Wednesday 22 May 2024

Supreme Court: The court should grant compensation to homemaker on notional income on account of future prospects

 Once notional income has been determined, the question remains as to whether escalation for future prospects should be granted with regard to it. Initially, the awarding of future prospects by this Court was related to the stability of the job held by the victim. {Para 37}

38. However, there was a shift in jurisprudence regarding future prospects with the five-Judge Bench decision of this Court in Pranay Sethi (supra). This Court extended the benefit regarding future prospects to even self-employed persons, or those on a fixed salary. The Court held as follows:

57. Having bestowed our anxious consideration, we are disposed to think when we accept the principle of standardisation, there is really no rationale not to apply the said principle to the self-employed or a person who is on a fixed salary. To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust. The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated Under Section 168 of the Act. In case of a deceased who had held a permanent job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one's income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities....Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable.

(emphasis supplied)

39. The rationale behind the awarding of future prospects is therefore no longer merely about the type of profession, whether permanent or otherwise, although the percentage awarded is still dependent on the same. The awarding of future prospects is now a part of the duty of the Court to grant just compensation, taking into account the realities of life, particularly of inflation, the quest of individuals to better their circumstances and those of their loved ones, rising wage rates and the impact of experience on the quality of work.

41. When it comes to the second category of cases, relating to notional income for non-earning victims, it is my opinion that the above principle applies with equal vigor, particularly with respect to homemakers. Once notional income is determined, the effects of inflation would equally apply. Further, no one would ever say that the improvements in skills that come with experience do not take place in the domain of work within the household. It is worth noting that, although not extensively discussed, this Court has been granting future prospects even in cases pertaining to notional income, as has been highlighted by my learned brother, Surya Kant, J., in his opinion [Hem Raj v. Oriental Insurance Company Limited,   MANU/SC/1799/2017 : (2018) 15 SCC 654; Sunita Tokas v. New India Insurance Co. Ltd.,   MANU/SC/1105/2019 : (2019) 20 SCC 688].

 The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 19-20 of 2021 

Decided On: 05.01.2021

Kirti and Ors. Vs. Oriental Insurance Co. Ltd.

Hon'ble Judges/Coram:

Surya Kant, S. Abdul Nazeer and N.V. Ramana, JJ.

Authored By : Surya Kant, N.V. Ramana

Surya Kant, J.

Citation: MANU/SC/0004/2021.

Read full Judgment here: Click here.


Print Page

Supreme court explains different theories for ascertaining the value of a homemaker's unpaid labour for grant of compensation under motor vehicles Act

The Second Schedule to the Motor Vehicles Act gives a value to the compensation payable in respect of those who had no income prior to the accident and for a spouse, it says that one-third of the income of the earning surviving spouse should be the value. Exploration on the internet shows that there have been efforts to understand the value of a homemaker's unpaid labour by different methods. One is, the opportunity cost which evaluates her wages by assessing what she would have earned had she not remained at home, viz., the opportunity lost. The second is, the partnership method which assumes that a marriage is an equal economic partnership and in this method, the homemaker's salary is valued at half her husband's salary. Yet another method is to evaluate homemaking by determining how much it would cost to replace the homemaker with paid workers. This is called the Replacement Method. {Para 10}

(emphasis supplied)

35. However, it must be remembered that all the above methods are merely suggestions. There can be no exact calculation or formula that can magically ascertain the true value provided by an individual gratuitously for those that they are near and dear to. The attempt of the Court in such matters should therefore be towards determining, in the best manner possible, the truest approximation of the value added by a homemaker for the purpose of granting monetary compensation.

36. Whichever method a Court ultimately chooses to value the activities of a homemaker, would ultimately depend on the facts and circumstances of the case. The Court needs to keep in mind its duty to award just compensation, neither assessing the same conservatively, nor so liberally as to make it a bounty to claimants [National Insurance Co. Limited v. Pranay Sethi,   MANU/SC/1366/2017 : (2017) 16 SCC 680; Kajal v. Jagdish Chand,   MANU/SC/0126/2020 : (2020) 4 SCC 413].

42. Therefore, on the basis of the above, certain general observations can be made regarding the issue of calculation of notional income for homemakers and the grant of future prospects with respect to them, for the purposes of grant of compensation which can be summarized as follows:

a. Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law.

b. Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special significance. It becomes a recognition of the work, labour and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation's international law obligations and our constitutional vision of social equality and ensuring dignity to all.

c. Various methods can be employed by the Court to fix the notional income of a homemaker, depending on the facts and circumstances of the case.

d. The Court should ensure while choosing the method, and fixing the notional income, that the same is just in the facts and circumstances of the particular case, neither assessing the compensation too conservatively, nor too liberally.

e. The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 19-20 of 2021 

Decided On: 05.01.2021

Kirti and Ors. Vs. Oriental Insurance Co. Ltd.

Hon'ble Judges/Coram:

Surya Kant, S. Abdul Nazeer and N.V. Ramana, JJ.

Authored By : Surya Kant, N.V. Ramana

Surya Kant, J.

Citation: MANU/SC/0004/2021.

Print Page

Supreme court lays down principles for computation of compensation on account of death of homemaker in motor accident

 Assuming that the deceased was not employed, it cannot be disputed that she was a homemaker. Her direct and indirect monthly income, in no circumstances, could be less than the wages admissible to a daily wager in the State of Uttarakhand under the Minimum Wages Act. {Para 7}

8. It goes without saying that the role of a homemaker is as important as that of a family member whose income is tangible as a source of livelihood for the family. The activities performed by a home-maker, if counted one by one, there will hardly be any doubt that the contribution of a home-maker is of a high order and invaluable. In fact, it is difficult to assess such a contribution in monetary terms.

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.2512 OF 2024

ARVIND KUMAR PANDEY & ORS. Vs GIRISH PANDEY & ANR.

Dated: FEBRUARY 16, 2024.

Print Page

Whether district legal services authority should deny compensation to the victim U/S 357A of CRPC if victim has received some compensation

 In view of the above legal position, Clause 4 of the Scheme has to be interpreted so as not to defeat the object of the Scheme. The Scheme read with Section 357A of Cr.P.C. envisages that the victim or the dependent should receive just compensation. To knock out an applicant under the Scheme merely because some meagre or token compensation was received by the applicant under some other statutory provisions would be unfair and contrary to the very object of the Scheme. Clause 4 is added to ensure that no victim or dependent gets a bonanza or largesse. It is not intended to inflict injury. Clause 4 has to be read conjointly and would have to take its colour from Section 357A Cr.P.C. read with Clause 5 and Schedule to the Scheme. Reading Clause 4 of the Scheme in this manner would mean that the victim can be said to "have been compensated for the loss and injury" from some other scheme when he has received compensation equivalent to or more than what is the minimum stipulated in the Schedule to the Scheme. Such an applicant would not be entitled to receive any compensation under the present Scheme. However, where the amount received is less than the minimum stipulated under the Schedule, it cannot be said that he has been compensated for the loss and injury and the concerned authority shall grant appropriate compensation under the Scheme but taking into account the amount of compensation already received by the victim/dependent. {Para 20}

 IN THE HIGH COURT OF DELHI

W.P. (C) 3754/2015

Decided On: 14.09.2015

Mohini Vs. The State (Govt. of NCT of Delhi) and Ors.

Hon'ble Judges/Coram:

G. Rohini, C.J. and Jayant Nath, J.

Author: Jayant Nath, J.

Citation:  MANU/DE/2694/2015,2016 ACJ 2115 (Del).

Print Page