Hon’ble Mr. Justice O.P. Sharma, Judge

Surekha Charak Appellant
versus
Ajay Kumar and others Respondents

CIMA No. 137 / 1997, decided on 6.9.2000.

J&K Motor Vehicles Act, 1988 S. 166 - Death in a motor vehicle accident - Deceased a Bank Officer - Drawing Rs. 9,816/- per month - Aged 35 years - Multiplier 12 applied - Award challenged - Held : Multiplier 12 rightly applied - Loss of consortium, shortening of life and funeral expenses also taken into consideration - Compensation allowed at Rs. 9 lacs held to be proper.

J&K Motor Vehicles Act, 1988, S. 166 - Income-tax payable by deceased can be deducted for purpose of paying compensation. [Para 4]

Advocates who appeared in this case :
Mr. J.P. Singh, Advocate, for appellant
Mr. H.L. Choudhary, Advocate, for respondent

3. The finding of the tribunal is that although monthly salary of the deceased was Rs. 9816/-, but taking into account his stable nature of job it was fixed at Rs.10,000/- per month. Since family comprised of three adults and two minor members, income was divided by 8 and the personal expense of the deceased including transport charges was found to be Rs.3000/-. So family dependency was assessed at Rs.7000/- and to ensure that the appellants are able to generate as such income by investing the capital feed on long term basis, tribunal selected multiplier of 12 after making deduction of income tax which he admittedly was paying. This is how the Trbunal awarded Rs.8,28,000/-. There can be no doubt that the deceased was having stable job and according to PWs Shamsher Singh and Yogesh Kumar he had fair chance of Promotion also. Even in the absence of promotion, salary of a salaried person continues to increase with the increase of price index. So the tribunal should have taken this aspect of the matter into consideration while determining the loss of income. The question of allowing some increase for future prospects was considered by the Supreme Court in General Manager Kerala State Transport Corporation v. Susamma Thomas 1994 ACJ 1. Applying the ratio of the judgment to the facts of the case because deceased was holding stable job, a proportionate increase in his income is justified, but while increasing the amount the court has to take into consideration certain imponderables such as life expectancy of the deceased as well as chances that the deceased may not have lived upto estimated period of life expentancy and the chances that he may have got better employment or might have lost his employment or income altogether. So income cannot be multiplied just by assuming that promotion would have earned him much more than what he was getting on the date of his retirement.

However, even the claimants have established the increase of income upto Rs.12,000/- only and considering the impenderables as noticed above it is reasonable to assume that his salary would have been higher than he was drawing at the time to death provided he had survived. So it is reasonable to hold that considering the stable nature of his job his monthly salary would have registered increase and it is fair to assess the loss of income assuming his monthly salary at Rs.12,000/- per month instead of Rs.10,000/-. So it is Rs.12,000/- which has to be divided by 8. When so divided his personal dependency would come Rs.3000/- per month. Since he was having his own scooter an amount of Rs.500/- as petrol expenses and an amount of Rs.500/- as out of pocket expenses would be reasonable. So personal expenses of the deceased would be Rs.12,000/- minus Rs.4000/- = Rs.8000/- The Family dependency of the appellants would thus be reduced to Rs.8000/- per month.

"In the method adopted by Viscount Simen in the case of Nance, (1951) AC 601, also first the annual dependency is worked out and then multiplied by the estimated useful life of the deceased. This is generally determined on the basis of longevity. But the, proper discounting on various factors having a bearing on the uncertainties of life, such as premature death of the deceased or the dependant, remarriage, accelarated payment and increase by wise and prudent investment, etc. would become necessary. It was generally felt that discounting on various imponderables made assessment of compensation rather complicated and cumbersome and very often as a rought and ready measure, one-third to one-half of the dependency was reduced, depending on the life-span taken. That is the reason why courts in India as well as England preferred the Davies’ formula as being simple and more realistic. However as observed earlier and as pointed out in Susamma Thomos’ case, 1994 ACJ 1(SC), usually English courts rarely exceed 16 as the multiplier."

4. The only other question to be decided is whether the income tax payable by the deceased should or should not be deducted. Mr.J.P.Singh places reliance on the judgment of High Court of Andhra Pradesh in K. Sapana v. B. Appa Rao & others. 1988 ACJ 113 what was observed by the High Court of Delhi reads as under :

"In support of the contention that the amount of imcome tax is liable to be deducted from the amount of damages, learned counsel has relied upon British Transport Commission v.Gourley, 1956(1)AC 185, where the House of Lords held that in assessing damages for loss pf personal earnings in case of personal injury the tax which paintiff would have to pay had he continued to receive those earnings must be taken into account. In this judgment Lord Keith of Avonhelm gave a dissenting opinion. Learned counsel for the plaintiff has relied upon Judgment of Supreme Court of Canada in Ontarie Vs. Jennings, 1957 DLR 644, for the prposition that there shold be no deduction from the amount awarded for lost earnings on the assumption that plaintiff would have had to pay income tax on the earnings whether or not lump sum amount is subject to tax. The lump sum is uncertain enough as it is. To assess another uncertainty the incidence of Income Tax would be an undue preference for the case of the defedant or his insurance company. I am inclined to agree with the reason given in the judgment of Supreme Court of Canada and with the opinion of Lord Kieth."

However is evident the deduction of income tax was disallowed because it was not proved as to what amount the injured was paying as tax. So this judgement does not help the appellants. However the judgement of Andhara Pradesh High Court is directly on the point. It reads as under :

"58. The income tax payable for the sum covered by the loss of earning or loss of future earnings, has to be deducted. The special damages (upto date of trial) will be the net earnings lost, after deduction of income tax payable therein. Likewise, the general damages for the future loss of earnings will be on basis of net earnings after deduction of income tax payable thereon. (See British Transport Commission Vs. Gourley, 1956 AC 185). However, if by reason of the accident, the plaintiff suffered partial disability and his income got reduced in part, the deduction towards income tax must be related to the top part of the earnings alone which he has lost. (See Lyndale Fashion Manufactures Vs. Rich 1973 (1) All ER 33)."