SHYAMWATI SHARMA & ORS.versusKARAM SINGH & ORS.

                 [2010] 8 S.C.R. 417

              SHYAMWATI SHARMA & ORS.                          A
                             v.
                  KARAM SINGH & ORS.
             (Civil Appeal No. 5316 of 2010)
                      JULY 13, 2010
                                                               B
    [R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]

     Motor Vehicles Act, 1988 - Motor accident - Death of
36 year old man - Claim for compensation by his six
dependants - Awarded by Tribunal - Enhanced by High            C
Court - On appeal, held: Compensation further enhanced
recalculating the same by increasing salary by 50% towards
future prospects; deducting 30% towards taxes and 25%
towards personal expenses and by applying multiplier of 15.
                                                               D
     Compensation - For motor accident - Deduction of 30%
from the income of the deceased towards taxes - Propriety
of - Held: If annual income is in taxable range, appropriate
deduction towards taxes is proper.

    After death of a Sub-Inspector of Police aged 36           E
years, in a motor accident, six of his dependants made a
claim for compensation. The Tribunal awarded
compensation of Rs. 14,44,6001- with 9% interest p.a. after
deducting one third from his gross monthly salary
towards personal and living expenses, and by applying          F
multiplier of 13. High Co1.1rt on appeal enhanced the
compensation to Rs. 14,65,7761-. It reached the amount
by making addition to income towards future prospects,
deducting therefrom 30% towards deduction from salary;
by deducting one fourth of income towards personal             G
expenses, and by applying multiplier of 13.

   The instant appeal was filed for enhancement of
compensation contending that deduction of 30% towards
                            417                                H
   41°8      SUPREME COURT REPORTS           [2010] 8 S.C.R.


A taxes was not warranted and that the court should have
  applied multiplier of 16.

          Allowing the appeal, the Court

       HELD: 1. Wherever the deceased is below 40 years
B of age and had a permanent job, the actual salary (less
  tax) should be increased by 50% towards future
  prospects, to arrive at the monthly income. Where the
  number of dependants of a deceased are in the range of
  4 to 6, the deduction towards personal and living
C expenses of the deceased should be 25%. In regard to
  persons aged 36 to 40 years, the appropriate multiplier
  should be 15. Applying the said principles, compensation
  in the instant case is recalculated. The compensation is
  increased from Rs.14,66,600/- to Rs.19, 70,250/-. The
D increased amount shall carry interest at the rate of 6%
  per annum from the date of claim petition to the date of
  payment. [Paras 6 and 9] [421-B-C; 422-E]

     Sar/a Verma vs. Delhi Transport Corporation 2009 (6)
E sec 121, relied on.

       2. The deduction of 30% from the salary is correct.
  Where the annual income is in the taxable range,
  appropriate deduction should be made towards tax. In
  the instant case as the annual income has been worked
F out as Rs.2,48,292/-, appropriate deduction has to be
  made towards income-tax. The rate of income tax is a
  varying figure, with reference to taxable income after
  permissible deductions and the year of assessment. The
  High Court has rightly assessed the deduction as 30%.
G However, it is clarified that while ascertaining the income
  of the deceased, any deductions shown in the salary
  certificate as deductions towards GPF, life insurance
  premium, repayments of loans etc., should not be
  excluded from the income. The deduction towards
H income tax/surcharge alone should be considered to
 SHYAMWATI SHARMA & ORS. v. KARAM SINGH &                     419
                  ORS.
arrive at the net income of the deceased. (Para 8] (421-              A
H; 422-A-D]

     Sar/a Verma vs. Delhi Transport Corporation 2009 (6)
sec 121, distinguished.
                      Case Law Reference:                             B

     2009 (6) sec 121           Relied on.             Para 6
                                Distinguished.         Para 8
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.                   C
5316 of 2010.

    From the Judgment & Order daed 20.4.2007 of the High
Court of Delhi at New Delhi in F.A.O. No. 250 of 2003.

     R.K. Khanna for the Appellant.                                   D

     A.K. Raina, Dr. Kailash Chand for the Respondent.

     The Judgment of the Court was delivered by

     R. V. RAVEENDRAN J. 1. Leave granted.                            E

      2. This is an appeal for enhancement of compensation, by
the mother, widow, three children and father of Kuldeep
Sharma, a Sub-Inspector of Poli~e. aged 36 years, who died
in a motor accident on 25.12.1990. According to the salary            F
certificate, his basic pay was Rs.7425/-, the gross salary (pay
and allowances) was Rs.13,794/-, the deductions aggregated
to Rs.4,305/- and the net take home salary was Rs.9,489/- per
month.

      3. The Tribunal by its award dated 17 .1.2003 held the          G
respondents liable and directed the insurer to pay to the
appellants, Rs.14,44,600/- as compensation, with simple
interest at 9% per annum from the date of filing of the claim
petition (21.2.2002) till re-alization. The Tribunal arrived at the
said compensation in the following manner : It deducted one           H
    420          SUPREME COURT REPORTS               [20101 8 s.c:R.


A third from the gross monthly salary of Rs.13, 794/- towards the
  personal and living expenses of the deceased and determined
  the contribution to the family as Rs.9, 196/- per month or
  Rs.1, 10,352/- per annum. It applied the multiplier '13' and
  arrived at the loss of dependency as Rs.14,34,576/- rounded
B off to Rs.14,34,600/-.

          4. Feeling aggrieved the claimants filed an appeal. The
    High Court started with the gross salary as Rs.13, 794/- per
    month. Drawing an assumption that the deceased would have
    at least got one promotion or gone to the next higher grade if
C   he had completed the remaining 24 years of service, and taking
    note of the recommendations of the Fifth Pay Commission and
    the annual increments, it inferred that by the time the deceased
    would have retired, he would have been earning a minimum
    gross income of Rs.22,000/- per month. The average of the
D   actual monthly income (Rs.13794/-) and the projected monthly
    income at the time of retirement (Rs.22000), that is Rs.17,897/
    -, was taken as the monthly income. The High Court deducted
    30% thereof towards 'deductions from salary' (income-tax etc.)
    and arrived at the net monthly income as Rs.12,528/-. It further
E   deducted one fourth thereof towards the personal and living
    expenses of the deceased and arrived at the contribution to the
    family as Rs.9,396/- per month or Rs.1, 12, 752/- per annum. By
    applying the multiplier of 13, it calculated the loss of dependency
    as Rs.14,65,776/-. As a consequence, it increased the
F   compensation awarded by the Tribunal by Rs.32,000/- with
    interest at the rate of 6% per annum from the date of claim
    petition till the date of payment.

        5. The said judgment of the High Court is challenged in
G this appeal. The appellants urged the following two contentions:

          (i)      The High Court ought not to have made a
                   'deduction' of 30% from the salary towards taxes
                   etc.; and

H         (ii)    The High Court ought to have applied the multiplier
 SHYAMWATI SHARMA & ORS.            v.
                           KARAM SINGH & 421
        ORS. [R.V. RAVEENDRAN, J.]

            '16' instead of '13', having regard to the age of the   A
            deceased.

      6. This Court in Sar/a Verma vs. Delhi Transport
Corporation - 2009 (6) SCC 121, has stated the principles
relating to 'addition to income' towards future prospects. This     B
Court held that wherever the deceased was below 40 years of
age and had a permanent job, the actual salary (less tax) should
be increased by 50% towards future prospects, to arrive at the
monthly income. It also held that where the number of
dependants of a deceased are in the range of 4 to 6, the            C
deduction towards personal and living expenses of the
deceased should be 25%. It further held that in regard to
persons aged 36 to 40 years, the appropriate multiplier should
be 15. We will re-calculate the compensation by applying the
said principles.
                                                                    D
   ... 7. As noticed above, the gross salary was Rs.13,794/~ per
month or Rs.1,65,528/- per annum. By adding 50% towards
future prospects (as the deceased was less than 40 years of
age), the deemed gross income would have been Rs.20,691/
- per month or Rs.2,48,292/- per annum. The percentage of           E
deduction towards income-tax and surcharge, taken as 30%
by the High Court, does not require to be disturbed, having
regard to the income. On such deduction, the net annual income
of the deceased would have been Rs.1, 73,800/-. From the said
sum, one-fourth (25%) had to be deducted towards the personal       F
and living expenses of the deceased. Thus the contribution of
the deceased to his family would have been Rs.1,30,350/- per
annum. By applying the multiplier of 15, the total loss of
dependency will be Rs.19,55,250/-. By adding a sum of
Rs.5,000/- each under the heads of loss of consortium, loss of      G
estate and funeral expenses, the total compensation is
determined as Rs.19, 70,250/-.

     8. The submission of the respondents that the deduction
of 30% from the salary is not warranted in view of the decision
in Sar/a Verma, is not sound. In Sar/a Verma, the monthly salary    H
    422      SUPREME COURT REPORTS               (2010] 8 S.C.R.

A of the deceased was only Rs.4004/- and the annual income
  even after taking note of future prospects was Rs. 72072/-. The
  income was in a range which was exempt from tax, if the
  permissible deductions were applied. Therefore, this Court did
  not make any deduction towards income-tax. But this Court
B made it clear that where the annual income is in the taxable
  range, appropriate deduction should be made towards tax. In
  this case as the annual income has been worked out as
  Rs.2,48,292/-, appropriate deduction has to be made towards
  income-tax. The rate of income tax is a varying figure, with
c reference to taxable income after permissible deductions and
  the year of assessment. The High Court has assessed the
  deduction as 30% and on the facts, we do not propose to
  disturb it. We however make it clear that while ascertaining the
  income of the deceased, any deductions shown in the salary
  certificate as deductions towards GPF, life insurance premium,
0
  repayments of loans etc., shoutd not be excluded from the
   income. The deduction towards income tax/surcharge alone
  should be considered to arrive at the net income of the
  deceased.

E        9. We accordingly allow the appeal and increase the
    compensation from Rs.14,66,600/- to Rs.19,70,250/-. The
    increased amount shall carry interest at the rate of 6% per
    annum from the date of claim petition to the date of payment.
    The parties to bear their respective costs.

    K.K.T.                                       Appeal allowed.