PRINCIPAL COMMISSIOER OF INCOME TAX-IV vs. INTERTEK TESTING SERVICE INDIA P.LTD

MAC.APP. 472/2016 & 316/2017

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$~17&18 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Decided on: 25.11.2019

+ CM APPL. 21502/2016 & CM APPL. 31196/2018 in MAC.APP. 472/2016

NATIONAL INSURANCE CO LTD ..... Appellant

versus

AKIM SCHWARZ & ANR ..... Respondents

+ MAC.APP. 316/2017

AKIM SCHWARZ

..... Appellant

versus

NATIONAL INSURANCE CO LTD ..... Respondent

Through: Mr. Pradeep Gaur and Mr. Kishore Rawat, Advocates for insurance company. Mr. Sunil Malhotra and Mr. B.S. Randhawa, Advocates for Akim Schwarz. CORAM: HON'BLE MR. JUSTICE NAJMI WAZIRI

NAJMI WAZIRI, J (Oral)

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Unemployment Dole:

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she/he would have been earning prior to such incapacitation. Such professional may have chosen to stay away from professional practice and if in that duration he meets an accident, it would not mean that such person who was on unemployment dole, would be entitled to only the dole compensation. The degree of skill incapacitation has to be seen and not the financial condition of the individual concerned. Therefore, the aforesaid argument too is rejected. 8. The learned counsel for the insurance company refers to the affidavit of the claimant wherein he has himself admitted that he was not employed between 2003 and 2006 and he was otherwise touring in South Asia, therefore, he cannot be compensated from the basis of minimum wages. “14. That the deponent visited frequently to India and Nepal during the period from March 2003 to Dec 2006. However, as during the said period deponent was not under continuous employment so, for proper assessment of deponent earning capacity, on deponent's request through his Advocate Mr. B. S.Randhawa, the Embassy of Federal Republic of Germany, New Delhi vide letter dated 03.11.2011 has confirmed the monthly minimum wage rate of skilled worker (Tool Mechanic) in Germany for the month of June 2006 as 2036/- Euros and year 2011 as 2307/- Euros.”

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case. However, this argument is no longer valid in view of the dicta of the Supreme Court in United India Insurance Co. Ltd. and Ors. vs. Patricia Jean Mahajan and Ors., (2002) 6 SCC 281.

Extent of Functional Disability: 11. The insurer further contends that 80% permanent physical disability of the claimant had never been established and his functional disability also remains undetermined. The Court would note that the PW-6, Dr. Sunil Tuli, the Consultant Orthopedic at Orthonova Hospital, New Delhi, had deposed that the injured was admitted to the hospital apropos his injury from 15th to 26th January 2007 for a fractured accetabulum right hip. He also stated that the injured has suffered permanent disability upto 80% apropos his full body and that he would not be able to sit down because sitting would involve movement of his hip, resultantly he would not be able to work properly. It was opined that resultantly his earning capacity from work which involved movement his hip, was affected 100%. He would need a hip replacement. Dr. Tuli also stated that he examined the claimant on 28.11.2011 and found that his disability confirms to the opinion given by the German doctor in her deposition. His deposition reads as under:

“PW6 Dr. Sunil Tuli S/o Sh. Roshan Lai Tuli R/o 15, DDA Flats, Shivalik Road, Panchsheel park. New DeIhi-17 OnSA I am consultant Orthopaedic surgeon at Orthonova Hospital, C- 5/29, -

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S.D.A Oppt. IIT Gate New Delhi. I have operated upon Mr. Akim Schwarz for fracture hip and left hand for a grade-IV injury on 15.01.2007 till 26.01.2007. During this duration he was operated upon for his hip and left hand. He was discharged on 29.01.2007. He was again admitted on 17.02.2007 till 18.02.2007. He was re-operated on his left hand and reconstruction was tried on his hand. The treatment given by me in North point hospital and its bills are already exhibited as PW4/A (colly) (28 sheets) are correct. The petitioner brought medical report by Dr. Antonious dated 15.02.2011 and a disability certificate. I have thoroughly read the medical report of petitioner and disability certificate which are already EX.PW4/K and Ex.PW4/J. He has 80% permanent disability to whole body. He is a skilled tool mechanic and has to work with his hands. He needs to sit down also and work at times because of the involvement of his hip and hand he will not be able to execute his work properly. The disability amounts to almost 80% work capacity wise and earning capacity wise it was almost 100%. I examined him on 28.11.2011 and I found that his disability conforms to the opinion given by the German Doctor. He needs a hip /replacement and further reconstruction of his hand to enable him to earn his livelihood. The cost to the surgery including hospitalisation and drugs and surgeons fee would be approximately Rs. 3,16,500/-. The provisional estimate dated 09.12.2011 is being attached which is Ex.PW6/A.

XXXXXXXX by Sh. Rakesh Talwar, counsel for respondent no. 2, I am summoned witness. I have my visiting card to show that I am consultant at Orthonova hospital, the same is Ex.PW6/RA. The estimate of the treatment for surgery for hip replacement and hand surgery was got prepared by me from Orthonova hospital where I do said surgeries. It is wrong to suggest that Ex.PW6/A is false document. Ex.PW4/0 is a discharge summary. It is wrong to suggest that discharge summary and bills discharge summary. It is wrong to suggest that discharge summary and bills are forged and fabricated documents. It is correct that in India the board is constituted by a Govt. Hospital to assess the disability

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sustained. It is correct that petitioner did not obtain disability certificate from any of the Govt. Hospital in Delhi. I do not know whether payment was made in respect of the bill dated 29.01.2007. I have mentioned in my statement about the profession of the injured on the basis of his statement. It is wrong to suggest that petitioner did not suffered disability to the extent of 80% of the whole body. It is further wrong to suggest that earning capacity of the petitioner has not been affected to the extent of 100% due to the disability. It is wrong to suggest that 1 am deposing falsely.” 12. The opinion of the German doctor is recorded in the document, which the learned Tribunal refers to as “opinion of a surgeon for determination of the disability”. The claimant was admitted to the Accidental Surgical Clinic of Medical Center Bielefeld, Germany from 05.05.2007 to 12.05.2007. PMMA chain was inserted in his left hand. On 08.05.2007, the claimant‟s fistula was excised at the left wrist. The impugned order records it as under: “…..the petitioner has filed on record the translated copy of Opinion of a surgeon for determination of the disability which shows that the petitioner was admitted in Accidental Surgical Clinic of Medical Center Bielefeld from 5.5.2007 and was discharged on 12.5.2007 and on 08.5.2007 the fistula excised, at the left hand wrist of the fixator distant externally and a PMMA Chain was inserted”.

Loss of Future Prospects: 13. The learned counsel for the claimant submits that compensation for loss of future prospect has not been granted. In terms of dicta of the Supreme Court in National Insurance Co. Ltd. vs. Pranay Sethi & Ors., (2017) 16 SCC 680 as well as Parminder Singh vs. New India Assurance Co. Ltd. & Ors., (2019) SCC OnLine SC 802, the same would be payable.

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The claimant has suffered 80% full body disability. The learned counsel refers to a certificate issued by the attending medical official in Germany which recorded that the disability level which was 80% as on 19.06.2011 had reduced to 70% on 04.09.2012. It is argued that since there was reduction in disability level, the lesser disability ought to have been considered. The Court finds merit in the said argument and, accordingly, the disability level is reduced from 80% to 70%. What is important to be considered is whether despite 70% full body physical disability the injured would be able to carry out the duties for which he was qualified i.e. whether he would be able to carry out assignments of a skilled tool mechanic. The deposition of Dr. Sunil Tuli (PW6) is instructive in this regard, he has opined that the injured had suffered a permanent disability of 80% apropos his full body and he will not be able to execute his work properly and that he would need a hip replacement. Subsequently, the opinion of the German doctor too has been taken into consideration by the learned Tribunal. 14. The learned counsel for the appellant refers to the dicta of the Supreme Court in Patricia Jean Mahajan (supra) to contend that in the present case the multiplier should be reduced when the multiplicand is high. The Court is of the view that the aforesaid reliance is misplaced because in terms of National Insurance Co. Ltd. v. Pranay Sethi & Ors (2017) 16 SCC 680, multiplier apropos age of the injured and/or deceased has to be taken into consideration. 15. In Raj Kumar vs. Ajay Kumar IV (2010) ACJ 815, it was held that the degree of loss and consequent assessment of compensation should be realistic as to whether the injured would be able to earn anything at all, despite the injuries. The Court is of the view that the learned Tribunal has

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assessed the disability on the basis of the said principles, it calls for no review or interference. Apropos claimant‟s contention that compensation towards „future prospects‟ have not been granted, the learned counsel for the appellant submits that „future prospects‟ is already built into the compensation awarded. The appellant‟s contention has merely to be stated to be rejected because what is to be taken into consideration is not the quantum of the compensation which a person get towards loss of earning, but also the prospective loss in future due to enhancement in earnings. Loss of future prospects takes into consideration many aspects factors, including the likely increase in earnings of the individual on account of his/her experience in the vocation, acquisition of greater efficiency, better time management and higher/better technical qualification over time, etc. A person always hopes and expects that she/ he will do better in future. This hope and aspiration cannot be denied to any individual. These factors will need to be kept in mind and as well as the settled law in Pranay Sethi (supra) and in Parminder Singh v. New India Assurance Co. Ltd. & Ors 2019 SCC OnLine SC 802, for grant of compensation for „loss of future prospects‟. 16. In Parminder Singh (supra), it was a case of paraplegic. He was awarded 50% towards „loss of future prospects‟. In the present case what would be assessed is the minimum wage for a skilled person, notified in Federal Republic of Germany. 17. The learned Tribunal assessed the compensation payable to the claimant on the basis of the aforesaid minimum wages converted into Indian Rupees @Rs.58.96 per Euro, after deducting the 400 Euros therefrom, it was rounded off toRs.1,20,043/- per month. The relevant tax slab for AY 2006- 07 was applied: Total income Rs.14,40,516/- less tax Rs.3,42,155/-. The

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post tax income was Rs.10,98,361/-, of which only 80% was assessed as functional loss resulting in loss of equivalent earning capacity. A multiplier of 16 was applied since the claimant was 34 years of age. 18. However, as discussed hereinabove, although the claimant was first was assessed as 80% physically disabled, later reduced to 70% physical disability, he would nevertheless be unable to carry out the functions of a skilled workman. Therefore, his functional disability has to be and is considered as 100%. 19. Thus the amount payable to the claimant for loss of warning capacity and loss of future prospects shall be: I. 100% of the post tax „loss of earning capacity‟ i.e. Rs,10,98,361/- + 50% [(loss of future prospects) Rs.5,49,180.5 less income tax @30% i.e. Rs.1,64,754.15 = Rs.384,426.35)] = Rs.14,82,787.35 x16 (multiplier) = Rs.2,37,24,597.60 II. Add to this the already awarded non-pecuniary compensation towards: Disfigurement of Body Rs.100,000/-; Loss of Marriage Prospects Rs.100,000/-; Future Treatment3,16,500/-; Medical expenses already incurred Rs.166,535/-; Attendant Charges Rs.20,000/- , Pain and Suffering Rs.200,000/-, Loss of Amenities of life Rs.50,000/- ; Conveyance and Special Diet Rs.50,000/-. 20. The excess amount, as may be, shall be deposited before the learned Tribunal, within three weeks from the date of receipt of copy of this order, to be disbursed to the beneficiary of the Award, in terms of the scheme of disbursement specified therein.

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Deduction of Income Tax in India: 21. The claimant contends that the taxes should not be deducted in India because ultimately the awarded amount would be assessed to tax in the country where the claimant is ordinarily a resident. The said argument is untenable because withholding taxes are levied in the remitter country where the revenue is generated. It will be open to the assessee for avoidance of double taxation or set-off, in case of such treaty of India and country of his place of residence or regular tax assessment. In any case, no such argument was raised before the learned Tribunal nor were any supporting documents placed on record by the claimant. Therefore, taxes as applicable on the said amount in India shall be deducted. 22. Lastly, the claimant submits that the rate of exchange on which the amount was assessed has altered significantly and the monies be released at the earliest so that the claimant can utilize the same optimally. Especially in view of the fact, that the debilitating accident occurred over 13 years ago. The Court would note that the assessment was made on the basis of monies which were otherwise receivable by the injured in Euros. The claim would therefore have to be made on the basis of Euros after deduction of the monthly dole of 400 Euros. The rate of exchange of Euros at the time of 56.84 and presently it is over Rs. 88/-. Once the compensation in Euros is assessed, the same would be paid to the claimant. The insurance company has deposited the compensation amount in Indian Rupees at the conversion rate in terms of the award. The claimant has not sought modification of the same i.e. the monies should be assessed and paid only in Euros. Therefore, the assessment of the monies in Indian Rupees cannot be altered.

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NAJMI WAZIRI, J NOVEMBER 25, 2019 AB/KK/RW/kb