Income to be assessed without deduction of allowances based on employee’s entitlement- Accident Compensation

Ukkash F | Sastra School of Law, Tamil Nadu | 21st May 2020 

Triveni Kodkany and Others Vs Air India Limited and Others 

FACTS OF THE CASE

The Supreme Court in this case granted the largest compensation for an individual where he died in a plane crash. The amount was Rs.7,64,29,437. The deceased was an employee at Middle Eastern Region with GTL Overseas. 

• The appellant on 2011 claimed for compensation and Air India paid an amount of Rs. 4,00,70,000. Moreover, an amount of 40lakhs was paid to the parents.
• The Trial Court by its judgment dated 27 September 2018 decreed the claim of the mother of the deceased in the amount of Rs 70 lakhs. The claims of the father and the brother were dismissed.
• The complaint out of which the present appeals arise was instituted on 18 May 2012 by the surviving spouse, son and daughter of the deceased before the NCDRC. The NCDRC awarded compensation of Rs 7,35,14,187 considering the interest amount and the damages.

Cross appeals were filed during the proceedings. Air India has also filed an appeal challenging the order of the NCDRC. By its judgment dated 10 December 2018, the NCDRC determined the total income as AED 4,52,395 by deducting the telephone allowance of AED 30,000. The telephone allowance was deducted by the NCDRC where after converting in Indian Rupees, 20 percent of personal expenses were deducted.

ISSUE

1. Whether the decision of NCDRC on assessing the compensation by deducting the allowances is justified?

SUBMISSIONS

The following are the submissions urged on behalf of the complainants 

1. The NCDRC erred in making a deduction of AED 30,000 from the total CTC of the deceased as reflected in the records produced by the employer.
2. An addition of thirty per cent ought to have been made towards future prospects instead of twenty-five per cent in view of the judgment of the Constitution Bench in National Insurance Company Limited v Pranay Sethi1.
3. The rate for conversion of AED into INR should be taken at the prevailing rate on the date of the judgment of this Court and not Rs 12.50 per AED which was the rate prevailing at the filing of the complaint before the NCDRC.
4. Only the salary of the deceased has been taken and not the income. The deceased was entitled to other benefits apart from salary including employees’ stock options (ESOP) and other financial benefits which have not been taken into consideration.

The following are the submissions on behalf of the respondents.

1. The NCDRC has erred in making a deduction of one-fifth towards the personal expenses of the deceased. The correct deduction ought to have been one-third since the complainants before the NCDRC were the spouse and two minor children 
2. Air India has paid a total amount of Rs 10.46 crores to the complainants and the mother, inclusive of interest and this would sufficiently meet the interests of justice particularly having regard to the precarious financial position of Air India
3. In addition to the deduction which was made on account of the telephone allowance, the transport allowance of AED 40,957 should also be deducted from the annual salary of the deceased in making the computation.

COURT’S DECISION

The bench ruled that there must be no exclusion of telephone and travel allowances for the purpose of computation. It was held that the income must be assessed based on the entitlement of the employee.

Moreover, the submission of considering the additional benefits & performance incentives of the employee was rejected that the employee can be entitled to a specific quantum and not on speculation. 

By placing the reliance on the case, Sarla Verma v. Delhi Transport Corporation the bench deducted the personal expenses 1/4^th of the basis of number of dependent family members.

In the event that the amount which has been paid by Air India is in excess of the amount payable under the present judgment in terms of the above order, the Court  directed under Article 142 of the Constitution, that the excess, if any, shall not be recoverable from the claimants.

CONCLUSION

This case will be benched for the largest compensation to be given in an individual case. The ruling was made by Justice Chandrachud and Justice Ajay Rastogi.