Full Text
HIGH COURT OF DELHI
Date of Decision: 22nd July 2026
14059/2021 NATIONAL INSURANCE CO LTD .....Appellant
Through: Ms Hetu Arora Sethi, Advocate (thru VC)
Through: Mr Azhar Alam, Adv.
JUDGMENT
1. This appeal has been filed by the Insurance Company assailing impugned award dated 05th August 2019, passed by the Motor Accidents Claims Tribunal (‘MACT/Tribunal’), Patiala House Courts, New Delhi in MACT No.310/2017, whereby compensation of Rs. 63,66,128/- along with interest at the rate of 9% per annum was awarded on account of death of Padam Singh (hereinafter, ‘deceased’), who was 45 years of age on the date of the accident, which occurred on 03rd May 2016.
2. The accident took place near Kirbi Place Red Light, New Delhi at about 02:38 p.m., when the deceased was driving his motorcycle and was hit by a bus bearing registration no. DL-9SAC-2110 (hereinafter, ‘offending vehicle’) from behind. As a result, deceased sustained severe injuries and was rushed to DDU Hospital, but was declared brought dead.
3. Ms. Hetu Arora Sethi, counsel for Insurance Company, challenges the award on the issue of wrongly clubbing the income of deceased from his private business of a travel agency under M/s Ayush Travels, along with the salary received as a field executive with M/s Innovsource Pvt. Ltd.
4. While calculating loss of dependency in paragraph 16 of the impugned award, MACT has taken two components of income on the basis of testimony of deceased’s wife, Kanta Devi (‘PW-1’). Considering her statement that at the time of the death, he was continuing to earn from his business M/s Ayush Travels and had also been engaged as a field executive. MACT combined the two components together and, after deduction of tax determined the net annual earnings to be Rs. 4,79,705/-.
5. Ms. Hetu Arora Sethi, points out that his employment as a field executive only commenced in February 2016, as is evident from the appointment letter on record. It is further stated that there was no proof filed that he was running his business under M/s. Ayush Travels.
6. Mr. Azhar Alam, counsel for claimants, however, states that the income tax returns (‘ITRs’) of Assessment Years (‘AY’) 2014-15 and 2015-16, being, the previous two years before his employment showed income from business at Rs. 3,01,120/- and Rs. 3,46,030/-.
7. Counsel for claimants submits that, no doubt the employment was from February 2016, but the testimony of PW-1 would have to be considered that the deceased was earning from both these accounts at that point of time.
8. He relies upon the decision of Supreme Court in Sunita & Ors v Vinod Singh & Ors 2025 INSC 366, which accommodates the issue of double earnings from two sources of income.
9. In her testimony, PW-1, categorically stated that the deceased was earning from both sources and was not cross-examined by the Insurance Company in that regard.
10. Counsel for Insurance Company, has drawn attention of the Court to the work assignment letter issued by M/s Innovsource Pvt. Ltd. regarding M/s. Last Mile Delivery Pvt. Ltd. where the deceased was appointed as a Field Executive from 01st February 2016 till 31st January
2017. She states that though, the employers had testified in favour of this employment, the work assignment letter itself prohibited the employee i.e. deceased from carrying out any other business activity in the meantime.
11. Clause 6 of the work assignment letter states that “during the tenure of your employment with us, you will not undertake any other employment or business activities, work or public office or payment or otherwise except with the written permission of the management.” Counsel further contends that there was nothing on record, either to state that any permission was granted nor was it stated by the officer of employer.
12. In order to buttress her submission, Ms. Sethi, has placed reliance on the decision of Supreme Court in Rashmirekha Tripathy & Anr. v The Branch Manager (Legal Claims) Sriram General Insurance Co. Ltd. & Ors. 2026:INSC:661, where the question before the Court was whether, assessment of annual income should be on the basis of ITRs of previous years or average of past two/three years. The Court held that there can be no hard and fast formula for computing annual income, while also noting the importance of ITRs being a statutory document. Considering that ITRs for two assessment years were provided, the Court took an average of the two years. Court bifurcated the manner of assessment for salaried individuals and self-employed individuals, and noting other factors which may be relevant while conducting an assessment. Relevant findings of the Court are extracted as under:
13. In the present case, as regards the alleged business income from M/s. Ayush Travels, though, no document in respect of M/s. Ayush Travels was placed on record, the ITRs itself would bear out that the gross income being generated for AY 2014-15 was Rs.3,01,120/- and for AY 2015-16 it was Rs.3,46,030/-.
14. No ITR has been filed for AY 2016-17 since presumably, the same would have not been filed since the deceased passed away in May 2016. It would therefore have to be assumed that for the Assessment Year 2016- 17 (Financial Year 2015-16 ending on 31st March 2016), income would have been generated from his business and possibly, on an incremental basis from the previous assessment years’ income of Rs.3,46,030/-. The income returned for AY 2015-16 can be considered as an average itself of three years.
15. However, MACT’s assessment of taking income both from his business, as well as, his job may not be correct, particularly, in view of the clauses of his work assignment letter. Accordingly, in view of the above observations, the gross annual income will be assessed at Rs.3,46,030/- and after deduction of income tax as applicable for AY 2016-17, the net annual income of deceased comes up to Rs. 3,45,855/-.
16. Reliance placed by counsel for claimants on Sunita (supra), may not be applicable to the present case, since the Supreme Court in Sunita (supra) was adjudicating the aspect of dual income with respect to the claim of a deceased housewife, which is not the case herein.
17. Further, considering that there were 4 claimants, loss of consortium shall be awarded at Rs. 1,60,000/- (Rs. 40,000/- x 4) in view of the decision of Supreme Court in Magma General Insurance Co. Ltd. v. Nanu Ram, (2018) 18 SCC 130.
18. Accordingly, revised computation is as under:
3 Less: Personal expenses of deceased (C) Rs. 1,49,907.81/- Rs. 1,08,079.68/- 4 Loss of dependency (A+B)-C=D Rs. 4,49,723.43/- Rs. 3,24,240/- (rounded off)
7 Compensation for loss of consortium (G) Rs. 40,000/- Rs. 1,60,000/- 8 Compensation for loss of estate (H) Rs. 15,000/- Rs. 15,000/- 9 Compensation towards funeral expenses (I) Rs. 15,000/- Rs. 15,000/- 10 Total compensation (F+G+H+I) =J Rs. 63,66,128/- Rs. 47,29,360/-
19. Accordingly, in view of the above, compensation has been reduced by Rs. 16,36,768/- (‘reduced compensation’).
20. Pursuant to order dated 30th September 2020, the Court had directed a stay on execution of the impugned award subject to deposit of 60% of awarded amount before the MACT. Further, by order dated 20th April 2022, the Court directed release of Rs. 10,00,000/- to respondent no.1 as per the scheme of impugned award.
21. Accordingly, if the amount originally deposited by Insurance Company is less than the revised compensation, balance amount along with accrued interest will be deposited by the Insurance Company before the MACT within 4 weeks, which will be released as lumpsum to claimants within 2 weeks thereafter. Originally deposited amount shall continue to be released to claimants as per the scheme of impugned award.
22. However, if the amount originally deposited by Insurance Company is more than the revised compensation, balance amount (originally deposited amount – revised compensation), along with accrued interest, shall be released to Insurance Company. Remaining balance amount shall continue to be released to claimants as per the scheme of impugned award.
23. Accordingly, the appeal is disposed of in the above terms.
24. Pending applications are rendered infructuous
25. Copy of this judgment be sent to the concerned MACT.
26. Copy of this judgment be sent to the concerned bank for information and compliance.
27. Statutory deposit, if any, shall be refunded to Insurance Company, only if the order of deposit has been complied with.
28. Judgement be uploaded on the website of this Court.
JUDGE JULY 22, 2026/sm/sp