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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