Case Note & Summary
The first appeal arose from the award of the Motor Accident Claims Tribunal, Mumbai, in Claim Petition No.241 of 2010, whereby the Tribunal held that the death of Jagdish Mehta in a motor vehicle accident on 1/11/2009 was due to the rash and negligent driving of a hydra crane insured with respondent No.2. The Tribunal awarded compensation of Rs.19,72,200/- inclusive of no fault liability with interest at 7.5% per annum, determining the deceased's monthly income at Rs.12,000/- by averaging income tax returns for six years. The claimants, being the deceased's mother, wife, and son, filed the present appeal seeking enhancement on three grounds: that the income should have been based on the last assessment year's return showing a higher income; that future prospects should be 50% instead of 30%; and that interest should be 12% per annum. The respondents, particularly the insurer, opposed the enhancement, contending that the last return filed after death should be disregarded and relying on V. Subbulakshmi v. S. Lakshmi. The High Court noted that the income tax returns on record demonstrated a gradual increase in the deceased's business income from assessment year 2005-06 to 2009-10, with the last return showing business income of Rs.2,41,695/-. The Court followed the Division Bench judgment in New India Assurance Company v. Alpa Rajesh Shah, which held that income for compensation must be taken from the last assessment year prior to death after deducting income tax. Distinguishing V. Subbulakshmi, where a sole return filed after death was not relied upon, the Court found that the consistent returns here warranted basing the income on the last year's return. Accordingly, the monthly income was recalculated at Rs.19,738/-. The Court found no infirmity in the 30% future prospects addition or the 7.5% interest rate and declined to interfere with those aspects. The appeal was partly allowed, and the Tribunal was directed to recompute the compensation within six weeks based on the revised monthly income of Rs.19,738/-, with the liability to be discharged jointly and severally by the owner and insurer.
Headnote
A) Motor Accident Compensation - Computation of Income - Determination of Income Based on Last Income Tax Return - Motor Vehicles Act, 1988, Section 166 - The claimants sought enhancement on the ground that the Tribunal erroneously computed the deceased's income by averaging income tax returns for six preceding years instead of taking the income from the last assessment year before death. The High Court, following a Division Bench decision in New India Assurance Company v. Alpa Rajesh Shah, held that income must be calculated on the basis of the earnings in the last financial year before death, as evidenced by income tax returns, and not by averaging over multiple years. The Court distinguished the Supreme Court's decision in V. Subbulakshmi v. S. Lakshmi, where the sole return filed after death was disregarded, noting that here the deceased's returns showed a consistent rising income. The impugned award was modified, directing computation of compensation using a monthly income of Rs.19,738/- (Paras 7-13). B) Motor Accident Compensation - Future Prospects - Criteria for 50% vs 30% - Motor Vehicles Act, 1988 - The appellant contended that the deceased, being a budding businessman aged 42, should receive 50% future prospects. The Tribunal, relying on Rajesh & Ors. v. Rabir Singh and Sarla Verma v. Delhi Transport Corporation, granted 30%. The High Court found no legal infirmity in this calculation and declined to interfere (Para 6). C) Motor Accident Compensation - Interest on Award - Claim for 12% per annum Rejected - Motor Vehicles Act, 1988 - The appellant argued that interest should be enhanced to 12% per annum. The High Court, without detailed reasoning, held that there was no legal infirmity in the Tribunal's award of 7.5% per annum and declined to interfere (Para 6).
Issue of Consideration
Whether the Tribunal was justified in computing the deceased's income by averaging income tax returns for six years, or whether it should have based the computation on the income disclosed in the last assessment year's return prior to the death?
Final Decision
The appeal is partly allowed. The impugned judgment is modified to the extent that the monthly income of the deceased is taken as Rs.19,738/- instead of Rs.12,000/-, based on the income tax return of the last assessment year after deducting income tax. The Tribunal is directed to recompute the compensation within six weeks. The other grounds regarding future prospects and interest are not interfered with.
Law Points
- income for compensation calculation must be based on last assessment year's income tax return
- not averaging over several years
- future prospects at 30% for age 40-50 is appropriate
- interest rate of 7.5% per annum is reasonable
