Motor Accident Claim | HRA, PF Contribution Should Be Included While Computing Loss Of Dependency: Supreme Court

Recently, the Supreme Court observed that the emoluments and benefits such as house rent allowance, flexible benefit plan, contribution to provident fund, etc. accrued to the deceased ought to be included while computing the loss of dependency to determine the compensation.

"...components of house rent allowance, flexible benefit plan and company contribution to provident fund have to be included in the salary of the deceased while applying the component of rise in income by future prospects to determine the dependency factor. The Accident Claims Tribunal was justified in factoring these components into the salary of the deceased, before applying 50% rise by future prospects due to future prospects, while calculating the total compensation payable to the appellant.”

Setting aside the order of the High Court, the bench comprising Justice Hima Kohli and Justice Sandeep Mehta observed that the High Court erred in not including the components of house rent allowance, flexible benefit plan, and contribution to provident fund to the basic salary of the deceased while applying the principle of rise in income by future prospects.

“We, therefore, hold that the High Court has erred while omitting to add the components of house rent allowance, flexible benefit plan and Company contribution to provident fund to the basic salary of the deceased while applying the principle of rise in income by future prospects.”, the court held.

The High Court's omission to not include components like house rent allowance, flexible benefit plan and contribution to provident fund, etc. in the basic salary of the deceased resulted in a reduction of the compensation payable to the appellant from a sum of ₹1,04,01,000/- (Rupees One crore four lakh one thousand only) awarded by the Accident Claims Tribunal to ₹ 49,57,035/-(Rupees Forty nine lakh fifty seven thousand and thirty five only).

The court referred to its July 11 order passed in the case of National Insurance Company Ltd. v. Nalini and Ors., to hold that allowances under the heads of transport allowance, house rent allowance, provident fund loan, provident fund, and special allowance ought to be added in the basic salary of the victim/deceased to arrive at the dependency factor.

In Nalini's case, the court observed that emoluments and benefits granted to the deceased ought to be considered as income to arrive at the dependency factor irrespective of whether they are taxable or not.

Further, the court also referred to its earlier decision in Raghuvir Singh Matolya and Others v. Hari Singh Malviya and Other reported in (2009) 15 SCC 363 where the court held that the “house rent allowance” payable to the deceased should have been included for determining the income of the deceased and consequently the amount of compensation.

“Therefore, components of house rent allowance, flexible benefit plan and company contribution to provident fund have to be included in the salary of the deceased while applying the component of rise in income by future prospects to determine the dependency factor. The Accident Claims Tribunal was justified in factoring these components into the salary of the deceased, before applying 50% rise by future prospects due to future prospects, while calculating the total compensation payable to the appellant.”, the court added.

Based on the above premise, the court re-assessed the quantum of compensation payable to the appellants by the respondent no.1/insurance company which turns out to be ₹ 93,66,272 instead of ₹1,04,01,000/- as originally decided by the tribunal after taking in to account components such as house rent allowance, flexible benefit plan, and contribution to provident fund.

Accordingly, the appeal was allowed in part.

Appearance:

For Petitioner(s) Mr. C.M.Angadi, Adv. Mr. Rameshwar Prasad Goyal, AOR

For Respondent(s) Mr. Arvind Gupta, AOR Mr. Anil Kumar Sahu, Adv. Mr. Mohit Bidhuri, Adv. Mrs. Suman Sharma, Adv. Mr. Kanav Bhardwaj, Adv. Mr. Sunil Kumar Roy, Adv.

Case Details: MEENAKSHI Versus THE ORIENTAL INSURANCE CO. LTD., Diary No. 39746 of 2018

Citation : 2024 LiveLaw (SC) 549

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