₹10 lakh criminal compensation to remain in interest-bearing deposit pending driver’s appeal, Delhi High Court directs in motor accident case

The Insurance Company appealed the MACT’s award of ₹56,84,854 with interest, arising from the death of Devender Rana in a motor accident on 18 December 2017.

The deceased, aged 48, was employed as a Senior Executive and had a gross monthly salary of ₹36,800, comprising basic salary and various allowances.

The insurer challenged the inclusion of certain allowances, the income-tax calculation, and the failure to deduct ₹10,00,000 directed to be paid to the deceased’s legal representatives under Section 357(3) CrPC in the criminal proceedings against the driver

Whether the MACT correctly assessed the deceased’s benchmark income, including allowances, and deducted the applicable income tax?

Whether the ₹10,00,000 compensation directed under Section 357(3) CrPC should be deducted from the MACT award, and, if so, how it should be dealt with while the criminal appeal remained pending?

Under the Motor Vehicles Act, compensation must be “just,” assessed on principles of fairness, reasonableness and equity, without producing either a windfall or inadequate compensation; the calculation of loss of dependency follows the established rules on income, future prospects and multiplier (National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680)

Salary allowances that benefit the employee and family are included in income unless shown to be intended solely for official purposes; income tax is deducted in calculating the multiplicand

Provident-fund contributions and similar receipts are not deducted as accident-related pecuniary advantages (Helen C. Rebello v. Maharashtra SRTC, (1999) 1 SCC 90)

Section 357(5) CrPC requires a court deciding a subsequent proceeding relating to the same matter to take into account compensation paid or recovered under Section 357, thereby preventing double recovery; concurrent civil and criminal remedies are not necessarily mutually exclusive (D. Purushotama Reddy v. K. Sateesh, (2008) 8 SCC 505)

The Court found that the employer’s evidence and salary records supported the gross monthly salary of ₹36,800.

HRA, travel allowance, children’s education allowance and special allowance were properly included because the insurer had not shown that they were solely for official use.

The Tribunal correctly deducted the annual income-tax liability of ₹9,580, leaving annual income of ₹4,32,020; the applicable multiplier was 13, with 30% future prospects.

As to the criminal-court compensation, the Court held that it could not simply be ignored because Section 357(5) requires account to be taken of compensation paid or recovered, while the pending criminal appeal created uncertainty about whether the ₹10,00,000 would ultimately be payable or recoverable.

To preserve the parties’ positions and avoid double recovery, the Court directed that ₹10,00,000 be retained in an interest-bearing FDR, with its eventual release or refund governed by the outcome of the criminal proceedings and whether payment had been made.

It directed that ₹10,00,000 be retained in a separate interest-bearing FDR, subject to the specified outcomes of the criminal proceedings and any payment under the Section 357(3) order.

The balance compensation, after accounting for that direction, together with accrued interest, was ordered released to the claimants as a lump sum.

The appeal was disposed of accordingly.