2018 INSC 0077
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REPORTABLE
         
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1754 OF 2018
( Arising out of SLP (Civil) No.12416 of 2016 )
Munusamy & Ors. ….   Appellants
                        
Versus
The Managing Director, Tamil Nadu State  ….Respondent
Transport Corporation (Villupuram) Ltd.  
J U D G M E N T
A.M. Khanwilkar, J.
1. This   appeal   emanates   from   the   judgment   and   order
passed   by   the   High   Court   of   Judicature   at   Madras   dated
16.04.2013   in   C.M.A.   No.2819   of   2012.   The   High   Court
allowed   the   prayer   for   grant   of   enhanced   compensation
amount   in   favour   of   the   appellants.   The   appellants   seek
further   enhancement  of   compensation   amount   on   the  ground

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that   the   High   Court   has   not   provided   for   future   prospects,
while   computing   the   compensation   amount.   The   appellants
rely upon the recent decision of the Constitution Bench of this
Court   in   the   case   of   National   Insurance   Company   Ltd.   Vs.
Pranay Sethi and Ors. 1
,   to buttress their submission. 
2. Before  we deal with  the  grievance of  the  appellants,  it  is
apposite   to   reproduce   the   relevant   extract   of   the   impugned
judgment which reads thus:
“ 7. We  have heard the learned counsel for the respondent
on the above submission. 
8. In   the   absence   of   specific   proof   of   employment,   the
Tribunal   rightly   has   taken   the   earning   of   the   deceased   at
Rs.4,000/­ per  month and deducted  50% towards  personal
expenses since the deceased were bachelors. However, the
proper multiplier to be adopted in the case must be 18, since
the deceased  were  21 and 20 years  respectively.  A sum of
Rs.20,000/­   to   each   of   the   claimants   towards   loss   of   love
and   affection   and   a   further   sum   of   Rs.5,000/­   towards
transport expenses were granted. 
9. Accordingly, in C.M.A. No.2819 of 2012 compensation
payable would be as follows:
(a) Loss of Dependency  Rs.4,32,000/­
(Rs.4,000/­×12	×18)
(b) Loss of love and affection  Rs.   60,000/­
(c) Transport Rs.  5,000/­
(d) Funeral Rs.  2,000/­
1
  AIR 2017 SC 5157 

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(e) Loss of estate Rs.  2,500/­
Total = Rs.5,01,500/­”
3. On   perusal   of   the   judgment   under   appeal,   it   is   evident
that   the   High   Court   has   not   provided   for   future   prospects
while   computing   the   compensation   amount   under   the   head
‘loss of dependency’. The necessity to provide future prospects
has   been   expounded   by   the   Constitution   Bench   of   this   Court
in   National   Insurance   Company   Ltd.   (supra).   It   will   be
useful   to   reproduce   paragraph   No.59   of   the   said   judgment,
which reads thus: 
“ 59. Having bestowed our anxious consideration, we are
disposed   to   think   when   we   accept   the   principle   of
standardization,   there   is  really   no  rationale   not   to  apply
the said principle to the self­employed or a person who is
on   a   fixed   44   salary.   To   follow   the   doctrine   of   actual
income   at   the   time   of   death   and   not   to   add   any   amount
with   regard   to   future   prospects   to   the   income   for   the
purpose   of   determination   of   multiplicand   would   be
unjust.   The   determination   of   income   while   computing
compensation has to include future prospects so that the
method   will   come   within   the   ambit   and   sweep   of   just
compensation as postulated under Section 168 of the Act.
In   case   of   a   deceased   who   had   held   a   permanent   job
with   inbuilt   grant   of   annual   increment,   there   is   an
acceptable   certainty.   But   to   state   that   the   legal
representatives of a deceased who was on a fixed salary
would not be entitled to the benefit of future prospects for
the   purpose   of   computation   of   compensation   would   be
inapposite.   It   is   because   the   criterion   of   distinction

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between the two in that event would  be certainty on the
one hand and staticness on the other. One may perceive
that   the   comparative   measure   is   certainty   on   the   one
hand and uncertainty on the other but such a perception
is fallacious. It is because the price rise does affect a self­
employed   person;   and   that   apart   there   is   always   an
incessant effort to enhance one’s income  for sustenance.
The   purchasing   capacity   of   a   salaried   person   on
permanent   job   when   increases   because   of   grant   of
increments and pay revision or for some other change in
service   conditions,   there   is   always   a   45   competing
attitude in the private sector to enhance the salary to get
better   efficiency   from   the   employees.   Similarly,   a   person
who   is   self­employed   is   bound   to   garner   his   resources
and raise his charges/fees so that he can live with same
facilities.   To   have   the   perception   that   he   is   likely   to
remain   static   and   his   income   to   remain   stagnant   is
contrary   to   the   fundamental   concept   of   human   attitude
which   always   intends   to   live   with   dynamism   and   move
and   change   with   the   time.   Though   it   may   seem
appropriate   that   there   cannot   be   certainty   in   addition   of
future prospects to the existing income unlike in the case
of   a   person   having   a   permanent   job,   yet   the   said
perception   does   not   really   deserve   acceptance.   We   are
inclined   to   think   that   there   can   be   some   degree   of
difference as regards the percentage that is meant for or
applied   to   in   respect   of   the   legal   representatives   who
claim   on   behalf   of   the   deceased   who   had   a   permanent
job   than   a   person   who   is   self­employed   or   on   a   fixed
salary.   But   not   to   apply   the   principle   of   standardization
on   the   foundation   of   perceived   lack   of   certainty   would
tantamount   to   remaining   oblivious   to   the   marrows   of
ground   reality.   And,   therefore,   degree­test   is   imperative.
Unless the degree­test is applied and left to the parties to
adduce   evidence   to   establish,   it   would   be   unfair   and
inequitable.   The   degree­test   has   to   have   the   inbuilt
concept   of   46   percentage.   Taking   into   consideration   the
cumulative   factors,   namely,   passage   of   time,   the
changing society,  escalation of  price,  the  change in price
index, the human attitude to follow a particular pattern of

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life, etc., an addition of 40% of the established income of
the   deceased   towards   future   prospects   and   where   the
deceased was below 40 years an addition of 25% where
the   deceased   was   between   the   age   of   40   to   50   years
would be reasonable.”
Again, in the concluding  paragraph No.61 the Court observed
thus:
“ 61.   In   view   of   the   aforesaid   analysis,   we   proceed   to
record our conclusions:­ 
* * *
  (iii) 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   48   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. 
(iv) In case the deceased was self­employed 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.” 
4. On   03.03.2007,   the   deceased   (Palani),   who   was   only
around   21   years   of   age   at   the   time,   was   riding   a   motorcycle
bearing Registration No. TN­22 AP 5092 along with his friend,

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one   Haridass   as   a   pillion   rider,   from   Tambaram   to
Chengalpattu   on   GST   Road,   Maraimalai   Nagar,   opposite
Vikram   Hotel,   when   they   collided   with   a   bus   bearing
Registration   No.   TN­21   N   0943   belonging   to   the   respondent
Transport   Corporation,   which   was   driven   in   a   rash   and
negligent   manner.   The   deceased   was   unmarried   and   working
as   a   contract   worker   in   Hyundai   Car   Company,
Sriperumbudur.   Applying   the   dictum   of   the   Constitution
Bench   referred   to   above,   the   appellants   are   justified   in
insisting for grant of future prospects at the rate of 40% of the
established income. The High Court has held that the earning
of   the   deceased   at   the   relevant   time   can   be   taken   as
Rs.4,000/­   per   month.   The   High   Court   did   not   provide   40%
towards   future   prospects   on   the   established   income   of   the
deceased.   Thus,   the   monthly   loss   of   dependency,   in   the   facts
of the present case would be Rs.4,000 + 1,600 = Rs.5,600/­. 
5. In   other   words,   instead   of   amount   awarded   by   the   High
Court towards loss of dependency in the sum of Rs. 4,32,000/­,
the   same   will   stand   modified   to   Rs.6,04,800/­   (Rupees   six

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lakh four thousand eight hundred only) along with interest at
the   rate   of   9%   (nine   percent)   per   annum.   We   are   not
disturbing   the   other   directions   given   by   the   High   Court   in
respect of other heads. 
6. Accordingly, the respondent Transport Corporation must
deposit   the   additional   amount   of   compensation   of
Rs.1,72,800 /­   (Rupees   one   lakh   seventy   two   thousand   eight
hundred only) along with interest, as awarded in the preceding
paragraph,   within   a   period   of   eight   weeks   from   the   date   of
receipt of the copy of this judgment in the Court of Additional
District   &   Sessions   Judge,   Fast   Track   Court­IV,   Chennai
(Motor Accident Claims Tribunal, Chennai). 
7. In   other   words,   the   compensation   payable   to   the
appellants would be as follows:
(a) Loss of Dependency  Rs.6,04,800/­
[Rs.5,600 – 50% of 5600)×12	×18]
(b) Loss of love and affection  Rs.   60,000/­
(c) Transport Rs.   5,000/­
(d) Funeral Rs.   2,000/­
(e) Loss of estate Rs.   2,500/­
Total = Rs.6,74,300/­

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8. As a result, the Appeal stands allowed. The compensation
awarded by the High Court is enhanced from Rs.5,01,500/­ to
Rs.6,74,300/­   [Rupees   six   lakh   seventy   four   thousand   three
hundred   only].   The   respondent   Transport   Corporation   is
directed to deposit the entire award amount as indicated above
with interest at 9% (nine percent) per annum less the amount
already   deposited   if   any,   within   a   period   of   eight   weeks   from
the   date   of   receipt   of   a   copy   of   this   judgment   and   the
appellants   shall   be   entitled   to   the   compensation   in   the
proportion   specified   by   the   Tribunal.   The   first   and   second
appellants   are   entitled   to   withdraw   the   amount   deposited
upon verification of due application and the share of the third
appellant (minor) shall be deposited in any of the nationalised
banks   till   she   attains   majority   and   the   second
claimant/mother is entitled to withdraw interest thereon once
in three months towards meeting the needs of the minor. Upon
turning   18,   the   minor   appellant   is   entitled   to   withdraw   her
respective share. 

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9.       Accordingly,   the   appeal   is   allowed   in   the
aforementioned terms with no order as to costs.   
.………………………….CJI.
        (Dipak Misra)
…………………………..….J.
                 (A.M. Khanwilkar)
…………………………..….J.
         (Dr. D.Y. Chandrachud)
New Delhi;
February 09, 2018.