Determination of compensation for self-employed professionals must be based on recent Income Tax Returns.

In brief

The question

1. Whether the income of the deceased should have been taken in terms of the notional income chart instead of proven past earnings and ITR filings

The court held

The Court answered the issues by holding that the deceased's actual proven income via ITR should be used, the multiplier is 17, and the interest rate must be 9%

It also directed

The total compensation was enhanced from ₹22,17,550 to ₹70,06,990 (an increase of ₹47,89,440)

The Court allowed the appeal in part. Respondent No. 2 was directed to deposit the enhanced amount within eight weeks

01Facts

On April 9, 2019, Bhaskaran S (aged 30), a passenger in a bus owned by Respondent No. 1 and insured by Respondent No. 2, died from injuries sustained after the driver’s rash and negligent driving caused the vehicle to collide with a tree

p. 3

The deceased was a qualified B.Tech engineer who had previously worked at Oracle India and recently started his own trucking business

pp. 7-8, 11

The claimants, the deceased’s parents, filed for compensation under Section 166 of the Motor Vehicles Act, 1988

p. 3

The Motor Accident Claims Tribunal (MACT) awarded ₹22,17,550 with 6% interest, calculating income notionally at ₹15,000/month despite Income Tax Returns (ITR) showing higher earnings

p. 3, 6

The claimants appealed for enhancement

p. 3

02Issues

i.1. Whether the income of the deceased should have been taken in terms of the notional income chart instead of proven past earnings and ITR filings

p. 9

ii.2. Whether the appropriate multiplier should be 17 instead of 16, given the deceased was 30 years old

p. 9

iii.3. Whether interest should be enhanced to 9% in accordance with recent judicial precedents

p. 9

03Law Applied

The Court applied Section 166 and Section 171 of the Motor Vehicles Act, 1988

p. 3, 16

It followed the principles for calculating loss of dependency established in Sarla Verma v. DTC and National Insurance Co. Ltd. v. Pranay Sethi

p. 9

Regarding the award of interest, the Court relied on Abati Bezbaruah v. Geological Survey of India, Jagadish v. Mohan, and Savita Devi v. SBI General Insurance, which emphasize that 9% interest is just and reasonable for death and disability claims to compensate for the detention of money

pp. 19-20

Provisions in the judgment · 4 · Linked ones open on LawLens

Motor Vehicles Act, 1988 Section 166 Section 171 Section 173

Code of Civil Procedure, 1908 Section 34

04Reasoning

The Court found the MACT erred in taking a notional income of ₹15,000 when ITR for AY 2018-19 proved a gross income of ₹5,83,727

pp. 13-14

The Court observed that the deceased’s educational background and career progression at multinational firms like Dell and Oracle justified using the last filed ITR as the base for calculation

pp. 10-12

Subtracting tax, the monthly income was assessed at ₹47,655

p. 14

Following Pranay Sethi, the Court added 40% for future prospects and deducted 50% for personal expenses as the deceased was a bachelor

pp. 14-15

Based on the deceased's date of birth (19.07.1988), the Court corrected the multiplier to 17

p. 9, 15

Finally, reviewing its own recent precedent in United India Insurance Co. Ltd. v. Sri. Malyadri. M, the Court determined that 9% interest is the current standard for "just compensation"

pp. 15-25

05Holding

The Court answered the issues by holding that the deceased's actual proven income via ITR should be used, the multiplier is 17, and the interest rate must be 9%

p. 14, 15, 25

The total compensation was enhanced from ₹22,17,550 to ₹70,06,990 (an increase of ₹47,89,440)

p. 25

The Court allowed the appeal in part. Respondent No. 2 was directed to deposit the enhanced amount within eight weeks

p. 26

LawLens.Karnataka High Court

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