Sharma & Ors. Vs. Karam Singh & Ors.  INSC 502 (13 July 2010)
APPELLATE JURISDICTION CIVIL APPEAL NO. 5316 OF 2010 (Arising out of SLP (C)
No.668/2008) Shyamwati Sharma & Ors. ... Appellants Karam Singh & Ors.
This is an appeal for enhancement of compensation, by the mother,
widow, three children and father of Kuldeep Sharma, a Sub-Inspector of Police,
aged 36 years, who died in a motor accident on 25.12.1990.
to the salary certificate, his basic pay was Rs.7425/-, the gross salary (pay
and allowances) was Rs.13,794/-, the deductions aggregated to Rs.4,305/- and
the net take home salary was Rs.9,489/- per month.
The Tribunal by its award dated 17.1.2003 held the respondents
liable and directed the insurer to pay to the appellants, Rs.14,44,600/- as
compensation, with simple interest at 9% per annum from the date of filing of
the claim petition (21.2.2002) till realization. The Tribunal arrived at the
said compensation in the following manner : It deducted one third from the
gross monthly salary of Rs.13,794/- towards the personal and living expenses of
the deceased and determined the contribution to the family as Rs.9,196/- per
month or Rs.1,10,352/- per annum. It applied the multiplier `13' and arrived at
the loss of dependency as Rs.14,34,576/- rounded off to Rs.14,34,600/-.
Feeling aggrieved the claimants filed an appeal. The High Court
started with the gross salary as Rs.13,794/- per month. Drawing an assumption
that the deceased would have at least got one promotion or gone to the next
higher grade if he had completed the remaining 24 years of service, and taking
note of the recommendations of the Fifth Pay Commission and the annual
increments, it inferred that by the time the deceased would have retired, he
would have been earning a minimum gross income of Rs.22,000/- per month.
average of the actual monthly income (Rs.13794/-) and the projected monthly
income at the time of retirement (Rs.22000), that is Rs.17,897/-, was taken as
the monthly income. The High Court deducted 30% thereof towards `deductions
from salary' (income-tax etc.) and arrived at the net monthly income as
Rs.12,528/-. It further deducted one fourth thereof towards the personal and
living expenses of the deceased and arrived at the contribution to the family
as Rs.9,396/- per month or Rs.1,12,752/- per annum. By applying the multiplier
of 13, it calculated the loss of dependency as Rs.14,65,776/-. As a consequence,
it increased the compensation awarded by the Tribunal by Rs.32,000/- with
interest at the rate of 6% per annum from the date of claim petition till the
date of payment.
The said judgment of the High Court is challenged in this appeal.
The appellants urged the following two contentions :
High Court ought not to have made a `deduction' of 30% from the salary towards
taxes etc.; and (ii) The High Court ought to have applied the multiplier `16'
instead of `13', having regard to the age of the deceased.
This Court in Sarla Verma vs. Delhi Transport Corporation - 2009
(6) SCC 121, has stated the principles relating to `addition to income' towards
future prospects. This Court held that wherever the deceased was below 40 years
of age and had a permanent job, the actual salary (less tax) should be
increased by 50% towards future prospects, to arrive at the monthly income.
held that where the number of dependants of a deceased are in the range of 4 to
6, the deduction towards personal and living expenses of the deceased should be
25%. It further held that in regard to persons aged 36 to 40 years, the
appropriate multiplier should be 15. We will re-calculate the compensation by
applying the said principles.
As noticed above, the gross salary was Rs.13,794/- per month or
Rs.1,65,528/- per annum. By adding 50% towards future prospects (as the
deceased was less than 40 years of age), the deemed gross income would have
been Rs.20,691/- per month or Rs.2,48,292/- per annum. The percentage of
deduction towards income-tax and surcharge, taken as 30% by the High Court,
does not require to be disturbed, having regard to the income. On such
deduction, the net annual income of the deceased would have been Rs.1,73,800/-.
From the said sum, one-fourth (25%) had to be deducted towards the personal and
living expenses of the deceased. Thus the contribution of the deceased to his
family would have been Rs.1,30,350/- per annum. By applying the multiplier of
15, the total loss of dependency will be Rs.19,55,250/-. By adding a sum of
Rs.5,000/- each under the heads of loss of consortium, loss of estate and
funeral expenses, the total compensation is determined as Rs.19,70,250/-.
The submission of the respondents that the deduction of 30% from
the salary is not warranted in view of the decision in Sarla Verma, is not
Verma, the monthly salary of the deceased was only Rs.4004/- and the annual
income even after taking note of future prospects was Rs.72072/-.
income was in a range which was exempt from tax, if the permissible deductions
were applied. Therefore, this Court did not make any deduction towards
income-tax. But this Court made it clear that where the annual income is in the
taxable range, appropriate deduction should be made towards tax. In this case
as the annual income has been worked out as Rs.2,48,292/-, appropriate
deduction has to be made towards income-tax. The rate of income tax is a
varying figure, with reference to taxable income after permissible deductions
and the year of assessment. The High Court has assessed the deduction as 30%
and on the facts, we do not propose to disturb it. We however make it clear
that while ascertaining the income of the deceased, any deductions shown in the
salary certificate as deductions towards GPF, life insurance premium,
repayments of loans etc., should not be excluded from the income. The deduction
towards income tax/surcharge alone should be considered to arrive at the net
income of the deceased.
We accordingly allow the appeal and increase the compensation from
Rs.14,66,600/- to Rs.19,70,250/-. The increased amount shall carry interest at
the rate of 6% per annum from the date of claim petition to the date of
payment. The parties to bear their respective costs.
__________________J. (R. V. Raveendran)
__________________J. (H. L. Gokhale)
July 13, 2010.