Kirti & Anr vs Oriental Insurance Company: Supreme Court Granted Future Prospects in Case of Notional Income

23rd February, 2021 - 12:56 pm Categories: Legal Issues 0 Comments

In the recent case passed by the three-judge bench of the Supreme Court on 5 January 2021, the court granted future prospects even in cases of national income.

Brief Facts of the Case:

The present civil appeal was filed by the three surviving dependents of the two deceased in which they have challenged the judgment passed by the Delhi High Court on 17 July 2017. Vide this judgment, the Delhi High Court reduced the amount of motor accident compensation awarded by the Motor Accident Claims Tribunal, Rohini (hereinafter referred to as “Tribunal”) under Section 168 of the Motor Vehicle Act, 1988 from Rs. 40.71 Lakhs to Rs 22 Lakhs.

The accident occurred in the early morning of 12^th April 2014 when the deceased couple, Vinod and Poonam of 29 and 26 years respectively, were hit by the Santro Car at an intersection. The couple succumbed to their injuries on that day itself. The FIR against the car driver was registered under Sections 279 and 304 of the Indian Penal Code, 1860 for rash and negligent driving, and the statement of one eye witness was also taken on record. Simultaneously, the two daughters and septuagenarian parents of the deceased also filed the claim petition under Section 166 of the MV Act.

The tribunal in its findings held the driver of the car liable for the rash driving making the insurance company liable towards the family of the deceased for the payment of compensation. The tribunal took into account various factors like minimum wage in Delhi, future prospects of the deceased wife, compensation of Rs 2.50 Lakhs for the loss of love, deducted 1/3^rd of Vinod’s salary towards personal expenses, and awarded the sum of Rs 40.71 Lakhs to the claimants.

This judgment of the tribunal was challenged by the respondent-insurer before the Delhi High Court on the following grounds:

• There is no proof that the deceased couple was working in Delhi, instead, their permanent residence was situated in Haryana. The tribunal should have taken into account the minimum wage in Haryana and not in Delhi.
• The number of future prospects should not be granted and personal expenses should be deducted from the salary of Poonam also.
• The amount of compensation awarded by the tribunal should be reduced to half due to contributory negligence.

The Delhi High Court accepted most of the contentions of the respondent-insurer and reduced the amount of compensation to Rs 22 Lakhs. Against this judgment of the Delhi High Court, the present civil appeal was filed by the claimants.

Supreme Court’s Analysis:

• The court observed that at the time of the accident, there were four dependents of the deceased, two children having the age of 3 and 4 years respectively, and two parents. The deceased’s dependent mother died subsequent to the occurrence of the accident. The court held that while determining the amount of compensation, dependents at the date of the accident itself have to be considered and changes that occurred after that date would not affect the proceedings.
• Furthermore, the court observed that the amount of compensation should be just and reasonable and should be guided by the principles of fairness, equity, and good conscience. The age of the deceased couple’s children at the time of the accident was 3 and 4 years. Here, it has to be considered that the age of the children requires a good amount of expenditure till the time they become self-dependent.
• At the time of the accident, Poonam was pregnant and due to the rash and negligent driving of the driver, the fetus in her womb extinguished. Therefore, the deduction for personal expenses for the two deceased should be 1/4^th and not 1/3^rd as determined by the Tribunal.
• The Supreme Court observed that determining compensation at the rate of the minimum wage in the absence of proof of income of the deceased is not justified. The court stated that the educational qualifications of the deceased and the existing standard of living of the family of the deceased have to be taken into account for determining the amount of compensation. The court held that the minimum wages to skilled workers in the State of Haryana during the time of the accident have to be applied for the present case.
• The court relied on the judgment passed by the Constitutional Bench of this court in the case of National Insurance Co Ltd v. Pranay Sethi wherein the court held that if the deceased was self-employed or a person on a fixed salary and his age is below 40 years, then the future prospects should be paid to the tune of 40% of the established income. The court rejected the contention of the respondent-insurer that future prospects cannot be allowed in case of national income. The Supreme Court relied on the observations of this court in the case of Hem Raj v. Oriental Insurance Co. Ltd. wherein the court refused to differentiate between the cases where there is positive evidence of income and the cases where income is calculated on guesswork.
• The Supreme Court allowed the appeals in part and increased the compensation awarded by the Delhi High Court to the claimants-appellants by Rs 11.20 Lakhs, making it a total sum of Rs 33.30 Lakhs.
• Justice N.V. Ramana concurred with the above findings of the case and in addition to that, he penned down his opinions on the determination of the national income of the homemakers, which are as follows:

1. In the cases of determination of national income of a victim, there are two categories of situations wherein the first category comprises of the victims who were employed at the time of the accident but the claimants/ surviving dependents of that victim were not able to prove his or her actual income. The second category of the situation relates to those wherein the court has to determine the income of a nonearning victim.
2. The position is now settled that the grant of future prospects cannot be refused merely on the basis that the actual income of the deceased was not proved and it is payable in cases of notional income also. The same principle should be applied with equal vigor in the case of the second category of cases (non-earning victims) particularly with respect to homemakers.
3. Grant of compensation to a homemaker, on a pecuniary basis, is a settled proposition of law.
4. Fixing the national income of a homemaker is of special significance as it will give recognition to the work, labor, and sacrifices of homemakers. In addition to that, it is in furtherance to India’s obligations under international law and will promote the principles of social equality and dignity to all, as envisaged in the Constitution of India.
5. The notional income of the homemaker can be determined by various methods. The court must ensure that the method used in determining the national income is just as per the facts and circumstances of the particular case.
6. The granting of future prospects on the calculated notional income is a component of just compensation.

Author: Pratiksha Rawat, a law student of Amity Law School Delhi, an intern at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at aishani@khuranaandkhurana.com.