Accident Compensation - Income To Be Assessed Based On Employee's Entitlement, Without Deduction Of Allowances : SC [Read Judgment]

The Supreme Court on Tuesday granted the largest compensation in an individual case related to the 2010 Mangalore Air Crash - Rs. 7,64,29,437 . Further, the judgement in the case Triveni Kodkany vs Air India Ltd and others discussed and applied the principles related to computation of compensation laid down by the Constitution Bench in the case National Insurance Company Limited v. Pranay Sethi.FACTS OF THE CASE An expat employed as a Regional Director for the Middle Eastern Region with GTL Overseas died in a plane crash on 22 May, 2010. The ill-fated Air India Express was travelling from Dubai to Mangalore, and crashed at the Mangalore airport. On 10 March, 2011, his spouse submitted a claim for compensation from Air India, who paid her an amount of Rs. 4,00,70,000 on 20 March, 2012 against an indemnity. Apart from this, an amount of Rs. 40 lakhs was paid to the parents of the deceased. On 18 April, 2012, the parents and brother of the deceased instituted a suit against Air India to claim compensation, and the Trial Court in its judgement dated 27 September, 2018, decreed the claim of the mother of the deceased in the amount of Rs. 70 lakhs, while dismissing the claims of the father and the brother. The present Appeals arise out of a complaint that was instituted on 18 May, 2012 by the surviving spouse, son and daughter of the deceased before NCDRC, claiming a compensation of Rs. 13.42 crores, together with interest at the rate of 18% per annum from the date of the accident and other consequential payments. NCDRC allowed the complaint and awarded final compensation of Rs. 7,35,14,187 and noted that an amount of Rs. 40 lakhs had been paid to the parents, apart from a sum of Rs. 4 crores which had been paid to the complainants, and were to be deducted from the final compensation. The balance of principal sum due was determined at Rs. 2,95,14,187, and simple interest at the rate of 9% per annum was awarded from 22 May 2010 till the date on which the amount of Rs. 40 lakhs was paid to the parents of the deceased. The complainants were held to be entitled to interest on the amount of Rs. 6,95,14,187 with effect from the date on which the payment was made to the parents of the deceased till the date on which Rs. 4 crores was paid to the complainants. They were also held to be entitled to interest on the remaining amount with effect from the date on which Rs. 4 crores were paid to the complainants until the date on which the entire principal sum is actually paid. In calculating the final compensation, NCDRC in its judgement dated 10 December 2018, deducted the telephone allowance of AED 30,000 from the total income (Annual Cost to Company) and adopted the conversion rate which had been adopted in the complaint which was lodged before the NCDRC. Cross appeals were filed in these proceedings, with the first appeal being filed by the complainants. SUBMISSIONS Advocate Yeshwant Shenoy made four submissions on behalf of the complainants: "(i). The NCDRC erred in making a deduction of AED 30,000 from the total CTC of the deceased as reflected in the records produced by the employer; (ii) An addition of thirty per cent ought to have been made towards future prospects instead of twenty-five per cent in view of the judgement of the Constitution Bench in National Insurance Company Ltd. v. Pranay Sethi. (iii)The rate for conversion of AED into INR shoud be taken at the prevailing rate on the date of the judgement of this Court and not Rs. 12.50 AED which was the rate prevailing at the filing of the complaint before the NCDRC; and (iv) Only the salary of the deceased has been taken and not the income. The deceased was entitled to other benefits apart form salary including employees' stock options (ESOP) and other financial benefits which have not been taken into consideration." Jatinder Kumar Sethi, Counsel on behalf of Air India, made the following submissions: "(i) The NCDRC has erred in making a deduction of one-fifth towards the personal expenses of the deceased. The correct deduction ought to have been one-third since the complainants before the NCDRC were the spouse and two minor children. (ii) Air India has paid a total amount of Rs. 10.46 crores to the complainants and the mother, inclusive of interest and this would sufficiently meet the interests of justice particularly having regard to the precarious financial position of Air India; and (iii) In addition to the deduction which was made on account of the telephone allowance, the transport allowance of AED 40, 957 should also be deducted from the annual salary of the deceased in making the computation. HELD A Supreme Court Bench of Justices DY Chandrachud and Ajay Rastogi held the following: No Exclusion of Telephone/Travel Allowance For Purpose of Computation The Bench held that in a claim for compensation arising out of the death...

Accident Compensation - Income To Be Assessed Based On Employee's Entitlement, Without Deduction Of Allowances : SC [Read Judgment]

Radhika Roy

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