[MV Act] Allowances Outside Salary Are Composite Earnings & Should Be Considered While Granting Compensation: Karnataka High Court

The Karnataka High Court has said that in assessing just compensation, for claims made under Motor Vehicles Act, amounts that were paid to the deceased by his employer, whether as perks or any other nomenclature, should be added to his monthly income. Such monthly income forms the basis for computing compensation.A division bench of Justice K S Mudgal and Justice K V Aravind held thus while partly allowing an appeal filed by Priti Singh and others who had questioned the compensation amount granted by the Motor Accidents Claim Tribunal. The court modified the amount granted by the tribunal Rs 81,89,000 and increased it to Rs 2,27,32,608. The bench said “The Tribunal committed an error in holding that the deceased was in the probationary period and that his entire salary paid could not be considered. The Tribunal considered the income of the deceased at Rs.40,000/-, which has no legal or logical basis.” The appellants had filed a claim petition under Section 166 of the Motor Vehicles Act, seeking compensation of Rs.3.00 crore for the death of Santhosh Kumar Singh in a road traffic accident. Singh worked in HCL technologies as a Technical Lead and was earning Rs.1,37,350/- per month. On 29.01.2019, the deceased who was riding his scooter was knocked down by a water tanker which was driving in a rash and negligent manner without adhering to traffic rules. The tribunal had in its order noted Rs.53,326 as the monthly salary of the deceased, after deducting applicable taxes. However, Rs.40,000 per month was considered, for the purpose of assessment of compensation. In addition to compensation under other notional heads such as consortium, loss of love and affection, loss of estate, funeral, and transportation expenses, the Tribunal determined the total compensation at Rs.81,89,000 with simple interest at 6% per annum. The claimants in appeal contended that the water tanker was moving in the wrong direction, i.e., opposite to the vehicle of the deceased. The accident was caused due to the rash and negligent driving of the tanker, in violation of traffic rules. The deceased was aged 35 years at the time of death and was earning a monthly salary of Rs.1,37,350, which should be considered for computing compensation, after deducting professional tax and income tax. The insurance company opposed the appeal submitting that the accident occurred due to the negligence of the deceased. The FIR was registered against the driver of the water tanker based on a complaint of a person, who was not an eyewitness. There was no negligence on the part of the driver of the water tanker, and that any negligence contributed to by the driver of the water tanker was minimal. In response to the appeal filed by the claimants for enhancement of compensation, learned counsel argues that the compensation awarded by the Tribunal is just and reasonable.Findings: On going through the record the court noted that the spot sketch, which is part of the record, shows that the width of the road is 25 feet. The Honda Activa was moving from West to East, and the water tanker was moving from East to West. The two-wheeler was on the extreme left, while the water tanker was positioned beyond the middle of the road, heading towards the North. Had the tanker not violated traffic rules, it should have been positioned towards the extreme South, not the North side.Stating that charge sheet has been filed against the driver of the water tanker. The insurer has failed to rebut the evidence adduced by the claimants in the charge sheet, the spot sketch etc. It held “In light of these facts, the Tribunal was justified in holding that the accident occurred due to the rash and negligent driving by the driver of the water tanker.” Referring to the salary slips of the deceased which showed that the deceased was drawing a gross salary of Rs.1,37,350, inclusive of allowances. Rejecting the contention of the insurer the court relied on Supreme Court judgment in the case of National Insurance Co. Ltd. vs. Pranay Sethi, [(2017) 16 SCC 680], wherein it is held that the income to be considered is the actual income less tax paid. The consideration of basic salary alone, while ignoring allowances such as Conveyance Allowance, House Rent Allowance, etc., is incorrect. The bench said “The allowances, namely Car Allowance, Holiday Allowance, Fuel and Vehicle Maintenance, Compensatory Allowance, Engagement Performance Bonus, and Food Valet, are paid in addition to the basic salary and HRA. Pay slips for the months of November and December 2018, and January 2019, indicate that these allowances were paid consistently every month, without variation. These allowances are in lieu of employment and form part of the salary. The allowances are part of the pay package agreed upon between the deceased and the employee.” Further, “While the allowances may be separated from the basic salary, they nonetheless remain part of the composite earnings of the employee/deceased. The payment of...

[MV Act] Allowances Outside Salary Are Composite Earnings & Should Be Considered While Granting Compensation: Karnataka High Court

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