The discussion on the point in Pranay Sethi was from the
standpoint of arriving at “just compensation” in terms of Section 168 of the Motor Vehicles Act, 1988.
11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. The prescription of 15% in cases where the deceased was in the age bracket of 50-60 years as stated in Pranay Sethi cannot be taken as maxima. In the absence of any governing principle available in the statutory regime, it was only in the form of an indication. If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4634 OF 2021
NEW INDIA ASSURANCE CO. LTD. Vs URMILA SHUKLA & ORS.
Author: UDAY U. LALIT, J.
Dated: August 06, 2021.
1. Leave granted.
2. This appeal challenges the judgment and order dated 24.04.2018
passed by the High Court of Judicature at Allahabad dismissing First
Appeal No. 2129 of 2018. Said appeal was preferred by the present
appellant challenging the determination by Motor Accidents Claim
Tribunal, Allahabad (“the Tribunal”, for short) vide its award dated
17.01.2018, whereby compensation in the sum of Rs.24,43,432/- was
awarded with 7% interest, while considering the claim in respect of an
accident which resulted in the death of one Jairam Shukla.
3. While assessing the compensation, reliance was placed by the
Tribunal on Rule 220A of the U.P. Motor Vehicles Rules, 1998 (“the Rules”
for short). For the present purposes, we are concerned with Rule 3(iii) of
the Rules which is to the following effect:
“(3) The future prospects of a deceased, shall be added in
the actual salary or minimum wages of the deceased as
under:
…
(iii) More than 50 years of age: 20% of the salary.”
4. The basic ground of challenge by the appellant is that sub-rule 3(iii)
of Rule 220A is contrary to the conclusions arrived at by the Constitution
Bench of this Court in National Insurance Company. Ltd. vs. Pranay Sethi
reported in (2017) 16 SCC 680 (“Pranay Sethi”, for short).
5. Considering the importance of the questions involved, this Court
appointed Mr. A.D.N. Rao, learned Advocate to assist the Court as Amicus
Curiae.
6. Mr. Rao has submitted a note which states that apart from the State
of U.P. similar provision exists in the State of Uttarakhand which had
adopted the Rules in its application to that State after reorganization.
7. Mr. Rao has invited our attention to the decision of this Court in
Pranay Sethi and specially paragraphs 31 and 55 to 58 which for facility
are quoted hereunder:
“31. Though we have devoted some space in analyzing the
precedential value of the judgments, that is not the thrust of
the controversy. We are required to keenly dwell upon the
heart of the issue that emerges for consideration. The
seminal controversy before us relates to the issue where the
deceased was self-employed or was a person on fixed
salary without provision for annual increment, etc., what
should be the addition as regards the future prospects. In
Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 :
(2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002], the
Court has made it as a rule that 50% of actual salary could
be added if the deceased had a permanent job and if the age
of the deceased is between 40-50 years and no addition to
be made if the deceased was more than 50 years. It is
further ruled that where deceased was self-employed or had
a fixed salary (without provision for annual increment, etc.)
the courts will usually take only the actual income at the
time of death and the departure is permissible only in rare
and exceptional cases involving special circumstances.
…
55. Section 168 of the Act deals with the concept of “just
compensation” and the same has to be determined on the
foundation of fairness, reasonableness and equitability on
acceptable legal standard because such determination can
never be in arithmetical exactitude. It can never be perfect.
The aim is to achieve an acceptable degree of proximity to
arithmetical precision on the basis of materials brought on
record in an individual case. The conception of “just
compensation” has to be viewed through the prism of
fairness, reasonableness and non-violation of the principle
of equitability. In a case of death, the legal heirs of the
claimants cannot expect a windfall. Simultaneously, the
compensation granted cannot be an apology for
compensation. It cannot be a pittance. Though the
discretion vested in the tribunal is quite wide, yet it is
obligatory on the part of the tribunal to be guided by the
expression, that is, “just compensation”. The determination
has to be on the foundation of evidence brought on record
as regards the age and income of the deceased and
thereafter the apposite multiplier to be applied. The formula
relating to multiplier has been clearly stated in Sarla Verma
[Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC
(Civ) 770 : (2009) 2 SCC (Cri) 1002] and it has been
approved in Reshma Kumari [Reshma Kumari v. Madan
Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 :
(2013) 3 SCC (Cri) 826] . The age and income, as stated
earlier, have to be established by adducing evidence. The
tribunal and the courts have to bear in mind that the basic
principle lies in pragmatic computation which is in
proximity to reality. It is a well-accepted norm that money
cannot substitute a life lost but an effort has to be made for
grant of just compensation having uniformity of approach.
There has to be a balance between the two extremes, that is,
a windfall and the pittance, a bonanza and the modicum. In
such an adjudication, the duty of the tribunal and the courts
is difficult and hence, an endeavour has been made by this
Court for standardisation which in its ambit includes
addition of future prospects on the proven income at
present. As far as future prospects are concerned, there has
been standardisation keeping in view the principle of
certainty, stability and consistency. We approve the
principle of “standardisation” so that a specific and certain
multiplicand is determined for applying the multiplier on
the basis of age.
56. The seminal issue is the fixation of future prospects in
cases of deceased who are self-employed or on a fixed
salary. Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC
121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002]
has carved out an exception permitting the claimants to
bring materials on record to get the benefit of addition of
future prospects. It has not, per se, allowed any future
prospects in respect of the said category.
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. To
have the perception that he is likely to remain static and his
income to remain stagnant is contrary to the fundamental
concept of human attitude which always intends to live
with dynamism and move and change with the time.
Though it may seem appropriate that there cannot be
certainty in addition of future prospects to the existing
income unlike in the case of a person having a permanent
job, yet the said perception does not really deserve
acceptance. We are inclined to think that there can be some
degree of difference as regards the percentage that is meant
for or applied to in respect of the legal representatives who
claim on behalf of the deceased who had a permanent job
than a person who is self-employed or on a fixed salary.
But not to apply the principle of standardisation on the
foundation of perceived lack of certainty would tantamount
to remaining oblivious to the marrows of ground reality.
And, therefore, degree-test is imperative. Unless the
degree-test is applied and left to the parties to adduce
evidence to establish, it would be unfair and inequitable.
The degree-test has to have the inbuilt concept of
percentage. 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.
58. The controversy does not end here. The question still
remains whether there should be no addition where the age
of the deceased is more than 50 years. Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] thinks it appropriate not to add
any amount and the same has been approved in ]Reshma
Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC
65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] .
Judicial notice can be taken of the fact that salary does not
remain the same. When a person is in a permanent job,
there is always an enhancement due to one reason or the
other. To lay down as a thumb rule that there will be no
addition after 50 years will be an unacceptable concept. We
are disposed to think, there should be an addition of 15% if
the deceased is between the age of 50 to 60 years and there
should be no addition thereafter. Similarly, in case of selfemployed
or person on fixed salary, the addition should be
10% between the age of 50 to 60 years. The aforesaid
yardstick has been fixed so that there can be consistency in
the approach by the tribunals and the courts.”
8. It is submitted by Mr. Rao that the judgment in Pranay Sethi does
not show that the attention of the Court was invited to the specific rules
such as Rule 3(iii) which contemplates addition of 20% of the salary as
against 15% which was stated as a measure in Pranay Sethi. In his
submission, since the statutory instrument has been put in place which
affords more advantageous treatment, the decision in Pranay Sethi ought
not to be considered to limit the application of such statutory Rule.
9. It is to be noted that the validity of the Rules was not, in any way,
questioned in the instant matter and thus the only question that we are called upon to consider is whether in its application, sub-Rule 3(iii) of Rule 220A of the Rules must be given restricted scope or it must be allowed to operate fully.
10. The discussion on the point in Pranay Sethi was from the
standpoint of arriving at “just compensation” in terms of Section 168 of the Motor Vehicles Act, 1988.
11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. The prescription of 15% in cases where the deceased was in the age bracket of 50-60 years as stated in Pranay Sethi cannot be taken as maxima. In the absence of any governing principle available in the statutory regime, it was only in the form of an indication. If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid.
12. We, therefore, reject the submission advanced on behalf of the
appellant and affirm the view taken by the Tribunal as well as the High
Court and dismiss this appeal without any order as to costs.
13. In the end, we express our sincere gratitude for the assistance
rendered by Mr. A.D.N. Rao, learned Amicus Curiae.
………………………….J.
[UDAY UMESH LALIT]
………………………….J.
[ AJAY RASTOGI]
New Delhi;
August 06, 2021.
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