 14. On the issue of quantification of compensation, learned counsel for the insurance company contends that Tribunal has erred in taking the income of the deceased to be Rs. 20,000/- per month for the purpose of computing compensation inasmuch as the deceased being commission agent had no fixed salary and thus, the compensation awarded by the Tribunal is excessive and not sustainable in law. He further contends that the income tax return for the year 2009-10 and 2010-11 has been filed after the death of Krishna Gopal Tripathi and, therefore, Tribunal has erred in relying upon the Income Tax Return filed after the death of Krishna Gopal Tripathi for the purpose of assessment of income of the deceased. 15. Per contra, learned counsel for the respondents would contend that the finding of the Tribunal on the issue of negligence is a finding based upon proper appreciation of evidence on record inasmuch as the Tribunal in deciding the issue of negligence has placed reliance upon the testimony of PW-2, the eye witness of the accident. The testimony of PW-2 corroborates the version of F.I.R. and site plan of the accident. He further contends that insurance company did not lead any evidence to rebut the testimony of PW-2 and thus, the finding of the Tribunal on the issue of negligence is based upon proper appreciation of evidence on record and is not liable to be interfered with. 16. He further refuted the contention of learned counsel for the insurance company with respect to the fact that truck was plied

6 without valid fitness certificate. He contends that it is not in dispute that the truck was having a fitness certificate valid upto 16.07.2010 and the permit of the truck was also valid on the date of accident. He further submits that though one of the condition for grant of permit is that vehicle in question should be plied with a valid fitness certificate but the fact remains that there was no order passed by the competent authority cancelling the permit and hence as the permit of the truck was not cancelled by the competent authority as contemplated under Section 86 of the Motor Vehicles Act, 1988, therefore, there was no breach of insurance policy. He further contends that under Section 149(2) of the Motor Vehicles Act, 1988 (hereinafter referred to as 'Act, 1988') one of the defense which is available to the insurance company is that truck is being used for the purpose not allowed by the permit where the vehicle is a transport vehicle but there is no reference of fitness certificate in Section 149(2) of the Act, 1988 that if vehicle is plied without valid fitness certificate, the insurer can avoid its liability on the said ground. He further submits that as the permit of the truck was valid on the date of accident, therefore, there was no breach of policy and even if, the Tribunal may not have given the correct reasoning in respect of fitness certificate while fixing the liability upon the insurance company to pay compensation but the Tribunal has rightly fixed the liability upon the insurance company to pay compensation. 17. As regards the quantification of compensation, learned counsel for the respondents submits that once the Tribunal has held average income of the deceased to be Rs.24,670/- on the basis of income shown in the last three years income tax return, the Tribunal has erred in computing the compensation treating the income of the deceased to be Rs.20,000/- per month. He further submits that Tribunal has further erred in deducting 10% towards income tax inasmuch as the average income arrived at by the Tribunal on the basis of last three years Income Tax Return has been calculated after

7 deducting the income tax paid by the deceased. Thus, the submission is that compensation should be computed by taking the income of the deceased to be Rs. 24,670/- per month and there should not be any further deduction on the said income as the said income has been arrived at after deducting the income tax paid by the deceased. He further contends that deceased was aged about 52 years and, therefore, in view of the judgement of Apex Court in the case of National Insurance Company Limited Vs. Pranay Sethi and Others 2017 (16) SCC 680, the claimants are entitled to 10% towards future prospect and also Rs.70,000/- towards non pecuniary damages in place of Rs.7,000/- which has been awarded by the Tribunal. 18. I have considered the rival submissions of the parties and perused the record. 19. The Tribunal in deciding the issue of negligence has considered in detail the contents of F.I.R. lodged after about three hours of the accident wherein it is stated that the accident had occurred due to the rash and negligent driving of driver of truck as he had hit the motorcycle on wrong side of road. Further the site plan of the accident also reveals that the truck which was moving from west to east came on the right side of the road and hit the deceased who was going on his left side from east to west. The contents of F.I.R. as well as manner in which the accident had taken place as depicted in the site plan has been corroborated by the testimony of PW-2 Babu Shankar Yadav, the eye witness of the alleged accident, who has unequivocally stated that truck was driven by its driver rashly and negligently and had hit the motorcycle on the wrong side of the road. The insurance company did not lead any evidence to rebut the testimony of PW-2 nor it challenged the correctness of site plan of the accident and thus, in view of the said fact, the finding of the Tribunal holding that the accident was the

8 outcome of the negligence of driver of truck is correct and based on proper appreciation of evidence and material on record. Thus, the finding of the Tribunal on the issue of negligence being a finding of fact is not liable to be interfered with in the appeal. 20. Before coming to the contention of learned counsel for the insurance company with respect to the fitness certificate, it is worth noticing the few relevant sections namely, 56(1), 66(1), and 84(a) of the Act, 1988 touching the aspect of the fitness certificate, which are extracted herein below:- 56. Certificate of fitness of transport vehicles.— (1) Subject to the provisions of sections 59 and 60, a transport vehicle shall not be deemed to be validly registered for the purposes of section 39, unless it carries a certificate of fitness in such form containing such particulars and information as may be prescribed by the Central Government, issued by the prescribed authority, or by an authorized testing station mentioned in sub-section (2), to the effect that the vehicle complies for the time being with all the requirements of this Act and the rules made thereunder: Provided that where the prescribed authority or the “authorized testing station” refuses to issue such certificate, it shall supply the owner of the vehicle with its reasons in writing for such refusal. 66. Necessity for permits.— (1) No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him the use of the vehicle in that place in the manner in which the vehicle is being used: Provided that a stage carriage permit shall, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a contract carriage: Provided further that a stage carriage permit may, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a goods carriage either when carrying passengers or not: Provided also that a goods carriage permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him.

9 84. General conditions attaching to all permits.—The following shall be conditions of every permit— (a) that the vehicle to which the permit relates carries valid certificate of fitness issued under section 56 and is at all times so maintained as to comply with the requirements of this Act and the rules made thereunder; 21. According to Section 56(1) of the Act, 1988, for registration of transport vehicles under Section 39, a valid fitness certificate is required and in absence of such fitness certificate, transport vehicle shall not be deemed to have valid registration. 22. Section 66(1) provides necessity for permit for the use of a vehicle as a transport vehicle in a public place. According to Section 66(1), a transport vehicle shall be used or permitted to be used by owner of vehicle in any public place in accordance with the condition of permit. 23. Section 84(a) provides the general condition which are attached to all the permits. One of the condition as contemplated under Section 84(a) of the Act, 1988 is that vehicle to which the permit relates carries valid certificate of fitness issued under Section 56 and is at all times so maintained as to comply with the requirements of the Act, 1988 and the rules made thereunder. 24. From the aforesaid provisions, it can be safely culled out that for the purposes of registration of transport vehicle, a fitness certificate as contemplated under Section 56 of the Act, 1988 is mandatory and plying of a transport vehicle without a valid fitness certificate amounts to violation of condition of permit. 25. At this juncture, it is useful to notice Section 86(1) (a) which provides that the transport authority which has granted permit may cancel the permit or suspend it for the period as it thinks fit on the breach of any condition specified in Section 84 or of any condition contained in the permit. The proviso to Section 86 (1) of the Act,

10 1988 provides that no permit shall be suspended or cancelled unless an opportunity of hearing has been given to the holder of permit to furnish his explanation. Section 86(1) of the Act, 1988 is reproduced herein below:- “86. Cancellation and suspension of permits.- (1) The Transport Authority which granted a permit may cancel the permit or may suspend it for such period as it thinks fit – (a) on the breach of any condition specified in section 84 or of any condition contained in the permit, or (b) if the holder of the permit uses or causes or allows a vehicle to be used in any manner not authorised by the permit, or (c) if the holder of the permit ceases to own the vehicle covered by the permit, or (d) if the holder of the permit has obtained the permit by fraud or misrepresentation, or (e) if the holder of the goods carriage permit, fails without reasonable cause, to use the vehicle for the purposes for which the permit was granted, or (f) if the holder of the permit acquires the citizenship of any foreign country : Provided that no permit shall be suspended or cancelled unless an opportunity has been given to the holder of the permit to furnish his explanation.” 26. The proviso to Section 86 (1) clearly contemplates an opportunity of hearing to the holder of permit before cancellation or suspension of the permit on the ground specified in Section 86 (1) (a) to (f). Thus, it is evident that the Act does not contemplate that if there is violation of any condition of the permit, the permit shall automatically be deemed to have been cancelled. In fact competent authority has to pass an order before cancelling or suspending the permit after affording opportunity of hearing to the holder of permit. 27. In the instant case, it is not in dispute that fitness certificate of the truck was valid upto 16.07.2010. The fitness certificate expired about a week before the date of accident i.e. 24.07.2010. It is also not disputed by the insurance company that the truck was having a valid permit on the date of accident. There is no order passed by the

11 competent authority on record cancelling the permit of the truck after given an opportunity of hearing to the owner of the truck on the ground that condition of permit has been violated by the owner as the truck was plied without valid fitness certificate. Thus, in such situation, it cannot be said that the truck was not having a valid permit. It is further useful to notice that Section 149(2) (a) (i) (c) talks about the breach of condition of policy where vehicle is used for the purpose not allowed by the permit. 28. In the case in hand, it is not the case of the insurance company that there was no permit of the truck or truck was being used for the purpose not allowed by the permit, therefore, the contention of learned counsel for the insurance company that since fitness certificate has expired on 16.07.2010 before the date of accident, therefore, insurance company is not liable to pay compensation is devoid of merit and is rejected. 29. So far as the judgement of the Kerala High Court in the case of Pareed Pillai (supra) relied upon by the learned counsel for the insurance company is concerned, the Court while deciding the case has proceeded on the basis that it is a mandatory requirement of every permit that the vehicle to which the permit relates shall carry valid certificate of fitness issued under Section 56 at all times, absence of which will automatically lead to a situation that the vehicle shall not be deemed having a valid permit and thus, there is violation of insurance policy. 30. The judgement of Kerala High Court has not noticed the proviso to Section 86(1) which talks about a situation that even if there is breach of any condition of permit specified in Section 84, the competent authority is required to give an opportunity of hearing to the holder of permit before cancelling or suspending the permit, therefore, the judgement of the Kerala High Court is of no help to the insurance company.

12 31. So far as the judgement of this Court in the case of Chandresh Kumar Agarwal (supra) is concerned, the same is not applicable inasmuch as the said case was rendered in the context that there was no permit of the vehicle and in such situation, this Court absolved the insurance company. 32. Thus, for the reasons given above, the submission of learned counsel for the appellant-insurance company in respect of breach of policy on the ground that truck was not having a valid fitness certificate is not sustainable and the same is rejected. 33. Coming to the question of quantification of compensation, the submission of learned counsel for the appellant that since deceased had no fixed income as he was earning through commission, therefore, Tribunal has erred in holding the income of the deceased to be Rs. 20,000/- per month is misconceived inasmuch as the income of deceased was proved by the claimants by filing income tax return which was not disputed by the insurance company. 34. Now coming to the contention of learned counsel for the claimants that Tribunal has erred in taking the income of the deceased as Rs.20,000/- and thereafter, had wrongly deducted 10% from the said amount towards income tax for the purpose of computing compensation has substance in view of the fact that once the Tribunal has recorded a finding that average income of the deceased was Rs. 24,670/- per month on the basis of income tax return of the last three years after deducting income tax, in the opinion of the Court, the Tribunal should have taken the said income as income of the deceased for the purpose of computing the compensation. Hence, this Court holds that compensation shall be computed by taking the income of the deceased to be Rs. 24,670/- per month. Further, the submission of learned counsel for the claimants in respect of future prospect and inadequate amount towards non pecuniary damages has also substance and, accordingly,

13 this Court awards 10% towards future prospect and Rs.70,000/- towards non pecuniary damages in place of Rs.7,000/- in view of the judgement of Apex Court in the case of Pranay Sethi (supra) to the claimants. 35. Thus, for the reasons given above, the F.A.F.O. No. 310 of 2013 preferred by the insurance company is dismissed and F.A.F.O. No. 4322 of 2012 preferred by the claimants is allowed. The award of the Tribunal is modified to the extent indicated above. The Insurance company is directed to pay the enhanced amount of compensation to the claimants within a period of two months from today. There shall be no order as to costs Order Date :- 19.07.2019 Sattyarth