Granting of future prospects, on notional income in such cases, is a component of just compensation

The awarding of future prospects is now a part of the duty of the Court to grant just compensation, taking into account the realities of life, particularly of inflation, the quest 15 of individuals to better their circumstances and those of their loved ones, rising wage rates and the impact of experience on the quality of work. (Para 23)

Kirti & Anr. Etc V/s Oriental Insurance Company Ltd.

CIVIL APPEAL NOS.19­20 of 2021 [Arising out of Special Leave Petition(C) Nos.18728­29 of 2018]

January 05, 2021.

The Hon'ble Supreme Court Comprising of Justice N.V. Ramana, Justice S. Abdul Nazeer and Justice Surya Kant re-computated the amount of compensation for loss of dependency in a motor vehicle accident due to the applicants.

These civil appeals have been filed by three surviving dependents (who are two minor daughters and father) of the two deceased, impugning the judgment dated 17.07.2017 of the High Court of Delhi through which the motor accident compensation of Rs 40.71 lakhs awarded by the Motor Accident Claims Tribunal, Rohini (hereinafter, “Tribunal”) on 24.12.2016 under Section 168 of the Motor Vehicle Act, 1988 (MV Act), was reduced to Rs 22 lakhs.

The deceased couple, Vinod and Poonam, while commuting on a motorcycle in Delhi at were hit at an intersection by a Santro Car. The impact immediately incapacitated both the deceased and they soon passed away by the accident’s blunt­force trauma. A motor accident compensation of Rs 40.71 lakhs was awarded by the Tribunal.This computation was challenged by the respondent­insurer before the High Court, on grounds that the Tribunal had erroneously relied upon the minimum wage as notified by Government of Delhi as there was no proof that the deceased were employed in Delhi. Instead, given their established residence in Haryana, the minimum wage notified for that State ought to be the basis for calculation of loss of dependency. Simultaneously, addition of future prospects as well as non­deduction of personal expenses for Poonam was prayed to be reversed. Further, compensation was sought to be halved on grounds of contributory negligence. The High Court reduced the amount payable the aggrieved and referred to

Learned counsel for the Appellants submitted that (i) Re­computation is sought of compensation for loss of dependency consequent to the decision of the Constitutional Bench of this Court in National Insurance Co Ltd v. Pranay Sethi (2017) 16 SCC 680, which authoritatively settles the law on future prospects for non­permanent employees as well. (ii) The anomaly between the gratuitous increase of income between Vinod and Poonam, and the usage of unskilled minimum wage for Vinod have been brought this Court’s notice. (iii) The question of notional income of a housewife and whether future prospects should apply to the same or not.

Learned counsel for the Repondents contented that (i) the Tribunal had erroneously relied upon the minimum wage as notified by Government of Delhi as there was no proof that the deceased were employed in Delhi. Instead, given their established residence in Haryana, the minimum wage notified for that State ought to be the basis for calculation of loss of dependency. (ii) addition of future prospects, as well as non­deduction of personal expenses for Poonam, was prayed to be reversed. (iii) Compensation was sought to be halved on grounds of contributory negligence. A categorical submission was made highlighting the then divergent law on the issue of payment of ‘future prospects’ to non­permanent employees, pending resolution of which, it was prayed that no such addition be granted to the claimants. (iv) Counsel claimed that the High Court’s decision was a consent order, and that the counsel for the appellants had conceded to a lower computation under the head of loss of dependency, which thus cannot be challenged before this Court.

This court concluded, Via Justice Surya Kant's Judgment, that re-computation of certain aspects were required and passed this revised compensation after suitable increases “For the reasons afore­stated, the appeals are allowed in­part. The total motor accident compensation of Rs 22 lakhs awarded by the High Court to the claimant­appellants is increased by Rs 11.20 lakhs to reach a new total of Rs 33.20 lakhs. The enhanced amount of compensation shall be paid within two months along with interest @ 9% p.a. from the date of filing of the Detailed Accident Report i.e. 23.05.2014, and shall be apportioned per the terms laid down by the Tribunal.” (Para 16)

Justice N.V. Ramana further added to the judgement supporting the decree and conferring with the views of his fellow brother that “When it comes to the second category of cases, relating to notional income for non­earning victims, it is my opinion that the above principle applies with equal vigor, particularly with respect to homemakers. Once notional income is determined, the effects of inflation would equally apply. Further, no one would ever say that the improvements in skills that come with experience do not take place in the domain of work within the household. It is worth noting that, although not extensively discussed, this Court has been granting future prospects even in cases pertaining to notional income, as has been highlighted by my learned brother, Surya Kant, J., in his opinion [Hem Raj v. Oriental Insurance Company Limited, (2018) 15 SCC 654; Sunita Tokas v. New India Insurance Co. Ltd., (2019) 20 SCC 688].” (Para 25)

Concluding, Justice Ramana Summed up the gist in the following words:

“Therefore, on the basis of the above, certain general observations can be made regarding the issue of calculation of notional income for homemakers and the grant of future prospects with respect to them, for the purposes of grant of compensation which can be summarized as follows:

a. Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law.

b. Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special significance. It becomes a recognition of the work, labour and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation’s international law obligations and our constitutional vision of social equality and ensuring dignity to all.

c. Various methods can be employed by the Court to fix the notional income of a homemaker, depending on the facts and circumstances of the case.

d. The Court should ensure while choosing the method, and fixing the notional income, that the same is just in the facts and circumstances of the particular case, neither assessing the compensation too conservatively, nor too liberally.

e. The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation.” (Para 26)

The appeal was hence allowed and revised compensation was made payable by the Respondent-Insurer.

View/Download Judgment: Kirti & Anr. Etc V/s Oriental Insurance Company Ltd.

Risikesh Dhanaki