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COMPENSATION FOR HOME-MAKERS OF THE NATION

August 4, 2021

By Lucy Rana and Sanjana Kala

CASE ANALYSIS: KIRTI VS ORIENTAL INSURANCE CO LTD (2021) 2 SCC 166

Recently, the Supreme Court in the case of Kriti v/s Oriental Insurance Co. Ltd. opined that while calculating the notional income in motor vehicle accidents, the deceased and non-earning members including homemakers should also be taken into consideration to arrive to a fair and just compensation. The apex court partly allowed the appeal from the judgment where the High Court had disallowed the future prospects awarded by the Motor Accident Claims Tribunal for a deceased victim who was a homemaker and further enhanced the awarded amount. The captioned judgment is a step forward towards negating the notion that homemakers do not contribute any economic value to the society and cannot share the same pedestal of that of a bread earner.

Facts

  • The deceased couple, Vinod and Poonam, while commuting on a motorcycle in Delhi at around 7 AM on April 12, 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 hemorrhagic shock caused by the accident’s blunt­force trauma;
  • 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   Motor Vehicles Act, 1988   by   the   two   toddler daughters 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 had been 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 INR 6.47 lakhs for the death of Poonam and INR 10.71 lakhs for Vinod.

Procedural History

  • The Motor Accident Claims Tribunal, Rohini (hereinafter, “Tribunal”) took note of the chargesheet filed against the driver in the criminal case and also his failure to step into the witness box. Relying on the strong testimony of the independent witness, it was concluded that the car­driver had indeed been driving rashly and thus liability ought to be fastened on the respondent­insurer.
  • The Tribunal awarded a motor accident compensation of INR 40.71 lakhs on December 24, 2016 under Section 168 of the Motor Vehicle Act, 1988 (“MV Act”). The quantum of compensation was calculated as below:
AGE-MULTPLIER COMPENSATION FOR LOSS OF LOVE AND AFFECTION COMPUTATION OF LOSS OF DEPENDENCY FUTURE PROSPECTS PERSONAL EXPENSES CONTRIBUTION TO HOUSEHOLD
Ages of Poonam and Vinod were determined as 26 and 29 years respectively. An age­ multiplier   of   17   was   adopted. Rs 2.50 lakhs was given for each deceased

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

charges

The minimum wage in Delhi was adopted for computation of loss of dependency for Vinod (owing to his father’s unsubstantiated claim of him being a teacher) An   additional   25% income   was   accounted   for   future prospects of   Poonam 1/3rd of   Vinod’s   salary was deducted towards personal expenses No income under this head was computed
DECISION OF TRIBUNAL: Thus, the Tribunal awarded a total sum of INR 40.71 lakhs for both deceased to the claimants

This computation was challenged by the Respondent­Insurer before the High Court and the quantum of compensation was calculated as below:

COMPUTATION OF LOSS OF DEPENDENCY FUTURE PROSPECTS PERSONAL EXPENSES CONTRIBUTION TO HOUSEHOLD
Minimum wage charged as per the state of Haryana (established residence of the deceased) and not the state of Delhi Therefore the High Court adopted the lowest minimum wage applicable for unskilled workers in Haryana Future prospects were denied

to both deceased

1/3rd  of Poonam’s income was

deducted towards personal expenses

 

Given the totality of circumstances and

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

income was added to her salary

DECISION OF HIGH COURT: Thus, the High Court reduced the total compensation to a total sum of INR 22 lakhs for both deceased.

The decision of the High Court was challenged by the claimants before the Supreme Court;

Issues before the Supreme Court

  • Should the subsequent death of the deceased’s mother be taken into consideration to calculate the share of deduction of personal expense?
  • Should minimum wages of the lowest tier be used to calculate the monthly income of the deceased?
  • Should payment for future prospects be made to the deceased where there is no proof of any employment or fixed salary?

Decision of the Supreme Court

The Supreme Court allowed the appeals in part and increased the compensation awarded by the Delhi High Court to the claimants-appellants by INR 11.20 Lakhs, making it a total sum of INR 33.30 Lakhs based on the following grounds:

(I) Deduction for Personal Expense

  • The Apex Court settled the fact that the time of death there were 4 dependents of the deceased and the subsequent death of the deceased’s mother ought not to be the reason for the deduction of the compensation. The legal claims crystallize at the time the accident has occurred and does not take into the account of the changes that occur in due course of the proceedings.
  • The accident also led to the death of the unborn child of the deceased couple and thus the appropriate deduction for personal expenses of both should be 1/4th and not 1/3rd.
  • The lower compensation conceded by the counsel for the Appellants does not bind the parties, as it is legally settled that advocates cannot throw away legal rights or enter into arrangements contrary to law.

(II) Assessment of monthly income

  • Considering the reasonable standard of living of the deceased and their family, as evidenced by the use of a motorcycle for commuting, adoption of the lowest tier of minimum wage while computing the income is not justified. Monthly income should be calculated in such a manner that the existing standard of living of the dependents are reserved. Thus the minimum wage of a skilled worker should be used to calculate the monthly income.

(III) Additional Future Prospects

  • The court relied on the judgment passed by the Constitutional Bench of the Supreme Court in the case of National Insurance Co Ltd v. Pranay Sethi[1] wherein the court held “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”.
  • The court rejected the contention of the respondent-insurer that future prospects cannot be allowed in case of notional income. The Supreme Court relied on the observations of this court in the case of Hem Raj v. Oriental Insurance Co. Ltd.[2] held “We are of the view that there cannot be distinction where there   is   positive   evidence   of   income   and   where   minimum 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.”
  • Therefore, Vinod and Poonam (29 years and 26 years respectively), both being below the age of 40 were granted future prospects calculated to the tune of 40% of their established income.

A comparative table of revised compensation after suitable increases was depicted by the Supreme Court as follows:

tribunal

Analysis and Commentary

Justice N.V. Ramana took the opportunity to explain the rationale behind the computation of notional income in case of a homemaker wherein he said:

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

Justice N.V Ramana also cited the judgment of Arun Kumar Agarwal v. National Insurance Co. Ltd[3], where the court had held:

“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.”

The notional income of the homemaker can be determined by various methods. Some of the methods were highlighted by a Division Bench of the Madras High Court in the case of Minor Deepika[4] which held:

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.

The 2021 judgement also took into the consideration of statistics in India wherein 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. 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 disparity.

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. 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. The total time spent on these activities per day makes the picture in India even clearer: 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 only 1.7 and 0.8 percent in comparison.

Conclusion

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. Therefore, fixing the national income of a homemaker is of special significance as it will give recognition to the work, labor, and sacrifices of homemakers. In addition to that, it is in furtherance of India’s obligations as being a signatory of the Universal Declaration of Human Rights wherein as per Article 7 it is highlighted that ‘All are equal before the law and are entitled without any discrimination to equal protection of the law’. Moreover, the captioned judgment will promote and reinstate the principles of social equality and dignity of all, as envisaged in the Constitution of India.

However, there can be no exact calculation or formula that can magically ascertain the true value provided by an individual gratuitously for those whom they hold near and dear. The attempt of the Court in such matters is therefore towards determining, in the best manner possible, the truest approximation of the value added by a homemaker for the purpose of granting monetary compensation.

[1] (2017) 16 SCC 680

[2] (2018) 15 SCC 654

[3] (2010) 9 SCC 218

[4] National Insurance Co. Ltd. v. Minor Deepika rep. byher   guardian   and   next   friend,   Ranganathan,   2009   SCC OnLine Mad 828

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