Case: Oriental Insurance Co. Ltd Vs. Deo Patodi

Bidya Dhar Dutta & Ors. [(2006) 3 SCC 242] this court deducted 1/3rd from the earnings of the deceased inter alia holding: "...It is by now well settled that the compensation should be the pecuniary loss to the dependants by the death of a person concerned. While calculating the compensation, annual dependency of the dependants should be determined in terms of the annual loss, according to them, due to the abrupt termination of life. To determine the quantum of compensation, the earnings of the deceased at the time of the accident and the amount, which the deceased was spending for the dependants, are the basic determinative factors. The resultant figure should then be multiplied by a "multiplier". The multiplier is applied not for the entire span of life of a person, but it is applied taking into consideration the imponderables in life, immediate availability of the amount to the dependants, the expectancy of the period of dependency of the claimants and so many other factors. Contribution towards the expenses of the family, naturally is in proportion to ones earning capacity. In the present case, the earning of the deceased and consequently the amount which he was spending over the members of his family i.e. dependency is to be worked out on the basis of the earnings of the deceased at the time of the accident. The mere assertion of the claimants that the deceased would have earned more than Rs.8000 to Rs.10,000 per month in the span of his lifetime cannot be accepted as legitimate income unless all the relevant facts are proved by leading cogent and reliable evidence before MACT. The claimants have to prove that the deceased was in a trade where he would have earned more from time to time or that he had special merits or qualifications or opportunities which would have led to an improvement in his income. There is no evidence produced on record by the claimants regarding future prospects of increase of income in the course of employment or business or profession, as the case may be. It is stated that the deceased was about 24 years old at the time of the accident. MACT has accepted Rs.4000 per month, as the earning of the deceased and after deducting Rs .400 per month for his pocket expenses, the remaining sum of Rs. 3600 has been divided into three equal shares, out of which two shares i.e. Rs.2400 per month or Rs.28,800 (wrongly mentioned as Rs.28,000 in the award), were assessed as loss to both the claimants, who were the parents of the deceased. The ages of the claimants are stated to be between 45 and 50 years and accordingly multiplier of 12 was applied. Thus, a sum of Rs 28,800 x 12 = Rs.3,45,600 was awarded as compensation." In Bilkish vs. United India Insurance Co. Ltd. [(2008) 4 SCC 259] , this Court held: "4. After hearing learned Counsel for the parties, we are of the opinion that the view taken by the High Court & Tribunal is not correct. The incumbent was a bachelor and he could not have spent more than 1/3rd of his total income for personal use and rest of the amount earned by him would certainly go to the family kitty. Therefore, determining the loss of dependency by 50% was not correct. Therefore, we assess that he must be spending 1/3rd towards personal use and contributing 2/3rd of his income to his family....." Yet again in Bangalore Metropolitan Transport Corporation vs. Sarojamma & Anr. [(2008) 5 SCC 142] , this Court held: "9. Whereas in determining an application for grant of compensation under Section 166 of the Act, the Tribunal may be entitled to find out actual loss of damages suffered by the claimants, the formula having not envisaged such a contingency, we are of the opinion that ordinarily one-third should be deducted from the income of the deceased and not the half thereof......" In Syed Basheer Ahamed & Ors. vs. Mohammed Jameel & Anr. [(2009) 2 SCC 225] , one-half (50%) of the income was held to be deductible if the deceased was a bachelor. 14. Indisputably, deduction of 1/3rd towards personal expenses is the ordinary rule in India. We think that in the facts and circumstances of the case, the same should be applied. The concept of joint family unlike the western countries where it has been wholly evaporated, although on the decline, should also be taken into consideration. The deceaseds father was a Doctor working in a Government Hospital; he was aged about 51 years at the time of the accident; he would have retired from the Government job after a few years. He might not, therefore, be completely dependent upon his son. We, therefore, are of the opinion that having regard to his age as also the age of his wife multiplier of 10 should be applied. We do so keeping in view the fact that the Court has a duty to grant a just and reasonable compensation. What would, however, be a just and reasonable compensation depends upon the fact situation obtaining in each case. No hard and fast rule therefore can be laid down. The Court must also bear in mind that compensation should not be treated to be wind-fall.15. We are not oblivious of the fact that the multiplier referred to in the Second Schedule in the Act may not automatically be applied in a case initiated under Section 166 of the Act. We have applied the aforementioned multiplier keeping in view the fact that the multiplier specified in the Second Schedule would not ordinarily be applicable in a case under Section 166 of the Act.16. The finding required to be arrived at by the choice of multiplicand as also the multiplier would depend upon a large number of factors as this aspect of the matter has been considered in various judgments, the same need not be reiterated.17. The question, in an appropriate case, may require consideration by a larger Bench.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]10. The Tribunal and the High Court, however, in our opinion, keeping in view the aforementioned backdrop might not be correct in holding that he would have earned only Rs.18,000/per month. It is true that the cost of living in the western countries would be higher. The standard of living in the western countries cannot be followed; in the absence of any material placed before this Court it should not be followed in India. Even in a case where the victim of an accident was earning salary in U.S. Dollars, this Court opined that a lower multiplier should be applied.Indisputably, deduction of 1/3rd towards personal expenses is the ordinary rule in India. We think that in the facts and circumstances of the case, the same should be applied. The concept of joint family unlike the western countries where it has been wholly evaporated, although on the decline, should also be taken into consideration. The deceaseds father was a Doctor working in a Government Hospital; he was aged about 51 years at the time of the accident; he would have retired from the Government job after a few years. He might not, therefore, be completely dependent upon his son. We, therefore, are of the opinion that having regard to his age as also the age of his wife multiplier of 10 should be applied. We do so keeping in view the fact that the Court has a duty to grant a just and reasonable compensation. What would, however, be a just and reasonable compensation depends upon the fact situation obtaining in each case. No hard and fast rule therefore can be laid down. The Court must also bear in mind that compensation should not be treated to be wind-fall.15. We are not oblivious of the fact that the multiplier referred to in the Second Schedule in the Act may not automatically be applied in a case initiated under Section 166 of the Act. We have applied the aforementioned multiplier keeping in view the fact that the multiplier specified in the Second Schedule would not ordinarily be applicable in a case under Section 166 of the Act.16. The finding required to be arrived at by the choice of multiplicand as also the multiplier would depend upon a large number of factors as this aspect of the matter has been considered in various judgments, the same need not be reiterated.17. The question, in an appropriate case, may require consideration by a larger Bench.