Commissioner of Income Tax-II vs. Pitti Laminations Limited

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Appeal From Order No. 417 of 2010

Smt. Kamla Patwal & others

………. Appellants

versus

Sanjay Manral & others

………. Respondents

Mr. Shraddha Pandit, Advocate holding brief of Mr. Prabhat Pande, Advocate for the appellants. None present for respondent no. 1 though served sufficiently. Mr. Shanker Aggarwal, Advocate for respondent no. 2.

Hon’ble Lok Pal Singh, J.

Present A.O. has been directed against the judgment / award dated 17.08.2010, passed by the Addl. District Judge / Motor Accident Claims Tribunal, Haldwani, District Nainital, in M.A.C. Case No. 123 of 2008, Smt. Kamla Patwal & others Vs Sanjay Manral & others, whereby the claim petition of the claimants was allowed and owner of the vehicle was directed to pay compensation to the tune of Rs.8,54,147/- along with simple interest at the rate of 6% per annum from the date of filing of claim petition.

Heard learned counsel for the parties and perused the papers brought on record.

Brief facts of the case are that on 28.04.2008 Hira Singh Pawtal was travelling from Bhikiasain to Ramnagar in bus bearing registration no. UA 12 / 1488. At about 02:30 P.M., when the bus reached village Saural, due to rash and negligent driving on the part of its driver the bus fell in a deep gorge. Hira Singh Patwal sustained grievous injuries in said accident and was taken to Govt. hospital Ramnagar, where he succumbed to his injuries on

2 28.04.2008. Postmortem of the deceased was conducted at Haldwani. The deceased was working as Accountant in Krishi Utpadan Mandi Samiti, Ramnagar and was earning Rs.16,535/- per month as salary. The salary of the deceased includes house rent besides provident fund which he was depositing per month with the department. The claim petition was filed by the wife and two sons of the deceased.

The petition was contested by the owner and ICICI Lombard General Insurance Co., with whom the bus in question was insured. Owner of the vehicle filed his written statement stating therein that the amount of compensation claimed by the claimants is excessive and claimants no. 2 and 3 are major and in no way dependent on the deceased. The liability to pay compensation, if any, is of the insurance co. with whom the bus was insured. The accident in question did not occur due to rash and negligent driving by its driver, but the accident occurred while saving a cow who came on the road suddenly and the driver of the bus has no fault in said accident. Insurance company also filed its separate written statement denying the averments made in the claim petition. It is stated that the amount of compensation claimed is excessive and without any basis. The insurance company is not liable to pay the compensation unless the owner of the vehicle proves the fact that the driver of the vehicle was having valid driving license and the vehicle was being plied with valid documents at the time of accident.

On the basis of the pleadings of the parties, following issues were framed by the Motor Accident Claims Tribunal:

Claimant Smt. Kamla Patwal examined herself as PW1 and Anand Singh (eyewitness) was examined as PW2. No evidence was led on behalf of the opposite parties.

Learned Tribunal recorded its findings on issues no. (i), (ii) and (iii) and held that Hira Singh Patwal succumbed to his injuries received in the accident as the driver of the bus was rash and negligent in driving the same. The driver of the bus

4 also died in said accident and the owner of the vehicle could not produce the driving license of the driver on record. As such, the owner of the vehicle failed to prove that that driver of the bus in question was having valid driving license on the date, time and place of accident. The bus was insured with ICICI Lombard General Insurance Co. The owner of the bus was having valid papers and the bus was not being plied in violation of the terms and conditions of the insurance policy.

Findings recorded on issues no. (i), (ii) and (iii) were not challenged by the respondents, as such, the same have attained finality.

The claimants-appellants are aggrieved by the findings recorded by the Tribunal on issue no. (iv). The present A.O. has been filed, inter alia, on the grounds that the Tribunal has erred in law in not taking the gross salary of the deceased for computation of compensation. Further, the Tribunal has not applied the correct multiplier and illegally deducted the amount of provident fund and income tax in assessing the income of the deceased without there being any evidence on record.

10)

A perusal of the impugned judgment and award would reveal that the Tribunal estimated the age of deceased at 53 years and 05 months in view of the High School mark sheet produced by the claimants on record. The Tribunal also recorded a finding that the deceased was getting a salary of Rs.16,535 per month, including other allowances. The Tribunal deducted Rs.200/- per months towards house rent and Rs.500/- towards provident fund

5 contribution and after deducting said amount and having considered the fact that the income tax was exempted upto the limit of Rs.1,10,000/- for the F.Y. 2007-08, assessed the taxable income of the deceased at Rs.88,420/-. The Tribunal further deducted Rs.6,000/- (Rs.500 X 12) towards provident fund, in absence of any proof in regard to contribution towards any savings, and took the taxable income at Rs.82,420. After applying the income tax at the rate of 10% on Rs.82,420/- as well as education cess at the rate of 3% thereon, the total income tax payable was assessed at Rs.8,489/-. Thus, the Tribunal has calculated the salary of the deceased at Rs.1,98,420/- per annum minus [Rs.8489 (income tax payable) + 2400 (house rent of one year, i.e., 200 x 12) + Rs.6,000 (provident fund contribution for the relevant year)], and arrived at the figure of Rs.1,81,531/-. It further deducted 1/3 of the amount towards personal expenses of the deceased at Rs.60,510/- and assessed the amount at Rs.1,21,021/-, which the deceased would have spent on his dependents. Having considered the fact that the deceased was 53 years and 05 months of age at the time of his death and ought to have continued in service upto the age of 60 years, applied the multiplier of 7 (as the dependents have suffered the loss of 7 service of service of deceased which he could have competed during his lifetime) and, as such, assessed the dependency at Rs.8,47,147/-.

11)

Having heard learned counsel for the parties and on perusal of the documents brought on record, this Court is of the view that the Tribunal has illegally deducted Rs.200/- and Rs.500/- respectively towards house rent and contribution towards

6 provident fund. The house rent is a benefit granted to the employees as well as to his family. Therefore, such a benefit cannot be deducted. So far as provident fund is concerned, the same will not come within the periphery of the Motor Vehicles Act to be termed as “pecuniary advantage” liable for deduction, as the insured (the deceased) contributes his own money for which he receives the amount which has no co-relation to the compensation computed. Thus, the Tribunal has illegally deducted the amount of Rs.200/- and Rs.500/- towards house rent and provident fund contribution.

12)

Undisputedly, the deceased was getting a salary of Rs.16,535/- per month, which comes to Rs.1,98,420/- per annum. Rs.1,10,000/- was exempted from income tax for F.Y. 2007-08, as such, Rs.88,420/- was the taxable income for the relevant F.Y. After deducting 10% (as the income of the deceased falls under 10% for relevant F.Y.), the figure thus arrived at Rs. 189,578/- [or say Rs.1,89,600/-] (Rs.1,98,420 – Rs.8842/-). Thus, notional income of the deceased after deduction of the tax amount comes to Rs. 1,89,600/-. After deducting 1/3 amount (Rs.63,200/-) towards personal expenses, the total dependency comes to Rs.1,26,400/- per annum.

13)

The Tribunal has evaluated the dependency at Rs.8,47,147/- after applying a multiplier of 7. Tribunal also awarded Rs.2,000/- towards funeral expenses and Rs.5,000/- towards loss of love and affection. In all, compensation to the tune of Rs.8,54,147/- has been awarded by the Tribunal to the claimants.

7 14)

Having heard learned counsel for the parties and after perusal of the record it depicts that in view of dictum of Hon’ble Apex Court in Smt. Sarla Verma and another vs Delhi Transport Corporation and others, 2009 (2) T.A.C. 677 (S.C.), at the age of 53 years, the multiplier of 11 is the warrant and should be made applicable as such. However, learned Tribunal has applied multiplier of 7. Thus, the Tribunal has not applied the correct multiplier and also did not award just and proper compensation under the conventional heads viz. loss of consortium, loss of estate and funeral expenses. Thus, the compensation is liable to be modified in view of judgment rendered by Hon’ble Apex Court in the case of National Insurance Company vs Pranay Sethi, reported in AIR 2017 SC 5157, wherein it has been held that the claimants are entitled to an amount of Rs.15,000/- each towards funeral expenses and loss of estate and Rs.40,000/- towards loss of consortium.

15)

The claimants have preferred the appeal for enhancement of the compensation. Since this Court is of the view that the Tribunal neither has applied the correct multiplier nor granted the appropriate compensation under conventional heads viz. funeral expenses, loss consortium, loss of estate, therefore the amount of compensation needs to be re-assessed keeping in view the fact that the Motor Vehicles Act is a beneficial and welfare legislation and the Court is duty bound to grant ‘just compensation’ to the claimants.

16)

In view of the discussion aforementioned, the compensation awarded to the claimants is being re-assessed as under:

Sl. No. Head Calculation (amount in rupees) 1 Annual income Rs.1,89,600/- 2 Net income after deducting 1/3 towards personal expenses (Rs.1,89,600 – 1,89,600 X 1/3) Rs. 1,26,400/- 4 Loss of future income after applying multiplier of 11 (Rs.1,26,400 x 11) Rs.13,90,400/- 5 Loss of consortium Rs.40,000/- 6 Loss of estate Rs.15,000/- 7 Funeral expenses Rs.15,000/- 8 Total compensation Rs. 14,60,400/-

17)

Insofar as the liability to pay the amount of compensation is concerned, the Tribunal has fastened the liability on respondent no.1-owner of the vehicle in view of the fact that the driver of the offending vehicle was not holding valid and effective driving license on the relevant date and time of the accident. Admittedly, the driver was not having valid driving license but the fact remains that the offending vehicle was insured with the respondent no.2-ICICI Lombard General Insurance Co. Ltd. Thus, considering the beneficial object of the Act and in view of consistent view taken by the Hon’ble Apex Court in National Insurance Co. Ltd. vs. Swarna Singh and Ors., [2004 (3) SCC 297] and Manuara Khatun and others vs. Rajesh Kumar Singh and others, [2017 (4) SCC 796], it would be just and proper to direct the respondent no.2 to pay the amount of compensation on the principle of ‘pay and recover’.

9 18)

Accordingly, present appeal from order stands allowed. The re-assessed amount of compensation of Rs.14,60,400/- shall be paid by respondent no. 2-ICICI Lombard General Insurance Company Ltd. to the claimants along with simple interest at the rate of 6% per annum from the date of institution of claim petition till the date of actual payment. Amount already paid, if any, shall be adjusted. Thereafter, respondent no.2 would be at liberty to recover the amount of compensation from the owner of the vehicle i.e. respondent no.1.

19)

Lower court record be sent back to the Tribunal concerned. No order as to costs.

(Lok Pal Singh, J.)

Dt. September 18, 2019. Negi