[Motor Accident] Managerial Skills Of Deceased To Run Business Can Be Considered While Counting 'Loss Of Dependency': Orissa High Court

Reaffirming the position, a Single Judge Bench of Justice Bibhu Prasad Routray observed,

“Perusal of afore-cited cases reveals the proposition that, for counting the loss of dependency, where the business entity subsists even after death of the deceased and is managed by the dependants, the managerial skill and expertise of the deceased to run the business is to be considered along with specific facts and circumstances brought on record.”

Brief Facts

The instant appeal was filed by the insurer, who impugned the judgment passed by the 4^th M.A.C.T., Keonjhar. Therein a compensation to the tune of Rs. 66,19,284/- was granted along with simple interest @7% per annum to the claimants (respondents herein) from the date of filing of the claim application, i.e. 09.08.2017 on account of death of the deceased in a motor vehicular accident on 01.03.2017.

Contentions of Parties

It was submitted on behalf of the appellant-insurance company that the deceased was the proprietor of the business establishment namely, M/s. Ajanta Textiles. After his death, his widow managed the business very well and gained almost equal profit as the deceased was getting. The income tax returns filed by the wife for the Assessment Years 2017-18, 2018-19 and 2019-20 were relied on to support the claim.

However, the respondents refuted the argument of the appellant regarding the income derived from the business establishment after the death of the deceased. It was submitted that the widow is managing the business of her late husband but it is not true that she has not lost dependency for the death of her husband.

It was further submitted that the experience and skill that the deceased possessed to run his business is not equivalent of what his widow has. So, to deduct loss of dependency only for the reason that the widow is managing the business is not appropriate.

Court’s Observations

The Court referred to the recent decisions of the Apex Court in Sushma H.R. & Anr. v. Deepak Kumar Jha & Ors. and K. Ramya & Ors. v. National Insurance Co. Ltd. & Anr. to hold that where the business entity subsists even after death of the deceased and is managed by the dependants, the managerial skill and expertise of the deceased to run the business are to be considered while counting the loss of dependency.

The Court then compared the income tax returns filed by the deceased with the income tax returns of his wife, which were filed after the death of the deceased. It was found that no substantial loss of income was sustained by the dependants upon death of the deceased even when the source of income of the deceased as well as the dependants remained the same business entity, i.e. M/s. Ajanta Textiles.

“On the advent of such facts with regard to the income of the deceased and the widow after death of the deceased, the managerial skills of the deceased based on the fact of profitable running of M/s. Ajanta Textiles, can be assessed at 50% of the loss of dependency computed,” the Court said.

Accordingly, the loss of dependency, as computed by the Tribunal to the tune of Rs.68,89,284/- was reduced to 50% having regard for the facts of the case. The total loss of dependency was computed to be Rs.32,94,642/-.

It also added Rs.1,20,000/- towards consortium to the widow and two daughters as well as Rs.30,000/- towards general damages and the sub-total compensation was computed as Rs.34,44,642/-, payable along with interest @6% per annum.

Case Title: Manager Legal, Tata AIG General Insurance Co. Ltd. v. Usha Agarwal & Ors.

Case No.: MACA No. 276 of 2020

Judgment Dated: 20^th February 2023

Coram: B.P. Routray, J.

Counsel for the Appellant: Mr. G.P. Dutta, Advocate

Counsel for the Respondents: Mr. P.K. Mishra, Advocate

Citation: 2023 LiveLaw (Ori) 29