MALARVIZHI & ORS.versusUNITED INDIA INSURANCE COMPANY LIMITED & ANR.

1086                       [2019]
                SUPREME COURT     16 S.C.R. 1086
                               REPORTS                   [2019] 16 S.C.R.


 A                          MALARVIZHI & ORS.
                                        v.
        UNITED INDIA INSURANCE COMPANY LIMITED & ANR.
                       (Civil Appeal Nos. 9196-97 of 2019)
 B                           DECEMBER 09, 2019
                 [DR. DHANANJAYA Y. CHANDRACHUD
                      AND HRISHIKESH ROY, JJ.]
              Motor Vehicles Act, 1988 – s.166 – Person died in motor
       accident – Survived by the appellants (his wife and four
 C
       daughters) – Appellants contended that the deceased derived
       income from many sources including business, agricultural land
       admeasuring 36.76 acres (sold in recovery proceedings after his
       death) and was also wholesale dealer of cement and owned wine
       shops – Sought compensation in the amount of Rs.99,90,000/- –
 D     Tribunal allowed the claim in the amount of Rs.59,04,000/- with
       interest @ 7.5% p.a. – High Court reduced the compensation to
       Rs.33,55,000/- – Held: Tribunal proceeded to determine the
       agricultural income arising from 36.76 acres of land on the basis
       of two judgments of the High Court, arrived at two different figures
       and determined the agricultural income on an average of the two
 E
       amounts – It superimposed a possible value of income from
       agricultural land despite clear indication in the income tax returns
       of the income from agricultural land – Such method not sustainable
       in law – Determination must proceed on the basis of the income
       tax return, where available, a statutory document on which reliance
 F     may be placed to determine the annual income of the deceased –
       To the benefit of the appellants, the High Court proceeded on the
       basis of the income tax return for the assessment year 1997-98 and
       not 1999-2000 & 2000-01 which reflected reduction in the annual
       income of the deceased – Tax return indicates annual income of
       Rs.2,11,131/- in the relevant assessment year – In the peculiar
 G
       circumstances of the case, Rs. 1,04,987/-, payment for prepaid
       license fee to the Tamil Nadu Government having been paid
       upfront and for a future period is added to the annual income of
       the deceased – Thus, the net annual income of the deceased is
       Rs.3,16,118/- – In accordance with Sarla Verma case, the multiplier
 H     applied is 13, appellant being 49 at the time of accident– Loss of
                                       1086
  MALARVIZHI v. UNITED INDIA INSURANCE COMPANY                           1087
                     LIMITED

dependency is at Rs.3,16,118 X 13= Rs.41,09,534/- – In                   A
accordance with Pranay Sethi case, Rs.15,000, 15,000 and 40,000
added for funeral expenses, loss of estate and loss of consortium
respectively – Rs.50,000/- for loss of love and affection – Thus,
total compensation payable to the appellants is Rs.42,29,534/- with
interest @ 9% p.a. from the date of filing of the application till
                                                                         B
the date of its payment of the appellants.
      Partly allowing the appeals, the Court
      HELD: 1.1 The method adopted by the Tribunal is not
sustainable in law. The tax return indicates an annual income of
Rs 2,11,131 in the relevant assessment year. The determination           C
must proceed on the basis of the income tax return, where
available. The income tax return is a statutory document on
which reliance may be placed to determine the annual income
of the deceased. To the benefit of the appellants, the High Court
has proceeded on the basis of the income tax return for the
assessment year 1997-1998 and not 1999-2000 and 2000-2001                D
which reflected a reduction in the annual income of the deceased.
Depreciation is the deduction allowed for the decline in the real
value of tangible or intangible assets over its useful life. Its value
varies over time and cannot amount to tangible income for the
purposes of computing annual income in a claim before the                E
MACT. An annual amount of Rs.1,04,987 is reflected as payment
for a prepaid license fee to the Tamil Nadu Government. In the
peculiar circumstances of the case, this amount, having been paid
upfront and for a future period is to be added to the annual
income of the deceased. Thus, the net annual income of the
deceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118. [Paras 10,            F
12 and 13] [1091-G; 1092-A-C; 1093-B-D]
      1.2 The determination of the amount payable to the
appellants is as follows: (i) The deceased was self-employed and
aged 49 at the time of the accident. In accordance with the
Constitution Bench judgment of this Court in National Insurance          G
Company Limited v Pranay Sethi, 25% of the annual income is
to be added for future prospects. 25% of Rs 3,16,118 = 79,029.5.
Annual income, accounting for future prospects, is Rs 3,16,118
+ 79,029.5 = Rs 3,95,147.5; and (ii) In accordance with
paragraph 30 of the decision of this Court in Sarla Verma v Delhi        H
1088            SUPREME COURT REPORTS                     [2019] 16 S.C.R.


 A     Transport Corporation4, the deduction for personal expenses for
       a married person where the dependents are between four to six
       people is 1/5th or 20%. 20% of Rs 3,95,147.5 = 79,029.5. Net
       annual income is Rs 3,95,147.5 - 79,029.5 = Rs 3,16,118. In
       accordance with the judgment of this Court in Sarla Verma, the
       multiplier to be applied when the deceased is between the age
 B
       group 46 to 50 is 13. The loss of dependency is calculated at
       Rs 3,16,118 x 13 = Rs 41,09,534. In accordance with the
       judgment of this Court in Pranay Sethi, Rs 15,000, 15,000 and
       40,000 must be added for funeral expenses, loss of estate and
       loss of consortium respectively. The total compensation payable
 C     to the appellants is Rs 42,29,534 with interest at 9% per annum
       from the date of filing of the application till the date of payment
       of the compensation to the appellants. [Paras 14, 16] [1093-D-
       G; 1094-A-E]
             Sarla Verma v. Delhi Transport Corporation (2009) 6
 D           SCC 121 : [2009] 5 SCR 1098 – followed.
             National Insurance Company Limited v. Pranay Sethi
             (2017) 16 SCC 680 – relied on.
             New India Assurance Company v. Yogesh Devi (2012)
             3 SCC 613 – referred to.
 E
                             Case Law Reference
       (2012) 3 SCC 613                  referred to          Para 11
       (2017) 16 SCC 680                 relied on            Para 14
 F     [2009] 5 SCR 1098                 followed             Para 14
             CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 9196-
       9197 of 2019.
             From the Judgment and Order dated 20.07.2018 of the High
       Court of Judicature at Madras in Civil Miscellaneous Appeal No. 1635
 G
       of 2013 and Cross Objection No. 1 of 2018
             Jayanth Muth Raj, Sr. Adv., Mrs. Malavika Jayanth, Advs. for
       the Appellants.
             Ravi Bakshi, Sudhir Mathur, Ms. Sayma Feroz, Shashank Kumar,
 H     C.S. Ashri, Advs. for the Respondents.
     MALARVIZHI v. UNITED INDIA INSURANCE COMPANY                             1089
                        LIMITED

         The Judgment of the Court was delivered by                           A
         DR. DHANANJAYA Y. CHANDRACHUD, J.
       1. The present appeals arise from a judgment of a Division Bench
of the Madras High Court dated 20 July 2018 in a first appeal and cross-
objection from the decision of the Motor Accident Claims Tribunal 1,
Ranipet.                                                                      B

      2. The appellants are the heirs and legal representatives of
Aranganathan who died as a result of a motor accident on 25 May
2001. He was travelling in an Ambassador car bearing Registration No
TN 23 A 7549 which was being driven by another person. At about
12:45 am, a Tata Sierra car bearing Registration No TN 20 Z 1613              C
came from the opposite direction and dashed against the car of the
deceased. Aranganathan was seriously injured and died during the
course of the accident. He is survived by his wife and four daughters
who are the appellants before this Court.
       3. The appellants filed a claim petition under Section 166 of the      D
Motor Vehicles Act, 1988 before the Tribunal, seeking compensation
in the amount of Rs 99,90,000. By its award dated 11 July 2012, the
Tribunal allowed the claim in the amount of Rs 59,04,000 together with
interest at the rate of 7.5% per annum from the date of filing the claim
petition till the date of realization of the decreed amount. The appellants   E
filed a first appeal before the High Court of Madras. The High Court,
by its impugned judgment partly allowed the appeal of the first
respondent. The High Court estimated the income of the deceased at
a reduced figure of Rs 2,50,000 per annum from Rs 4,48,790.55. The
total compensation awarded was thus reduced from Rs 59,04,000 to
Rs 33,55,000. Aggrieved by the judgment of the High Court, the                F
claimants are in appeal before this Court.
      4. The deceased was 49 years old at the time of the accident.
The appellants contended that the deceased was a businessman who
derived income from many sources including business and agricultural
land admeasuring 36.76 acres. It was stated that the deceased was,            G
amongst others, a wholesale dealer of cement and also owned wine
shops. The land was sold in recovery proceedings after the death of
the deceased.

1
    Tribunal                                                                  H
1090            SUPREME COURT REPORTS                        [2019] 16 S.C.R.


 A            5. The Tribunal assessed the agricultural income of the deceased
       at Rs 3,40,708 per annum and the total income from business at Rs
       89,590. The Tribunal added to this Rs 30,000 per annum for income
       through real estate and contract business. The annual income of the
       deceased was assessed at Rs 4,60,298. 30% was added to this towards
 B     future prospects bringing the annual income to Rs 5,98,387.40. After a
       deduction of 1/4th of the total income towards living expenses, the
       Tribunal used a multiplier of 13 to arrive at a compensation of
       Rs.58,34,277. Damages under conventional heads, including funeral
       expenses, loss of consortium and loss of love and affection were
       computed at Rs 70,000. A total compensation of Rs 59,04,000 was
 C     awarded.
             6. In appeal, the High Court concluded that on an analysis of
       the income tax returns filed by the deceased for the financial years
       1995-1996 to 2000-2001, the income declared for the financial year
       1997-1998 was the highest and must be taken as the annual income of
 D     the deceased. Hence, Rs 2,09,211 was determined to be the annual
       income of the deceased. Rs 40,000 per annum was added towards future
       prospects. The total income was thus arrived at Rs 2,50,000 per annum.
       No deduction was made towards personal expenses. Applying a
       multiplier of 13, the loss of dependency was calculated to be Rs
 E     32,50,000. To this, funeral expenses, loss of consortium and loss of love
       and affection were added in the amount of Rs 1,05,000. A total
       compensation of Rs 33,55,000 was awarded.
              7. Assailing the reduction of the compensation, Mr Jayanth Muth
       Raj, learned Senior Counsel appearing on behalf of the appellants has
 F     contended:
                   (i) The High Court has held that income tax returns take
                       precedence over other documents in the determination
                       of annual income. Over 52 documents were marked
                       before the Tribunal demonstrating income from various
 G                     sources, all of which were not disclosed in the income
                       tax returns;
                  (ii) The High Court erred in not considering other
                       contractual work awarded to the deceased and other
                       solvency certificates of the deceased in the computation
 H                     of his annual income;
  MALARVIZHI v. UNITED INDIA INSURANCE COMPANY                               1091
   LIMITED [DR. DHANANJAYA Y. CHANDRACHUD, J.]

           (iii) Even assuming that the High Court is justified in taking    A
                 the income reflected in the tax return for the financial
                 year 1997-1998 as the determinant, the High Court has
                 erred in not accounting for the depreciation costs on
                 fixed assets which have been reflected therein; and
          (iv) The High Court ought to have calculated the monthly           B
               income of the deceased at Rs 50,000 taking into account
               the turnover from his trade and wine business.
      8. On the other hand, learned counsel for the respondents
contended:
            (i) The High Court is justified in according precedence to       C
                the income tax returns of the deceased to determine his
                annual income;
           (ii) There is no merit in the contention that the appellant has
                suffered a loss on account of the sale of properties for
                the settling of the debt owed to banks;                      D
           (iii) Depreciation on fixed assets cannot be added to the
                 income of the deceased; and
          (iv) The award of the High Court is legally sustainable and
               calls for no interference by this Court.
                                                                             E
      9. The rival submissions fall for our consideration.
       10. The Tribunal proceeded to determine the agricultural income
arising from 36.76 acres of land on the basis of two judgments of the
High Court. The Tribunal arrived at two different figures by applying
the decisions and proceeded to determine the agricultural income on          F
an average of the two amounts. The Tribunal superimposed a possible
value of income from agricultural land despite a clear indication in the
income tax returns of the income from agricultural land. The method
adopted by the Tribunal is not sustainable in law. On the other hand,
the High Court has proceeded on the basis of the income reflected in
the income tax returns for the assessment year 1997-1998. The relevant       G
portion of the return reads:
      “Income from House property         –   Rs. 1,920
      Business profit (other than 14.b) –     Rs. 1,21,071
      Net Agricultural income             –   Rs. 88,140”                    H
1092             SUPREME COURT REPORTS                      [2019] 16 S.C.R.


 A            The tax return indicates an annual income of Rs 2,11,131 in the
       relevant assessment year. Mr Jayanth Muth Raj, learned Senior Counsel
       appearing on behalf of the appellant contended that other documents
       were marked which reflected the income of the deceased. We are in
       agreement with the High Court that the determination must proceed
       on the basis of the income tax return, where available. The income tax
 B
       return is a statutory document on which reliance may be placed to
       determine the annual income of the deceased. To the benefit of the
       appellants, the High Court has proceeded on the basis of the income
       tax return for the assessment year 1997-1998 and not 1999-2000 and
       2000-2001 which reflected a reduction in the annual income of the
 C     deceased.
              11. Learned Senior Counsel appearing on behalf of the appellants
       drew the attention of this Court to the judgment of this Court in New
       India Assurance Company v Yogesh Devi2 to contend that this Court
       may reasonably determine the income that accrues to the deceased and
 D     also compute the expenses incurred in the upkeep of agricultural land.
       In that case, a two judge Bench of this Court dealt with a claim where
       “there was no evidence regarding the amount of income derived from
       the abovementioned properties.” The only evidence available in regard
       to the monthly income of the deceased was the statement of the
       claimant. In the present case, the High Court has relied on the income
 E     tax return of the deceased. Further, the Court in New India Assurance
       opined that though a court may be required to account for the depletion
       in the net income accruing from the assets of the deceased on account
       of payments for engaging managers, evidence must be adduced to
       compute the depletion. The Court held:
 F             “In the normal course the claimants are expected to adduce
               evidence as to what would be the quantum of depletion in the
               income from the abovementioned asset on account of the
               abovementioned factors.”
              In the present case, no evidence was adduced by the appellants
 G     at any stage of the proceedings to assist in the computation of the
       depletion in the net income which accrues to the deceased. The
       judgment of this Court in New India Assurance does not help the case
       of the appellants.

       2
 H         (2012) 3 SCC 613
     MALARVIZHI v. UNITED INDIA INSURANCE COMPANY                             1093
      LIMITED [DR. DHANANJAYA Y. CHANDRACHUD, J.]

       12. It was then contended by Mr Jayanth Muth Raj that this             A
Court must add to the annual income of the deceased, depreciation costs
on capital assets to the amounts of Rs 21,642, 74,685 and 7701 as
reflected in the tax return for the assessment year 1997-1998. We are
unable to accede to this contention. Depreciation is the deduction
allowed for the decline in the real value of tangible or intangible assets    B
over its useful life. Its value varies over time and cannot amount to
tangible income for the purposes of computing annual income in a claim
before the MACT.
       13. Mr Jayanth Muth Raj has then drawn our attention to the
balance sheet dated 31 March 1997 of Pavai Wines, Sholinghur for the          C
assessment year 1997- 1998. An annual amount of Rs 1,04,987 is
reflected as payment for a prepaid license fee to the Tamil Nadu
Government. In the peculiar circumstances of the case, this amount,
having been paid upfront and for a future period is to be added to the
annual income of the deceased. Thus, the net annual income of the
deceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118.                            D

       14. The determination of the amount payable to the appellants is
as follows:
              (i) The deceased was self-employed and aged 49 at the
                  time of the accident. In accordance with the Constitution   E
                  Bench judgment of this Court in National Insurance
                  Company Limited v Pranay Sethi 3, 25% of the
                  annual income is to be added for future prospects. 25%
                  of Rs 3,16,118 = 79,029.5. Annual income, accounting
                  for future prospects, is Rs 3,16,118 + 79,029.5 = Rs
                  3,95,147.5; and                                             F

              (ii) In accordance with paragraph 30 of the decision of this
                   Court in Sarla Verma v Delhi Transport
                   Corporation4, the deduction for personal expenses for
                   a married person where the dependents are between
                   four to six people is 1/5th or 20%. 20% of Rs 3,95,147.5   G
                   = 79,029.5. Net annual income is Rs 3,95,147.5 -
                   79,029.5 = Rs 3,16,118.

3
    (2017) 16 SCC 680
4
    (2009) 6 SCC 121                                                          H
1094            SUPREME COURT REPORTS                          [2019] 16 S.C.R.


 A           In accordance with the judgment of this Court in Sarla Verma,
       the multiplier to be applied when the deceased is between the age group
       46 to 50 is 13. The loss of dependency is calculated at Rs 3,16,118 X
       13 = Rs 41,09,534. In accordance with the judgment of this Court in
       Pranay Sethi, Rs 15,000, 15,000 and 40,000 must be added for funeral
       expenses, loss of estate and loss of consortium respectively.
 B
             15. Therefore, the appellants shall be entitled to compensation
       under the following heads:

             Loss of dependency                       Rs 41,09,534

 C           Funeral expenses                         Rs 15,000
             Loss of estate                           Rs 15,000
             Loss of consortium                       Rs 40,000
             Loss of love and affection               Rs 50,000
 D                                                    Rs 42,29,534

              16. Thus, the total compensation payable to the appellants is Rs
       42,29,534 with interest at 9% per annum from the date of filing of the
       application till the date of payment of the compensation to the appellants.

 E           17. The appeals are partly allowed to the extent indicated above.
       There shall be no order as to costs.
             18. Pending application(s), if any, shall stands disposed of.


       Divya Pandey                                           Appeals partly allowed.
 F




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