Allahabad High Court provides payment of accident compensation based on indicative notional income

The Allahabad High Court has described the payment of accident compensation on the basis of a theoretical indicative income as arbitrary, irrational, contrary to the fundamental right to equality and to life.

The Division Bench of Judge Surya Prakash Kesarwani and Judge Saurabh Srivastava heard the motion filed by Kaneez Fatima.

The facts of the case are that the applicant’s husband, namely Hani Khan, died on 10.04.2022 as a result of electrocution by an 11 KV overhead line which was installed by the respondents at a height of less than of 4.7 meters in breach of Rule 77 of The Rules, 1956 and failure to maintain said line by the Respondents in accordance with the provisions of Rule 29 of The Rules, 1956.

According to the admitted case of the respondents, the death of the applicant’s husband was caused on 10.04.2022. The applicant submitted all the desired documents, including the certificate from Maharani Laxmi Bai Medical College and Hospital, Jhansi, dated 10.04.2022, in which the cause of death of her husband was stated as electric current, Panchnama dated 10.04. .2022 and the death certificate dated 20.04.2022. etc. of her husband.

The petitioner’s statement was registered by the competent authority/electrical safety officer on 13.04.2022. Form 4 under Section 161(2) Electricity Act 2003 was submitted by Deputy Director, Electricity Safety, Government of Uttar Pradesh, Jhansi Region, Jhansi on 18.04 .2022 in which all incident details and investigation report etc. have been well mentioned with reference to documentary evidence, namely, first information report of 11.04.2022, detailed report of 11.04.2022, police report, medical report received on 15.04.2022 and investigation report of 13.04.2022 etc

The cause of death of the applicant’s husband being electric current and the negligence of the officers and employees were also recorded in the said report.

On 18.04.2022, Deputy Director, Electricity Safety, Government of Uttar Pradesh, Jhansi Region, Jhansi, submitted a report to Respondent No. 2 requesting him to take action in accordance with relevant government orders and also submitted this inquiry under Section 161 of the Electricity Act. The 2003 Act has been completed and a recommendation has been made for the petitioner to be compensated, to be paid by the utility company.

Thus, as of 18.04.2022, all required investigations and reports have been submitted by the competent authorities to Respondent No. 2 for the payment of compensation to the Petitioner.

In the petition in brief, the petitioner specifically stated that her deceased husband worked as a contractor of M/s Sri Ramdoot Steelfab and his total income was around Rs 3,50,000/- per annum and in support of this, she also submitted proof of income.

Thus, it is undisputed that the income of the deceased, based on the average income of the last three years, was higher than Rs 3,50,000/- per year.

It was also admitted by the respondents in the personal affidavit/counter-affidavit of 06.09.2022 that the death of the applicant’s husband was caused by faulty installation of the 11 KV overhead line.

The plaintiff’s lawyer argued that the plaintiff is entitled to just compensation based on the recognized annual income of her deceased husband, according to the law set out in two judgments of the court’s division bench in the Shiv Ranshu case. Chhuneja against State Of UP and others. .

Counsel for the petitioner further argued that the petitioner is a widow and that there are four dependents of the deceased and that she is running from pillar to post to obtain just compensation in terms of the aforementioned judgments read with the political decision of the respondents dated 25.09. 2021 but no compensation was paid to them and she and her family were left without any source of income for their survival.

The applicant’s lawyer also argued that it was only after the court issued the order of 01.09.2022 and 08.09.2022 that the respondents only paid a sum of Rs 5 lacs and declared on 09.09.2022 before this Court that the total compensation is Rs 7,23,506/- of which Rs 5 lacs were paid in accordance with the sanction letter dated 03.09.2022 and the balance of Rs 2,23,500/- will be soon paid.

The Claimant’s lawyer stated that the above calculation of compensation is based simply on a fictitious income of Rs 51,000/- per year while it was admitted by the Respondents that the actual annual income of the deceased from work contract was Rs 3.50,000/-.

He further stated that in the circumstances, the motion in writ deserved to be allowed with exemplary cost.

The Court observed that,

It is admitted by the Respondents that the deceased husband of the Applicant, namely Hani Khan, died on 10.04.2022 as a result of electrocution due to faulty installation of the 11 KV overhead line by the Respondents. It was also admitted by the respondents in their personal affidavit/counter affidavit dated 06.09.2022 that the actual income of the deceased husband of the applicant was Rs 3.50,000/- per year based on the tax return of the last three years.

Thus, according to established principles of law, the defendants are obliged to grant fair compensation to the claimant for a fatal accident resulting from their own negligence which caused the death of the claimant’s husband on 10.04.2022. However, despite the admitted proof of the actual income of the deceased of Rs 3.50,000/- per year, the respondents calculated compensation on the basis of the assumed theoretical income of the deceased of Rs 51,000/- per year.

The Compensation Order was made by the Authority in the exercise of statutory power under Section 161 of the Electricity Act 2003 and the Policy Decision to award just compensation. If fair compensation is not given, it would affect the fundamental rights of the victim guaranteed by Articles 14 and 21 of the Constitution of India. Therefore, the ordinance so passed would fall under written jurisdiction under Section 226 of the Constitution of India.

In light of the discussions made above and applying the law established by the Supreme Court in various judgments mentioned above, the Court concluded that the petitioner is entitled to compensation based on the undisputed actual annual income of the deceased at Rs 3, 50,000/- . The notional income of Rs 51,000/- as stated in the Company’s policy decision dated 25.09.2021 does not apply when the actual income of the applicant’s deceased husband has been admitted by the sponsors to be Rs 3.50,000/- per year.

The Court stated that, the accepted facts of the case, as stated in the previous paragraphs of the judgment, are that the applicant’s husband, namely Sri Hani Khan, died on 10.04.2022 as a result of electrocution by an 11 KV overhead line due to defendants’ negligence. At the time of his death he was approximately 27 years old and left behind four dependents, including the applicant. His average annual income based on previous tax returns was around Rs 3,50,000/-.

The Court granted the motion with the following instructions:-

(a) The defendants shall pay the dependents of the deceased the above mentioned compensation amount of Rs 66,85,000/- with simple interest @ 6% per annum from the date of filing of the claim until the realization, after adjustment of the amount previously paid by them to the petitioner.

(b) Out of the aforementioned amount of compensation, a sum of Rs 10,00,000/- shall be paid on behalf of the minor daughter of the deceased through the claimant as guardian, which shall be retained by the claimant in the highest interest bearing fixed deposit with interest payable monthly/quarterly, in a nationalized bank until the aforementioned minor daughter attains majority. Interest so received by the Claimant shall only be expended by the Claimant for the purposes of the upbringing and maintenance of her aforesaid minor daughter, Amayera Khan. After said minor daughter attains majority, the aforesaid principal amount may be used or invested by the applicant as required and after her, the remaining amount, if any, by her aforesaid daughter.

(c) Out of the aforesaid amount of compensation, another sum of Rs 10,000,000 will also be paid on behalf of the aforesaid minor daughter of the deceased through the claimant as guardian, which will also be retained by the claimant in a fixed deposit bearing the highest interest in a nationalized bank in the name of the aforementioned minor daughter with the possibility of accumulation of interest, for the purposes of higher education and the marriage of the aforementioned minor daughter.

(d) The other two dependents of the deceased will each receive Rs 10,00,000/- on the compensation amount determined above. (e) Interest and the balance of the compensation (after adjustment of the above-mentioned amount of Rs 40,00,000/- payable to three dependents and also after adjustment of the amount already paid), shall be paid to the claimant.

“The decision of the defendants dated 25.09.2021 to calculate and pay compensation solely on the basis of notional income, is not only arbitrary and violates fundamental rights guaranteed by Articles 14 and 21 of the Constitution of India, but is also in conflict with the law set by the Supreme Court in the aforementioned judgments ordering the payment of just compensation.

Therefore, we issue a general mandamus to respondents to calculate and pay just compensation based on the actual income of the injured/victim/deceased person where the actual income is verifiable or can be proven by the claimant with prospects future in accordance with the law established by the Supreme Court in the various aforementioned judgments and apply the multiplier as provided for in the political decision of 25.09.2021.

If the actual income of the injured/victim/deceased person is not verifiable or is not proven by the claimant, the fictitious income as indicated in the policy decision of 25.09.2021 will be applied for the calculation and the payment of compensation.

The amount of compensation for loss of property, loss of consortium and funeral expenses shall be determined and paid by the respondents in accordance with the law established by the Supreme Court in National Insurance Company Ltd v Pranay Sethi (supra), which is binding under Sections 141 of the Constitution of India,” the order reads.


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Elaine R. Knight