Summary
In a motor accident death claim, the Supreme Court held that house rent allowance, flexible benefit plan and the employer's provident fund contribution form part of a salaried deceased's income and must be included before adding the future-prospects increase. The High Court erred in excluding them, but rightly deducted income tax, which the Tribunal had overlooked. Compensation was reassessed at Rs. 93,66,272.
Issues
- Whether perquisites and allowances such as house rent allowance, flexible benefit plan and the employer's provident fund contribution must be included in the deceased's salary when applying the future-prospects increase under the motor accident compensation formula.
- Whether income tax should be deducted from the deceased's salary in computing loss of dependency.
Held
- Allowances and perquisites payable to a salaried employee, such as house rent allowance, flexible benefit plan and the company's provident fund contribution, do not stay static but generally rise with length of service and in proportion to the basic salary. Excluding them entirely when applying future prospects is unjustified; they must be added to the salary before the future-prospects increase is applied. (¶¶ 6, 7, 10, 12)
- Following Raghuvir Singh Matolya v. Hari Singh Malviya (house rent allowance and dearness allowance form part of income) and National Insurance Co. Ltd. v. Nalini (allowances to be added to salary in fixing dependency), the Tribunal was justified in including these components; the High Court erred in excluding them and reducing the award. (¶¶ 8, 9, 10, 11)
- The High Court was, however, justified in deducting income tax from the deceased's salary in computing income, a factor the Tribunal had overlooked. (¶ 13)
- Applying these principles to a monthly salary of Rs. 50,942 (net of professional tax and income tax at 10%), with 50% personal-expense deduction for an unmarried deceased, 50% future prospects and multiplier 17 for age 26, loss of dependency was fixed at Rs. 93,16,272, plus Rs. 25,000 each for funeral expenses and loss of love and affection. (¶ 14)
Result
Appeal partly allowed; High Court's judgment reversed; compensation payable to the claimant-mother reassessed at Rs. 93,66,272; no order as to costs.