Friday, 31 January 2025

Supreme Court: Compensation under Motor Accident Claim petition Can't Be Reduced Merely Because Dependents Took Over Business Of Deceased

 The mere fact that the Deceased's share of ownership

in these businesses ventures was transferred to the

Deceased's minor children just before his death or to the

dependents after his death is not a sufficient justification to

conclude that the benefits of these businesses continue to

accrue to his dependents. On the contrary, it has come on

record that the Deceased was actively involved in the day to-day administration of these businesses from their stage

of infancy, had undergone specialized training to

administer his business and that the audit reports neatly

delineate Deceased's share of income from the

businesses. These facts necessitate that the entire amount

from the business ventures is treated as income. Similarly,

the amount earned from the bank interests and remaining

investments must also be included as income.’ {Para 17}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

 CIVIL APPEA L NOS. 1162 - 1163 OF 2025

S. VISHNU GANGA & ORS Vs M/S ORIENTAL INSURANCE COMPANY LIMITED.

Author: AHSANUDDIN AMANULLAH, J.

Citation:  2025 INSC 123.

Citation: JANUARY 29, 2025.

Leave granted.

2. The present appeals are directed against the Final Order and

Judgment dated 22.12.2017 (hereinafter referred to as the “Impugned

2

Judgment”) passed by a learned Division Bench of the High Court of

Judicature at Madras, Bench at Madurai in appeals bearing C.M.A.

(MD) Nos.1075 of 2015 and 1076 of 2015 (both filed by the Insurance

Company/R11

) , against the Award dated 25.11.2014 passed by the

learned Motor Accidents Claims Tribunal (hereinafter referred to as the

“Tribunal”) in Claim Petitions bearing M.C.O.P No.1573 of 2009 and

1574 of 2009. The appeals preferred by R1 were allowed in part and

the compensation awarded by the Tribunal was reduced.

BRIEF FACTS:

3. The parents - father and mother - of the appellants were travelling

in a Tempo Traveler vehicle (hereinafter referred to as the “vehicle”)

belonging to R22

 insured with R1 from Salem to Madurai. While the

vehicle was near Namakkal, at that time, a bus belonging to R33

 came

from the opposite side and dashed into the vehicle resulting in the

unfortunate death of the parents of the appellants. The bus was bearing

Registration No.TN30 N0612 and was not insured.

1

 Respondent No.1 herein.

2

 Respondent No.2 herein.

3

 Respondent No.3 herein.

3

4. The appellants filed M.C.O.P No.1573 of 2009 with regard to the

death of their father claiming a total compensation of Rs.1,00,00,000/-

(Rupees One Crore). Likewise, they also filed M.C.O.P No.1574 of 2009

claiming compensation to the tune of Rs.1,00,00,000/- (Rupees One

Crore) for the death of their mother. The claims made were more or less

identical in both cases as the parents of the appellants were partners in a

firm and, thus, the calculation(s) made to arrive at the claimed

compensation amount(s) was the same. The appellants, in support of

their claims, produced various documents including the Partnership Deed

dated 01.06.2006, Income Tax Returns of the firm Sri Ganga Mills

(hereinafter referred to as the “Mill”) for the Assessment Years 2007-

2008, 2008-2009, 2009-2010, 2010-2011 and 2011-2012. R1 also filed

its written objection(s). After hearing the parties, the Tribunal awarded

compensation of Rs.58,24,000/- (Rupees Fifty-Eight Lakhs Twenty-Four

Thousand) for the father and Rs.93,61,000/- (Rupees Ninety-Three

Lakhs Sixty-One Thousand) for the mother with interest @ 7.5 per cent

per annum from the date of the filing of the claim petition till realization. It

was R1 which filed appeals before the High Court, but R3 did not

challenge the Award of the Tribunal.

5. Both the appeals have been decided by the High Court vide the

common Impugned Judgment. The appeals were partly allowed. Final

compensation, as awarded by the High Court was Rs.26,68,600/-

(Rupees Twenty-Six Lakhs Sixty-Eight Thousand Six Hundred) for the

father of appellants, whereas for the mother, it was Rs.19,22,680/-

(Rupees Nineteen Lakhs Twenty-Two Thousand Six Hundred and

Eighty). A comparative overview of the compensation awarded by the

Tribunal and High Court is extracted below:

CLAIM THE TRIBUNAL THE HIGH COURT

Claimants 4 (daughters of deceased)

Age Father: 57 years

Mother: 50 years

Multiplier Father: 9

Mother: 13

Father: 8

Mother: 12

Income Father: Rs.60,000

p.m.4

Mother: Rs.60,000

p.m.

Father: Rs.30,000 p.m.

Mother: Rs.12,500

p.m.

Future Prospects Father: Rs.9,000 p.m.

Mother: Rs.18,000

p.m.

Father: Rs.3,000 p.m.

Mother: Rs.3,125 p.m.

Loss of Income Father: Rs.55,89,000

Mother: Rs.91,26,000

Father: Rs.24,33,600

Mother: Rs.16,87,680

Loss of Love and

Affection

Father: Rs.2,00,000

Mother: Rs.2,00,000

Conventional Head

(Transportation +

Cremation

Charges)

Father: Rs.35,000

Mother: Rs.35,000

Award Father: Rs.58,24,000

Mother: Rs.93,61,000

Interest @ 7.5 p.a.5

Father: Rs.26,68,600

Mother: Rs.19,22,680

4

 Abbreviation for per mensem or per month.

5

Interest @ 7.5 p.a.

SUBMISSIONS BY THE APPELLANTS:

6. Learned counsel for the appellants submitted that the High Court

by the Impugned Judgment without any reasoning has upset the Award

on the ground that the income from the Mill was not reduced due to the

death of the deceased, and the appellants have stepped into the

business of the deceased parents and the business continued after the

deaths.

7. Learned counsel submitted that the High Court erred by relying on

a judgment of the High Court of Karnataka6

 in B Parimala v Riyaz

Ahmed, 2000 SCC OnLine Kar 446 to hold that the relevant factors to

see for the prevailing loss of the income of the deceased is the

remuneration received by them from the Mill and not the income of the

Mill, which is contrary to what has been held in Paragraphs 18, 20, 22,

23 and 27 of the relied upon judgment itself i.e., B Parimala (supra),

holding that when a person is an active partner and has also contributed

5

 Abbreviation for per annum.

6

 Incorrectly noted in the Impugned Judgment as ‘High Court of Karnataka Vs. Riyaz Ahamed’ (sic).

6

to the capital, then a judicious decision will have to be made of the

income to determine the income attributable to the efforts of the

deceased and income attributable to the investment made. Further, it

was contended that K Ramya v National Insurance Co. Ltd., 2022

SCC OnLine SC 1338 at Paragraphs 17 and 18, has held that merely

because the deceased’s share of ownership in the business was

transferred to the children is not sufficient justification to conclude that

the benefits of his business continue to accrue to his dependents. It was

also submitted that a Coordinate Bench of this Court on 15.09.2022 in

Civil Appeal Nos.6671-6672 of 2022 (Sushma H.R. & Anr. v Deepak

Kumar Jha & Ors.)

7

 had held that in view of the young age of the

appellants, without experience, it cannot be expected that the business

can be run by them in the same manner as it was run by the deceased.

8. It was submitted that in this background, the view of the High

Court that the appellants had stepped into the shoes of the deceased by

becoming partners in the firm and that they did not suffer any pecuniary

loss in the business is also incorrect for the reason that the firm was

being run by the parents of the appellants. The appellants were added as

partners at the age of about 24, 22, 18 and 18 years respectively, but

were not participating in the business for which the evidence of PWs 3, 8

7 2022 SCC OnLine SC 2166.

7

and 10 were relied on. It was submitted that the evidence showed that

due to the death of the parents, there was a downfall in the number of

workers employed which reduced to 138 from 202, including technical

workers as the firm was unable to pay their salaries on time. Further, it

was contended that RW-1, who was the Chartered Accountant of the

firm, had specifically admitted that the loss was to the tune of

Rs.68,00,000/- (Rupees Sixty Eight Lakhs). Further, learned counsel

submitted that the appellants had filed the Mill’s Income Tax Returns

from AY8

 2005-2006 to AY 2011-2012 to show reduced profits. Yet, the

High Court, relying on some statements, without considering the whole

evidence and the context in which such statements were made, decided

to reduce the compensation awarded. It was the contention of the

learned counsel that the multiplier of 8 instead of 9 was applied in the

case of the father and 12 in place of 13 with regard to the mother which

was against settled law.

9. It was submitted that even the Tribunal had not fully appreciated

the facts of the case and failed to apply the law as was required to be

done, but the High Court had caused further damage by drastically

reducing the compensation awarded, leading to a miscarriage of justice.

Moreover, it was contended that, in fact, R1 had challenged only 50 per

8

 Abbreviation for Assessment Year.

8

cent of the total amount awarded by the Tribunal, but the High Court

reduced the awarded amount by more than 50 per cent with regard to the

father and 80 per cent with regard to the mother, way beyond what was

sought for by R1.

SUBMISSIONS BY R1:

10. Learned counsel for R1 submitted that the claims made by the

appellants were exorbitant and even the Tribunal’s Award was on the

much higher side, than what was actually due and admissible to the

appellants. It was submitted that rightly, the High Court reduced the

quantum of amount awarded. It was argued that reduction was made

after considering the evidence led by the appellants, especially of PW-8,

PW-9 and PW-10. It was stated that the cases referred to by the

appellants did not apply to the facts of the present cases. Lastly, it was

contended that the Impugned Judgment needs no interference.

 ANALYSIS, REASONING AND CONCLUSION:

11. Having examined the matter, the Court finds that the Award

rendered by the Tribunal is well-considered. Though the claimed

compensation was Rs.1,00,00,000/- (Rupees One Crore) each with

9

regard to the father and the mother, the Tribunal granted Rs.58,24,000/-

(Rupees Fifty-Eight Lakhs Twenty-Four Thousand) re the father and

Rs.93,61,000/-(Rupees Ninety-Three Lakhs Sixty-One Thousand) re the

mother. The documents produced by the appellants and the reasoning

given by the Tribunal as well as the Karnataka High Court’s Division

Bench judgment in B Parimala (supra) indicate, and in our opinion,

rightly so, that merely because the appellants stepped into the shoes of

the deceased, by such factum itself, the appellants would not be capable

of running the Mill. It would be of relevance as to whether due to their

lack of experience and maturity, real/expected downfall in the profitability

of the firm or the business would ensue. Such factor, while considering a

claim pertaining to loss of future income/earnings, would have to be dealt

with. In the present cases, even the monthly incomes of the parents as

claimed by the appellants i.e.. income of the father being Rs.25,00,000/-

(Rupees Twenty-Five Lakhs) per year and the mother’s being

Rs.20,00,000/- (Rupees Twenty Lakhs) per year, the notional income

fixed by the Tribunal of Rs.60,000/- (Rupees Sixty Thousand) each per

month, is much more reasonable. It is no longer res integra that Income

Tax Returns are reliable evidence to assess the income of a deceased,

reference whereof can be made to Amrit Bhanu Shali v National

Insurance Co. Ltd., (2012) 11 SCC 7389

; Kalpanaraj v Tamil Nadu

9

 Para 17.

10

State Transport Corporation, (2015) 2 SCC 76410, and K Ramya

(supra)

11

.

12. The observations, as under, in Sushma (supra) fortify our view:

‘7. Therefore in the matter of determining the

compensation certain larger aspects have to be kept in

perspective and even if it is expected that the Bakery

business is continued, the loss due to the death of the

husband and his expertise in such business certainly would

be at least to the extent of 50% of the normal way in which

the business was conducted…’

13. K Ramya (supra), wherein it was, inter alia, held as below, also

supports the case put forth by the appellants:

‘11. At the outset, it is pertinent to reiterate the concept of

‘just’ compensation under Section 168 of the Act. It is a

settled proposition, now through a catena of

 decisions12

 including the one rendered by the Constitution

 Bench in Pranay Sethi13

 that compensation must be fair,

reasonable and equitable. Further, the determination of

quantum is a fact-dependent exercise which must be

liberal and not parsimonious. It must be emphasized that

compensation is a more comprehensive form of pecuniary

relief which involves a broad-based approach unlike

damages as noted by this court in Yadava

Kumar v. Divisional Manager, National Insurance Co.

Ltd.14. The discussion in the abovementioned cases

highlights that Tribunals under the Act have been granted

reasonable flexibility in determining ‘just’ compensation and

are not bound by any rigid arithmetic rules or strict

10 Para 7.

11 Para 14.

12 Helen C Rebello v Maharashtra State Road Transport Corporation, (1999) 1 SCC 90; United India

Insurance Co. Ltd. v Patricia Jean Mahajan, (2002) 6 SCC 281; New India Assurance Co.

Ltd. v Charlie, (2005) 10 SCC 720, and; National Insurance Co. Ltd. v Indira Srivastava, (2008) 2 SCC 763.

13 National Insurance Co. Ltd. v Pranay Sethi, (2017) 16 SCC 680.

14 (2010) 10 SCC 341.

11

evidentiary standards to compute loss unlike in the case of

damages. Hence, any interference by the Appellate Courts

should ordinarily be allowed only when the compensation

is ‘exorbitant’ or ‘arbitrary’.

12. Furthermore, Motor Vehicles Act of 1988 is a beneficial

 and welfare legislation Ningamma v United India Insurance Co. Ltd., (2009) 13 SCC 710  that seeks to provide

compensation as per the contemporaneous position of an

 individual which is essentially forward-looking. Unlike

tortious liability, which is chiefly concerned with making up

for the past and reinstating a claimant to his original

position, the compensation under the Act is concerned with

providing stability and continuity in peoples' lives in the

 future. See Peter Cane, Atiyah’s Accidents, Compensation and the Law (7th Edition, Cambridge University Press, 2006) Keeping the abovementioned principles in the backdrop, we now move on to the facts at hand. 

17. The mere fact that the Deceased's share of ownership

in these businesses ventures was transferred to the

Deceased's minor children just before his death or to the

dependents after his death is not a sufficient justification to

conclude that the benefits of these businesses continue to

accrue to his dependents. On the contrary, it has come on

record that the Deceased was actively involved in the dayto-day administration of these businesses from their stage

of infancy, had undergone specialized training to

administer his business and that the audit reports neatly

delineate Deceased's share of income from the

businesses. These facts necessitate that the entire amount

from the business ventures is treated as income. Similarly,

the amount earned from the bank interests and remaining

investments must also be included as income.’

(sic)

(emphasis supplied)

14. Even otherwise, we are satisfied that between the formula

applied by the Tribunal vis-a-vis the approach adopted by the High Court,



411-412.

12

the view of the Tribunal rendered in the form of the Award satisfies our

judicial conscience. The High Court’s reasoning militates against settled

law. For the reasons aforesaid and adopting a holistic view, we find that

the Impugned Judgment of the High Court deserves to be interfered with.

It is, accordingly, set aside. The Award passed by the Tribunal stands

restored; payments in terms thereof be made by R1 to the appellants,

after deducting/adjusting the amounts, if any already paid, within a period

of 6 (six) weeks, reckoned from today.

15. The appeals stand disposed of in the aforesaid manner.

16. No order as to costs.

 ………………..................…..J.

 [SUDHANSHU DHULIA]


 …………………..................…..J.

 [AHSANUDDIN AMANULLAH]

NEW DELHI

JANUARY 29, 2025

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