Shriram General Insurance Company Ltd v. Mamta & Ors.

1. The present Appeal has been filed under Section 173 of the Motor Vehicles Act, 1988 seeking to challenge the Award dated 14.03.2013 passed by the learned Presiding Officer, MACT, Rohini Courts, Delhi [hereinafter referred to as “Impugned Award”]. By the Impugned Award, a sum of Rs. 65,64,340/- has been granted to the Respondent Nos. 1 to 5/Claimants along with 9% interest.

2. Learned Counsel appearing on behalf of the Appellant fairly submits that the only ground for challenge in the present Appeal is the grant of compensation for future prospects. However, in terms of the judgment of the Supreme Court in National Insurance Co. Ltd. v. Pranay Sethi & Ors.[1] case, which has allowed grant of future prospects, this issue is no longer res integra.

3. Learned Counsel appearing on behalf of the Respondents submits that given the judgment in the Pranay Sethi case, the Appeal has become infructuous.

4. The Supreme Court in Pranay Sethi case has held that even self employed or fixed salary earners are entitled to future prospects when computing compensation under Section 168 of Motor Vehicle Act, 1988. The Supreme Court while acknowledging some uncertainty, emphasised that assuming the income of the victim would remain static is unrelastic, Thus the Court allowed a standardised addition 40% if the deceased was below 40 years age and 25% if age between 40 to 50 years. It is apposite to set the relevant extract of Pranay Sethi case which are set out below:

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 selfemployed 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. …

59.3. While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. [Emphasis supplied]

5. Given that the challenge in the present Appeal is limited to the grant of compensation for future prospects and in view of the settled law as laid by the Supreme Court in Pranay Sethi case, the challenge does not subsist.

6. The Appeal is accordingly dismissed. Pending Applications, if any, stand closed.