Full Judgment Text
$~12
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Pronounced on: 24 February, 2025
+ MAC.APP. 324/2018, CM APPL. 12428/2018
CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD.
st
Plot No.6,1 Floor, Pusa Road,
Near Metro Pillar No.81,
New Delhi -110005 .....Appellant
Through: Ms. Suman Bagga, Advocate.
Versus
1. BHUPAN PASWAN .....Respondent No.1.
2. MRS. INDU DEVI
Parents of deceased master Parvesh @ Rahul
.....Respondent No.2.
Both R/o 202-203, Jai Vihar,
Block F-2, Near FaujI Farm House,
Nangloi, West Delhl-110041.
3. MR. UMESH KUMAR
S/o Sh. Braham Singh
R/o Village Nirganjani,
District Muzaffar Nagar, U.P. .....Respondent No.3.
4. MR. AMIT JAIN
S/o Sh. Jagdeesh
R/o 128, Sadh Bhopa Road,
Nai Mandi, Muzaffar Nagar, LLP. .....Respondent No.4.
Through: Mr. Javed Hashmi and Mr. F.M.
Khan, Advocates for R-1 & R-2.
J U D G M E N T
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By:VIKAS ARORA
Signing Date:25.02.2025
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MAC.APP. 324/2018 Page 1 of 14
NEENA BANSAL KRISHNA, J.
1. An Appeal under Section 173 of the Motor Vehicle Act, 1988
(hereinafter referred to as “MV Act, 1988” ) has been filed by the Insurance
Company/Appellant against the Award dated 05.12.2017, wherein the
compensation in the sum of Rs.10,20,000/- along with interest @ 9% per
annum has been granted on account of death of Master Parvesh @ Rahul,
aged 11 years (hereinafter referred to as “deceased” ) in a road accident on
10.02.2017.
2. Briefly stated, on 10.02.2017 at about 1:05 a.m., Master Parvesh @
Rahul was walking on the Street in front of M.V. Hospital, Pooth Khurd,
Delhi when he was hit by the offending truck bearing No.UP 12 AT 1899,
driven by Shri Umesh Kumar and owned by Shri Amit Jain. The driver of
the offending truck was improperly reversing the vehicle, as a result of
which he hit the deceased and crushed him against the wall.
3. The FIR No. 55/2017 was filed under Sections 279/337/304A of the
Indian Penal Code, 1860 at Police Station Bawana. After investigations, the
DAR was filed by the Investigating Officer on 12.09.2017. Also, the Claim
Petition was filed by the parents of the deceased for the grant of
compensation under Sections 166 and 140 of the Motor Vehicles Act, 1988.
4. After trial, the compensation was granted in the sum of Rs.10,20,000/-
along with interest @ 9% per annum, on account of demise of Master
Parvesh @ Rahul.
5. Learned counsel for the Appellant/Insurance Company submits that
compensation has been calculated by placing reliance on the judgment of
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Chetan Malhotra vs. Lala Ram, etc . MAC APP.No.554/2010 decided on
13.05.2016. However, this judgment is no longer being followed and in the
light of the later judgments of the Apex Court, the compensation be
calculated by taking the Notional Income of the deceased as Rs. 30,000/- per
annum. The Appellants further contend that the compensation awarded
under the non-pecuniary heads is on the higher side.
6. Learned counsel for the Respondent, however, has submitted that the
compensation has been rightly calculated and the Award does not merit any
interference.
7. Submissions heard and record perused.
Loss of Dependency: -
Assessment of Notional Income: -
8. The Appellant/Insurance Company has questioned the Loss of Income
of the deceased by the learned Tribunal, which has been determined on the
basis of the “inflation correction method/formula” by taking the Notional
Income of the deceased as per the Second Schedule of the MV Act, 1988, as
prescribed in the case of Chetan Malhotra (supra).
9. The core issue is what should be the principle for determination of
Loss of Income in case of demise of the child in a road accident.
10. In the landmark judgment of R.K. Malik vs . Kiran Pal , (2009) 14 SCC
1, the Apex Court, while considering the Claims arising on account of
demise of 29 children in a road accident in November 1997, succinctly
observed that in motor accident cases, the goal is to return the dependents or
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claimants to the pre-accident state. The compensation includes future
financial losses, such as lost income or dependency. In case of the death of
an infant, there may have been no actual pecuniary benefit derived by its
parents during the child's lifetime, but this will not necessarily bar the
parents' claim and prospective loss will find a valid claim provided that the
parents establish that they had a reasonable expectation of pecuniary
benefit if the child had lived. Since the Second Schedule was introduced in
the year 1994 and the year of accident in that case was 1997, the Court
deemed it appropriate to refer to the notional income mentioned in the
Second Schedule to determine the pecuniary loss of the
Claimants/Dependants.
11. Thus, traditionally, in the case of death of a child upto 15 years, it was
the notional income of Rs. 15,000/- in terms of Second Schedule to Section
163-A of the Motor Vehicle Act, 1988 , was being adopted which was from
time to time corrected by taking into consideration the cost inflation index.
12. In Kishan Gopal vs. Lala , (2014) 1 SCC 244, the Apex Court, while
assessing the notional Income of the deceased 10 year old child, declined to
fix the same as 15,000 p.a. (the amount specified in the Second Schedule for
a non-earning member) by observing that the Rupee value has come down
drastically since 1994 and the amount mentioned in the Second Schedule
would be inadequate. Thus, the Apex Court determined the notional income
as Rs. 30,000/- p.a., by taking into consideration the Cost Inflation Index.
13. Likewise, in the case of Chetan Malhotra vs. Lala Ram , MAC. APP.
554/2010, decided on 13.05.2016, the Coordinate Bench of this Court while
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deciding the Claim Petitions arising out of death of 15 children, observed
that the notional income specified in the Second Schedule in November
1994, needs to be corrected as the amount specified therein, cannot hold
good even after elapse of more than two decades because the value of
money stands eroded on account of the effect of inflation. Thus, on the basis
of inflation correction method , the method of Calculation was defined thus:
“71. Subject to all other requisite conditions being fulfilled, for the
foregoing reasons, in order to bring about consistency and uniformity
in approach to the issue, it is held that claims for compensation on
account of death of children shall be determined as follows :-
(i). Till such time as the law is amended by the legislature, or the
Central Government notifies the amendment to the Second Schedule in
exercise of the enabling power vested in it by Section 163-A (3) of
the Motor Vehicles Act, 1988, and except in cases wherein the
prospects of employability and earnings (in future or present) of the
deceased child are proved by cogent and irrefutable evidence, this
having regard, inter alia, to the academic record or training in special
talents or skills, for computing the pecuniary damages on account of
the loss to estate, the notional income of non-earning persons
(`15000/- p.a.) as specified in the Second Schedule (brought in force
from 14.11.1994), shall be assumed to be the income of the deceased
child, and taken into account after it is inflation- corrected with the
help of Cost Inflation Index (CII) as notified by the Government of
India from year to year under Section 48 of the Income Tax Act, 1961,
by applying the formula indicated hereinafter.
(ii) For inflation-correction, the financial year of 1997- 1998 shall be
treated as the "base year" and the value of the notional income
relevant to the date of cause of action shall be computed in the
following manner :- 15,000/- x A ÷331 [wherein the figure of
„`15,000/-‟ represents the notional income specified in the second
schedule requiring inflation-correction; „A‟ represents the CII for the
financial year in which the cause of action arose (i.e. the accident /
death occurred); and the figure of „331‟ represents the CII for the
„base year‟]
(iii). After arriving at an appropriate figure of the present
equivalent value of the notional income (i.e. inflation-
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corrected amount), it shall be rounded off to a figure in next
thousands of rupees.
(iv). The amount of notional income thus calculated shall be reduced
to two-third, the deduction to the extent of one- third being towards
personal & living expenses of the deceased, the balance taken as the
annual loss to estate (hereinafter also referred to as “the
multiplicand”).
(v). For assessment of the pecuniary damages on account of the death
of children upto the age of 10 years, the loss to estate shall be
calculated, capitalizing the multiplicand, by applying the multiplier of
ten (10).
(vi). For children of the age-group of more than 10 years upto 15
years, the loss to estate shall be calculated by applying the multiplier
of fifteen (15).
(vii). For children of the age-group of more than 15 years but less than
18 years, the loss to estate shall be calculated by applying the
multiplier of eighteen (18).
(viii). After the pecuniary loss to estate has been worked out in the
manner indicated above, an amount equivalent to the amount thus
computed shall be added to it as the composite non-pecuniary
damages taking care of not only the conventional heads but also
towards future prospects as awarded in R.K. Malik v. Kiran
Pal (2009) 14 SCC 1.
(ix). The final sum thus arrived at, appropriately rounded off, if so
required to the nearest (if not next) thousands of rupees, shall be
awarded as compensation for the death of the child.”
14. The Apex Court, in Rajendra Singh vs. National Insurance Company
Ltd. , 2020 SCC OnLine SC 521 while considering dismissal of Appeals
arising out of the Impugned Awards in regard to accident prior to 2019,
decided the notional income of a 12-year-old child (deceased), as Rs.
36,000/- p.a., by observing that the structured formula provided in the
Second Schedule was inadequate to assess the compensation; thus, the
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computation by the Learned Tribunal was fair and the Awards passed by the
learned Tribunal did not warrant any interference.
15. Pertinently, here also the basis was the Notional Income which was
adjusted in accordance with the Cost Inflation Index. The general trend thus,
was to take the base of notional income as per Schedule II which was time to
time adjusted by taking into consideration the Cost Inflation Index.
16. Similarly, in Kurvan Ansari, (supra), the Apex Court assessed the
notional income of a deceased 7-year-old victim as Rs. 25,000/- p.a. and
observed that the income is an enhancement of the figure specified in the
Second Schedule of the M.V. Act, considering the devaluation of the Rupee
since the Schedule’s introduction. Relying on this judgment, the Apex
Court, in Meena Devi vs. Nunu Chand Mahto & Ors., decided on October
13, 2022, observed that for the 12-year-old (deceased) victim, the
appropriate notional income would be Rs. 30,000/-.
17. However, it is apposite to note that in the above judgments while
Notional income as defined in Second Schedule was taken as a basis but the
amount was being modified by applying Cost Inflation Index , in the facts of
each case.
18. The Second Schedule however, stands deleted w.e.f. 01.09.2019.
Thus, the question that what would be the basis of assessing the notional
income of a child/ i.e. a non-earning member below 15 years of age, who is
a victim of a motor vehicle accident, became a subject of extensive judicial
discourse.
19. A definitive change of Principle of determination of the income of a
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deceased/disabled Child from Notional income with its correction on the
basis of Cost Inflation Index to Minimum Wages was reflected in Kajal vs.
Jagdish Chand & Ors., (2020) 4 SCC 413, wherein while computing the
Loss of earning for calculating compensation to be granted to an injured girl
child aged around 12 years, who suffered permanent disability, the
Supreme Court observed that the Courts have erred in taking notional
income of Rs 15,000 p.a. as the girl was a young child of 12 years and held
that this was not a proper way of assessing the future loss of income,
because after studying, the child could have worked and would have earned
much more than Rs.15,000 p.a. Hence, the Supreme Court assessed the
notional income on the basis of the Minimum Wages payable to a skilled
workman and opined that the same would be reflective of the minimum
amount which she would have earned on becoming major.
20. Subsequently, in Master Ayush vs . Branch Manager, Reliance
General Insurance Co. Ltd. , (2022) 7 SCC 738, the Apex Court while
considering the grant of compensation to the parents on account of injuries
suffered by a five-year-old child, relied upon Kajal (Supra) and observed
that the notional income should be calculated on the basis of minimum
wages payable to a skilled worker.
21. Similar observations were made in Minor Roopa vs. The Divisional
Manager, New India Assurance Company Ltd. , Civil Appeal No.5069 of
2022 decided on 03.08.2022 and the Apex Court assessed the compensation
based on minimum wages notified by the State of Karnataka.
22. Recently, in Oriental Insurance vs. Reena Raghav , 2023 SCC OnLine
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Del 6695, wherein the deceased was a 5-year-old-girl-child, studying in
DPS Public school, the Coordinate Bench of this Court upheld the Impugned
Award of compensation and assessed the income of the deceased by
adopting minimum wages of a skilled labour as notified in the State of
Uttar Pradesh.
23. The principle of Minimum Wages for skilled Worker has been
adopted as the principle to calculate the Income of a deceased child by the
Co-ordinate Bench of this Court in United India Insurance Company Ltd. v.
Jamaluddin Khan & Ors. , NC No. 2023:DHC:6242 and Om Prakash vs.
Reliance Gen Ins Co. Ltd. and Ors. , 2023 SCC OnLine Del 6526.
24. The Kerala High Court in the case of Master Jyothis Raj Krishna,
Represented by His Next Friend and Father Rajesh Kumar vs. Sunny
George , 2024 SCC OnLine Ker 6875 held, “This Court is conscious of the
fact that by referring to the provisions of the Minimum Wages Act, 1948,
for the purpose the notional income of a minor child, this Court has never
ignored the future of a blooming young mind nor has closed its eyes over the
bright future of the child and the prospects which he may have secured but
for this fatal accident.”
25. The Minimum Wage criteria has been adopted by Supreme Court in
the recent judgment of Baby Sakshi Greola vs. Manzoor Ahmad Simon
&Anr., SLP (C) No. 10996/2018, wherein the Apex Court applied the
approach taken in Kajal (supra) and Master Ayush, (supra) and ascertained
the notional income of a 7-year-old injured child on the basis of the
‘Minimum Wages paid to a skilled worker on a fulltime basis’.
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26. In light of the aforementioned Judgements, it emerges that the
Minimum Wage criteria guarantees a dignified and a uniform standard for
compensation calculation. The most reasonable basis for estimating the
child’s income, in the present case, would be to refer to the Minimum
Wages established by the State Government, in the location where the minor
lived at the time of the accident.
27. In the present case, the income of the deceased child is taken as Rs.
11,830/- as per the Minimum Wages of a Skilled Worker in Delhi in the
year 2017 .
Future Prospects: -
28. In the case of Master Ayush, (supra), it was observed that in addition
to the Minimum Wages for skilled worker, the Claimants would also be
entitled to 40% for future prospects in view of the judgment of National
Insurance Company Limited v. Pranay Sethi & Ors; (2017) 16 SCC 680.
29. Thus, in the present case, the deceased is held entitled to 40% Future
Prospects as per Pranay Sethi (supra) as the same creates a standard
ensuring uniformity in compensation calculation and upholding the dignity
of the deceased minor by recognizing their unrealized potential.
Deduction of personal expenses:-
30. In light of the judgment of the Supreme Court in Sarla Verma (Smt) &
Ors. vs. Delhi Transport Corporation & Anr., (2009) 6 SCC 121, and
United India Insurance Co. Ltd. vs. Satinder Kaur alias Satwinder Kaur &
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Ors., (2021) 11 SCC 780, out of the above amount so assessed, 50% have to
be deducted on account of personal and living expenses for a bachelor.
Multiplier:-
31. The learned Tribunal has computed the compensation by applying a
multiplier of 15, by considering the age of the deceased.
32. The calculation of Multiplier has been laid down in the case of Sarla
Varma (Supra) as under :-
“ 21. We therefore hold that the multiplier to be used
should be as mentioned in column (4) of the Table above
(prepared by applying Susamma Thomas, Trilok Chandra
and Charlie), which starts with an operative multiplier of
18 (for the age groups of 15 to 20 and 21 to 25 years),
reduced by one unit for every five years, that is M-17 for
26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to
40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50
years, then reduced by two units for every five years, that
is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7
for 61 to 65 years and M-5 for 66 to 70 years.”
33. Evidently, the Judgment is silent on the multiplier to be used for the
victims under 15 years of age. This incongruity in the matter of selection of
multiplier in the case of persons in the age group up to 15 years was noted in
by the Apex the case of Divya vs. National Insurance Company Ltd., Civil
Appeal No. 7605/2022.
34. In the most recent judgment of the Supreme Court in Baby Sakshi
Greola vs. Manzoor Ahmad Simon &Anr., SLP (C) No. 10996/2018, while
referring to the judgments of Kajal (supra) and Master Ayush (supra), the
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Apex Court has applied the multiplier of 18 for a minor.
35. Thus, in light of the above judgments, this Court deems it appropriate
to ascertain the Multiplier as ‘18’ to calculate the loss of dependency is
calculated accordingly.
36. Thus, the Total Loss of Dependency is calculated as under: -
i. Rs. 11,830/- p.m. + 40% (Future Prospects) = Rs. 16,562/-p.m.
ii. Rs. 14,523 - 50% (personal expenses) = Rs. 8,281/- p.m.
iii. Rs. 8,281- x 12 x 18 = Rs. 17,88,696/-.
37. Therefore, the Total Loss of Dependency is determined as Rs.
17,88,696/-.
Non-Pecuniary Heads:-
38. The Respondents/Claimants shall be entitled to the compensation
under Non-Pecuniary Heads in terms of National Insurance Company
Limited vs. Pranay Sethi And Others , (2017) 16 SCC 680.
1. In the case of Pranay Sethi (supra), it was held that in the case of
death, Rs.15,000/- is liable to be paid towards the loss of estate and funeral
charges each, while Rs.40,000/- was payable towards the loss of consortium
to each legal heir and the same may be enhanced by 10% every three years.
2. In the present case, the accident is of 2017 and the Award was also
passed in 2017. Thus, an amount of Rs. 15,000/- is granted towards the Loss
of Estate , Rs. 15,000/- towards funeral charges.
3. Further, Rs. 40,000/- each is granted to the father and mother i.e.
total of Rs. 40,000 x 2 = Rs. 80,000/- towards Loss of Consortium.
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Relief:-
4. In view of the above observations, the modified final amount of
compensation, is calculated as under:-
S.No. Heads Compensation
granted by the
Final Amount /
Enhanced
Compensation
1. Income of Deceased Rs.15,000/-
(Notional Income)
Tribunal
Rs. 11,830 p.m.
2. Add-Future Prospects NIL 40%
3. Less-Personal Expenses of
Deceased
1/3 1/2
4. Monthly loss of
Dependency
NIL Rs. 8,281/-
5. Annual loss of
Dependency
NIL Rs. 99,372/-
6. Multiplier 15 18
7. Total loss of Dependency Rs 5,09,759/-
Rs.17,88,696/-
[Reliance placed on
the principle of Cost
Inflation Index
method as per Chetan
Malhotra (supra)]
8. Medical Expenses Nil. Nil.
9. Loss of Consortium Rs 5,09,759/- Rs. 80,000/-
10. Loss of Estate Rs. 40,000/-
11. Funeral expenses Rs. 40,000/-
12. Total Compensation Rs. 10,20,000/-
(rounded off)
Rs. 19,48,696/-
Rounded off to
Rs.19,49,000/-
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5. Thus, the total compensation granted to the Claimants is r evised as
Rs. 19,49,000/- along with interest @ 9% per annum from the date of the
Claim till deposit of the amount, in terms of the Impugned Award
dated 05.12.2017 of the learned Tribunal.
6. The additional amount be deposited within three months, to be
disbursed in terms of the Award dated 05.12.2017. The statutory deposit be
returned to the Insurance Company in accordance with law.
7. The Appeal is accordingly disposed of along with the pending
Application(s), if any.
(NEENA BANSAL KRISHNA)
JUDGE
FEBRUARY 24, 2025
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