Whether the entire amount under ‘Income from House Property and Agricultural Land’ should be deducted or not while computing the compensation

The Appeal here is directed against the judgment passed on 30.06.2017 passed by the High Court of Judicature at Madras, Madurai Bench. 

The Supreme Court held here set aside the judgment by the high court and held the appellant entitled to the enhanced compensation. 

The deceased was a resident of Tiruchirappalli, Tamil Nadu. At 4 PM, he was traveling alone in a Lancer Car and met with an unfortunate accident with an Ambassador Car in the accident the drivers of both vehicles passed away before any medical assistance could reach them. The sole survivors of the collision were occupants of the Ambassador Car.

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The Deceased was aged above 31 years at the time of death and was an income tax assessee. He was a businessman who held diverse interests in arenas such as jewellery, textiles, and exports. Furthermore, he also drew income from his agricultural lands and leased out real estate. 

At the time of his demise, he left behind a widow, two minor children, and parents who were stated to be dependent on him. It is to be noted that among these dependents, the father of the Deceased passed away during the proceedings before the High Court. 

The Deceased's dependents filed a claim petition for Rs. 7,00,00,000 in August 2004, contending, inter alia, that he died as a result of the injuries suffered in the abovementioned accident, which occurred due to the rash and negligent driving of the Ambassador Car which the Insurance Company had insured. 

Before the Tribunal, the Insurance Company took the stance that the Deceased was the one who was responsible for the accident and that the compensation sought by the Deceased was exorbitant. It is worth noting that the injured occupants of the Ambassador Car who survived the crash also filed their respective claim petitions.

Tribunal held that it was the driver of the Ambassador Car who was solely responsible for the crash and assigned liability for the accident to him, the compensation granted to Appellants was reduced from Rs. 4,29,37,700 to Rs. 57,90,000 along with requisite interest. 

 The aggrieved Insurance Company filed its appeal the High Court held that the Ambassador Car driver was solely liable for the accident but the approach of the Tribunal in respect to the computation of compensation, primarily under the reliability of income tax returns and audit reports to determine “loss of income”.

 The Deceased’s dependants suffered no loss of income and instead computed the compensation by fixing his salary at Rs 25,000/- per month on a notional basis as per his educational qualification and compensation was reduced to Rs 57,90,000 along with interest of 7.5% per annum. 

The Supreme court of India here held that the total Compensation payable to the Appellant is 2,27,12,400 with interest at the rate of 7.5% per annum to divide the income as mentioned in the audit reports into two parts that are Income from Business Ventures and other Investments and Income from House Property and Agricultural Land.

The court analyzed that the mere fact that the Deceased’s share of ownership in 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. The income of the   Deceased is computed by adding the amount awarded under the two parts, forty percent of the income has to be added towards prospects, deducting one-fourth towards personal expenses, Applying the multiplier of 16, and compensation under the remaining conventional heads.