Perquisites, allowances to be computed in salary in determining compensation in road mishap cases: Supreme Court

The court partly allowed an appeal filed by Meenakshi against the Karnataka High Court's August 2, 2017 judgment, which had reduced the compensation payable to her from a sum of Rs 1,04,01,000 awarded by the Motor Accident Claims Tribunal to Rs 49,57,035.

New Delhi: The Supreme Court has awarded over Rs 93 lakh to a woman, whose 26-year-old service consultant son died in a road mishap in 2013, holding that perquisites and allowances have to be added to the basic salary of the deceased before applying the rise by future prospects in determining the compensation in motor accident claims cases.

A bench of Justices Hima Kohli and Sandeep Mehta held the Karnataka High Court erred by omitting to add the components of house rent allowance, flexible benefit plan and company contribution to provident fund to the basic salary of the deceased while applying the principle of rise in income by future prospects.

"Components of house rent allowance, flexible benefit plan and company contribution to provident fund have to be included in the salary of the deceased while applying the component of rise in income by future prospects to determine the dependency factor," the bench said.

The court partly allowed an appeal filed by Meenakshi against the High Court's August 2, 2017 judgment, which had reduced the compensation payable to her from a sum of Rs 1,04,01,000 awarded by the Motor Accident Claims Tribunal to Rs 49,57,035.

Holding the HC's decision as erroneous, the bench said there cannot be any two views on the aspect that these perquisites and allowances admissible to a salaried employee do not remain static and continue to rise generally proportionate to the length of the service of the employee. These allowances are generally fixed on a pro rata basis with reference to the basic salary, the bench added.

The court noted as per the service conditions and pay scales of the Government officials, the house rent allowance is payable between 8 per cent and 30 per cent of the basic salary.

"Therefore, the house rent allowance is paid in a fixed ratio proportionate to the basic salary. With the increase in basic salary, the quantum of house rent allowance also increases proportionately. The flexible benefit plan and Company contribution admissible to a person employed in private service would also not remain static and are bound to increase with the length of service," the bench added.

The court, however, felt the High Court was justified in deducting Income Tax from the gross salary of the deceased-Suryakanth for calculating his gross income, a factor, which was overlooked by the Accident Claims Tribunal while quantifying the award.