Punjab & Haryana High Court Recalculates Motor Accident Compensation Using Averaged ITR Income — Rekha Gupta & Others vs TATA AIG General Insurance Company & Others
Background and Context
The Punjab and Haryana High Court recently disposed of two cross-appeals stemming from a common award issued by the Motor Accident Claims Tribunal, Patiala, in a matter involving the accidental death of one Raj Kumar. The fatal road accident took place on 15.01.2021 near Jakhal Road, Patran, when the offending vehicle bearing registration No. PB-72A-5940, driven rashly and negligently by respondent No. 2, collided with the motorcycle being ridden by the deceased. Raj Kumar was rushed to multiple hospitals following the incident but could not survive his injuries. An FIR was duly registered against the errant driver at Police Station Patran.
The widow and children of the deceased approached the Tribunal by filing a claim petition under Section 166 of the Motor Vehicles Act, seeking compensation of ₹70,00,000/-, on the basis that Raj Kumar was actively engaged in agriculture, a brick kiln business, and a cloth trading business, and was earning an approximate monthly income of ₹1,00,000/-.
Tribunal's Original Award and Grounds of Appeal
The driver and owner of the offending vehicle failed to appear and were proceeded against ex parte. The insurance company alone contested the proceedings. After evaluating the material on record, the Tribunal found rash and negligent driving to be established and awarded total compensation of ₹50,82,600/- along with applicable interest.
Both parties were aggrieved. The claimants preferred an appeal seeking enhancement of the awarded amount, while TATA AIG General Insurance Company filed a separate appeal challenging the methodology of income computation, specifically contending that the income tax liability of the deceased had not been deducted while arriving at the multiplicand. The High Court noted at the outset that neither the finding regarding rash and negligent driving nor the insurer's liability to indemnify was challenged before it. The sole question before the High Court, therefore, was the quantum of compensation.
Income Computation: The Core Legal Issue
Reliance on Income Tax Returns
To establish the deceased's earning capacity, the claimants placed reliance on two Income Tax Returns:
- Ex.C10 — Filed for Assessment Year 2020-21, during the deceased's lifetime, reflecting total income of ₹7,23,984/- and tax liability of ₹95,722/-
- Ex.C11 — Filed for Assessment Year 2021-22, after the death of Raj Kumar, reflecting income of ₹6,31,650/- and tax liability of ₹44,227/-