Motor Accident Claim| 'Future Prospects' Ought To Be Allowed For Those With Notional Income: Bombay High Court

Background

Applicants, who were the dependants of a 24-year-old deceased of a motor accident, filed an Application under Section 166 of the Motor Vehicles Act, 1988 to the Tribunal, along with IT return for the Assessment Year 2000-01 of the deceased. The Tribunal, proceeding on the rash and negligent driving of the driver of the offending vehicle, awarded compensation to the tune of Rs. 3,20,000. The applicants came in an appeal against the quantum of this compensation before the Bombay High Court.

Tribunal's Ruling

The Tribunal examined the evidence of the Applicants. It found that the Applicants had produced flimsy evidence of income of the deceased to justify its claims for compensation. The evidence, being an invisible copy of the IT returns of 2000-01, was deemed inadmissible.

Further, the Applicants had failed to furnish any evidence on the nature of business, its ownership structure, type of proprietorship, and the fulfillment of licensing requirements.

The Applicants claimed that the deceased was a 24-year-old sole-proprietor of a paper business and sole breadwinner of the family, without sufficient evidence.

Accordingly, the Tribunal ascertained the notional income of the deceased as Rs. 3000/- per annum, on guesswork. Deducting half of this amount to personal expenses and applying the multiplier of 17, the loss of dependency was computed to be Rs. 3,20,000. The Tribunal added sums of Rs. 4000/- towards funeral expenses and Rs. 10,000/- towards love and affection.

Just Compensation

The outstanding issue remained on the justness of the quantum of compensation awarded by the Tribunal. The Bombay High Court established that compensation was due owing to the rash and negligent driving of the offending vehicle. The Court determined the object of the applicable provision S. 166 of the Motor Vehicles Act as to "place the dependents in the same position as they would have been, had they not lost the breadwinner, in the accident."

Proceeding on this objective, the Court examined the factors for the quantification of loss.

Nature of Business

The Court admonished the Tribunal's determination of notional income based on its assessment of the situation of the deceased and the applicants. The object of the law was to provide for just compensation; it was not necessary to adhere to strict rules of evidence in determining the same. The lack of sufficient evidence notwithstanding, the Tribunal ought to have considered that the nature of the avocation, being that of a paper business, would have reasonably yielded an amount upwards of Rs. 100/- per day in 2004.

Further, the Tribunal should have considered the claims of the applicant of income at Rs. 48,000/- per annum based on 2000-01 IT return. Accordingly, on a conservative estimate, notional income would be Rs. 60,000/- per annum.

The Court cited the Supreme Court case of Kirti and Ors. V. Oriental Insurance Co. Ltd. to hold that the "failure to produce evidence in support of income does not justify the adoption of the lowest tier of minimum wage while computing the income." The Court deduced 50% towards personal income, arriving at Rs. 30,000/- per annum.

Future Prospects

The young age of the deceased was a pertinent factor in the determination of overall compensation.

Citing the Constitutional Bench of the Supreme Court case National Insurance Company Limited v. Pranay Sethi & Others, the Court observed that "in case of a self-employed deceased, who was below 40 years of age, an addition of 40% of the established income is required to be made towards future prospects."

Applying this ruling for cases of insufficient evidence, the Court cited Supreme Court case Hem Raj v. Oriental Insurance Co. Ltd. & Ors, laying down that "future prospects" ought to be allowed for those with notional income as well.

Thus, the Court computed an additional sum of Rs. 12,000/- per annum. Accordingly, the multiplicand was determined to be Rs. 42,000/-. Given the youth of the deceased, the Court updated the the multiplier to 18 from the Tribunal's 17. Overall, the Court quantified the loss of dependency at Rs. 7,56,000/-.

Final Court Order

The Court incorporated further requirements, following Pranay Sethi, towards loss of estate, funeral expenses, and filial compensation towards each applicant. Summing all the costs, the Court partly modified the Order of the Tribunal. It ordered the Opponents to pay Rs. 8,66,000/- plus interest at 7.5%/annum from the date of application till realization, to the applicants minus deductions of any compensation, already paid.

Case Details: Mulchand Dhanji Shah & Anr. V. Mr. Noordam Iraj Ahmad & Ors., First Appeal No. 1005/2019 (Civil Appellate Jurisdiction)

Judgment rendered by Justice NJ Jamadar

Citation: 2022 LiveLaw (Bom) 11

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