Income Calculation Without Deducting GPF/LIC Premiums Upheld: AP HC Enhances Motor Accident Compensation in Reliance General Insurance Case [Read Order]

The High Court of Andhra Pradesh at Amaravati has dismissed the appeal filed by Reliance General Insurance Co. Ltd. and enhanced the compensation awarded to the claimants in a motor accident case. The Court upheld the adoption of the deceased's gross salary for compensation calculation, relying on Supreme Court precedents to establish that deductions for GPF and LIC premiums should not be excluded from the income.

The appeal was directed against the Order-in-Appeal dated 08.07.2011 passed by the Motor Accident Claims Tribunal (MACT), Kadapa. The Insurance Company had challenged the liability and the quantum of compensation awarded to the family of the deceased, P. Venkata Ramana, a Drilling Supervisor who succumbed to injuries resulting from a collision with a rashly driven auto.

The Insurer contended that the driver of the offending vehicle did not possess a valid driving licence and that the MACT had erroneously adopted the gross salary without deducting income tax. It was argued that the compensation awarded was excessive.

The claimants, represented by Counsel V.B. Subrahmanyam and A. Sree Ram, submitted that the liability was correctly imposed. While they accepted the quantification, they argued that they were entitled to additional compensation under conventional heads such as loss of estate and loss of consortium, which had not been awarded by the Tribunal.

The bench of Justice A. Hari Haranadha Sharma perused the records and heard both sides. Regarding the issue of liability, the Court found that the Insurance Company had failed to adduce any evidence to prove the absence of a driving licence. Consequently, the liability imposed on the insurer was found acceptable.

On the issue of quantum, the Insurance Company argued that tax payable by the deceased should have been deducted from his gross monthly income of Rs. 22,879/-. The Court, however, relied on the observations of the Hon’ble Supreme Court in Shyamwati Sharma and others vs. Karam Singh and others. The Apex Court had held that while ascertaining the income of the deceased, deductions shown in the salary certificate for GPF, life insurance premium, and loan repayments should not be excluded.

The Court observed:

“As per the observations of the Hon'ble Apex Court... while taking the income of the deceased, any deductions shown in the salary certificate as deductions towards GPF, life insurance premium, repayment of loans etc. should not be excluded from the income.”

The Court noted that while future prospects of 10% had not been added to the income since the deceased was over 50 years of age, the non-deduction of approximately 10% towards income tax balanced the equation, causing no prejudice to the Appellant.

However, following the directives of the Supreme Court, the Court found the claimants were entitled to compensation under conventional heads. The MACT was enhanced as follows: Loss of Consortium was increased from Rs. 10,000 to Rs. 1,60,000 (Rs. 40,000 each to the wife and three children); Loss of Estate was set at Rs. 15,000; and Funeral Expenses were increased from Rs. 5,000 to Rs. 15,000.

The total compensation was enhanced from Rs. 20,28,352/- to Rs. 22,03,352/- with interest at 6% per annum. The appeal was dismissed, and the claimants were directed to receive the enhanced amount from the Insurance Company.

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