JUDGMENT [ENTITY], J.
1. This is an appeal filed by insurance company (non-applicant No. 3) under [SECTION] of the [ACT], against an award dated 6.5.2005 passed by learned Member, Motor Accidents Claims Tribunal, Indore in [CASE NUMBER]. By impugned award, the Claims Tribunal allowed the claim petition of the claimants (respondent Nos. 1 to 4 herein) and awarded a total sum of Rs. 20,70,000 towards compensation for the death of one [ENTITY], aged around 40 years and who died in vehicular accident. According to insurance company (appellant herein), the learned Member of Claims Tribunal erred in determining the compensation payable to claimants to the extent of Rs. 20,70,000. It is according to them on much higher side and being excessive in nature, deserves to be reduced so as to make it a just and reasonable one. According to the insurance company, they have obtained the requisite permission as contemplated under [SECTION] of the [ACT] from the Tribunal for contesting the case on merits on all the defences available to owner and driver who were ex parte before Claims Tribunal and that they actually contested the case by filing written statement. It is, therefore, contended that company has a right to file an appeal under [SECTION] of the Act and question the correctness of the impugned award insofar as it relates to determination of the quantum of compensation awarded to the claimants. So the question that arises for consideration in this appeal is: whether Tribunal was justified in awarding compensation amounting to Rs. 20,70,000 to the claimants (respondent Nos. 1 to 4) for the death of [ENTITY]? And secondly, whether the manner in which the calculation of the income of deceased was done by the Tribunal is proper, or not? In short, the facts of the case are these:
[ENTITY], a businessman, aged around 41 years, was going in his Maruti van on 16.10.2002 from Mardana Square to Man-glia Bypass Road in Indore when his car was hit by a truck bearing No. MH 12-Q 9964. This truck was owned by the non-applicant No. 1, driven by non-applicant No. 2 and insured with non-applicant No. 3. Due to this dash, [ENTITY] died on the spot. It is this incident which gave rise to filing of claim petition by his legal representatives (respondent Nos. 1 to 4) under the provisions of the [ACT], seeking compensation for his death. The non-applicant Nos. 1 and 2, i.e., owner and driver remained ex parte whereas the case was contested only by non-applicant No. 3, i.e., insurance company (appellants herein) by filing written statement. Parties adduced evidence. As observed supra, Tribunal by impugned award, allowed the claim petition filed by the claimants and awarded a total compensation of Rs. 20,70,000. It is against this award; the company has felt aggrieved and filed this appeal.
2. Heard Mr. [ENTITY], learned Counsel for the appellant and Mr. [ENTITY] with Mr. [ENTITY], learned Counsel for the respondents.
3. Learned Counsel for appellant while assailing the legality and correctness of the award and in particular the manner in which the Tribunal took the yearly income of deceased to be the basis, contended that learned Member of Claims Tribunal erred in taking Rs. 2,20,000 as yearly income of the deceased. According to learned Counsel, the correct and proper yearly business income of the deceased as per his income tax return (Exh. P31 and Exh. P32) was Rs. 1,27,346 and not Rs. 2,20,000. It was, therefore, contended that Tribunal should have calculated the compensation taking Rs. 1,27,346 to be the yearly income of the deceased which was a loss to the dependants, i.e., claimants-respondent Nos. 1 to 4 on account of death of [ENTITY]. Learned Counsel, thus, contended that if the calculation of compensation is done on this basis, i.e., taking Rs. 1,27,346 to be the basis then in that event, the claimants will be entitled for much lesser sum than what has been awarded by the Tribunal. This in substance was the submission of learned Counsel for the appellant while assailing the determination of quantum made by Tribunal.
4. In reply, the learned Counsel for the claimants (respondent Nos. 1 to 4) while supporting the impugned award in totality including the manner of determination made by Tribunal contended that no fault can be found in the entire impugned award which is just, legal and proper, calling no interference by this court. According to learned Counsel, the Tribunal was justified in taking Rs. 2,20,000 to be the basis, it being the real and total yearly income of the deceased from his business for determining the compensation payable to the claimants. It was his submission that apart from the business income of Rs. 1,27,346 the deceased had in the last assessment year before his death, an income from the other sources amounting to Rs. 20,707 and Rs. 84,240 as an income of minor also. According to learned Counsel, even this income, i.e., Rs. 20,707 and Rs. 84,240 was a business income of deceased in addition to Rs. 1,27,346 and hence, all the three heads were rightly clubbed for making a total business income of Rs. 2,20,000 for working out the compensation. Learned Counsel placed on three decisions reported in [CASE NUMBER] and contended that even income earned from other sources and minor's income is held as business income of assessee for the purpose of determining the compensation payable to claimants.
5. Having heard learned Counsel for the parties and having perused record of the case, we are inclined to allow this appeal in part and while modifying the impugned award, reduce the amount of compensation to the extent indicated infra.
6. The deceased [ENTITY] was a businessman. He was engaged in the business of purchase and sale of gold/silver bullion on wholesale basis in Indore. He was an income tax assessee. For the year 2001-2002, he filed his last income tax return (Exhs. P31 and P32).
7. In this return, he had disclosed his income as follows:
(1) Income from business Rs. 1,27,346 (2) Income from interest earned on IDBI bonds and HUDCO bonds Rs. 20,707 (3) Income of minor clubbed in his hands under [SECTION]
8. The question as to how the computation of compensation should be done in cases of death arising out of accident cases remains no longer res integra. This issue was debated and eventually settled by the Apex Court in at least four leading cases, namely: (i) [PRECEDENT]; (ii) [PRECEDENT] ; (iii) [PRECEDENT] ; and (iv) Tamil Nadu State Trans. Corporation Ltd. v. [ENTITY] . In all the four cases the learned Judges placed reliance on three English decisions, namely: [PRECEDENT]; (ii) [PRECEDENT]; and (iii) [PRECEDENT] and following the principle laid down in these three English cases held as under in [ENTITY]'s case (supra). The learned Judge [ENTITY], J. speaking for the Bench made following subtle observations for the guidance of the courts in this country while deciding the issue of compensation:
(5) Certain principles were highlighted by this court in the case of [PRECEDENT], in the matter of fixing the appropriate multiplier and the computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. 'How much has the widow and family lost by the father's death'? The answer to this lies in the oft-quoted passage from the opinion of Lord [ENTITY] in [PRECEDENT], which says:
The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended towards his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that widow might have again married and thus ceased to be dependent and other like matters of speculation and doubt.
(6) The rule in common law in [PRECEDENT], enunciated by Lord [ENTITY] was that 'in a civil court, the death of a human being could not be complained of as an injury'. Indeed, the maxim actio personalis moritur cum persona, had the effect that all actions in tort, with very few exceptions, also became extinguished with that person. Great changes were brought about by the [ACT] (now [ACT]) and the [ACT]. Under the statute, as indeed under the Indian statute as well, there are two separate and distinct causes of action, which are maintainable in consequence of a person's death. They were the dependant's claim for the financial loss suffered and a claim for injury, loss or damage, which the deceased would have had, had he lived, and which survives for the benefit of his estate.
(7) The measure of damages is the pecuniary loss suffered and is likely to be suffered by each dependant. Thus 'except where there is express statutory direction to the contrary, the damages to be awarded to a dependant of a deceased person under the [ACT] must take into account any pecuniary benefit accruing to that dependant in consequence of the death of deceased. It is the net loss on balance which constitutes the measure of damages'. Lord [ENTITY] in Davies case said:
The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing on the one hand, the loss to him of the future pecuniary benefit and on the other, any pecuniary advantage which from whatever source comes to him by reason of the death.
These words of Lord [ENTITY] were adopted as the principle applicable also under the [ACT] in [PRECEDENT], where this court stated that general principle is that the actual pecuniary loss can be ascertained only by balancing on the one hand, the loss to the claimant of the future pecuniary benefit and, on the other, any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death, must be ascertained.
(8) But the assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that deceased may not have lived or dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income or might have lost his employment or income altogether.
(9) The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalised by multiplying it by a figure representing the proper number of years' purchase.
9. When we apply the aforementioned principle to the facts of this case then it becomes clear that only that income could have been taken as basis which the deceased was actually earning from his business and which due to his death has ceased to earn, resulting in loss to his dependants, i.e., claimants herein. In other words what the deceased was earning from his business alone could be made basis for determining the compensation payable to dependants because it is that sum which is now no longer available to the dependants due to untimely death of deceased. Applying this principle which is discernible from the law laid down by the Supreme Court quoted supra, income of Rs. 1,27,346 which was shown by the deceased in his last return (i.e., prior to his death) as income earned from business should have been made basis for calculation. It is this income which has ceased due to his death and becomes a loss to the dependants (claimants). So far as income earned by deceased from interest i.e., Rs. 20,707 was concerned, it may be taxable or non-taxable but the same could not be regarded as loss to the dependants because due to death of the deceased, the amount remained in deposit and at best it would have gone to his nominee. In other words, the interest income was being earned from deposits made in HUDCO/IDBI bonds and, hence, the same was a recurring income to deceased and on his death to any of his nominees, nominated in the bonds. In these circumstances, we do not consider it proper to hold that income earned by deceased from these deposits was also a loss to the dependants. In our considered view, this part of income, i.e., Rs. 20,707 earned as interest, should have been excluded from considering the loss to the dependants. Same is the case in relation to income shown in the third head, i.e., Rs. 84,240. This income was also not a business income of deceased but it was shown to be an income earned by deceased's minor son out of the capital standing in the name of minor son. It is due to the scheme of the [ACT], the income of minor children is required to be clubbed in the hands of minor's father which in turn obliges the deceased, i.e., father to include in his return for payment of income tax. In no case, it could be regarded as income earned by the deceased from his own business. In other words, the income of minor remains his own income and he had a right to utilise it on his attaining majority it being his own capital. In our opinion, thus, even this amount (Rs. 84,240) could not have been made basis for determining the compensation payable to the dependants because it was not the income of the deceased from his business.
10. We do not agree to the submission of learned Counsel for the respondents who placed reliance on three cases mentioned supra in support of his contention. In our view, those are the cases relating to [ACT] and, hence, the ratio laid down in those cases cannot be applied while examining the question arising out of [ACT]. In order to determine the income of deceased, the principle enunciated in [ENTITY]'s case [CASE NUMBER], would govern the field and not the one laid down under the [ACT].
11. Accordingly and in view of the foregoing discussion, a case for interference in the impugned award is made out by the appellant. We thus take Rs. 1,27,346 (Rs. 1,27,500 round figure) as basis for determining the compensation payable to the claimants because in our opinion, it is this income which was deceased's business income as disclosed by him in his return (Exhs. P31 and P32) which he was earning from his business. It is this income which has now resulted in loss to his dependants, i.e., claimants herein and hence, they have to be compensated on the basis of this income by working out the compensation in the light of principles applicable to the case, referred supra.
12. In this view, when we deduct 1/3rd from Rs. 1,27,500, towards his personal income, we get a sum of Rs. 85,000 as an income loss to the claimants. Applying the multiplier of 14, we get a total amount of Rs. 85,000 x 14 = Rs. 11,90,000. In addition, the Tribunal has awarded a total sum of Rs. 12,000 towards conventional heads. We uphold that part of award. This makes a total of Rs. 11,90,000 + Rs. 12,000 = Rs. 12,02,000.
13. In other words, claimants are held entitled for a total sum of Rs. 12,02,000 by way of compensation for the death of [ENTITY].
14. The compensation awarded to the claimants is just, reasonable and proper looking to the facts and circumstances of the case and taking into account the law laid down by the Supreme Court in these types of cases, referred supra. Indeed in such cases, no fixed and any static formula is provided for determining the compensation and the same is required to be determined on the basis of evidence adduced and the relevant factors mentioned supra. It is on this basis, the courts have to work out award of reasonable compensation.
15. In this view of the matter, the appeal succeeds and is allowed in part. Impugned award is modified to the extent indicated above. All the other findings are upheld though challenged by the respondent by way of cross-objection but in our view; we find no merit in them.
16. As a result, cross-objection is dismissed.
Counsel's fee Rs. 1,500, if certified.