SANTOSH DEVIversusNATIONAL INSURANCE COMPANY LTD. AND OTHERS

                       [2012] 3 S.C.R. 1178


A                         SANTOSH DEVI
                                 v.
     NATIONAL INSURANCE COMPANY LTD. AND OTHERS
               (Civil Appeal No. 3723 of 2012)
                          APRIL 23, 2012
B
                [G.S. SINGHVI AND SUDHANSU
                 JYOTI MUKHOPADHAYA, JJ.]

        Motor Vehicles Act, 1988:
c
       s.166 - Motor accident - Death of a self employed
  person aged 4q years - Claim petition - Dependents
  including 2 unemployed major sons - Benefit of increment
  in annual income - Deductions towards personal expenses
0 - Multiplier - Held: Keeping in view the challenges posed by
  high cost of living, the formula of 30% increase in the total
  income also deserves to be applied for calculating the amount
  of compensation of a self-employed person or a person
  engaged on fixed salary, who dies in a motor accident -
  Ordinarily, deductions towards personal expenses of such a
E person earning Rs. 15001- per month and the family consisting
  of 5 persons, should be 10% from his monthly income - It
  cannot be said that in the absence of any source of
  sustenance, the two major sons were not dependent on the
  deceased - High Court rightly applied the multiplier of 14 -
F Claimant also held entitled to charges for transportation of the
  dead body, funeral expenses and towards loss of consortium
  - Compensation enhanced accordingly with 7% interest on
  enhanced amount from the date of application - Precedent
  - Judicial notice.
G
       Precedent:

        Compensation - Held: The judgments which have
    bearing on socio-economic conditions of citizens and issues
H                               1178
        SANTOSH DEVI v. NATIONAL INSURANCE                            1179
                  COMPANY LTD.

 relating to compensation payable to victims of motor                        A
 accidents, those who are deprived of their lands and in similar
matters need to be frequently revisited keeping in view the fast
changing social values and price rise - The victims or their
dependents should be awarded just compensation - Social
justice.                                                                     B

     The appellant's husband, who was aged about 45
years and running a dairy as also doing agriculture, died
in a car accident. The Tribunal held that the accident was
caused by rash and negligent driving of the car by 'VS',
who also died in the said accident. It assumed the                           C
monthly income of the deceased as Rs.15001- and
deducted Rs.5001- towards personal expenses of the
deceased and applying the multiplier of 11, awarded
Rs.1,32,0001- as compensation with 12% interest from the
date of application. The Tribunal also held that two major                   D
sons of the deceased could not be treated as
dependents. The High Court relying upon Sar/a Verma's 1
case, applied the multiplier of 14 and enhanced the
compensation to Rs. 1,77,500/- with 7% interest on the
enhanced compensation from the date of the appeal.                           E

     In the instant appeal by the claimant, it was
contended for the appellant that the High Court erred in
not giving the benefit of 30 per cent increase in the
income of the deceased. It was also contended that a                         F
deduction of 1/3rd of monthly income towards personal
expenses of the deceased was totally disproportionate
to the size of the family.

      Allowing the· appeal, the Court
                                                                             G
   HELD: 1.1. Although, the legal jurisprudence
developed in the country in last five decades is
somewhat precedent-centric, the judgments which have

1.   Sarla Verma v. Delhi Transport Corporation 2009 (5) SCR 1098..          H
   1180    SUPREME:. COURT REPORTS             [2012] 3 S.C.R.


A bearing on socio-economic conditions of the citizens and
  issues relating to compensation payable to the victims of
  motor accidents, those who are deprived of their land and
  similar matters need to be frequently revisited keeping in
  view the fast changing societal values, the effect of
8 globalisation on the economy of the nation and their
  impact on the life of the people. The victims of the road
  accidents and/or their family members should be
  awarded just compensation. [para 11-12) [1185-E-F, HJ

       RK. Malik v. Kiran Pal 2009 (10) SCR 87 = (2009) 14
C SCC 1; M. S. Grewal v. Deep Chand Sood 2001 (2) Suppl.
   SCR 156    = (2001) 8 SCC 151, La ta Wadhwa v. State of
  Bihar 2001 (1) Suppl. SCR 578 = (2001) 8 SCC 197,
  Kera/a SRTC v. Susamma Thomas (1994) 2 SCC 176, Sar/a
  Dixit v. Ba/want Yadav (1996) 3 SCC 179; and UP. SRTC
D v. Trilok Chandra 1996 (2) Suppl. SCR 443 = (1996) 4 SCC
  362 - referred to.

      Nance v. British Columbia Electric Railway Co. Ltd. 1951
  AC 601, Davies v. Powell Duffryn Associated Collieries Ltd.
E 1942 AC 601 - referred to.

       1.2. It will be na'ive to say that the wages or total
  emoluments/income of a person who is self-employed or
  who is employed on a fixed salary without provision for
  annual increment, etc., would remain the same
F throughout his life. Judicial notice can be taken of the fact
  that with a view to meet the challenges posed by high
  cost of living, such persons periodically increase the cost
  of their labour. Therefore, it cannot be said that while
  making the observations in the last three lines of
G paragraph 24 of Sar/a Verma's judgment, the Court had
  intended to lay down an absolute rule that there will be
  no addition in the income of a person who is self-
  employed or who is paid fixed wages. Rather, it would be
  reasonable to say that a person who is self-employed or
H is engaged on fixed wages will also get 30 per cent
      SANTOSH DEVI v. NATIONAL INSURANCE                1181
                COMPANY LTD.

increase in his total income over a period of time and if       A
he I she becomes victim of accident then the same
formula deserves to be applied for calculating the
amount of compensation. [para 14] [1188-E; 1189-D-G]

     Sar/a Verma v. Delhi Transport Corporation 2009 (5)
                                                                B
SCR 1098   =(2009) 6 SCC 121· referred to.
     1.3. The deduction of 1/3rd of the total income of the
deceased i.e., Rs. 500/-, towards personal expenses
cannot be approved. It will be impossible for a person
whose monthly income is Rs.1,500/- to spend 1/3rd on            C
himself leaving 2/3rd for the family consisting of five
persons. Ordinarily, such a person would, at best, spend
1/10th of his income on himself or use that amount as
personal expenses and leave the rest for his family. [para
15] [1189-H; 1190-A]                                            D

     1.4. In the absence of any source of sustenance of
the two sons of the deceased, there was no reason for
the Tribunal to assume that the sons who had become
major could no longer be regarded dependant on the              E
deceased [para 16] [1190-C]

     1.5. The impugned judgment as also the award of the
Tribunal are set aside and it is declared that the claimants
shall be entitled to compensation of Rs.2,94,840. Besides,
the claimant shall also be entitled to Rs.5,000/- for           F
transportation of the body, Rs.10,000/- as funeral
expenses and Rs.10,000/- in lieu of loss of consortium.
The enhanced amount of compensation shall carry
interest of 7% from the date of application till realisation.
[para 17-18] [1190-D-E]                                         G

                     Case Law Reference:
 2009 (5) SCR 1098               referred to       para 8
 2009 (10) SCR 87                referred to       para 12      H
    1182    SUPREME COURT REPORTS                    [20121 3 S.C.R.


A    2001 (1) Suppl. SCR 578           referred to         para 12
     2001 (2) Suppl. SCR 156           referred to         para 12
     (1994) 2 sec 176                  referred to         para 12
     (1996) 3 sec 119                  referred to         para 12
B
     1996 (2) Suppl. SCR443            referred to         para 13

     1951 AC 601                       referred to         para 13
     1942 AC 601                       referred to         para 13
c       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    3723 of 2012.
         From the Judgment & Order dated 06.05.2010 of the High
    Court of Punjab & Haryana at Chandigarh in F. A. 0. No. 362
o   of 1998 (0 & M).
        Vikas K. Sangwan, Ansar Ahamad Chaudhary for the
    Appellant.
      S.L. Gupta, Ram Ashray, Darsham Singh, P.K. Singh,
E Shalu Sharma for the Respondents.
        The Judgment of the Court was delivered by
        G.S. SINGHVI, J. 1. Leave granted.
      2. Feeling dissatisfied with the enhancement granted by
F the Punjab and Haryana High Court in the amount of
  compensation determined by Motor Accident Claims Tribunal,
  Gurdaspur (for short, 'the Tribunal') in MACT Case No. 97 of
  1995, the appellant has filed this appeal.
       3. Shri Swaran Singh (the appellant's husband) died in a
G road accident when the Maruti car in which he was travelling
  with Varinder Singh (husband of respondent No. 2 and the
  father of respondent Nos. 3 and 4) went out of control. Varinder
  Singh, who was driving the vehicle also suffered multiple injuries
  and died on the spot.
H
      SANTOSH DEVI v. NATIONAL INSURANCE                    1183
         COMPANY LTD. [G.S. SINGHVI, J.]

     4. The appellant and other legal representatives of Swaran      A
Singh filed a petition under Section 166 of the Motor Vehicles
Act, 1988 (for short, 'the Act') for award of compensation to the
tune of Rs. 4 lacs. They pleaded that the accident was caused
due to rash and negligent driving of the Maruti car by Varinder
Singh; that at the time of his death, the age of the deceased        B
was about 45 years and that he was earning Rs. 5,000/- per
month by running a milk dairy and doing agriculture. The legal
representatives of Varinder Singh denied that the accident had
occurred due to rash and negligent driving of the Maruti car. In
the written statement filed on behalf of respondent' No. 1, it was   c
pleaded that the claim petition was not maintainable because
the deceased, who was travelling in the car cannot be treated
as a third party and that the person driving the vehicle did not
have valid driving licence. Respondent No.1 also controverted
the claimant's assertion about the income of Swaran Singh.
                                                                     D
     5. On the pleadings of the parties the Tribunal framed the
following issues:
     "1) Whether the death of Swaran Singh not amounting to
     culpable homicide took place on account of the rash and
     negligent driving of Maruti Car No. PB-035A-0090 drivon         E
     by Varinder Singh?
    2)     To what amount of compensation the applicants are
    entitled? If so, from whom?
    3)     Rel~"                                                     F
     6. In support of the claim petition, the appellant examined
herself and two other witnesses, namely, Bakhshish Singh and
Surain Singh. Respondent No.1 examined Milap Chand, Clerk,
in the office of the District Transport Officer, Gurdaspur. On
behalf of the legal representatives of Varinder Singh copies of      G
driving licence, insurance policy and registration certificate
were produced and marked as Exhibits R1 to R3.
     7. After analysing the evidence produced by the parties,
the Tribunal decided issue No.1 in the affirmative and held that     H
    1184    SUPREME COU,RT REPORTS                [2012] 3 S.C.R.


A the accident was caused due to rash and negligent driving of
  Maruti car by Varinder Singh. While dealing with issue No.2,
  the Tribunal adverted to the statement made by the appellant
  in her cross-examination that the deceased did not own any
  agricultural land and that he was cultivating land on lease basis
B and proceeded to determine the amount of compensation by
  assuming his income as Rs. 1,500/- per month. The Tribunal
  was also of the view that two sons of the appellant, namely,
  Sulakhan Singh and Surjit Singh cannot be treated as
  dependants of the deceased because their age was 26 years
C and 23 years respectively. The Tribunal deducted Rs. 500/-
  towards personal expenses of the deceased and held that
  dependency of the appellant and other family members would
  Rs.1,000/- per month. The Tribunal then applied the multiplier
  of 11 and declared that the claimants are entitled to
  compensation of Rs. 1,32,000/- with interest at the rate of 12
0 per cent per annum from the date of application.

        8. The High Court relied upon the judgment of this Court
  in Sar/a Verma v. Delhi Transport Corporation (2009) 6 SCC
  121, applied the multiplier of 14 and held that the claimants are
E entitled to total compensation of Rs.1,77,500/-with interest at
  the rate of 7 per cent per annum on the enhanced amount from
  the date of appeal till realisation.
       9. Learned counsel for the appellant relied upon the
  judgment in Sarla Verma's case and argued that the Tribunal
F and the High Court committed serious error by not giving the
  benefit of 30 per cent increase in the income of the deceased
  which he would have earned for the next 25 years. Learned
  counsel further argued that the deduction of Rs.500/- towards
  personal expenses of the deceased was totally
G disproportionate to size of his family and the Tribunal and the
  High Court overlooked stark reality that it is impossible for a
  person having meagre earning of Rs. 1,500/- per month to
  spend 1/3rd on himself and leave 2/3rd of his income for five
  dependants including three children. He criticised the
H observations made by the Tribunal that Sulakhan Singh and
      SANTOSH DEVI v. NATIONAL INSURANCE                     1185
         COMPANY LTD. [G.S. SINGHVI, J.]

Surjit Singh could not be treated as dependant of the deceased       A
because they were major and argued that in the absence of
any evidence to the contrary, there was no reason to discard
the testimony of the appellant that in all five family members
were dependant on the deceased.
      10. Learned counsel for respondent No.1 submitted that         B
the rule of 30 per cent addition in the income of the deceased
as laid down in Sarla Verma's case cannot be applied to a
case like the present one because the deceased was neither
in Government service nor he was a permanent employee of a
corporation or company which may have ensured increase in            C
his income from time to time. He argued that those employed
in unorganized sectors cannot be placed at par with
Government employees and those employed in agencies/
instrumentalities of the State or private corporations/
companies.                                                           D
      11. We have considered the respective arguments.
Although, the legal jurisprudence developed in the country in last
five decades is somewhat precedent-centric, the judgments
which have bearing on socio-economic conditions of the
citizens and issues relating to compensation payable to the          E
victims of motor accidents, those who are deprived of their land
and similar matters needs to be frequently revisited keeping
in view the fast changing societal values, the effect of
globalisation on the economy of the nation and their impact on
the life of the people.                                              F
     12. In R.K. Malik v. Kiran Pal (2009) 14 SCC 1, the two
Judge Bench while dealing with the case involving claim of
compensation under Section 163-A of the Act, noticed the
judgments in M.S. Grewal v. Deep Chand Sood (2001) 8 SCC
151, Lata Wadhwa v. State of8ihar(2001) 8 SCC 197, Kera/a            G
SRTC v. Susamma Thomas (1994) 2 SCC 176, Sar/a Dixit
v. Ba/want Yadav (1996) 3 sec 179 and made some of the
following observations, which are largely reflective of the
philosophy that victims of the road accidents and/or their family
members should be awarded just compensation:                         H
    1186      SUPREME COURT REPORTS                   [2012] 3 S.C.R.


A      "In cases of motor accidents the endeavour is to put the
       dependants/claimants in the pre-accidental position.
       Compensation in cases of motor accidents, as in other
       matters, is paid for reparation of damages. The damages
       so awarded should be adequate sum of money that would
B      put the party, who has suffered, in the same position if he
       had not suffered on account of the wrong. Compensation
       is therefore required to be paid for prospective pecuniary
       loss i.e. future loss of income/dependency suffered on
       account of the wrongful act. However, no amount of
c      compensation can restore the lost limb or the experience
       of pain and suffering due to loss of life. Loss of a child,
        life or a limb can never be eliminated or ameliorated
        completely.
           To put it simply-pecuniary damages cannot replace a
D          human life or limb lost. Therefore, in addition to the
           pecuniary losses, the law recognises that payment should
           also be made for non-pecuniary losses on account of, loss
           of happiness, pain, suffering and expectancy of life, etc.
           The Act provides for payment of "just compensation" vide
E          Sections 166 and 168. It is left to the courts to decide what
           would be "just compensation" in the facts of a case."
       13. In Sar/a Verma's case (supra), another two Judge
  Bench considered various factors relevant for determining the
  compensation payable in cases involving motor accidents,
F noticed apparent divergence in the views expressed by this
  Court in different cases, referred to large number of precedents
  including the judgments in UP. SRTC v. Trilok Chandra (1996)
  4 SCC 362, Nance v. British Columbia Electric Railway Co.
  Ltd. 1951 AC 601, Davies v. Powell Duffryn Associated
G Collieries Ltd. 1942 AC 601 and made an attempt t6 limit the
  exercise of discretion by the Tribunals and the High Courts in
  the matter of award of compensation by laying down
  straightjacket formula under different headings, some of which
  are enumerated below:
H
 SANTOSH DEVI v. NATIONAL INSURANCE                     1187
    COMPANY LTD. [G.S. SINGHVI, J.]

"(i) Addition to income for future prospects                     A
In Susamma Thomas this Court increased the income by
nearly 100%, in Sarla Dixit the income was increased only
by 50% and in Abati Bezbaruah the income was increased
by a mere 7%. In view of the imponderables and
uncertainties, we are in favour of adopting as a rule of         8
thumb, an addition of 50% of actual salary to the actual
salary income of the deceased towards future prospects,
where the deceased had a permanent job and was below
40 years. (Where the annual income is in the taxable
range, the words "actual salary" should be read as "actual       C
salary less tax"). The addition should be only 30% if the
age of the deceased was 40 to 50 years. There should be
no addition, where the age of the deceased is more than
50 years. Though the evidence may indicate a different
percentage of increase, it is necessary to standardise the       D
addition to avoid different yardsticks being applied or
different methods of calculation being adopted. Where the
deceased was self-employed or was on a fixed salary
(without provision for annual increments, etc.), the courts
will usually take only the actual income at the time of death.   E
A departure therefrom should be made only in rare and
exceptional cases involving special circumstances.
(ii) Deduction for personal and living expenses
Though in some cases the deduction to be made towards
                                                                 F
personal and living expenses is calculated on the basis of
units indicated in Trilok Chandra, the general practice is
to apply standardised deductions. Having considered
several subsequent decisions of this Court, we are of the
view that where the deceased was married, the deduction
towards personal and living expenses of the deceased,            G
should be one-third (1/3rd) where the number of dependent
family members is 2 to 3, one-fourth (1/4th) where the
number of dependent family members is 4 to 6, and one-
fifth (1/5th) where the number of dependent family members
                                                                 H
    1188    SUPREME COURT REPORTS                    [2012] 3 S.C.R.


A       exceeds six.
        (iii) Selection of multiplier
        We therefore hold that the multiplier to be used should be
        as mentioned in Column (4) of the table above (prepared
B       by applying Susamma Thomas, Trilok Chandra and
        Charlie), which starts with an operative multiplier of 18 (for
        the age groups of 15 to 20 and 21 to 25 years), reduced
        by one unit for every five years, that is M-17 for 26 to 30
        years, M-16 for 31 to 35 years, M-.15 for 36 to 40 years,
        M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then
c       reduced by two units for every five years, that is, M-11 for
        51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65
        years and M-5 for 66 to 70 years."
         14. We find it extremely difficult to fathom any rationale for
o the observation made in paragraph 24 of the judgment in Sarla
  Verma's case that where the deceased was self-employed or
  was on a fixed salary without provision for annual increment,
  etc., the Courts will usually take only the actual income at the
  time of death and a departure from this rule should be made
E only in rare and exceptional cases involving special
  circumstances. In our view, it will be na'ive to say that the wages
  or total emoluments/income of a person who is self-employed
  or who is employed on a fixed salary without provision for annual
  increment, etc., would remain the same throughout his life. The
F rise in the cost of living affects everyone across the board. It
  does not make any distinction between rich and poor. As a
  matter of fact, the effect of rise in prices which directly impacts
  the cost of living is minimal on the rich and maximum on those
  who are self-employed or who get fixed income/emoluments.
  They are the worst affected people. Therefore, they put extra
G efforts to generate additional income necessary for sustaining
  their families. The salaries of those employed under the Central
  and State Governments and their agencies/instrumentalities
  have been revised from time to time to provide a cushion
  against the rising prices and provisions have been made for
H
     SANTOSH DEVI v. NATIONAL INSURANCE                     1189
        COMPANY LTD. [GS. SINGHVI, J.]

preividing security to the families of the deceased employees.       A
Tr1e salaries of those employed in private sectors have also
i•1creased manifold. Till about two decades ago, nobody could
have imagined that salary of Class IV employee of the
Government would be in five figures and total emoluments of
those in higher echelons of service will cross the figure of         B
rupees one lac. Although, the wages/income of those employed
in unorganized sectors has not registered a corresponding
increase and has not kept pace with the increase in the salaries
of the Government employees and those employed in private
sectors but it cannot be denied that there has been incremental      c
enhancement in the income of those who are self-employed and
even those engaged on daily basis, monthly basis or even
seasonal basis. We can take judicial notice of the fact that with
a view to meet the challenges posed by high cost of living, the
persons falling in the latter category periodically increase the     D
cost of their labour. In this context, it may be useful to give an
example of a tailor who earns his livelihood by stitching cloths.
 If the cost of living increases and the prices of essentials go
up, it is but natural for him to increase the cost of his labour.
So will be the cases of ordinary skilled and unskilled labour,
like, barber, blacksmith, cobbler, mason etc. Therefore, we do       E
not think that while making the observations in the last three
 fines of paragraph 24 of Sarla Verma's judgment, the Court had
intended to lay down an absolute rule that there will be no
addition in the income of a person who is self-employed or who
is paid fixed wages. Rather, it would be reasonable to say that      F
a person who is self-employed or is engaged on fixed wages
will also get 30 per cent increase in his total income over a
period of time and if he I she becomes victim of accident then
the same formula deserves to be applied for calculating the
amount of compensation.                                              G
     15. It is also not possible to approve the view taken by the
Tribunal which has been reiterated by the High Court albeit
without assigning reasons that the deceased would have spent
1/3rd of his total earning, i.e., Rs. 500/-, towards personal
expenses. It seems that the Presiding Officer of the Tribunal and    H
    1190     SUPREME COURT REPORTS                   r20121 ·3 s.c.R.


A the learned Single Judge of the High Court were totally oblivious
  of the hard realities of the life. It will be impossible for a person
  whose monthly income is Rs.1,500/- to spend 1/3rd on himself
  leaving 2/3rd for the family consisting of five persons. Ordinarily,
  such a person would, at best, spend 1/10th of his income on
B himself or use that amount as personal expenses and leave the
  rest for his family.
         16. The Tribunal's observation that the two sons of the
  appellant cannot be treated dependant on their father because
  they were not minor is neither here nor there. In the cross-
C examination of the appellant, no question was put to her about
  the source of sustenance of her two sons. Therefore, there was
  no reason for the Tribunal to assume that the sons who had
  become major can no longer be regarded dependant on the
  deceased.
D
         17. In the result, the appeal is allowed, the impugned
  judgment as also the award of the Tribunal are set aside and it
  is declared that the claimants shall be entitled to compensation
  of Rs.2,94,840 [Rs.1,500 + 30% of Rs.1,500 = Rs.1,950 less
   1/10th towards personal expenses = Rs.1, 755 x 12 x 14
E =Rs.2,94,840]. The claimants shall also be entitled to Rs.5,000/
  - for transportation of the body, Rs.10,000/- as funeral expenses
  and Rs.10,000/- in lieu of loss of consortium. Thus, the total
  amount payable to the claimants will be Rs.3,19,840/-. The
  enhanced amount of compensation i.e. Rs.1,42,340/-
F (Rs.3,19,840 - Rs.1,77,500) shall carry interest of 7 per cent
  from the date of application till realisation.
       18. Respondent No.1 - Insurance Company is directed to
  pay to the appellant the total amount of compensation within a
G period of three months by getting prepared a demand draft in
  her name which shall be delivered to her at the address given
  in the claim petition filed before the Tribunal. While doing so,
  respondent No.1 shall be free to deduct the amount already
  paid to the appellant.
H R.P.                                               Appeal allowed.