The Hon’ble Supreme Court in Triveni Kodkany and Others vs. Air India Limited and Others has categorically enunciated that gross income of a person would be the factor for determination of compensation and not the salary of the deceased.
In the present case, a claim was made against Air India by the appellant (Triveni Kodkany) after her husband’s death in the Air India Flight IX 812 crash at Mangalore Airport in 2010. Air India, in 2012 paid an amount of Rs. 4,00,70,000/- to the appellant against an indemnity and Rs. 40,00,000/- to the parents of the deceased in addition. Subsequently, a complaint was filed before the National Consumer Disputes Redressal Commission (NCDRC) in 2012 claiming a compensation of Rupees 13.42 crores along with 18% interest p.a. from the date of the accident. Allowing the complaint, the NCDRC awarded a compensation of AED (Arab Emirate Dirham) 58,81,135/- which is equivalent to Rs. 7,35,14,187/- and viewed that the earlier compensation amounts were to be altered accordingly. The NCDRC in its order dated 10.12.2018, determined the amount to be AED 4,52,395 after deducting various allowances and expenses from the total CTC of the deceased. Thus, aggrieved by this order, an appeal was filed before the Hon’ble Supreme Court by both the parties.
The complainant/appellant contended that NCDRC erred in deducting the allowances and expenses and that 30% were to be granted instead of 25% towards future prospects in view of the judgment in National Insurance Company Limited v Pranay Sethi . Further, the complainant argued that the conversion of AED was to be made at the current prevailing rate rather than the rate mentioned in the consumer complaint. Complainant also submitted that, while determining compensation, the income of the deceased was to be considered and not the salary, as income would have a wider amplitude and will include all financial benefits. The respondents on the other hand, contended that the NCDRC erred in deducting one-fifth towards personal expenses when one-third was the correct deduction. Respondents also contended that Rs.10.46 crores were already paid to the complainants with interest and that the travel expense of AED 40,957 was to be deducted from the annual salary of the deceased while determining the compensation.
The Hon’ble Supreme Court, considering submissions from both sides, opined that the total CTC per annum of the deceased would comprise of all allowances and expenses and viewed that the income was to be assessed on the basis of entitlement of the employee, in cases where compensation arose from the death of an employee. The Apex court however, did not agree to the current prevalent exchange rate and fixed it to the earlier mentioned rate in the consumer Complaint. Thus, the Hon’ble Supreme Court disposing the appeals, enhanced the compensation and set the total amount to be paid as Rs.7,64,29,437/- and interest at the rate of 9% per annum on the same basis as had been awarded by the NCDRC.
Find this article on Lex Witness Introduction On December 26, 2018, the Department of Industrial Policy and Promotion (“DIPP”) vide Press Note 2 of 2018