The Supreme Court (SC) bench comprising of Justice D Y Chandrachud and Justice Ajay Rastogi awarded a whopping compensation of Rs. 7,64,29,437, the largest so far in an individual accident claim. Further it also elaborated on the principles related to computation of compensation while determining a claim.
Facts of the Case:
Mr. Mahendra Kodkany, an expat employed with GTL Overseas (Middle east) FZ-LLC was aboard the ill-fated Air India aircraft which crashed at Mangalore airport on 22nd May, 2010. His wife, Triveni Kodkany submitted a claim for compensation on 10th March, 2010 pursuant to which Air India paid an amount of Rs. 4,00,70,000 to her on 20th March, 2012 against an indemnity. In addition to this, an amount of Rs. 40,00,000 was paid to the parents of the deceased. Further, the parents and brother of the deceased instituted a suit against Air India to claim compensation. The Trial Court decreed the claim of the mother in the amount of Rs. 70,00,000 however, claims of the father and the brother were dismissed.
The present appeal arises out of a complaint instituted by the surviving wife, son and daughter of the deceased before the National Consumer Disputes Redressal Commission (NCDRC) claiming a compensation of Rs.13,42,00,000 along with interest at the rate of 18 per cent per annum from the date of accident and other consequential payments. Allowing the complaint, the NCDRC awarded a compensation of AED 58,81,135 equivalent to Rs. 7,35,14,187 (on the basic conversion rate of Rs. 12.50 per AED). The NCDRC noted that Rs. 4,00,00,000 and Rs. 40,00,000 have already been paid to the complainants and the parents of the deceased respectively and directed that these amounts should be deducted from the final compensation. The complainants were also held to be entitled to simple interest on the compensation amount.
At the time of the accident, the deceased’s Total Cost to Company (CTC) was AED 482,395. However, the NCDRC determined the deceased’s total income as AED 452,395 after deducting the telephone allowance of AED 30,000. While an addition of 25% was made towards future prospects, a deduction of 20% (one fifth) was made towards personal expenses of the deceased. As the deceased was 45 years old on the date of the accident, a multiplier of 13 was applied on the total income i.e. AED 452,395 to arrive at the total compensation of AED 58,81,135. Cross appeals were filed in these proceedings.
Analysis of the SC:
- Deduction of allowance for determination of compensation. The SC rejected the deduction of the telephone allowance by the NCDRC for determining the total income. It observed that the CTC of the deceased is a consolidated amount comprising of the basic pay, house rent allowance, transport allowance, telephone allowance, LTA, etc. This consolidated amount is the amount that was paid to him annually by the employer on account of his employment. The SC further remarked, “The bifurcation of the salary into diverse heads may be made by the employer for a variety of reasons. However, in a claim for compensation arising out of the death of the employee, the income has to be assessed on the basis of the entitlement of the employee.”
- Appropriate deduction on account of personal expenses The SC also rejected the deduction of one fifth on account of personal expenses. According to the rule laid down in Sarla Verma v Delhi Transport Corporation, where the deceased was married, the deduction towards personal living expenses should be one-third, where the number of dependent family members is two or three; one fourth, where the number of dependent family members is four to six; and one-fifth, where the number of dependent family members exceeds six . Therefore, as the number of dependents in the present case is 4, the appropriate deduction on account of personal expenses should have been one-fourth and not one-fifth as determined by the NCDRC.
- Additions to be made towards future prospects The SC relied on National Insurance Company Limited v Pranay Sethi for determination of additions to be made on account of future prospects. The conclusion in Pranay Sethi is as follows:
“59.3 While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. 59.4 In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.”
While determining the additions to be made on account of future prospects, the NCDRC made an addition of 25%. However, the SC held that, the deceased being a long-standing employee of the employer and having risen from the ranks of a Senior Manager in 2003 to that of a Country Head in 2005 and finally as Regional Director in 2009, was a confirmed employee of his employer. His employment cannot be equated with that of a person drawing a fixed salary. The SC expanded the scope of the expression “permanent job” as mentioned in Paragraph 59.3 and concluded that the determination of additions towards future prospects should be done in accordance with paragraph 59.3. Therefore, it was decided that 30% additions should be made on account of future prospects.
Based on the above, the apex court awarded a final compensation of Rs.7,64,29,437 to the claimants along with interest at the rate of nine per cent per annum to be paid as has been awarded by the NCDRC.
1 (2009) 6 SCC 121
2 (2017) 16 SCC 680
By taking a liberal approach for determining quantum of compensation, the SC has yet again corroborated its view that ‘the law values life and limb in free country in generous scales”. This judgment not only takes in to account the sufferings of the deceased’s family but also makes a fair assessment of his eminence as an employee. The precedent set in this judgment will certainly benefit several accident victims and their families in the years to come.