HDFC ERGO GENERAL INSURANCE CO LTD v. Lalta Devi & Ors.

11. On the other hand, the learned counsel for the Insurance Company refers to a three Judge Bench decision of the Supreme Court in Reshma Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65 wherein while approving the ratio with regard to future prospects in Sarla Verma (Smt.) & Ors. (supra) and relying on General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. (1994) 2 SCC 176; Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 and Abati Bezbaruah v. Dy. Director General, Geological Survey of India & Anr., 2003 (3) SCC 148, the Supreme Court held as under:-

39. The standardization of addition to income for future prospects shall help in achieving certainty in arriving at appropriate compensation. We approve the method that an addition of 50% of actual salary be made to the actual salary income of the deceased towards future prospects where the deceased had a permanent job and was below 40 years and the addition should be only 30% if the age of the deceased was 40 to 50 years and no addition should be made where the age of the deceased is more than 50 years. Where the annual income is in the taxable range, the actual salary shall mean actual salary less tax. In the cases where the deceased was self-employed or was on a fixed salary without provision for annual increments, the actual income at the time of death without any addition to income for future prospects will be appropriate. A departure from the above principle can only be justified in extraordinary circumstances and very exceptional cases.”

12. The learned counsel for the Insurance Company relies upon a Constitutional Bench judgment of the Supreme Court in Central Board of Dawoodi Bohra Community & Anr. v. State of Maharashtra & Anr., (2005) 2 SCC 673; Safiya Bee v. Mohd. Vajahath Hussain @ Fasi, (2011) 2 SCC 94; and Union of India & Ors. v. S.K. Kapoor, (2011) 4 SCC 589 to contend that in case of divergence of opinion in judgments of benches of co-equal strength, earlier judgment will be taken as a binding precedent.

13. It may be noted that in Reshma Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65; the three Judge Bench was dealing with a reference made by a two Judge Bench (S.B. Sinha and Cyriac Joseph, J.J.). The two Hon’ble Judges wanted an authoritative pronouncement from a Larger Bench on the question of applicability of the multiplier and whether the inflation was built in the multiplier. The three Judge Bench approved the two Judge Bench decision of the Supreme Court in Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC 121 with regard to the selection of multiplier. It further laid down that addition towards future prospects to the extent of 50% of the actual salary shall be made towards future prospects when the deceased had a permanent job and was below 40 years and addition of 30% should be made if the age of the deceased was between 40-50 years. No addition towards future prospects shall be made where the deceased was self-employed or was getting a fixed salary without any provision of annual increment.

14. Of course, three Judge Bench of the Supreme Court in its later judgment in Rajesh relying on Santosh Devi v. National Insurance Company Ltd. & Ors., 2012 (6) SCC 421 observed that there would be addition of 30% and 50%, depending upon the age of the deceased, towards future prospects even in the case of self-employed persons. It may, however, be noted that in Rajesh, the three Judge Bench decision in Reshma Kumari (supra) was not brought to the notice of their Lordships.

15. The divergence of opinion was noted by another three Judge Bench of the Supreme Court in Sanjay Verma v. Haryana Roadways, (2014) 3 SCC 210. In paras 14 and 15, the Supreme Court observed as under:-

15. Answering the above reference a three-Judge Bench of this Court in Reshma Kumari v. Madan Mohan [(2013) 9 SCC 65: (2013) 4 SCC (Civ) 191: (2013) 3 SCC (Cri) 826] (SCC p. 88, para 36) reiterated the view taken in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121: (2009) 2 SCC (Civ) 770: (2009) 2 SCC (Cri) 1002] to the effect that in respect of a person who was on a fixed salary without provision for annual increments or who was self-employed the actual income at the time of death should be taken into account for determining the loss of income unless there are extraordinary and exceptional circumstances. Though the expression “exceptional and extraordinary circumstances” is not capable of any precise definition, in Shakti Devi v. New India Insurance Co. Ltd. [(2010) 14 SCC 575: (2012) 1 SCC (Civ) 766: (2011) 3 SCC (Cri) 848] there is a practical application of the aforesaid principle. The near certainty of the regular employment of the deceased in a government department following the retirement of his father was held to be a valid ground to compute the loss of income by taking into account the possible future earnings. The said loss of income, accordingly, was quantified at double the amount that the deceased was earning at the time of his death.”

16. Further, the divergence of opinion in Reshma Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65 and Rajesh & Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54 was noticed by the Supreme Court in another latest judgment in National Insurance Company Ltd. v. Pushpa & Ors., CC No.8058/2014, decided on 02.07.2014 and in concluding paragraph while making reference to the Larger Bench, the Supreme Court held as under:- “Be it noted, though the decision in Reshma (supra) was rendered at earlier point of time, as is clear, the same has not been noticed in Rajesh (supra) and that is why divergent opinions have been expressed. We are of the considered opinion that as regards the manner of addition of income of future prospects there should be an authoritative pronouncement. Therefore, we think it appropriate to refer the matter to a larger Bench.”

17. Now, the question is which of the judgments ought to be followed awaiting answer to the reference made by the Supreme Court in Pushpa & Ors. (supra).

18. In Central Board of Dawoodi Bohra Community & Anr. v. State of Maharashtra & Anr., (2005) 2 SCC 673 in para 12, the Supreme Court observed as under:-

19. Similarly, in Safiya Bee v. Mohd. Vajahath Hussain @ Fasi, (2011) 2 SCC 94 in para 27, the Supreme Court observed as under:-

20. In Union of India & Ors. v. S.K. Kapoor, (2011) 4 SCC 589 while holding that the decision of the Co-ordinate Bench is binding on the subsequent Bench of equal strength, held that the Bench of Coordinate strength can only make a reference to a larger Bench. In para 9 of the report, the Supreme Court held as under:- “9. It may be noted that the decision in S.N. Narula case [(2011) 4 SCC 591] was prior to the decision in T.V. Patel case [(2007) 4 SCC 785: (2007) 2 SCC (L&S) 98]. It is well settled that if a subsequent coordinate Bench of equal strength wants to take a different view, it can only refer the matter to a larger Bench, otherwise the prior decision of a coordinate Bench is binding on the subsequent Bench of equal strength. Since, the decision in S.N. Narula case [(2011) 4 SCC 591] was not noticed in T.V. Patel case [(2007) 4 SCC 785: (2007) 2 SCC (L&S) 98], the latter decision is a judgment per incuriam. The decision in S.N. Narula case [(2011) 4 SCC 591] was binding on the subsequent Bench of equal strength and hence, it could not take a contrary view, as is settled by a series of judgments of this Court.”

21. This Court in New India Assurance Co. Ltd. v. Harpal Singh & Ors., MAC APP.138/2011, decided on 06.09.2013, went into this question and held that in view of the report in S.K. Kapoor (supra), the three Judge Bench decision in Reshma Kumari & Ors. (surpa) shall be taken as a binding precedent.

22. Consequently, it cannot be said that every person including a student would be entitled to addition of 50% towards future prospects. In the instant case, I have already noted above that deceased Aditya was pursuing engineering from a little known college and from an ordinary University. He had failed in a number of subjects in first and second semester. Thus, the Claimants will not be entitled to any addition towards future prospects.

MULTIPLIER

23. It is urged by the learned counsel for the Claimants that multiplier has to be as per the age of the deceased and not as per the age of the Claimants. In support of his contention, the learned counsel for the Claimants places reliance on Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC 121 and Reshma Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65; wherein it was held that the multiplier has to be taken as per the age of the deceased.

24. This issue was gone into detail by this Court wherein the history of awarding reasonable compensation was gone into. This Court referred to a three Judge Bench decision in U.P. SRTC v. Trilok Chandara, (1996) 4 SCC 362; General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. (1994) 2 SCC 176; another three Judge Bench decision of the Supreme Court in New India Assurance Company Ltd. v. Shanti Pathak (Smt.) & Ors., (2007) 10 SCC 1, Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC 121 and National Insurance Company Ltd. v. Shyam Singh & Ors., (2011) 7 SCC 65, and in paras 4 to 8 observed as under:-

5. There is another three Judges‟ decision of the Supreme Court in New India Assurance Company Ltd. v. Shanti Pathak (Smt.) & Ors., (2007) 10 SCC 1, where in the case of the death of a bachelor, who was aged only 25 years, the multiplier of 5 was applied according to the age of the mother of the deceased, who was about 65 years at the time of the accident. Para 6 of the report is extracted hereunder:-

6. Learned counsel for the Appellant referred to Sarla Verma (supra) in support of the proposition that age of the deceased is to be taken into consideration for selection of the multiplier. As an example the multiplier taken in various cases such as in Susamma Thomas (supra), U.P. SRTC v. Trilok Chandara, (1996) 4 SCC 362 as clarified in New India Assurance Co. Ltd. v. Charlie, (2005) 10 SCC 720 and the multiplier as mentioned in Second Schedule to the Motor Vehicles Act were compared and it was held that the multiplier as per Column No.4 in the said table was appropriate for application. Sarla Verma (supra) related to the death of one Rajinder Prakash who had left behind his widow, three minor children apart from his parents and the grandfather. Obviously, the age of the deceased was taken into consideration for the purpose of selection of the multiplier as the deceased left behind a widow younger to him, apart from three minor children. It was not laid down as a proposition of law that irrespective of the age of the claimants, the age of the deceased is to be taken into consideration for selection of the multiplier for calculation of the loss of dependency. It is true that in Mohd. Ameeruddin (supra 2) and P.S. Somanathan (supra 3) and National Insurance Company Ltd. v. Azad Singh (supra 5), the Hon‟ble Supreme Court applied the multiplier according to the age of the deceased, yet in view of Trilok Chandra (supra) and Shanti Pathak (supra) decided by the three Judges of the Supreme Court, the judgment in Mohd. Ameeruddin (supra 2), P.S. Somanathan (supra 3) and Azad Singh (supra 5) cannot be taken as a precedent for selection of the multiplier.

7. In the latest judgment of the Supreme Court in National Insurance Company Ltd. v. Shyam Singh & Ors., (2011) 7 SCC 65, decided on 04.07.2011, the Supreme Court referred to Ramesh Singh & Anr. v. Satbir Singh & Anr., (2008) 2 SCC 667 and held that the multiplier as per the age of the deceased or the claimant whichever is higher would be applicable. Para 9 and 10 of the report are apposite:-

8. Similarly in Manam Saraswathi Sampoorna Kalavathi & Ors., v. The Manager, APSRTC, Tadepalligudem A.P. & Anr., (2010) 5 SCC 785, decided on 26.03.2010, the multiplier of 13 was applied in case of death of a young bachelor where the mother was 47 years of age.”

25. There is no manner of doubt that the appropriate multiplier while awarding compensation for death of an unmarried boy, the multiplier will be selected on the basis of age of the mother of the deceased.

26. In the instant case, the Claims Tribunal adopted the multiplier of 14 as the Claimant Lalta Devi (mother of the deceased Aditya) was aged 41 years which is accepted and affirmed.

MULTIPLICANT

27. Now, the question for consideration is as to what should be the potential income of a bachelor who had just passed higher secondary examination with more than 60% marks but who was not very good in his performance while pursuing his engineering and that too from an ordinary Institution.

28. The Claimants examined Dev Kumar Chaudhary, the deceased father who testified that he had spend a sum of Rs.92,781/- per year as a tuition fee for the course of B.Tech. He stated that his son Aditya was a student of 3rd year B.Tech from Echelon Institute of Technology, Faridabad. A sum of Rs.92,781/- approximately was spent per year towards tuition fee. On completion of course, the deceased was likely to get a monthly salary of Rs.40,000/-. No record of placement of the student from this college was placed on record. Moreover, as noticed above, performance of Aditya was not up to the mark. At the same time, it can be assumed that in due course, the deceased would have cleared his examination and even if he would not have completed the course in another 1½ years, i.e, in four years, he might have taken another six months or a year to clear all the papers. The vex question which confront this Court is as to what should be the potential income of the deceased.

29. In the case of Haji Zainullah Khan (Dead) by Lrs. v. Nagar Mahapalika, Allahabad, 1994 (5) SCC 667, death of a young boy, aged 20 years took place in an accident which happened in the year

1972. The deceased was a student of B.Sc Ist year (Biology), a compensation of `1,46,900/- was increased and rounded off to ` 1,50,000/-.

30. In Ganga Devi & Ors. v. New India Assurance Co. Ltd. & Ors., MAC APP. 359/2008, decided by this Court on 23.11.2009, which was related to the death of a student (studying medicine) who was doing internship and was to be awarded the MBBS degree in a short time, the Tribunal awarded a compensation of ` 9,35,352/- on the basis of the minimum wages of a Graduate. This Court observed that although the deceased was getting a stipend of ` 5,000/- per month at the time of his death due to the accident, he would have ultimately joined as a doctor at a salary ranging between ` 16,000/- per month to ` 25,000/per month. Thus, the average monthly income of the deceased was taken as ` 18,000/- and after adding 50% towards future prospects, the compensation was enhanced to ` 21,36,000/-.

31. In Ramesh Chand Joshi v. New India Assurance Company, MAC APP.212-213/2006 decided on 20.01.2010, this Court took the potential income of a BE (Bio-Technology) First year student of Delhi College of Engineer (DCE) as `38,333/- per month.

32. A Division Bench of Andhra Pradesh High Court in B.Ramulamma & Ors. v. Venkatesh, Bus Union, Rep. by A.M. Velu Mudaliyar & Anr., 2011 ACJ 1702, held that it was very difficult to determine the income of a student who was allowed to complete his course. It was observed that it was appropriate and reasonable to take a salary at the entry level which is fixed by the Govt. for such jobs.

33. In the circumstances of the case, it can be assumed that the deceased might not have been able to obtain a Class-I job in the government sector or a lucrative job in the private sector. I shall have to make a guess work and assume that the deceased might have been able to procure a job of a junior engineer in the government or in public sector undertaking or similar such job in a private sector. Starting salary of a junior engineer with basic pay of Rs.9300/- and Grade Pay of Rs. 4200/- on the date of the accident was in the vicinity of Rs.25,000/- as taken by the Claims Tribunal. Thus, even in private sector deceased would have been able to secure a job with a salary of about Rs.26,000/-. To be precise, the breakup can be as under:- Basic Pay 9300 Grade Pay 4200 DA (51%) 6885 HRA 4050 TA 2416 Total 26,851/- x 12 = Rs.3,22,212/-

34. If the amount on HRA is spent on hiring a house, the same would be non-taxable. The liability towards income tax would thus be Rs.13659/-.

35. The loss of dependency thus comes to Rs.21,59,871/- (3,22,212/- - 13659/-(income tax) x ½ x 14) as against Rs.18,90,000/- awarded by the Claims Tribunal.

36. The Claims Tribunal awarded a sum of Rs.25,000/- towards loss of love and affection. In view of the judgment in Rajesh & Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54 and with the inflation, the Claimants are awarded a sum of Rs.1,00,000/- towards loss of love and affection. The revised compensation is tabulated as under:-

┌──────────────────────────────────────────────────────────────────────────────────────────┐
│    Sl.      Compensation under various        Awarded by        Awarded by               │
│                       heads                   the Claims         this Court              │
│   No.                                          Tribunal                                  │
├──────────────────────────────────────────────────────────────────────────────────────────┤
│    1.      Loss of Dependency                    18,90,000/-       21,59,871/-           │
│    2.      Loss of Love and Affection               25,000/-        1,00,000/-           │
│    3.      Funeral Expenses                         25,000/-          25,000/-           │
│    4.      Loss of Estate                           10,000/-          10,000/-           │
│                                       Total   Rs.19,50,000/-    Rs.22,94,871/-           │
│ MAC APP. 189/2014 & 640/2014                                       Page 24 of 25         │
│                                                                           2015:DHC:207   │
└──────────────────────────────────────────────────────────────────────────────────────────┘

37. The compensation is accordingly enhanced by Rs.3,44,871/- which shall carry interest @ 9% per annum as granted by the Claims Tribunal.

38. The entire enhanced compensation shall go to the first Claimant Lalta Devi (mother of the deceased Aditya). Sixty percent of the enhanced compensation along with proportionate interest shall be held in fixed deposit for a period of one, two and three years respectively in equal proportion. Rest 40% with proportionate interest shall be released on deposit.

39. MAC APP.189/2014 preferred by the Insurance Company is consequently dismissed.

40. MAC APP.640/2014 preferred by the Claimants is allowed in above terms.

41. Pending applications, if any, also stand disposed of.

JUDGE JANUARY 12, 2015 vk