K. RAMYAversusNATIONAL INSURANCE CO. LTD. & ANR.

238                       [2022]
               SUPREME COURT     18 S.C.R. 238
                              REPORTS                     [2022] 18 S.C.R.


A                                 K. RAMYA
                                       v.
                NATIONAL INSURANCE CO. LTD. & ANR.
                        (Civil Appeal No. 7046 of 2022)
B                           SEPTEMBER 30, 2022
          [SURYA KANT AND V. RAMASUBRAMANIAN, JJ.]
             Motor Vehicles Act, 1988: s. 168 – Motor Accident – Quantum
      of Compensation – Determination of – Loss of Income – Notional
      Income – Reliability on income tax returns and audit reports – Death
C
      of a businessman in a motor accident – Grant of compensation to
      deceased’s dependants-appellants while relying on income tax
      returns and other financial documents – In appeal by the Insurance
      Company, the compensation reduced on the ground that the tribunal
      erred in calculating ‘loss of income’ – High Court held that
D     deceased’s income consisted returns over capital assests, which were
      transferred to his legal heirs who continued to enjoy the benefits
      derived from them; income derived from capital assets cannot be
      said to be income earned out of the deceased’s personal skills as
      there was no real contribution by him; deceased’s dependants
      suffered no loss of income and instead computed the compensation
E
      by fixing his salary at Rs 25,000/- per month on a notional basis as
      per his educational qualification – On appeal, held: Compensation
      must be fair, reasonable, and equitable – Determination of quantum
      must be liberal and not parsimonious – Documents such as income
      tax returns and audit reports are reliable evidence to determine the
F     income of the deceased – Entire amount from the business ventures
      must be treated as income, as deceased was actively involved in the
      day-to-day administration of the businesses from their stage of
      infancy – Computation under income from house property and
      agricultural land is related to loss of dependency arising mainly
      out of loss of managment capacity or efficiency – Value of managerial
G
      skills to be determined along with the other considerations – In
      view thereof, compensation modified to Rs.2,27,12,400/- with interest
      at the rate of 7.5% p.a.


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                                      238
   K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                     239


      Allowing the appeal, the Court                                  A
      HELD: 1.1 Compensation must be fair, reasonable and
equitable. Further, the determination of quantum is a fact-
-dependent exercise which must be liberal and not parsimonious.
It must be emphasized that compensation is a more
comprehensive form of pecuniary relief which involves a broad--       B
based approach unlike damages. The Tribunals under the Motor
Vehicles Act have been granted reasonable flexibility in
determining ‘just’ compensation and are not bound by any rigid
arithmetic rules or strict evidentiary standards to compute loss
unlike in the case of damages. [Para 11][246-A-C]
                                                                      C
      1.2 Motor Vehicles Act of 1988 is a beneficial and welfare
legislation that seeks to provide compensation as per the
contemporaneous position of an individual which is essentially
forward--looking. Unlike tortious liability, which is chiefly
concerned with making up for the past and reinstating a claimant
to his original position, the compensation under the Act is           D
concerned with providing stability and continuity in peoples’ lives
in the future. [Para 12][246-D]
      1.3 The High Court set aside the same on the ground that
the income earned was out of capital assets and cannot be said to
have been earned out of personal skills of the deceased. It           E
consequently went on to determine the income of the Deceased
on a notional basis as per his educational qualification.
Unfortunately, such an approach is erroneous in view of the
decisions of this Court, wherein this Court has held that
documents such as income tax returns and audit reports are            F
reliable evidence to determine the income of the deceased.
[Para 14][247-A-C]
      1.4 Compensation must be modified, especially when
neither any additional evidence has been produced to showcase
that the income of the Deceased was contrary to the amount            G
mentioned in the audit reports nor it is the stand taken by the
Insurance Company that the said reports inflated the income.
[Para 14][247-C]


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240            SUPREME COURT REPORTS                     [2022] 18 S.C.R.


A            1.5 It would be pertinent to divide the income as mentioned
      in the audit reports into two parts-(a) Income from Business
      Ventures and other Investments and (b) Income from House
      Property and Agricultural Land. Moreover, it deserves to be
      clarified that the income under the abovementioned two parts
      have been computed at gross value as per the audit reports and
B
      includes the deductions such as interest paid on loans and
      expenses incurred by the deceased. [Para 15][247-A-C]
            1.6 The mere fact that the Deceased’s share of ownership
      in these businesses ventures was transferred to the Deceased’s
      minor children just before his death or to the dependents after
C     his death is not a sufficient justification to conclude that the
      benefits of these businesses continue to accrue to his dependents.
      On the contrary, it has come on record that the Deceased was
      actively involved in the day-to-day administration of these
      businesses from their stage of infancy, had undergone specialized
D     training to administer his business and that the audit reports neatly
      delineate Deceased’s share of income from the businesses. These
      facts necessitate that the entire amount from the business
      ventures is treated as income. Similarly, the amount earned from
      the bank interests and remaining investments must also be
      included as income. [Para 17][248-B-D]
E
            1.7 For computation of income from house property and
      agricultural land, loss of dependency arises mainly out of loss of
      management capacity or efficiency. As a rule of prudence,
      computation of any individual’s managerial skills should lie
      between 10 to 15 per cent of the total rental income but the
F     acceptable range can be increased in light of specific
      circumstances. The appropriate approach, therefore, is to
      determine the value of managerial skills along with any other
      factual considerations. [Para 21][249-F-G; 250-A]
            1.8 The remaining amount which has been deducted by us
G     includes the tax which has to be deducted in terms of the decision
      in Pranay Sethi’s case. [Para 23][250-E]




H
  K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.               241


     Amrit Bhanu Shali v National Insurance Co. Ltd., (2012)   A
     11 SCC 738: (2012) 5 SCR 207; Kalpanaraj v Tamil
     Nadu State Transport Corpn, (2015) 2 SCC 764: (2014)
     6 SCR 577; Sarla Verma v DTC (2009) 5 SCR 1098;
     National Insurance Co. Ltd. v Pranay Sethi, (2017) 16
     SCC 680: (2017) 13 SCR 100; United Insurance
                                                               B
     Company Ltd. v Satinder Kaur, (2021) 11 SCC 780
     – relied on.
     Rani Gupta v United India Insurance Limited, (2009)
     13 SCC 498: (2009) 5 SCR 721; Helen C. Rebello v
     Maharashtra State Road Transport Corporation (1999)
     1 SCC 90: (1998) 1 Suppl. SCR 684; United India           C
     Insurance Co. Ltd. v Patricia Jean Mahajan (2002) 6
     SCC 281: (2002) 3 SCR 1176; New India Assurance
     Co. Ltd. v Charlie (2005) 10 SCC 720: (2005) 2 SCR
     1173; National Insurance Co. Ltd. v Indira Srivastava
     (2008) 2 SCC 763: (2007) 13 SCR 352; Yadava Kumar         D
     v Divisional Manager, National Insurance Co. Ltd,
     (2010) 10 SCC 341: (2010) 10 SCR 746; Shashikala
     v Gangalakshmamma, (2015) 9 SCC 150: (2015) 5
     SCR 1; State of Haryana v Jasbir Kaur (2003) 7 SCC
     484: (2003) 2 Suppl. SCR 245 – referred to.
                                                               E
                          Case Law Reference
[2009] 5 SCR 721             referred to             Para 10
[1998] 1 Suppl. SCR 684      referred to             Para 11
[2002] 3 SCR 1176            referred to             Para 11   F
[2005] 2 SCR 1173            referred to             Para 11
[2007] 13 SCR 352            referred to             Para 11
[2010] 10 SCR 746            referred to             Para 11
[2015] 5 SCR 1               referred to             Para 20   G
[2003] 2 Suppl. SCR 245      referred to             Para 21
[2017] 13 SCR 100            relied on               Para 9


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242            SUPREME COURT REPORTS                        [2022] 18 S.C.R.


A     [2012] 5 SCR 207                 relied on                 Para 14
      [2014] 6 SCR 577                 relied on                 Para 14
      [2009] 5 SCR 1098                relied on                 Para 24
      (2021) 11 SCC 780                relied on                 Para 24
B           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7046
      of 2022.
           From the Judgment and Order dated 30.06.2017 of the High Court
      of Madras at Madurai Bench in C.M.A. (MD) No.279 of 2013.
           K. Radhakrishnan, Sr. Adv., Dr. Joseph Aristotle S., Ms. Nupur
C
      Sharma, Shobhit Dwivedi, Sanjeev Kr. Mahara, Advs. for the Appellants.
            Hetu Arora Sethi, Rahul Jain, S. P. Jain, Ms. Sakshi Kakkar, Shakti
      Singh, Advs. for the Respondents.
            The Judgment of the Court was delivered by
D           SURYA KANT, J.
            1. Leave Granted.
             2. The present appeal is directed against the judgment dated
      30.06.2017 passed by the High Court of Judicature at Madras, Madurai
E     Bench whereby the appeal preferred by the National Insurance Co.
      Ltd. (Respondent No.1; hereinafter, “Insurance Company”) against the
      award dated 06.10.2012 passed by Motor Vehicle Accident Claims
      Tribunal, Tiruchirappalli (hereinafter, “Tribunal”) was allowed and the
      compensation granted to Apellants was reduced from Rs. 4,29,37,700/-
      to Rs. 57,90,000/- along with requisite interest. The factual matrix is
F     succinctly discussed below before delving into the issue of law regarding
      determination of quantum of compensation which requires adjudication
      before us.
            A. FACTS
             3. S. Kumareshan (hereinafter, “Deceased”) was a resident of
G
      Tiruchirappalli, Tamil Nadu. On the fateful day, at about 4 PM in the
      evening, he was travelling alone in a Lancer Car bearing Registration
      No. TN 45 S 9199 and met with an unfortunate accident with an
      Ambassador Car bearing Registration No. TN 59 E 9288 along the
      stretch of road between Sethathupatti and Soriampattti. The collision
H     was so powerful that the drivers of both vehicles passed away before
   K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                              243
                   [SURYA KANT, J.]

any medical assistance could reach them. The sole survivors of the             A
collision were occupants of the Ambassador Car, who miraculously
escaped death but were saddled with multiple injuries.
      4. The Deceased was aged above 31 years at the time of death
and was an income tax assessee. He was a businessman who held
diverse interests in arenas such as jewellery, textiles, exports and           B
transport. Furthermore, he also drew income from his agricultural lands
and leased out real estate. At the time of his demise, he left behind a
widow, two minor children and parents who were stated to be dependent
on him. It is to be noted that among these dependents, the father of the
Deceased passed away during the proceedings before the High Court.
                                                                               C
       5. The Deceased’s dependents filed a claim petition for Rs.
7,00,00,000/- in August 2004, alleging, inter alia, that he died as a result
of the injuries suffered in the abovementioned accident of 10.06.2004,
which occurred due to the rash and negligent driving of the Ambassador
Car which the Insurance Company had insured. Before the Tribunal,
the Insurance Company took the stance that the Deceased was the one            D
who was responsible for the accident and that the compensation sought
by the Deceased was exorbitant. It is worth noting that the injured
occupants of the Ambassador Car who survived the crash also filed
their respective claim petitions.
       6. In reaching its verdict, the Tribunal relied upon the statements     E
of the abovementioned injured occupants to conclude that it was the
driver of the Ambassador Car who was solely responsible for the crash
and therefore assigned liability for the accident to him, which ultimately
was to be borne by the Insurance Company. As a result, the claim petition
of the Deceased’s dependents was allowed partly, and compensation of           F
Rs 4,29,37,700/- was granted along with interest at the rate of 7.5% per
annum. The Tribunal relied on the Deceased’s income tax returns and
other financial documents, which were supported by the testimonies of
the chartered accountant, auditor, and wife of the deceased (Appellant
No. 1).
                                                                               G
      7. The aggrieved Insurance Company filed its appeal which was
decided through the impugned judgement dated 30.06.2017. The High
Court although being in total agreement with the Tribunal’s reasoning in
finding that the Ambassador Car driver was solely liable for the accident,
disagreed with the approach of the Tribunal in respect to the computation
of compensation, primarily under the head of ‘loss of income’. It              H
244            SUPREME COURT REPORTS                         [2022] 18 S.C.R.


A     emphasized that the Deceased before his death had transferred his interest
      in some of the partnership firms in favour of his minor children.
      Furthermore, it highlighted that almost all of the Deceased’s income
      consisted of returns he received on his capital assests. Even after his
      death, the same assets were transferred to his legal heirs who continued
      to enjoy the benefits derived from them. The impugned judgement’s
B
      reasoning was hinged on the premise that income derived from capital
      assets cannot be said to be income earned out of the Deceased’s personal
      skills as there was no real contribution by him. Consequently, the High
      Court concluded that the Deceased’s dependants suffered no loss of
      income and instead computed the compensation by fixing his salary at
C     Rs 25,000/- per month on a notional basis as per his educational
      qualification. Furthermore, it also made minor alterations under other
      conventional heads and accordingly, the compensation was reduced to
      Rs 57,90,000/- along with interest of 7.5% per annum.
            B. CONTENTIONS
D            8. We have heard the learned counsel for parties and perused the
      documents produced on record. It must be noted that Learned counsels
      for both sides have not disputed the finding concerning the Insurance
      Company’s liability to pay the compensation. The only limited question
      that remains disputed before us in the present proceedings pertains to
E     concerning the quantum of compensation that is to be granted to the
      Appellants.
             9. Mr. K. Radhakrishnan, learned senior counsel for the Appellants
      contended that – Firstly, High Court via impugned decision has erred by
      computing the compensation on the basis of notional income despite the
F     fact that the Appellants adduced specific evidence to ascertain the income
      earned by Deceased. He strongly asserted that the Tribunal rightly relied
      on the income tax returns and the audit reports of the Deceased to
      compute the amount under the head of ‘loss of income’ and stated that
      relevant testimonies supported the same; Secondly, he contended that
      the Deceased was actively involved in running multiple businesses and
G     even undertook specialized courses to achieve success. Hence, the High
      Court has unjustly concluded that the Deceased has earned no income
      from his personal skills; Thirdly, it is argued that the only deduction
      allowed while computing an individual’s income is the tax payable by

H
    K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                                  245
                    [SURYA KANT, J.]

him in terms of the decision of the Constitution Bench in National                  A
Insurance Co. Ltd. v Pranay Sethi.1; Finally, he contended that the
computation of compensation under Section 168 of Motor Vehicles Act,
1988 (hereinafter, “The Act”) must be ‘just’ and the same must co-
relate to the standard of ‘fairness, reasonableness and equitability’ as
per the decision in Pranay Sethi.2
                                                                                    B
       10. On the contrary, learned counsel for the Insurance Company
argued that High Court has rightly reduced the compensation in view of
the fact that the income tax returns and the audit reports highlight that
the Deceased’s income essentially constituted of returns from his capital
assets which have been duly bequeathed to the Deceased’s dependents.
It was argued that loss of income must be equivalent to only that portion           C
which corresponds to the skill of the deceased, as a consequence of
which there has been no loss of income to the Appellants in the present
case. High Court has rightly taken notional income as the basis of
determination of compensation under the head of ‘loss of income’. The
learned counsel has placed substantial reliance on the decision of this             D
court in Rani Gupta v United India Insurance Limited3 to advance
the argument that in the case of accidental death of people in business,
the genuine determination for loss of income depends on ascertaining
the Deceased’s contribution in running the business and the same is a
factual enquiry which varies on the facts and circumstances of each
case.                                                                               E

       C. ANALYSIS
    C.1 DETERMINATION OF ‘JUST’ COMPENSATION
UNDER A SOCIAL WELFARE STATUTE
      11. At the outset, it is pertinent to reiterate the concept of ‘just’         F
compensation under Section 168 of the Act. It is a settled proposition,
now through a catena of decisions4 including the one rendered by the
Constitution Bench in Pranay Sethi5 that compensation must be fair,
1
  National Insurance Co. Ltd. v Pranay Sethi (2017) 16 SCC 680, para 59.3.
2
  ibid, para 55.                                                                    G
3
  Rani Gupta v United India Insurance Limited (2009) 13 SCC 498, para 24.
4
  Helen C. Rebello v Maharashtra State Road Transport Corporation
(1999) 1 SCC 90; United India Insurance Co. Ltd. v Patricia Jean Mahajan (2002) 6
SCC 281; New India Assurance Co. Ltd. v Charlie (2005) 10 SCC 720; National
Insurance Co. Ltd. v Indira Srivastava
(2008) 2 SCC 763.
5
  Pranay Sethi (n 1), para 55.                                                      H
246             SUPREME COURT REPORTS                            [2022] 18 S.C.R.


A     reasonable and equitable. Further, the determination of quantum is a
      fact-dependent exercise which must be liberal and not parsimonious. It
      must be emphasized that compensation is a more comprehensive form
      of pecuniary relief which involves a broad-based approach unlike
      damages as noted by this court in Yadava Kumar v Divisional
      Manager, National Insurance Co. Ltd 6. The discussion in the
B
      abovementioned cases highlights that Tribunals under the Act have been
      granted reasonable flexibility in determining ‘just’ compensation and are
      not bound by any rigid arithmetic rules or strict evidentiary standards to
      compute loss unlike in the case of damages. Hence, any interference by
      the Appellate Courts should ordinarily be allowed only when the
C     compensation is ‘exorbitant’ or ‘arbitrary’.
            12. Furthermore, Motor Vehicles Act of 1988 is a beneficial and
      welfare legislation7 that seeks to provide compensation as per the
      contemporaneous position of an individual which is essentially forward-
      looking.8 Unlike tortious liability, which is chiefly concerned with making
D     up for the past and reinstating a claimant to his original position, the
      compensation under the Act is concerned with providing stability and
      continuity in peoples’ lives in the future.9 Keeping the abovementioned
      principles in the backdrop, we now move on to the facts at hand.
          C.2 RELIABILITY ON INCOME TAX RETURNS AND
E     AUDIT REPORTS TO DETERMINE ‘LOSS OF INCOME’
             13. The Deceased in the present case was a businessman and
      during the proceedings before the Tribunal, the Appellants produced the
      relevant income tax returns, audit reports and other relevant documents
      pertaining to the commercial ventures of the Deceased to prove the loss
F     of income attributable on account of his sudden demise. The Tribunal
      relied on the same and computed the income by taking an average of the
      income recorded in three prior financial years (FY 2000-2001, FY 2001-
      2002 and FY 2002-2003) to determine the compensation under the head
      of ‘loss of income’.

G
      6
        Yadava Kumar v Divisional Manager, National Insurance Co. Ltd. (2010) 10 SCC
      341, para 17.
      7
        Ningamma v United India Insurance Co. Ltd. (2009) 13 SCC 710, para 34.
      8
         Peter Cane, Atiyah’s Accidents, Compensation and the Law (7 th edn, Cambridge
      University Press 2006) 411-412.
      9
H       ibid.
      K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                               247
                      [SURYA KANT, J.]

       14. In contrast, the High Court set aside the same on the ground            A
that the income earned was out of capital assets and cannot be said to
have been earned out of personal skills of the deceased. It consequently
went on to determine the income of the Deceased on a notional basis as
per his educational qualification. Unfortunately, such an approach, in our
opinion, is erroneous in view of the decisions of this court in Amrit Bhanu
                                                                                   B
Shali v National Insurance Co. Ltd.10 and Kalpanaraj v Tamil Nadu
State Transport Corpn.11 wherein this court has held that documents
such as income tax returns and audit reports are reliable evidence to
determine the income of the deceased. Hence, we are obliged to modify
the compensation, especially when neither any additional evidence has
been produced to showcase that the income of the Deceased was                      C
contrary to the amount mentioned in the audit reports nor it is the stand
taken by the Insurance Company that the said reports inflated the income.
        15. At this stage, to facilitate our analysis, it would be pertinent to
divide the income as mentioned in the audit reports into two parts – (a)
Income from Business Ventures and other Investments and (b) Income                 D
from House Property and Agricultural Land. It should be emphasized
that these audit reports only showcase amounts which specifically stem
from the shares and interest held by the Deceased in the businesses and
it is not a case wherein the entire turnover of businesses are depicted as
Deceased’s income. Moreover, it deserves to be clarified that the income
under the abovementioned two parts have been computed at gross value               E
as per the audit reports and includes the deductions such as interest paid
on loans and expenses incurred by the deceased.
      C.2.1 – Treatment of Income from Business Ventures and other
Investments
                                                                                   F
        16. As per the audit report and other documents, the income under
this part was attributable to the amounts earned from the deceased’s
multiple business ventures, which included the partnership firms and other
investments such as shares and bank interests. On perusal of the
documents on record, it is to be noticed that almost all business ventures
were the result of the initiatives taken by the Deceased, and he was               G
actively involved in the day-to-day management of these entities. In
fact, the testimony of the Deceased’s wife points out that the Appellants
10
     Amrit Bhanu Shali v National Insurance Co. Ltd. (2012) 11 SCC 738, para 17.
11
     Kalpanaraj v Tamil Nadu State Transport Corpn. (2015) 2 SCC 764, para 8.
                                                                                   H
248             SUPREME COURT REPORTS                         [2022] 18 S.C.R.


A     had to sell the buses which were utilized in the transport business because
      they were not able to take care of the vehicles on account of the demise
      of the Deceased and even the export business was shut down due to the
      same reason.
             17. The mere fact that the Deceased’s share of ownership in
B     these businesses ventures was transferred to the Deceased’s minor
      children just before his death or to the dependents after his death is not
      a sufficient justification to conclude that the benefits of these businesses
      continue to accrue to his dependents. On the contrary, it has come on
      record that the Deceased was actively involved in the day-to-day
      administration of these businesses from their stage of infancy, had
C     undergone specialized training to administer his business and that the
      audit reports neatly delineate Deceased’s share of income from the
      businesses. These facts necessitate that the entire amount from the
      business ventures is treated as income. Similarly, the amount earned
      from the bank interests and remaining investments must also be included
D     as income.
              18. The Appellants have produced audit reports for the last four
      financial years which highlight the amounts under ‘Income from Business
      Ventures and other Investments’ which is as per follows – (i) for FY
      2000-2001 is Rs. 8,95,812/- (ii) for FY 2001-2002 is Rs. 10,31,091/-
E     (iii) for FY 2002- 2003 is Rs. 14,65,060/- and (iv) for FY 2003-2004 is
      Rs. 9,79,099/-. The average of these amounts comes up to
      Rs. 10,92,765.50/-, which is rounded off to Rs 10,93,000/- and the same
      is awarded to the Appellants as loss of income derived under ‘Income
      from Business Ventures and other Investments’.

F          C.2.2 – Treatment of Income from House Property and
      Agricultural Land
             19. As per the audit reports, the Deceased used to draw all his
      rental income from the share he held in a commercial building known as
      ‘Lakshmi Complex’ and the remaining income was from his agricultural
G     lands, which have been bequeathed to his legal heirs on his death. The
      audit reports indicate the amounts under the ‘Income from House
      Property and Agricultural Land’ as per follows – (i) for FY 2000-2001 is
      Rs. 6,90,396/- (ii) for FY 2001-2002 is Rs. 6,47,127/- (iii) for FY 2002-
      2003 is Rs. 6,14,329/- and (iv) for FY 2003-2004 is Rs. 4,78,240/-. The
      average of these amounts comes up to Rs. 6,07,523/-.
H
     K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                           249
                     [SURYA KANT, J.]

      20. At this juncture, we must note the decision in Shashikala v         A
Gangalakshmamma12 whereby this court deducted the entire amount
earned as income from house property while determining the
compensation under the Act. The decision in Shashikala13 was a split
decision because of disagreement between the bench on whether future
prospects are to be considered for awarding compensation when the
                                                                              B
deceased is a self-employed person. Accordingly, the matter was tagged
and heard along with Pranay Sethi14 , wherein this court had conclusively
decided the abovementioned issue regarding future prospects. After that,
the matter was remitted back to a three-judge bench for redetermination
of compensation, wherein this court again deducted the entire amount
earned as income from house property.15                                       C
       21. Now, the sole issue which remains before this court is whether
the entire amount under ‘Income from House Property and Agricultural
Land’ should be deducted or not. In this respect, we are guided by the
observations of this court in State of Haryana v Jasbir Kaur16 wherein
it was noted that –                                                           D
       8. x-x-x-x
       The land possessed by the deceased still remains with his
       legal heirs. There is however a possibility that the claimants
       may be required to engage persons to look after agriculture.
       Therefore, the normal rule about the deprivation of income is          E
       not strictly applicable to cases where agricultural income is
       the source. Attendant circumstances have to be considered.
                                                      (Emphasis Applied)
       In our opinion, the abovementioned observations, though made in        F
the context of agricultural land, would also be applicable to rent received
from leased out properties as the loss of dependency arises mainly out
of loss of management capacity or efficiency. As a rule of prudence,
computation of any individual’s managerial skills should lie between 10
to 15 per cent of the total rental income but the acceptable range can be
increased in light of specific circumstances. The appropriate approach,       G
12
   Shashikala v Gangalakshmamma (2015) 9 SCC 150.
13
   ibid.
14
   Pranay Sethi (n 1).
15
    Shashikala v Gangalakshmamma (Civil Appeal No 2836 of 2015, 14 February
2019).
16
   State of Haryana v Jasbir Kaur (2003) 7 SCC 484.                           H
250             SUPREME COURT REPORTS                              [2022] 18 S.C.R.


A     therefore, is to determine the value of managerial skills along with any
      other factual considerations.
              22. In the instant case, documents produced on record indicate
      two salient aspects with respect to ‘Lakshmi Complex’, which was the
      sole source of rental income for the deceased. The partition deed related
B     to the land on which the commercial building is situated, highlights that
      the building was constructed on account of the joint investment made by
      the Deceased and his partners. Furthermore, as per the rental records,
      ‘Lakshmi Complex’ was leased out to more than ten different commercial
      entities. Hence, keeping in mind that – first, the rental amount which is
      sought to be deducted partakes the character of investment; and second,
C     that the managerial skills required for supervising the said building would
      require sophisticated contract management skills and goodwill among
      the business community, it is necessary that we determine the value of
      managerial skills of the Deceased on the higher side.
             23. Accordingly, we deem it appropriate to award Rs 2,50,000/-
D     as the amount for the Deceased’s managerial skills. It is clarified that
      the said amount would also include the amount for the managerial skills
      in respect of the Deceased’s agricultural lands. It is further clarified that
      the remaining amount which has been deducted by us includes the tax
      which has to be deducted in terms of the decision in Pranay Sethi17.
E            D. CONCLUSION
             24. In light of the above discussion, income of the Deceased is
      computed by adding the amount awarded under the two parts
      (Rs 10,93,000/- + Rs 2,50,000/-), which comes to Rs 13,43,000/-. In
      terms of Pranay Sethi18, forty per cent of the income has to be added
F     towards future prospects, which would come to Rs 18,80,200/-. After
      deducting one-fourth towards personal expenses as per Sarla Verma19,
      the net amount comes to Rs 14,10,150/- per annum. Applying the multiplier
      of 16, the total loss of dependency on account of the Deceased’s income
      is calculated at Rs 2,25,62,400/-. We further grant compensation under
G     the remaining conventional heads as per the decisions in Pranay Sethi20
      and Satinder Kaur21.
      17
         Pranay Sethi (n 1), para 59.3.
      18
         Pranay Sethi (n 1), para 59.3.
      19
         Sarla Verma v DTC (2009) 6 SCC 121.
      20
         Pranay Sethi (n 1), para 59.8.
      21
H        United Insurance Company Ltd. v Satinder Kaur (2021) 11 SCC 780, para(s) 33-37.
    K. RAMYA v. NATIONAL INSURANCE CO. LTD. & ANR.                               251
                    [SURYA KANT, J.]

       25. Hence, the compensation is determined as per follows -                A




                                                                                 B




                                                                                 C




                                                                                 D
        26. We also direct that the interest at the rate of 7.5% per annum
shall be payable on the aforesaid amount from the date of filing the
claim petition till the date of realization. The enhanced amount shall be
paid to the claimants within three months from today. Needless to say,
that the amount already paid or deposited shall be adjusted while depositing
                                                                                 E
the enhanced compensation awarded by this court.
       27. Hence, the judgment under appeal of the High Court is set
aside and the Appellants are held entitled to enhanced compensation as
determined above.
      28. The appeal stands disposed of along with any pending                   F
applications in above terms.


Nidhi Jain and Anurag Bhaskar                              Appeal disposed of.


                                                                                 G




                                                                                 H