Major Sibling Residing with Spinster Deceased Entitled to Loss of Dependency Compensation; Penal Interest Held Impermissible

In brief

The question

1. Whether major siblings of a deceased individual are entitled to compensation under the head of "loss of dependency"

The court held

The Court answered that only the non-married, residing sibling was entitled to dependency compensation

It also directed

The appeal was allowed in part. The "loss of dependency" component (re-calculated at ₹3,73,329/-) is to be paid exclusively to the second claimant, while the remaining balance is to be shared among all claimants. The interest rate was maintained at 8%, but the 12% penal interest direction was set aside

01Facts

On 04.10.2014, Ms. Santhamma (the deceased), a spinster and pensioner, was fatally struck by a scooter driven negligently by the first respondent

p. 3

The Motor Accidents Claims Tribunal (MACT), Mavelikkara, awarded ₹6,89,400/-, treating all siblings as dependents and fixing notional income at ₹7,000/- while deducting only one-third for personal expenses

pp. 4-5

The insurance company appealed, contending that major siblings living separately are not "dependents" and that the deduction for a spinster should be one-half

p. 5

02Issues

i.1. Whether major siblings of a deceased individual are entitled to compensation under the head of "loss of dependency"

p. 4, para 5

ii.2. Whether the Tribunal erred in fixing the notional income and the percentage of deduction for personal expenses for a deceased spinster/pensioner

p. 5, para 5

iii.3. Whether the award of penal interest at 12% is legally sustainable

p. 10, para 13

03Law Applied

The court applied the principles of National Insurance Co. Ltd. v. Pranay Sethi [2017(4) KLT 662(SC)] regarding the addition of 10% future prospects and the mandatory 50% (one-half) deduction for personal expenses for spinsters/bachelors

pp. 9-10

It followed Sarla Verma v. Delhi Transport Corporation [2010(2) KLT 802(SC)] for the application of the multiplier "9" for the age group of 57 years

p. 10

The Court applied National Insurance Co. Ltd. v. Keshav Bahadur [(2004) 2 SCC 370] to strike down the imposition of penal interest

pp. 10-11

Provisions in the judgment · 1 · Linked ones open on LawLens

Motor Vehicles Act, 1988 Section 166

04Reasoning

The Court found that while four of the siblings were major, married, and living separately, the second claimant (a sister) was an unmarried spinster who resided with and was wholly supported by the deceased's pension

pp. 8-9

Regarding income, the Court rejected the Tribunal’s ₹7,000/- fixation, holding that the Treasury Passbook (Ext.A18) clearly proved a pension of ₹6,285/-, which must be the baseline

p. 7

The Court also determined that the Tribunal lacked the authority to award a 12% penal interest rate for default, as such "interest on interest" or penal rates are not supported by precedent

pp. 10-11