Holding

Dearness allowance and house rent allowance form part of the deceased's income and must be included in the computation of compensation under Section 166 of the Motor Vehicles Act, 1988.

Summary

The appellant, a relative of the deceased Puspa Matolya, challenged the compensation awarded under Section 166 of the Motor Vehicles Act, 1988, arguing that the Tribunal and the High Court had failed to include the dearness allowance and house rent allowance in the deceased's income for computing compensation. The deceased, an assistant teacher, earned a salary comprising basic pay, dearness allowance, and house rent allowance. The Tribunal had awarded Rs. 3,38,000 based only on basic pay, and the High Court increased it to Rs. 5,28,000, still ignoring the allowances. The Supreme Court, relying on precedents (National Insurance Co. Ltd. v. Indira Srivastava and Oriental Insurance Co. Ltd. v. Ram Prasad Varma), held that both allowances constitute income and must be factored into the compensation calculation. Consequently, the Court allowed the appeal, directed that the allowances be included, and remitted the matter to the Tribunal for a fresh award.

Issues considered

Whether dearness allowance and house rent allowance payable to a deceased person should be taken into consideration for computing compensation under Section 166 of the Motor Vehicles Act, 1988.

Legislation cited

Motor Vehicles Act, 1988s. 166

Subjects

Motor Vehicles ActCompensationDearness AllowanceHouse Rent AllowanceIncome ComputationRoad AccidentSupreme Court

Judgment

~ f [2009] 5 S.C.R. 379

RAGHUVIR SINGH MATOLYA & ORS. A
V.
HARi SINGH MALVIYA & ORS.
(Civil Appeal No. 2050 of 2009)
-~
MARCH 31, 2009
B
[S.S. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

MOTOR VEHICLES ACT, 1988:

s.166 - Claim petition by relatives of deceased - c
Compensation - Computation of - Dearness Allowance and
House Rent Allowance - HELD: Should form part of income
of deceased for determining the amount of compensation -
Matter remitted to Tribunal to calculate amount of
+-
compensation taking into consideration the dearness D
allowance and house rent allowance and to pass the award
..., accordingly.

In the instant appeal filed by the claimants, the
question for consideration before the Court was: Whether
the dearness allowance and the house rent allowance E
should be taken into consideration for the purpose of
computing the amount of compensation payable in terms
of the provisions of Section 166 of the Motor Vehicles Act,
1988.
F
Allowing the appeal and remitting the matter to the
Tribunal, the Court

HELD: The dearness allowance should form part of
income. The house rent allowance is paid for the benefit
of the family members and not for the employee alone. G
-r Therefore, 'Dearness Allowance' and 'House Rent
Allowance' payable to the deceased should have been
included for determining his income and, consequently,
379 -H
380 SUPREME COURT REPORTS [2009) 5 S.C.R.

A the amount of compensation. It is directed that in
calculating the amount of compensation, the dearness
allowance as also the house rent allowance should also
be taken into consideration. The Tribunal would pass the
award accordingly. [Para 8 and 1OJ (383-E-G]
B
National Insurance Co. Ltd. v. Indira Srivastava and
.-
Others (2008) 2 SCC 763 and Oriental Insurance Co. Ltd. v.
Ram Prasad Varma & Ors. 2009 (1) SCALE 598, relied on.
Case Law Reference:
c (2008) 2 sec 763 relied on para 7
2009 (1) SCALE 598 relied on para 7
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
o 2050 of 2009. +
· From the Judgment and Order dated 14.02.2007 of the
High Court of Madhya Pradesh Judicature at Jabalpur in M.A.
No. 2177 of 2005.

E Pragati Neekhra and Suryanarayana Singh for the
Appellant.

Atul Nanda, Rameeza Hakeem and Sanjay Bhardwaj Law
Associates & Co., for the Respondents.
F The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

2. Whether dearness allowance and house rent allowance
G payable to a deceased should be taken into consideration for
the purpose of computing the amount of compensation payable
in terms of the provisions of Section 166 of the Motor Vehicles
Act, 1988 (for short "the Act") is the question involved in this
appeal which arises out of a judgment and order dated
H 14.02.2007 passed by the High Court of Madhya Pradesh in
RAGHUVIR SINGH MATOLYA & ORS. v. HARi SINGH 381
MALVIYA & ORS. [S.S. SINHA, J.]
-.. f
M.A. No. 2177 of 2005. A

3. The basic fact of the matter is not in dispute.

The deceased Puspa Matolya was travelling in a Tata

., Sumo on the fateful day, viz., 30.11.2002 at about 11.00 a.m.
It dashed against a mango tree. She died on the spot. B

Indisputably, the deceased was an Assistant teacher in a
primary school. The said school was a State-run one. She was
to superannuate on 28.02.2011. She at the time of her death
was aged about 52 years and 9 months. The salary certificate c
produced on behalf of the claimants - appellants showed that
she was drawing a monthly salary of Rs.8611/- (Rs.6050/-
basic pay, Rs.2481/- dearness allowance and Rs.80/- house
rent) per mensum.
D
-+- The Tribunal, however, taking into consideration only the
basic pay passed an award awarding compensation for a sum
of Rs. 3,38,000/-. For the said purpose, the Tribunal applied
the multiplier of 7.
An appeal in terms of Section 173(1) of the Act was E
preferred by the appellants. The High Court, by reason of the
impugned judgment, enhanced the amount of compensation to
Rs. 5,28,000/- by applying the multiplier of 11.
Still not satisfied with the quantum of compensation F
' -~ awarded in their favour, the appellants are before us.

4. Ms. Pragati Neekhra, learned counsel appearing on
behalf of the appellants would contend that the Tribunal as also
the High Court committed a serious error as they failed to take
into consideration that in computing the net income of the G
deceased, dearness allowance as also the house rent
-f
allowance should be taken into consideration.
5. Mr. Atul Nanda, learned counsel appearing on behalf of
<t
the respondents, on the other hand, would support the impugned H
382 SUPREME COURT REPORTS [2009] 5 S.C.R.

A judgment.

6. Before the learned Tribunal, salary as also a pension
certificate was produced.

7. Dearness allowance, in our opinion, should form part of
B income. House rent allowance is paid for the benefit of the family 1•
members and not for the employee alone. What would
constitute an income, albeit in a different fact situation, came
up for consideration before this Court in National Insurance Co.
Ltd. v. Indira Srivastava and Others [(2008) 2 SCC 763]
C wherein it was held:

"19. The amounts, therefore, which were required to be
paid to the deceased by his employer by way of perks,
should be included for computation of his monthly income
D as that would have been added to his monthly income by
way of contribution to the family as contradistinguished to
the ones which were for his benefit. We may, however,
hasten to add that from the said amount of income, the
statutory amount of tax payable thereupon must be
deducted.
E
20. The term "income" in P. Ramanatha Aiyar's Advanced
Law Lexicon (3rd Edn.) has been defined as under:

"The value of any benefit or perquisite whether convertible
F into money or not, obtained from a company either by a
director or a person who has substantial interest in the
company, and any sum paid by such company in respect
of any obligation, which but for such payment would have
been payable by the director or other person aforesaid,
G occurring or arising to a person within the State from any
profession, trade or calling other than agriculture."

It has also been stated:

" 'Income' signifies 'what comes in' (per Se/borne, C.,
H Jones v. Ogle). 'It is as large a word as can be used' to
.... RAGHUVIR SINGH MATOLYA & ORS. v. HARi SINGH 383
; MALVIVA & ORS. [S.B. SINHA, J.]
I denote a person's receipts (per Jessel, M.R., Re Huggins). A
........
Income is not confined to receipts from business only and
means periodical receipts from one's work, lands,
investments, etc. Secy. to the Board of Revenue, Income
". ~
Tax v. Al. Ar. Rm. Arunachalam Chettiar & Brothers. Ref.
Vulcun Insurance Co. Ltd. v. Corpn. of Madras." 8
21. If the dictionary meaning of the word "income" is taken
to its logical conclusion, it should include those benefits,
either in terms of money or otherwise, which are taken into
consideration for the purpose of payment of income tax
or professional tax although some elements thereof may c
or may not be taxable or would have been otherwise
taxable but for the exemption conferred thereupon under
the statute."
+- To the same effect is the decision of this Court in Oriental D
Insurance Co. Ltd. v. Ram Prasad Varma & Ors. [2009 (1)
SCALE 598).

8. We, therefore, are of the opinion that 'Dearness
Allowance' and 'House Rent Allowance' payable to the
E
deceased should have been included for determining the
,
income of the deceased and consequently the amount of
compensation.

, .~
9. For the reasons aforementioned, we direct that in
calculating the amount of compensation, the dearness F
allowance as also the house rent allowance should also be
taken into consideration.
~

10. The matter is remitted to the trial court. An award may
be passed accordingly. The appeal is allowed with the G
aforementioned directions. There shall, however, be no order
-~ as to costs.

R.P. Appeal allowed.

H