Kirti vs Oriental Insurance Company … on 5 January, 2021

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Supreme Court of India
Kirti vs Oriental Insurance Company … on 5 January, 2021Author: N.V. Ramana

Bench: N.V. Ramana, Surya Kant, Aniruddha Bose

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.19­20 of 2021
[Arising out of Special Leave Petition(C) Nos.18728­29 of 2018]

Kirti & Anr. Etc. ….. Appellant(s)
VERSUS

Oriental Insurance Company Ltd. ….. Respondent(s)

JUDGMENT

Surya Kant, J:

Leave Granted.

2. These civil appeals, which have been heard through video

conferencing, have been filed by three surviving dependents (who are

two minor daughters and father) of the two deceased, impugning the

judgment dated 17.07.2017 of the High Court of Delhi through which

the motor accident compensation of Rs 40.71 lakhs awarded by the
Signature Not Verified

Digitally signed by
SATISH KUMAR YADAV
Date: 2021.01.05

Motor Accident Claims Tribunal, Rohini (hereinafter, “Tribunal”) on
17:44:53 IST
Reason:

24.12.2016 under Section 168 of the Motor Vehicle Act, 1988 (“MV
Page | 1
Act”), was reduced to Rs 22 lakhs.

FACTUAL MATRIX

3. The deceased couple, Vinod and Poonam, while commuting on a

motorcycle in Delhi at around 7AM on 12.04.2014 were hit at an

intersection by a Santro Car bearing registration ‘DL 7CA 1053’. The

impact immediately incapacitated both the deceased and they soon

passed away from cranio­cerebral damage and haemorrhagic shock

caused by the accident’s blunt­force trauma.

4. An FIR was registered under Sections 279 and 304 of the Indian

Penal Code, 1860 (hereinafter, “IPC”) against the driver, and the

statement of an independent eyewitness (Constable Vishnu Dutt) was

recorded, which evidenced rash driving and negligence on part of the

car­driver. Subsequently, a claim petition was filed under Section 166

of the MV Act by the two toddler­daughters and septuagenarian­

parents of the deceased. This was contested by the driver and owner

claiming that the deceased were themselves driving negligently and

the accident was as a result of their very own actions. Two witnesses

were examined by the appellant­claimants and none by the

respondents. The insurance company (Respondent No. 1) offered as

settlement a compensation of Rs 6.47 lakhs for the death of Poonam

and Rs 10.71 lakhs for Vinod.

Page | 2
5. The Tribunal took note of the chargesheet filed against the driver

in the criminal case and also his failure to step­into the witness box.

Relying on the strong testimony of the independent witness, it was

concluded that the car­driver was indeed driving rashly and thus

liability ought to be fastened on the respondent­insurer. Regarding the

quantum of compensation, the Tribunal began by determining the

ages of Poonam and Vinod as being 26 and 29 years respectively.

Consequently, an age­multiplier of 17 was adopted. Although the

deceased’s father took a plea that Vinod was earning Rs 14,000 every

month as a teacher at the Pratap Public School in Delhi, but he was

unable to substantiate his claim with any documentary evidence.

Thus, minimum wage in Delhi was adopted for computation of loss of

dependency. An additional 25% income was accounted for future

prospects of Poonam, and 1/3rd of Vinod’s salary was deducted

towards personal expenses. Rs 2.50 lakhs was given for each deceased

as compensation for loss of love and affection, estate, and funeral

charges. Thus, the Tribunal awarded a total sum of Rs 40.71 lakhs for

both deceased to the claimants.

6. This computation was challenged by the respondent­insurer

before the High Court, on grounds that the Tribunal had erroneously

relied upon the minimum wage as notified by Government of Delhi as

there was no proof that the deceased were employed in Delhi. Instead,
Page | 3
given their established residence in Haryana, the minimum wage

notified for that State ought to be the basis for calculation of loss of

dependency. Simultaneously, addition of future prospects as well as

non­deduction of personal expenses for Poonam was prayed to be

reversed. Further, compensation was sought to be halved on grounds

of contributory negligence. A categorical submission was made

highlighting the then divergent law on the issue of payment of ‘future

prospects’ to non­permanent employees, pending resolution of which,

it was prayed that no such addition be granted to the claimants.

7. The High Court concurred with these contentions and

consequently reduced the notional income for both deceased by

adopting the lowest minimum wage applicable for unskilled workers in

Haryana, instead of Delhi. Similarly, 1/3 rd of Poonam’s income was

deducted towards personal expenses and future prospects were denied

to both deceased. However, given the totality of circumstances and

Poonam’s contribution to her household, 25% additional gratuitous

income was added to her salary. The High Court thus brought down

the total compensation payable to the claimants to Rs 22 lakhs.

CONTENTIONS OF PARTIES

8. This reduction has been assailed before us by learned counsel

for the claimants. Re­computation is sought of compensation for loss

Page | 4
of dependency consequent to the decision of the Constitutional Bench

of this Court in National Insurance Co Ltd v. Pranay Sethi 1, which

authoritatively settles the law on future prospects for non­permanent

employees as well. Furthermore, the anomaly between the gratuitous

increase of income between Vinod and Poonam, and the usage of

unskilled minimum wage for Vinod have been brought to our notice.

9. Learned Counsel for the respondent­insurer, on the other hand,

has sought to forestall any increase in compensation, including under

the ground of future prospects. It is claimed that the High Court’s

decision was a consent order, and that the counsel for the appellants

had conceded to a lower computation under the head of loss of

dependency, which thus cannot be challenged before this Court.
ANALYSIS

I. Deduction for Personal Expenses

10. We have thoughtfully considered the rival submissions. It

cannot be disputed that at the time of death, there in fact were four

dependents of the deceased and not three. The subsequent death of

the deceased’s dependent mother ought not to be a reason for

reduction of motor accident compensation. Claims and legal liabilities

crystallise at the time of the accident itself, and changes post thereto

1
(2017) 16 SCC 680.
Page | 5
ought not to ordinarily affect pending proceedings. Just like how

appellant­claimants cannot rely upon subsequent increases in

minimum wages, the respondent­insurer too cannot seek benefit of

the subsequent death of a dependent during the pendency of legal

proceedings. Similarly, any concession in law made in this regard by

either counsel would not bind the parties, as it is legally settled that

advocates cannot throw­away legal rights or enter into arrangements

contrary to law.2

11. Any compensation awarded by a Court ought to be just,

reasonable and consequently must undoubtedly be guided by

principles of fairness, equity, and good conscience. 3 Not only did the

family of the deceased consist of septuagenarian parents, but there

were also two toddler­girls, aged merely 3 and 4 years; each of whom

requires exceptional care and expenditure till they reach the stage of

self­dependency. Tragically, in addition to the married couple, the

negligence of the driver also extinguished the life of the family’s third

child who was a foetus in Poonam’s womb at the time of the accident.

Thus, the appropriate deduction for personal expenses for both Vinod

and Poonam ought to be 1/4th only, and not 1/3rd as applied by the

Tribunal and the High Court, more so when there were four family

members dependent on the deceased.
2
Director of Elementary Education v. Pramod Kumar Sahoo, (2019) 10 SCC 674, ¶ 11.
3
See, Helen C Rebello v. Maharashtra State Road Transport Corp, (1999) 1 SCC 90, ¶ 28. Page | 6
 II. Assessment of monthly income

12. Second, although it is correct that the claimants have been

unable to produce any document evidencing Vinod’s income, nor have

they established his employment as a teacher; but that doesn’t justify

adoption of the lowest­tier of minimum wage while computing his

income. From the statement of witnesses, documentary evidence­on­

record and circumstances of the accident, it is apparent that Vinod

was comparatively more educationally qualified and skilled. Further,

he maintained a reasonable standard of living for his family as

evidenced by his use of a motorcycle for commuting. Preserving the

existing standard of living of a deceased’s family is a fundamental

endeavour of motor accident compensation law. 4 Thus, at the very

least, the minimum wage of Rs 6197 as applicable to skilled workers

during April 2014 in the State of Haryana ought to be applied in his

case.

III. Addition of Future Prospects

13. Third and most importantly, it is unfair on part of the

respondent­insurer to contest grant of future prospects considering

their submission before the High Court that such compensation ought

not to be paid pending outcome of the Pranay Sethi (supra)

4
See, RK Malik v. Kiran Pal, (2019) 14 SCC 1, ¶ 9.
Page | 7
reference. Nevertheless, the law on this point is no longer res integra,

and stands crystalised, as is clear from the following extract of the

afore­cited Constitutional Bench judgment5:

“59.4. In case the deceased was self­employed or on a fixed
salary, an addition of 40% of the established income should
be the warrant where the deceased was below the age of 40
years. An addition of 25% where the deceased was between
the age of 40 to 50 years and 10% where the deceased was
between the age of 50 to 60 years should be regarded as the
necessary method of computation. The established income
means the income minus the tax component.”
[Emphasis supplied]
14. Given how both deceased were below 40 years and how they

have not been established to be permanent employees, future

prospects to the tune of 40% must be paid. The argument that no

such future prospects ought to be allowed for those with notional

income, is both incorrect in law6 and without merit considering the

constant inflation­induced increase in wages. It would be sufficient to

quote the observations of this Court in Hem Raj v. Oriental

Insurance Co. Ltd.7, as it puts at rest any argument concerning non­

payment of future prospects to the deceased in the present case:

“7. We are of the view that there cannot be distinction where
there is positive evidence of income and where minimum
5
National Insurance Co Ltd v. Pranay Sethi, (2017) 16 SCC 680, ¶ 59.4.
6
Sunita Tokas v. New India Insurance Co Ltd, 2019 SCC OnLine SC 1045.
7
(2018) 15 SCC 654.
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 income is determined on guesswork in the facts and
circumstances of a case. Both the situations stand at the
same footing. Accordingly, in the present case, addition of
40% to the income assessed by the Tribunal is required to be
made..”
[Emphasis supplied]

IV. Other heads and division of compensation

15. Finally, given the lack of arguments on the other heads of

funeral charges, loss of estate, love, and affection; there arises no

cause of alteration. We similarly see no infirmity with the High Court’s

adoption of 17 as the age­multiplier, award of 9% interest, calculation

of Poonam’s notional income or the division of total compensation in

the ratio of 1:2:2 between the grandfather and the two girls. For ready

reference, a comparative table of revised compensation after suitable

increases would thus be as follows:

TRIBUNAL HIGH COURT SUPREME COURT

Head Vinod Poonam Vinod Poonam Vinod Poonam

A Monthly Income 8554 9438 5547.1 5547.1 6197.1 5547.1

Deduction
B towards Personal 33% None 33% 33% 25% 25%
Expenses

C Age Multiplier 17 17 17 17 17 17

Adjustment for
D None 25% None None 40% 40%
Future Prospects
Increase for
E Special None None None 25% None 25%
Circumstances
Funeral Charges
F 250000 250000 250000 250000 250000 250000
& Loss of Estate

Page | 9
 Total per
G 1413344 2656690 1004406 1193007 1577419 1735236
deceased

(rounded off) 1414000 2657000 1005000 1195000 1580000 1740000

Total
4071000 2200000 3320000
compensation

CONCLUSION

16. For the reasons afore­stated, the appeals are allowed in­part.

The total motor accident compensation of Rs 22 lakhs awarded by the

High Court to the claimant­appellants is increased by Rs 11.20 lakhs

to reach a new total of Rs 33.20 lakhs. The enhanced amount of

compensation shall be paid within two months along with interest @

9% p.a. from the date of filing of the Detailed Accident Report i.e.

23.05.2014, and shall be apportioned per the terms laid down by the

Tribunal.

…………………………….. J.
(N.V. RAMANA)

…………………………… J.
(S. ABDUL NAZEER)

……………………………J.
(SURYA KANT)

NEW DELHI
DATED : 05.01.2021

Page | 10
 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 19­20 OF 2021
(ARISING OUT OF SLP (C) NOS. 18728­18729 OF 2018)

KIRTI & ANR. ETC. …APPELLANT(S)

VERSUS

ORIENTAL INSURANCE CO. LTD. …RESPONDENT

JUDGMENT

N.V. RAMANA, J.

1. I have had the advantage of perusing the judgment prepared

by my learned brother, Surya Kant, J., and am in complete

agreement with him. However, I thought to supplement the

reasoning in his judgment, with respect to the question of

notional income of a housewife and whether future prospects

should apply to the same or not.

2. There are two distinct categories of situations wherein the

Court usually determines notional income of a victim. The first

category of cases relates to those wherein the victim was

employed, but the claimants are not able to prove her actual

income, before the Court. In such a situation, the Court

1
“guesses” the income of the victim on the basis of the evidence on

record, like the quality of life being led by the victim and her

family, the general earning of an individual employed in that field,

the qualifications of the victim, and other considerations.

3. The second category of cases relates to those situations

wherein the Court is called upon to determine the income of a

non­earning victim, such as a child, a student or a homemaker.

Needless to say, compensation in such cases is extremely difficult

to quantify.

4. The Court often follows different principles for determining

the compensation towards a non­earning victim in order to arrive

at an amount which would be just in the facts and circumstances

of the case. Some of these involve the determination of notional

income. Whenever notional income is determined in such cases,

different considerations and factors are taken into account. For

instance, for students, the Court often considers the course that

they are studying, their academic proficiency, the family

background, etc., to determine and fix what they could earn in

the future. [See M. R. Krishna Murthi v. New India Assurance

Co. Ltd., 2019 SCC OnLine SC 315]

5. One category of non­earning victims that Courts are often

2
called upon to calculate the compensation for are homemakers.

The granting of compensation for homemakers on a pecuniary

basis, as in the present case, has been considered by this Court

earlier on numerous occasions. A three­Judge Bench of this

Court in Lata Wadhwa v. State of Bihar, (2001) 8 SCC 197,

while dealing with compensation for the victims of a fire during a

function, granted compensation to housewives on the basis of the

services rendered by them in the house, and their age. This

Court, in that case, held as follows:

“10. So far as the deceased housewives are
concerned, in the absence of any data and as
the housewives were not earning any income,
attempt has been made to determine the
compensation on the basis of services
rendered by them to the house. On the basis of
the age group of the housewives, appropriate
multiplier has been applied, but the estimation of
the value of services rendered to the house by the
housewives, which has been arrived at Rs 12,000
per annum in cases of some and Rs 10,000 for
others, appears to us to be grossly low. It is true
that the claimants, who ought to have given data
for determination of compensation, did not assist
in any manner by providing the data for
estimating the value of services rendered by such
housewives. But even in the absence of such
data and taking into consideration the
multifarious services rendered by the
housewives for managing the entire family,
even on a modest estimation, should be Rs
3000 per month and Rs 36,000 per annum…”
(emphasis supplied)

3
6. In Arun Kumar Agrawal v. National Insurance Co. Ltd.,

(2010) 9 SCC 218, this Court, while dealing with the grant of

compensation for the death of a housewife due to a motor vehicle

accident, held as follows:

“26. In India the courts have recognised that
the contribution made by the wife to the
house is invaluable and cannot be computed
in terms of money. The gratuitous services
rendered by the wife with true love and
affection to the children and her husband and
managing the household affairs cannot be
equated with the services rendered by others.
A wife/mother does not work by the clock. She is
in the constant attendance of the family
throughout the day and night unless she is
employed and is required to attend the
employer’s work for particular hours. She takes
care of all the requirements of the husband and
children including cooking of food, washing of
clothes, etc. She teaches small children and
provides invaluable guidance to them for their
future life. A housekeeper or maidservant can do
the household work, such as cooking food,
washing clothes and utensils, keeping the house
clean, etc., but she can never be a substitute for
a wife/mother who renders selfless service to her
husband and children.

27. It is not possible to quantify any amount
in lieu of the services rendered by the
wife/mother to the family i.e. the husband
and children. However, for the purpose of
award of compensation to the dependants,
some pecuniary estimate has to be made of
the services of the housewife/mother. In that
context, the term “services” is required to be
given a broad meaning and must be construed by
taking into account the loss of personal care and

4
 attention given by the deceased to her children
as a mother and to her husband as a wife. They
are entitled to adequate compensation in lieu of
the loss of gratuitous services rendered by the
deceased. The amount payable to the dependants
cannot be diminished on the ground that some
close relation like a grandmother may volunteer
to render some of the services to the family which
the deceased was giving earlier.”
(emphasis supplied)

The above pronouncement has been followed by this Court in its

recent judgment in Rajendra Singh v. National Insurance Co.

Ltd., 2020 SCC OnLine SC 521, wherein the notional income of

a deceased housewife was calculated for the purposes of granting

compensation in a motor accident case.

7. Before discussing this topic further, it is necessary to

comment on its gendered nature. In India, according to the 2011

Census, nearly 159.85 million women stated that “household

work” was their main occupation, as compared to only 5.79

million men.

8. In fact, the recently released Report of the National

Statistical Office of the Ministry of Statistics & Programme

Implementation, Government of India called “Time Use in India­

2019”, which is the first Time Use Survey in the country and

collates information from 1,38,799 households for the period

January, 2019 to December, 2019, reflects the same gender

5
disparity.1 The key findings of the survey suggest that, on an

average, women spend nearly 299 minutes a day on unpaid

domestic services for household members versus 97 minutes

spent by men on average. 2 Similarly, in a day, women on average

spend 134 minutes on unpaid caregiving services for household

members as compared to the 76 minutes spent by men on

average.3 The total time spent on these activities per day makes

the picture in India even more clear­ women on average spent

16.9 and 2.6 percent of their day on unpaid domestic services

and unpaid caregiving services for household members

respectively, while men spent 1.7 and 0.8 percent. 4

9. It is curious to note that this is not just a phenomenon

unique to India, but is prevalent all over the world. A 2009 Report

by a Commission set up by the French Government, analyzing

data from six countries, viz. Germany, Italy, United Kingdom,

France, Finland and the United States of America, highlighted

similar findings:

“117. Gender differences in time use are
significant. In each of the countries under
consideration, men spend more time in paid
work than women and the converse is true for
unpaid work. Men also spend more time on
leisure than women. The implication is that
1 National Statistical Office, Time Use in India­ 2019 (September, 2020).
2 Id, at 56.
3 Id, at 54.
4 Id, at x.

6
 women provide household services but other
members of the household benefit…”5
(emphasis supplied)
10. The sheer amount of time and effort that is dedicated to

household work by individuals, who are more likely to be women

than men, is not surprising when one considers the plethora of

activities a housemaker undertakes. A housemaker often

prepares food for the entire family, manages the procurement of

groceries and other household shopping needs, cleans and

manages the house and its surroundings, undertakes decoration,

repairs and maintenance work, looks after the needs of the

children and any aged member of the household, manages

budgets and so much more. In rural households, they often also

assist in the sowing, harvesting and transplanting activities in

the field, apart from tending cattle [See Arun Kumar Agrawal

(supra); National Insurance Co. Ltd. v. Minor Deepika rep. by

her guardian and next friend, Ranganathan, 2009 SCC

OnLine Mad 828]. However, despite all the above, the conception

that housemakers do not “work” or that they do not add

economic value to the household is a problematic idea that has

persisted for many years and must be overcome.

11. The concurring opinion in the Arun Kumar Agrawal

5 Stiglitz et al., Report of the Commission on the Measurement of Economic Performance and
Social Progress, 117 (2009).

7
judgment (supra), has highlighted this bias:

“44. This bias is shockingly prevalent in the work
of census. In the Census of 2001 it appears that
those who are doing household duties like
cooking, cleaning of utensils, looking after
children, fetching water, collecting firewood have
been categorised as non­workers and equated
with beggars, prostitutes and prisoners who,
according to the census, are not engaged in
economically productive work. As a result of
such categorisation about 36 crores (367 million)
women in India have been classified in the
Census of India, 2001 as non­workers and
placed in the category of beggars, prostitutes and
prisoners. This entire exercise of census
operations is done under an Act of Parliament.”

12. In fact, this unfortunate silence when it comes to the value

of housework has been a problem which was identified as far

back as in 1920, when the economist Pigou noted the oddity and

contradictions when it came to the calculation of the contribution

of women in the national income, by stating that:

“…the services rendered by women enter into the
dividend when they are rendered in exchange for
wages, whether in the factory or in the home, but
do not enter into it when they are rendered by
mothers and wives gratuitously to their own
families. Thus, if a man marries his housekeeper
or his cook, the national dividend is
diminished”.6

This issue was further focused on by those in the field of

feminism economics in the 1970s and 1980s, who criticized the

traditional labour statistics which did not consider unpaid

6 Cecil Pigou, The Economics of Welfare, 44 (1920).

8
domestic work and therefore undervalued women’s role in the

economy.7
13. On considering the growing awareness around this issue,

the United Nations Committee on the Elimination of

Discrimination against Women adopted General Recommendation

No. 17 on the “Measurement and quantification of the

unremunerated domestic activities of women and their recognition

in the gross national product” in 1991. The General

Recommendation affirmed that “the measurement and

quantification of the unremunerated domestic activities of women,

which contribute to development in each country, will help to

reveal the de facto economic role of women”.

14. It is worth noting that the above General Recommendation

is passed in furtherance of Article 11 of the Convention on the

Elimination of All Forms of Discrimination against Women which

relates to ending discrimination against women in the field of

employment, a Convention that India has ratified.

15. The issue of fixing notional income for a homemaker,

therefore, serves extremely important functions. It is a

recognition of the multitude of women who are engaged in this

activity, whether by choice or as a result of social/cultural

7 United Nations Economic Commission for Europe, Guide on Valuing Unpaid Household Service
Work, 2 (2017).

9
norms. It signals to society at large that the law and the Courts of

the land believe in the value of the labour, services and sacrifices

of homemakers. It is an acceptance of the idea that these

activities contribute in a very real way to the economic condition

of the family, and the economy of the nation, regardless of the

fact that it may have been traditionally excluded from economic

analyses. It is a reflection of changing attitudes and mindsets and

of our international law obligations. And, most importantly, it is a

step towards the constitutional vision of social equality and

ensuring dignity of life to all individuals.

16. Returning to the question of how such notional income of a

homemaker is to be calculated, there can be no fixed approach. It

is to be understood that in such cases the attempt by the Court

is to fix an approximate economic value for all the work that a

homemaker does, impossible though that task may be. Courts

must keep in mind the idea of awarding just compensation in

such cases, looking to the facts and circumstances [See R.K.

Malik v. Kiran Pal, (2009) 14 SCC 1].

17. One method of computing the notional income of a

homemaker is by using the formula provided in the Second

Schedule to the Motor Vehicles Act, 1988, which has now been

omitted by the Motor Vehicle (Amendment) Act, 2019. The Second

10
Schedule provided that the income of a spouse could be

calculated as one­third of the income of the earning surviving

spouse. This was the method ultimately adopted by the Court in

the Arun Kumar Agrawal (supra) case. However, rationale

behind fixing the ratio as one­third is not very clear. [See Arun

Kumar Agrawal (supra)]

18. Apart from the above, scholarship around this issue could

provide some guidance as to other methods to determine the

notional income for a homemaker.8 Some of these methods were

highlighted by a Division Bench of the Madras High Court in the

case of Minor Deepika (supra) which held as follows:

“10. The Second Schedule to the Motor Vehicles
Act gives a value to the compensation payable in
respect of those who had no income prior to the
accident and for a spouse, it says that one­third
of the income of the earning surviving spouse
should be the value. Exploration on the internet
shows that there have been efforts to understand
the value of a homemaker’s unpaid labour by
different methods. One is, the opportunity cost
which evaluates her wages by assessing what
she would have earned had she not remained
at home, viz., the opportunity lost. The
second is, the partnership method which
assumes that a marriage is an equal economic
partnership and in this method, the
homemaker’s salary is valued at half her
husband’s salary. Yet another method is to
evaluate homemaking by determining how
8 See Ann Chadeau, What is Households’ Non­Market Production Worth, OECD ECONOMIC STUDIES
NO. 18 (1992); Also see United Nations Economic Commission for Europe, supra note 7.

11
 much it would cost to replace the homemaker
with paid workers. This is called the
Replacement Method.”
(emphasis supplied)

19. However, it must be remembered that all the above methods

are merely suggestions. There can be no exact calculation or

formula that can magically ascertain the true value provided by

an individual gratuitously for those that they are near and dear

to. The attempt of the Court in such matters should therefore be

towards determining, in the best manner possible, the truest

approximation of the value added by a homemaker for the

purpose of granting monetary compensation.

20. Whichever method a Court ultimately chooses to value the

activities of a homemaker, would ultimately depend on the facts

and circumstances of the case. The Court needs to keep in mind

its duty to award just compensation, neither assessing the same

conservatively, nor so liberally as to make it a bounty to

claimants [National Insurance Company Limited v. Pranay

Sethi, (2017) 16 SCC 680; Kajal v. Jagdish Chand, (2020) 4

SCC 413].

21. Once notional income has been determined, the question

remains as to whether escalation for future prospects should be

granted with regard to it. Initially, the awarding of future

12
prospects by this Court was related to the stability of the job held

by the victim [See General Manager, Kerala State Road

Transport Corporation, Trivandrum v. Susamma Thomas

(Mrs), (1994) 2 SCC 176; Sarla Dixit (Smt) v. Balwant Yadav,

(1996) 3 SCC 179]. This focus on the stability of the job of the

victim, while awarding future prospects, was continued in the

judgment of this Court in Sarla Verma (Smt) v. Delhi

Transport Corporation, (2009) 6 SCC 121 wherein the Court

held as follows:

“24. In Susamma Thomas [(1994) 2 SCC 176]
this Court increased the income by nearly 100%,
in Sarla Dixit [(1996) 3 SCC 179] the income was
increased only by 50% and in Abati
Bezbaruah [(2003) 3 SCC 148] the income was
increased by a mere 7%. In view of the
imponderables and uncertainties, we are in
favour of adopting as a rule of thumb, an
addition of 50% of actual salary to the actual
salary income of the deceased towards future
prospects, where the deceased had a
permanent job and was below 40 years. (Where
the annual income is in the taxable range, the
words “actual salary” should be read as “actual
salary less tax”). The addition should be only
30% if the age of the deceased was 40 to 50
years. There should be no addition, where the
age of the deceased is more than 50 years.
Though the evidence may indicate a different
percentage of increase, it is necessary to
standardise the addition to avoid different
yardsticks being applied or different methods of
calculation being adopted. Where the deceased
was self­employed or was on a fixed salary

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 (without provision for annual increments,
etc.), the courts will usually take only the
actual income at the time of death. A
departure therefrom should be made only in
rare and exceptional cases involving special
circumstances.”
(emphasis supplied)

22. However, there was a shift in jurisprudence regarding future

prospects with the five­Judge Bench decision of this Court in

Pranay Sethi (supra). This Court extended the benefit regarding

future prospects to even self­employed persons, or those on a

fixed salary. The Court held as follows:

“57. Having bestowed our anxious consideration,
we are disposed to think when we accept the
principle of standardisation, there is really no
rationale not to apply the said principle to the
self­employed or a person who is on a fixed
salary. To follow the doctrine of actual
income at the time of death and not to add
any amount with regard to future prospects to
the income for the purpose of determination
of multiplicand would be unjust. The
determination of income while computing
compensation has to include future prospects
so that the method will come within the
ambit and sweep of just compensation as
postulated under Section 168 of the Act. In
case of a deceased who had held a permanent job
with inbuilt grant of annual increment, there is
an acceptable certainty. But to state that the
legal representatives of a deceased who was on a
fixed salary would not be entitled to the benefit of
future prospects for the purpose of computation
of compensation would be inapposite. It is
because the criterion of distinction between the

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 two in that event would be certainty on the one
hand and staticness on the other. One may
perceive that the comparative measure is
certainty on the one hand and uncertainty on the
other but such a perception is fallacious. It is
because the price rise does affect a self­
employed person; and that apart there is
always an incessant effort to enhance one’s
income for sustenance. The purchasing
capacity of a salaried person on permanent
job when increases because of grant of
increments and pay revision or for some other
change in service conditions, there is always a
competing attitude in the private sector to
enhance the salary to get better efficiency
from the employees. Similarly, a person who
is self­employed is bound to garner his
resources and raise his charges/fees so that
he can live with same facilities.…Taking into
consideration the cumulative factors, namely,
passage of time, the changing society,
escalation of price, the change in price index,
the human attitude to follow a particular
pattern of life, etc., an addition of 40% of the
established income of the deceased towards
future prospects and where the deceased was
below 40 years an addition of 25% where the
deceased was between the age of 40 to 50 years
would be reasonable.”
(emphasis supplied)

23. The rationale behind the awarding of future prospects is

therefore no longer merely about the type of profession, whether

permanent or otherwise, although the percentage awarded is still

dependent on the same. The awarding of future prospects is now

a part of the duty of the Court to grant just compensation, taking

into account the realities of life, particularly of inflation, the quest

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of individuals to better their circumstances and those of their

loved ones, rising wage rates and the impact of experience on the

quality of work.

24. Taking the above rationale into account, the situation is

quite clear with respect to notional income determined by a Court

in the first category of cases outlined earlier, those where the

victim is proved to be employed but claimants are unable to prove

the income before the Court. Once the victim has been proved to

be employed at some venture, the necessary corollary is that they

would be earning an income. It is clear that no rational

distinction can be drawn with respect to the granting of future

prospects merely on the basis that their income was not proved,

particularly when the Court has determined their notional

income.

25. When it comes to the second category of cases, relating to

notional income for non­earning victims, it is my opinion that the

above principle applies with equal vigor, particularly with respect

to homemakers. Once notional income is determined, the effects

of inflation would equally apply. Further, no one would ever say

that the improvements in skills that come with experience do not

take place in the domain of work within the household. It is

worth noting that, although not extensively discussed, this Court

16
has been granting future prospects even in cases pertaining to

notional income, as has been highlighted by my learned brother,

Surya Kant, J., in his opinion [Hem Raj v. Oriental Insurance

Company Limited, (2018) 15 SCC 654; Sunita Tokas v. New

India Insurance Co. Ltd., (2019) 20 SCC 688].

26. Therefore, on the basis of the above, certain general

observations can be made regarding the issue of calculation of

notional income for homemakers and the grant of future

prospects with respect to them, for the purposes of grant of

compensation which can be summarized as follows:

a. Grant of compensation, on a pecuniary basis, with respect
to a homemaker, is a settled proposition of law.

b. Taking into account the gendered nature of housework, with
an overwhelming percentage of women being engaged in the
same as compared to men, the fixing of notional income of a
homemaker attains special significance. It becomes a
recognition of the work, labour and sacrifices of
homemakers and a reflection of changing attitudes. It is also
in furtherance of our nation’s international law obligations
and our constitutional vision of social equality and ensuring
dignity to all.

c. Various methods can be employed by the Court to fix the
notional income of a homemaker, depending on the facts
and circumstances of the case.

d. The Court should ensure while choosing the method, and
fixing the notional income, that the same is just in the facts
and circumstances of the particular case, neither assessing
the compensation too conservatively, nor too liberally.

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 e. The granting of future prospects, on the notional income
calculated in such cases, is a component of just
compensation.

27. With the above observations, I concur with the opinion of

my learned brother.

……………………J.
(N.V. RAMANA)

NEW DELHI;
January 05, 2021.

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