Case: Oriental Insurance Company Ltd Vs. Jashuben

Claimants-Respondents herein are heirs and legal representatives of Davjibhai Kushalbhai Rathod. He, while travelling in a mini luxury bus as a passenger from Surat to Mehsana, met with a road accident which took place on 23.6.1994. The accident occurred due to rash and negligent driving on the part of the driver of the said mini bus is not question3. The deceased, Devjibhai, at that time, was aged about 35 years. He was working as an Assistant in the Oil and Natural Gas Commission. A sum of Rs.12,00,000/- was initially claimed by way of compensation which was subsequently raised to 25,00,000/-. The Tribunal, as per the certificate issued by the Senior Personnel and Administrative Officer, ONGC, noticed that the deceased had been receiving the following salaries and perks in the month of June 1994:4. However, the Tribunal also took into consideration the salary which might have been payable to the said deceased as in August, 2002; had he continued in service which was stated to be as under:5. The Tribunal, clubbed the income of the deceased which he might have got at the time of his retirement, i.e., Rs.3,295/- + Rs.17453/-, totaling a sum of Rs.20,748/- and divided the same by figure two to arrive the figure of at Rs.10,374/- per month. Adopting a multiplier of 16, the amount of compensation was determined at Rs.13,27,872/-. Besides the compensation amount, amount of gratuity, conventional amount and funeral expenses were calculated as follows:6. Interest on the said amount sum at the rate of 12 per cent was also awarded7. On an appeal preferred by the appellant there against, a Division Bench of the High Court opined that as a revision of pay had been effected by ONGC from 1.1.1997 and in August 2002, the employees in the same cadre would have received a sum of Rs.10,693/- per month with Dearness Allowance at the rate of 35.5% amounting to Rs.3892/- and other allowances. The net income of the deceased was found to be at least a sum of Rs.16,000/- so as to enable the Tribunal to come to the conclusion that the loss of dependency benefit would come to Rs.16,000/- from January 1997 onwards. The High Court stated:In view of the above settled legal position, we do not find any difficulty in accepting the submission of Mr. Nanavati for the original claimants that the Tribunal was justified in looking at the pay revision of employees of the ONGC for the purpose of assessing prospective income of the deceased. The accident in question took place in September 1994. The basic pay of the deceased at that time was Rs.3295/- and with dearness allowance and other allowances, his total pay-packet was Rs.6,418/-. Even proceeding on the basis that the deductions made by the employer may be taken into account, basic pay, dearness allowance, drill site compensation allowance and house rent allowance granted to the deceased would almost come to Rs.5,000/- per month. Within less than three years from the date of the accident, pay revision was made by the ONGC with effect from 1.1.97 and in August 2002, basic pay of the employees in the same cadre in which the deceased was working was Rs.10,693/- per month with dearness allowance at the rate of 35.5% being Rs.3892/-; drill site compensatory allowance and HRA were also substantially revised and they were 20% and 22.5% of the basic pay in August 2002. These four items aggregated to Rs.19,184/- per month. Over and above these heads, there were also other allowances like productivity allowance, conveyance allowance, child education allowance, child bus welfare allowance, etc. making it a total figure of Rs.21,808/-. Even after taking into account all deductions including the income tax liability, the net income available to the deceased and his family would have been at least Rs.16000/- from January 1997 onwards8. The High Court, however, not only adopted the multiplier of 13 instead of 16 to arrive at the conclusion that the loss of dependency would be about Rs.16,000/-, but also interfered with the rate of interest to hold that reasonable interest payable would be 8% per annum. Appellant was directed to deposit the said amount with proportionate costs and interest at the rate of 8% per annum from the date of filing of the claim petition till its realization.

Court's reasoning:
We, therefore, are of the opinion that what would have been the income of the deceased on the date of retirement was not a relevant factor in the light of peculiar facts of this case and, thus, the approach of the Tribunal and the High Court must be held to be incorrect. It is impermissible in law to take into consideration the effect of revision in scale of pay w.e.f. 1.1.1997 or what would have been the scale of pay in 200226. The loss of dependency, in our opinion, should be calculated on the basis as if the basic pay of the deceased been Rs. 3295/- X 2 = Rs. 6,590/-, thereto should be added 18.5% dearness allowance which comes to Rs.1219/-, child education allowance for two children @ Rs.240/- X 2 = Rs.480 and child bus fair Rs.160 X 2 = Rs.320/- should have been added which comes to Rs.8,609/-27. From the aforementioned figure 1/3rd should be deducted. After deduction, the amount of income comes to Rs.5,738/- per month [Rs.8609/- - Rs.2871/-] and the amount of compensation should be determined by adopting the multiplier of 13, which comes to Rs.8,95,128/-28. In the present case, the High Court itself has applied the multiplier of 13. We are of the opinion that no interference therewith is warranted. We furthermore do not intend to interfere with the rate of interest in the facts and circumstance of the case.