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}
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.1920 of 2021
Kirti & Anr. Etc. Vs Oriental Insurance Company Ltd.
Author: Surya Kant, J:
Dated: January 05, 2021.
Leave Granted.
2. These civil appeals, which have been heard through video
conferencing, 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
Page | 1
Act”), was reduced to Rs 22 lakhs.
FACTUAL MATRIX
3. The deceased couple, Vinod and Poonam, while commuting on a
motorcycle in Delhi at around 7AM on 12.04.2014 were hit at an
intersection by a Santro Car bearing registration ‘DL 7CA 1053’. The
impact immediately incapacitated both the deceased and they soon
passed away from craniocerebral
damage and haemorrhagic shock
caused by the accident’s bluntforce
trauma.
4. An FIR was registered under Sections 279 and 304 of the Indian
Penal Code, 1860 (hereinafter, “IPC”) against the driver, and the
statement of an independent eyewitness (Constable Vishnu Dutt) was
recorded, which evidenced rash driving and negligence on part of the
cardriver.
Subsequently, a claim petition was filed under Section 166
of the MV Act by the two toddler daughters
and septuagenarian parents
of the deceased. This was contested by the driver and owner
claiming that the deceased were themselves driving negligently and
the accident was as a result of their very own actions. Two witnesses
were examined by the appellant claimants
and none by the
respondents. The insurance company (Respondent No. 1) offered as
settlement a compensation of Rs 6.47 lakhs for the death of Poonam
and Rs 10.71 lakhs for Vinod.
5. The Tribunal took note of the chargesheet filed against the driver
in the criminal case and also his failure to step into
the witness box.
Relying on the strong testimony of the independent witness, it was
concluded that the car driver
was indeed driving rashly and thus
liability ought to be fastened on the respondentinsurer.
Regarding the
quantum of compensation, the Tribunal began by determining the
ages of Poonam and Vinod as being 26 and 29 years respectively.
Consequently, an agemultiplier
of 17 was adopted. Although the
deceased’s father took a plea that Vinod was earning Rs 14,000 every
month as a teacher at the Pratap Public School in Delhi, but he was
unable to substantiate his claim with any documentary evidence.
Thus, minimum wage in Delhi was adopted for computation of loss of
dependency. An additional 25% income was accounted for future
prospects of Poonam, and 1/3rd of Vinod’s salary was deducted
towards personal expenses. Rs 2.50 lakhs was given for each deceased
as compensation for loss of love and affection, estate, and funeral
charges. Thus, the Tribunal awarded a total sum of Rs 40.71 lakhs for
both deceased to the claimants.
6. 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. 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.
7. The High Court concurred with these contentions and
consequently reduced the notional income for both deceased by
adopting the lowest minimum wage applicable for unskilled workers in
Haryana, instead of Delhi. Similarly, 1/3rd of Poonam’s income was
deducted towards personal expenses and future prospects were denied
to both deceased. However, given the totality of circumstances and
Poonam’s contribution to her household, 25% additional gratuitous
income was added to her salary. The High Court thus brought down
the total compensation payable to the claimants to Rs 22 lakhs.
CONTENTIONS OF PARTIES
8. This reduction has been assailed before us by learned counsel
for the claimants. Recomputation
is sought of compensation for loss
Page | 4
of dependency consequent to the decision of the Constitutional Bench
of this Court in National Insurance Co Ltd v. Pranay Sethi1, which
authoritatively settles the law on future prospects for nonpermanent
employees as well. Furthermore, the anomaly between the gratuitous
increase of income between Vinod and Poonam, and the usage of
unskilled minimum wage for Vinod have been brought to our notice.
9. Learned Counsel for the respondentinsurer,
on the other hand,
has sought to forestall any increase in compensation, including under
the ground of future prospects. It is 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.
ANALYSIS
I. Deduction for Personal Expenses
10. We have thoughtfully considered the rival submissions. It
cannot be disputed that at the time of death, there in fact were four
dependents of the deceased and not three. The subsequent death of
the deceased’s dependent mother ought not to be a reason for
reduction of motor accident compensation. Claims and legal liabilities
crystallise at the time of the accident itself, and changes post thereto
1 (2017) 16 SCC 680.
Page | 5
ought not to ordinarily affect pending proceedings. Just like how
appellantclaimants
cannot rely upon subsequent increases in
minimum wages, the respondentinsurer
too cannot seek benefit of
the subsequent death of a dependent during the pendency of legal
proceedings. Similarly, any concession in law made in this regard by
either counsel would not bind the parties, as it is legally settled that
advocates cannot throwaway
legal rights or enter into arrangements
contrary to law.2
11. Any compensation awarded by a Court ought to be just,
reasonable and consequently must undoubtedly be guided by
principles of fairness, equity, and good conscience.3 Not only did the
family of the deceased consist of septuagenarian parents, but there
were also two toddlergirls,
aged merely 3 and 4 years; each of whom
requires exceptional care and expenditure till they reach the stage of
selfdependency.
Tragically, in addition to the married couple, the
negligence of the driver also extinguished the life of the family’s third
child who was a foetus in Poonam’s womb at the time of the accident.
Thus, the appropriate deduction for personal expenses for both Vinod
and Poonam ought to be 1/4th only, and not 1/3rd as applied by the
Tribunal and the High Court, more so when there were four family
members dependent on the deceased.
2 Director of Elementary Education v. Pramod Kumar Sahoo, (2019) 10 SCC 674, ¶ 11.
3 See, Helen C Rebello v. Maharashtra State Road Transport Corp, (1999) 1 SCC 90, ¶ 28.
Page | 6
II. Assessment of monthly income
12. Second, although it is correct that the claimants have been
unable to produce any document evidencing Vinod’s income, nor have
they established his employment as a teacher; but that doesn’t justify
adoption of the lowesttier
of minimum wage while computing his
income. From the statement of witnesses, documentary evidenceonrecord
and circumstances of the accident, it is apparent that Vinod
was comparatively more educationally qualified and skilled. Further,
he maintained a reasonable standard of living for his family as
evidenced by his use of a motorcycle for commuting. Preserving the
existing standard of living of a deceased’s family is a fundamental
endeavour of motor accident compensation law.4 Thus, at the very
least, the minimum wage of Rs 6197 as applicable to skilled workers
during April 2014 in the State of Haryana ought to be applied in his
case.
III. Addition of Future Prospects
13. Third and most importantly, it is unfair on part of the
respondentinsurer
to contest grant of future prospects considering
their submission before the High Court that such compensation ought
not to be paid pending outcome of the Pranay Sethi (supra)
4 See, RK Malik v. Kiran Pal, (2019) 14 SCC 1, ¶ 9.
Page | 7
reference. Nevertheless, the law on this point is no longer res integra,
and stands crystalised, as is clear from the following extract of the
aforecited
Constitutional Bench judgment5:
“59.4. In case the deceased was selfemployed
or on a fixed
salary, an addition of 40% of the established income should
be the warrant where the deceased was below the age of 40
years. An addition of 25% where the deceased was between
the age of 40 to 50 years and 10% where the deceased was
between the age of 50 to 60 years should be regarded as the
necessary method of computation. The established income
means the income minus the tax component.”[
Emphasis supplied]
14. Given how both deceased were below 40 years and how they
have not been established to be permanent employees, future
prospects to the tune of 40% must be paid. The argument that no
such future prospects ought to be allowed for those with notional
income, is both incorrect in law6 and without merit considering the
constant inflationinduced
increase in wages. It would be sufficient to
quote the observations of this Court in Hem Raj v. Oriental
Insurance Co. Ltd.7, as it puts at rest any argument concerning nonpayment
of future prospects to the deceased in the present case:
“7. We are of the view that there cannot be distinction where
there is positive evidence of income and where minimum
5 National Insurance Co Ltd v. Pranay Sethi, (2017) 16 SCC 680, ¶ 59.4.
6 Sunita Tokas v. New India Insurance Co Ltd, 2019 SCC OnLine SC 1045.
7 (2018) 15 SCC 654.
Page | 8
income is determined on guesswork in the facts and
circumstances of a case. Both the situations stand at the
same footing. Accordingly, in the present case, addition of
40% to the income assessed by the Tribunal is required to be
made..”
[Emphasis supplied]
IV. Other heads and division of compensation
15. Finally, given the lack of arguments on the other heads of
funeral charges, loss of estate, love, and affection; there arises no
cause of alteration. We similarly see no infirmity with the High Court’s
adoption of 17 as the agemultiplier,
award of 9% interest, calculation
of Poonam’s notional income or the division of total compensation in
the ratio of 1:2:2 between the grandfather and the two girls. For ready
reference, a comparative table of revised compensation after suitable
increases would thus be as follows:
TRIBUNAL HIGH COURT SUPREME COURT
Head Vinod Poonam Vinod Poonam Vinod Poonam
A Monthly Income 8554 9438 5547.1 5547.1 6197.1 5547.1
B
Deduction
towards Personal
Expenses
33% None 33% 33% 25% 25%
C Age Multiplier 17 17 17 17 17 17
D Adjustment for
Future Prospects None 25% None None 40% 40%
E
Increase for
Special
Circumstances
None None None 25% None 25%
F Funeral Charges
& Loss of Estate 250000 250000 250000 250000 250000 250000
Page | 9
G Total per
deceased 1413344 2656690 1004406 1193007 1577419 1735236
(rounded off) 1414000 2657000 1005000 1195000 1580000 1740000
Total
compensation 4071000 2200000 3320000
CONCLUSION
16. 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.
…………………………….. J.
(N.V. RAMANA)
…………………………… J.
(S. ABDUL NAZEER)
…………………………...J.
(SURYA KANT)
NEW DELHI
DATED : 05.01.2021
Page | 10
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1920
OF 2021
(ARISING OUT OF SLP (C) NOS. 1872818729
OF 2018)
KIRTI & ANR. ETC. …APPELLANT(S)
VERSUS
ORIENTAL INSURANCE CO. LTD. …RESPONDENT
JUDGMENT
N.V. RAMANA, J .
1. I have had the advantage of perusing the judgment prepared
by my learned brother, Surya Kant, J., and am in complete
agreement with him. However, I thought to supplement the
reasoning in his judgment, with respect to the question of
notional income of a housewife and whether future prospects
should apply to the same or not.
2. There are two distinct categories of situations wherein the
Court usually determines notional income of a victim. The first
category of cases relates to those wherein the victim was
employed, but the claimants are not able to prove her actual
income, before the Court. In such a situation, the Court
1
Reportable
“guesses” the income of the victim on the basis of the evidence on
record, like the quality of life being led by the victim and her
family, the general earning of an individual employed in that field,
the qualifications of the victim, and other considerations.
3. The second category of cases relates to those situations
wherein the Court is called upon to determine the income of a
nonearning
victim, such as a child, a student or a homemaker.
Needless to say, compensation in such cases is extremely difficult
to quantify.
4. The Court often follows different principles for determining
the compensation towards a nonearning
victim in order to arrive
at an amount which would be just in the facts and circumstances
of the case. Some of these involve the determination of notional
income. Whenever notional income is determined in such cases,
different considerations and factors are taken into account. For
instance, for students, the Court often considers the course that
they are studying, their academic proficiency, the family
background, etc., to determine and fix what they could earn in
the future. [See M. R. Krishna Murthi v. New India Assurance
Co. Ltd., 2019 SCC OnLine SC 315]
5. One category of nonearning
victims that Courts are often
2
called upon to calculate the compensation for are homemakers.
The granting of compensation for homemakers on a pecuniary
basis, as in the present case, has been considered by this Court
earlier on numerous occasions. A threeJudge
Bench of this
Court in Lata Wadhwa v. State of Bihar, (2001) 8 SCC 197,
while dealing with compensation for the victims of a fire during a
function, granted compensation to housewives on the basis of the
services rendered by them in the house, and their age. This
Court, in that case, held as follows:
“10. So far as the deceased housewives are
concerned, in the absence of any data and as
the housewives were not earning any income,
attempt has been made to determine the
compensation on the basis of services
rendered by them to the house. On the basis of
the age group of the housewives, appropriate
multiplier has been applied, but the estimation of
the value of services rendered to the house by the
housewives, which has been arrived at Rs 12,000
per annum in cases of some and Rs 10,000 for
others, appears to us to be grossly low. It is true
that the claimants, who ought to have given data
for determination of compensation, did not assist
in any manner by providing the data for
estimating the value of services rendered by such
housewives. But even in the absence of such
data and taking into consideration the
multifarious services rendered by the
housewives for managing the entire family,
even on a modest estimation, should be Rs
3000 per month and Rs 36,000 per annum…”
(emphasis supplied)
3
6. In Arun Kumar Agrawal v. National Insurance Co. Ltd.,
(2010) 9 SCC 218, this Court, while dealing with the grant of
compensation for the death of a housewife due to a motor vehicle
accident, held as follows:
“26. In India the courts have recognised that
the contribution made by the wife to the
house is invaluable and cannot be computed
in terms of money. The gratuitous services
rendered by the wife with true love and
affection to the children and her husband and
managing the household affairs cannot be
equated with the services rendered by others.
A wife/mother does not work by the clock. She is
in the constant attendance of the family
throughout the day and night unless she is
employed and is required to attend the
employer's work for particular hours. She takes
care of all the requirements of the husband and
children including cooking of food, washing of
clothes, etc. She teaches small children and
provides invaluable guidance to them for their
future life. A housekeeper or maidservant can do
the household work, such as cooking food,
washing clothes and utensils, keeping the house
clean, etc., but she can never be a substitute for
a wife/mother who renders selfless service to her
husband and children.
27. It is not possible to quantify any amount
in lieu of the services rendered by the
wife/mother to the family i.e. the husband
and children. However, for the purpose of
award of compensation to the dependants,
some pecuniary estimate has to be made of
the services of the housewife/mother. In that
context, the term “services” is required to be
given a broad meaning and must be construed by
taking into account the loss of personal care and
4
attention given by the deceased to her children
as a mother and to her husband as a wife. They
are entitled to adequate compensation in lieu of
the loss of gratuitous services rendered by the
deceased. The amount payable to the dependants
cannot be diminished on the ground that some
close relation like a grandmother may volunteer
to render some of the services to the family which
the deceased was giving earlier.”
(emphasis supplied)
The above pronouncement has been followed by this Court in its
recent judgment in Rajendra Singh v. National Insurance Co.
Ltd., 2020 SCC OnLine SC 521, wherein the notional income of
a deceased housewife was calculated for the purposes of granting
compensation in a motor accident case.
7. Before discussing this topic further, it is necessary to
comment on its gendered nature. In India, according to the 2011
Census, nearly 159.85 million women stated that “household
work” was their main occupation, as compared to only 5.79
million men.
8. In fact, the recently released Report of the National
Statistical Office of the Ministry of Statistics & Programme
Implementation, Government of India called “Time Use in India2019”,
which is the first Time Use Survey in the country and
collates information from 1,38,799 households for the period
January, 2019 to December, 2019, reflects the same gender
5
disparity.1 The key findings of the survey suggest that, on an
average, women spend nearly 299 minutes a day on unpaid
domestic services for household members versus 97 minutes
spent by men on average.2 Similarly, in a day, women on average
spend 134 minutes on unpaid caregiving services for household
members as compared to the 76 minutes spent by men on
average.3 The total time spent on these activities per day makes
the picture in India even more clearwomen
on average spent
16.9 and 2.6 percent of their day on unpaid domestic services
and unpaid caregiving services for household members
respectively, while men spent 1.7 and 0.8 percent.4
9. It is curious to note that this is not just a phenomenon
unique to India, but is prevalent all over the world. A 2009 Report
by a Commission set up by the French Government, analyzing
data from six countries, viz. Germany, Italy, United Kingdom,
France, Finland and the United States of America, highlighted
similar findings:
“117. Gender differences in time use are
significant. In each of the countries under
consideration, men spend more time in paid
work than women and the converse is true for
unpaid work. Men also spend more time on
leisure than women. The implication is that
1 National Statistical Office, Time Use in India2019
(September, 2020).
2 Id, at 56.
3 Id, at 54.
4 Id, at x.
6
women provide household services but other
members of the household benefit…”5
(emphasis supplied)
10. The sheer amount of time and effort that is dedicated to
household work by individuals, who are more likely to be women
than men, is not surprising when one considers the plethora of
activities a housemaker undertakes. A housemaker often
prepares food for the entire family, manages the procurement of
groceries and other household shopping needs, cleans and
manages the house and its surroundings, undertakes decoration,
repairs and maintenance work, looks after the needs of the
children and any aged member of the household, manages
budgets and so much more. In rural households, they often also
assist in the sowing, harvesting and transplanting activities in
the field, apart from tending cattle [See Arun Kumar Agrawal
(supra); National Insurance Co. Ltd. v. Minor Deepika rep. by
her guardian and next friend, Ranganathan, 2009 SCC
OnLine Mad 828]. However, despite all the above, the conception
that housemakers do not “work” or that they do not add
economic value to the household is a problematic idea that has
persisted for many years and must be overcome.
11. The concurring opinion in the Arun Kumar Agrawal
5 Stiglitz et al., Report of the Commission on the Measurement of Economic Performance and
Social Progress, 117 (2009).
7
judgment (supra), has highlighted this bias:
“44. This bias is shockingly prevalent in the work
of census. In the Census of 2001 it appears that
those who are doing household duties like
cooking, cleaning of utensils, looking after
children, fetching water, collecting firewood have
been categorised as nonworkers
and equated
with beggars, prostitutes and prisoners who,
according to the census, are not engaged in
economically productive work. As a result of
such categorisation about 36 crores (367 million)
women in India have been classified in the
Census of India, 2001 as nonworkers
and
placed in the category of beggars, prostitutes and
prisoners. This entire exercise of census
operations is done under an Act of Parliament.”
12. In fact, this unfortunate silence when it comes to the value
of housework has been a problem which was identified as far
back as in 1920, when the economist Pigou noted the oddity and
contradictions when it came to the calculation of the contribution
of women in the national income, by stating that:
“…the services rendered by women enter into the
dividend when they are rendered in exchange for
wages, whether in the factory or in the home, but
do not enter into it when they are rendered by
mothers and wives gratuitously to their own
families. Thus, if a man marries his housekeeper
or his cook, the national dividend is
diminished”.6
This issue was further focused on by those in the field of
feminism economics in the 1970s and 1980s, who criticized the
traditional labour statistics which did not consider unpaid
6 Cecil Pigou, The Economics of Welfare, 44 (1920).
8
domestic work and therefore undervalued women’s role in the
economy.7
13. On considering the growing awareness around this issue,
the United Nations Committee on the Elimination of
Discrimination against Women adopted General Recommendation
No. 17 on the “Measurement and quantification of the
unremunerated domestic activities of women and their recognition
in the gross national product” in 1991. The General
Recommendation affirmed that “the measurement and
quantification of the unremunerated domestic activities of women,
which contribute to development in each country, will help to
reveal the de facto economic role of women”.
14. It is worth noting that the above General Recommendation
is passed in furtherance of Article 11 of the Convention on the
Elimination of All Forms of Discrimination against Women which
relates to ending discrimination against women in the field of
employment, a Convention that India has ratified.
15. The issue of fixing notional income for a homemaker,
therefore, serves extremely important functions. It is a
recognition of the multitude of women who are engaged in this
activity, whether by choice or as a result of social/cultural
7 United Nations Economic Commission for Europe, Guide on Valuing Unpaid Household Service
Work, 2 (2017).
9
norms. It signals to society at large that the law and the Courts of
the land believe in the value of the labour, services and sacrifices
of homemakers. It is an acceptance of the idea that these
activities contribute in a very real way to the economic condition
of the family, and the economy of the nation, regardless of the
fact that it may have been traditionally excluded from economic
analyses. It is a reflection of changing attitudes and mindsets and
of our international law obligations. And, most importantly, it is a
step towards the constitutional vision of social equality and
ensuring dignity of life to all individuals.
16. Returning to the question of how such notional income of a
homemaker is to be calculated, there can be no fixed approach. It
is to be understood that in such cases the attempt by the Court
is to fix an approximate economic value for all the work that a
homemaker does, impossible though that task may be. Courts
must keep in mind the idea of awarding just compensation in
such cases, looking to the facts and circumstances [See R.K.
Malik v. Kiran Pal, (2009) 14 SCC 1].
17. One method of computing the notional income of a
homemaker is by using the formula provided in the Second
Schedule to the Motor Vehicles Act, 1988, which has now been
omitted by the Motor Vehicle (Amendment) Act, 2019. The Second
10
Schedule provided that the income of a spouse could be
calculated as onethird
of the income of the earning surviving
spouse. This was the method ultimately adopted by the Court in
the Arun Kumar Agrawal (supra) case. However, rationale
behind fixing the ratio as onethird
is not very clear. [See Arun
Kumar Agrawal (supra)]
18. Apart from the above, scholarship around this issue could
provide some guidance as to other methods to determine the
notional income for a homemaker.8 Some of these methods were
highlighted by a Division Bench of the Madras High Court in the
case of Minor Deepika (supra) which held as follows:
“10. The Second Schedule to the Motor Vehicles
Act gives a value to the compensation payable in
respect of those who had no income prior to the
accident and for a spouse, it says that onethird
of the income of the earning surviving spouse
should be the value. Exploration on the internet
shows that there have been efforts to understand
the value of a homemaker's unpaid labour by
different methods. One is, the opportunity cost
which evaluates her wages by assessing what
she would have earned had she not remained
at home, viz., the opportunity lost. The
second is, the partnership method which
assumes that a marriage is an equal economic
partnership and in this method, the
homemaker's salary is valued at half her
husband's salary. Yet another method is to
evaluate homemaking by determining how
8 See Ann Chadeau, What is Households’ NonMarket
Production Worth, OECD ECONOMIC STUDIES
NO. 18 (1992); Also see United Nations Economic Commission for Europe, supra note 7.
11
much it would cost to replace the homemaker
with paid workers. This is called the
Replacement Method.”
(emphasis supplied)
19. However, it must be remembered that all the above methods
are merely suggestions. There can be no exact calculation or
formula that can magically ascertain the true value provided by
an individual gratuitously for those that they are near and dear
to. The attempt of the Court in such matters should therefore be
towards determining, in the best manner possible, the truest
approximation of the value added by a homemaker for the
purpose of granting monetary compensation.
20. Whichever method a Court ultimately chooses to value the
activities of a homemaker, would ultimately depend on the facts
and circumstances of the case. The Court needs to keep in mind
its duty to award just compensation, neither assessing the same
conservatively, nor so liberally as to make it a bounty to
claimants [National Insurance Company Limited v. Pranay
Sethi, (2017) 16 SCC 680; Kajal v. Jagdish Chand, (2020) 4
SCC 413].
21. Once notional income has been determined, the question
remains as to whether escalation for future prospects should be
granted with regard to it. Initially, the awarding of future
12
prospects by this Court was related to the stability of the job held
by the victim [See General Manager, Kerala State Road
Transport Corporation, Trivandrum v. Susamma Thomas
(Mrs), (1994) 2 SCC 176; Sarla Dixit (Smt) v. Balwant Yadav,
(1996) 3 SCC 179]. This focus on the stability of the job of the
victim, while awarding future prospects, was continued in the
judgment of this Court in Sarla Verma (Smt) v. Delhi
Transport Corporation, (2009) 6 SCC 121 wherein the Court
held as follows:
“24. In Susamma Thomas [(1994) 2 SCC 176]
this Court increased the income by nearly 100%,
in Sarla Dixit [(1996) 3 SCC 179] the income was
increased only by 50% and in Abati
Bezbaruah [(2003) 3 SCC 148] the income was
increased by a mere 7%. In view of the
imponderables and uncertainties, we are in
favour of adopting as a rule of thumb, an
addition of 50% of actual salary to the actual
salary income of the deceased towards future
prospects, where the deceased had a
permanent job and was below 40 years. (Where
the annual income is in the taxable range, the
words “actual salary” should be read as “actual
salary less tax”). The addition should be only
30% if the age of the deceased was 40 to 50
years. There should be no addition, where the
age of the deceased is more than 50 years.
Though the evidence may indicate a different
percentage of increase, it is necessary to
standardise the addition to avoid different
yardsticks being applied or different methods of
calculation being adopted. Where the deceased
was selfemployed
or was on a fixed salary
13
(without provision for annual increments,
etc.), the courts will usually take only the
actual income at the time of death. A
departure therefrom should be made only in
rare and exceptional cases involving special
circumstances.”
(emphasis supplied)
22. However, there was a shift in jurisprudence regarding future
prospects with the fiveJudge
Bench decision of this Court in
Pranay Sethi (supra). This Court extended the benefit regarding
future prospects to even selfemployed
persons, or those on a
fixed salary. The Court held as follows:
“57. Having bestowed our anxious consideration,
we are disposed to think when we accept the
principle of standardisation, there is really no
rationale not to apply the said principle to the
selfemployed
or a person who is on a fixed
salary. To follow the doctrine of actual
income at the time of death and not to add
any amount with regard to future prospects to
the income for the purpose of determination
of multiplicand would be unjust. The
determination of income while computing
compensation has to include future prospects
so that the method will come within the
ambit and sweep of just compensation as
postulated under Section 168 of the Act. In
case of a deceased who had held a permanent job
with inbuilt grant of annual increment, there is
an acceptable certainty. But to state that the
legal representatives of a deceased who was on a
fixed salary would not be entitled to the benefit of
future prospects for the purpose of computation
of compensation would be inapposite. It is
because the criterion of distinction between the
14
two in that event would be certainty on the one
hand and staticness on the other. One may
perceive that the comparative measure is
certainty on the one hand and uncertainty on the
other but such a perception is fallacious. It is
because the price rise does affect a selfemployed
person; and that apart there is
always an incessant effort to enhance one's
income for sustenance. The purchasing
capacity of a salaried person on permanent
job when increases because of grant of
increments and pay revision or for some other
change in service conditions, there is always a
competing attitude in the private sector to
enhance the salary to get better efficiency
from the employees. Similarly, a person who
is selfemployed
is bound to garner his
resources and raise his charges/fees so that
he can live with same facilities.…Taking into
consideration the cumulative factors, namely,
passage of time, the changing society,
escalation of price, the change in price index,
the human attitude to follow a particular
pattern of life, etc., an addition of 40% of the
established income of the deceased towards
future prospects and where the deceased was
below 40 years an addition of 25% where the
deceased was between the age of 40 to 50 years
would be reasonable.”
(emphasis supplied)
23. The rationale behind the awarding of future prospects is
therefore no longer merely about the type of profession, whether
permanent or otherwise, although the percentage awarded is still
dependent on the same. 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.
24. Taking the above rationale into account, the situation is
quite clear with respect to notional income determined by a Court
in the first category of cases outlined earlier, those where the
victim is proved to be employed but claimants are unable to prove
the income before the Court. Once the victim has been proved to
be employed at some venture, the necessary corollary is that they
would be earning an income. It is clear that no rational
distinction can be drawn with respect to the granting of future
prospects merely on the basis that their income was not proved,
particularly when the Court has determined their notional
income.
25. 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].
26. 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.
27. With the above observations, I concur with the opinion of
my learned brother.
........................J.
(N.V. RAMANA)
NEW DELHI;
January 05, 2021.
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