Bombay High Court
SMT. DHARMISHTA SANAT GANDHI AND ORS.versusDEPUTY COMMISSIONER OF POLICE,
- Decided
- Disposal
- Partly Allowed
- Bench
- R M JOSHI
Holding
The Court held that only the managerial loss (10‑15% of the deceased’s income) plus a 10% future prospect should be used for loss of dependency, income tax should not be deducted, and the compensation should be revised to Rs.16,02,000.
Summary
The appellants, the legal heirs of a deceased motorist killed in a 2023 road accident, appealed a Motor Vehicles Tribunal award that granted Rs.13,76,800 as compensation. They argued that the tribunal erred by using only Rs.1,80,000 per annum (10‑15% of the deceased's claimed income of Rs.9,00,000) for loss of dependency and by deducting income tax, seeking the full income to be considered. The respondent, Deputy Commissioner of Police, contended that the business continued after death and the claimants had suppressed this fact, so the full income should not be taken. The Court examined Supreme Court precedents on loss of dependency, noting that the deceased’s managerial skill loss is limited to 10‑15% of income unless specific circumstances justify more. It held that the tribunal was correct in limiting the income to Rs.1,80,000 but was wrong to deduct tax, and ordered a revised compensation of Rs.16,02,000 with interest.
Issues considered
- Whether the entire annual income of the deceased should be taken into account for loss of dependency under Section 173 of the Motor Vehicles Act.
- Whether the continuation of the deceased's business after death negates the claim for full income loss.
- Whether income tax should be deducted from the income considered for compensation.
- Whether the tribunal erred in its quantum of compensation and interest awarded.
Legislation cited
- Motor Vehicles Act, 1988 — s. 173
Subjects
- Motor Vehicles Act
- Section 173
- loss of dependency
- compensation calculation
- business continuation
- income tax deduction
- tribunal award
- interest
Judgment
17-FA-1718 OF 2025
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 1718 OF 2025
Smt. Dharmishta Sanat Gandhi …Appellant
And Ors.
Versus
Deputy Commissioner Of Police …Respondent
Ms. Varsha Chavan for the Appellant.
Mrs Shilpa Talar AGP for the State/Respondent
CORAM: R. M. JOSHI, J.
DATED: 20TH FEBRUARY, 2026
PC:-
1. This appeal is filed by the Original Claimants under
Section 173 of the Motor Vehicles Act,1988 taking exception to the
judgment and award dated 23rd October 2018 passed in MACT
Mumbai claim petition No. 834 of 2013. Whereby, death claim
came to be allowed by the Tribunal partly, directing payment of
compensation of Rs. 13,76,800/- to the original claimant
alongwith interest at the rate of 7.5% per annum from date of
claim petition till realisation of amount.
2. The accident in question had occurred on 23.03.2023
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at New Link Road, Dahisar West to East Lane, Anand Nagar
Junction Dahisar (W) Mumbai, when offending vehicle i.e. Tochan
Van bearing No. MH-01-YA 3550, came in high speed in a rash and
negligent manner and dashed the two-wheeler (scooter) which
deceased was riding. As a result of the same he fell down on the
road and sustained grievous injuries. He was taken to Bhagvati
Hospital, Borivali, Mumbai where he was declared as dead. It is
the case of the claimants that deceased was aged about 52 years
doing business in the name and style of M/s P.B. Sales
Corporation, Mahavir Nagar, Kandivali (W) Mumbai. It is claimed
that he was receiving annual income of Rs. 9,00,000/-. With these
averment the claimants, have claimed final compensation total of
Rs. 75,00,000/- under various heads.
3. Opponent i.e. Deputy Commissioner of Police, Motor
Transport Section Shepherd Road, Nagpada, Mumbai 400 008,
filed written statement at Exhibit-13 resisting claim. All
contentions of the claimants in respect of negligence on the part
of driver of the offending vehicle and income of the deceased etc
were denied.
4. The Claimants led evidence of claimant no.1 Smt.
Dharmishta Gandhi and relied upon documentary evidence
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including police papers and income tax returns of the deceased.
The opponent on the other hand examined police constable Mr.
Sandip Mahadik. Tribunal partly allowed the claim. The present
Appeal is filed by the claimants for enhancement of the
compensation.
5. Learned counsel for the claimants submit that the
claimants have succeeded in proving income of the deceased to be
9,00,000/- p.a. and the Tribunal ought to have accepted the same
for the purpose of computation of compensation amount towards
the loss of dependency. By drawing attention of the Court to the
evidence on record it is her submission that the Tribunal
committed error in not accepting the entire amount earned by the
deceased for the purpose of computation of compensation.
According to her irrespective of the fact as to whether the business
run by the deceased is continued or not by his legal
representative, the entire amount earned by the deceased is
required to be accepted for the purpose of loss of dependency. By
drawing attention to cross-examination of Claimant No.1, it is
argued that there is no suggestion made to this women that
claimants receive any income from business of deceased which is
now run by his nephew. To support her submission reliance is
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placed on judgment of Honble Supreme Court in the case of K.
Ramya and Ors Vs. National Insurance Co. Ltd. And Anr., 2022
SCC Online SC 1338 and S. Vishnu Ganga and ors. Vs. Oriental
Insurance Company Limited 2025 SCC Online SC 182. Without
prejudice to these submissions it is argued that the tribunal ought
not to have deducted income tax from Rs. 1,80,000 p.a., which
was considered to be the income of the deceased for the purpose
of computation of compensation amount.
6. In addition to the earlier submissions, learned counsel
for the Claimants has placed reliance on the judgment of the
Supreme Court in the case of Rukmani Devi and Ors. Versus Om
Prakash and Ors ( 1991 ACJ 3) and the judgment delivered by this
Court in Royal Sundaram Alliance Insurance Co. Ltd Versus Vinaya
Udaybabu Shah and Ors. ( 2022 ACJ 2122).
7. Learned counsel for the respondent/ original
opponent supports impugned judgment and award. It is her
contention that the claimants have failed to make out a case
before the Tribunal that after death of the deceased business was
required to be closed down. It is her further submission that
claimant suppressed fact of continuation of business of deceased
and it is only by way of cross examination opponent brought said
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fact on record. Thus according to her on the ground of support of
the material fact from Tribunal claimants are entitled to seek any
compensation.
8. Perusal of the claim filed before the Tribunal,
indicates that it was a case of the claimants that deceased was
conducting business in the name and style of M/s P. B. Sales
Corporation, Mahavir Nagar, Kandivali (W) Mumbai and was
earning Rs.9,00,000/- p.a., The claimants however are
conspicuously silent about the said business being still conducted
or closed down. It is not case of the claimants that they are not in
a position to conduct the same for want of any expertise or
experience. In fact even during the evidence on oath before the
tribunal, Claimant No.1 has not made any whisper anything about
status of the business. It is only in the cross-examination, it has
come on record that the said business is still being run. Though, as
per the voluntary statement of the claimant no.1 that business
run by her nephew, she never further claims that claimants are not
earning income therefrom. It is only during oral arguments for
the first time it is sought to be claimed that business is still being
run but income from the same is not received by claimants. There
is however no evidence to indicate so.
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9. The aforesaid facts clearly indicate that the claimants
have suppressed material fact with regard to the status of the
business of the deceased. Moreover, it was not claimed that
business was required to be closed down and the income arising
from the said business has completely stopped. On the other hand
there is admission of the claimant no.1 that for first time in her
cross-examination that the said business is still running. This
admission of claimants shows that the business of deceased was
not totally dependent upon his personal skills, since it continued
even after his death. It is pertinent to note that the business of the
deceased was not dependent of his individual skill but he had a
complete set up which could be seen from the balance-sheet and
profit and loss account of the deceased, which indicate about
expenses incurred on various head, including payment of rent of
premises. In the light of the these facts the position of the present
condition of business assumes importance. As per the
undisputable fact the business runs and income is earned/derived
therefrom. Needless to say that it was incumbent on the part of
the claimants to bring the said fact to the notice of Tribunal
10. Perusal of the judgment of the Hon’ble Supreme Court
in the Case of K. Ramya (supra), the fact is recorded in para no.
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16 of the said judgment indicates that the deceased wife in her
testimony before the tribunal has specifically deposed:
“which were utilised in the transport business
because they were not able to take care of the
vehicle on account of the demise of the deceased
and even the export business was shut down due
to the same reason.”
11. It is in the light of the this fact the Hon’ble Supreme
Court has held that the entire amount of income earned by the
deceased was required to be take for the purpose of computation
of loss of dependency. Further in the same judgment in paragraph
22 it is observed that:
“As rule of prudence, computation of any
individual’s managerial skills should lie between 10
to 15 per cent of the total rental income but the
acceptable range can be increased in the light of
specific circumstances.”
12. In the case of S.Vishnu Ganga (Supra) in paragraph
11 of the judgment, it is observed by the Hon’ble Supreme Court
that:
“ It would be of relevance as to whether due to
their lack of experience and maturity,
real/expected downfall in the profitability of the
firm or the business would ensue. Such factor,
while considering a claim pertaining to loss of
future income/earnings, would have to be dealt
with.”
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13. Perusal of the above judgments clearly inculcates that the
claimant is required to substantiate before the tribunal, that after
death of deceased on account of lack of experience or expertise
business either could be continued or cannot yield same income.
Leave apart making out such case before tribunal, in the instant
case, in fact claimants have supported the fact of continuation of
the business of the deceased even after his death. the claimants
therefore cannot get support from the said judgments.
14. Needless to say that any business would not only
require management but also capital/ investments and cumulative
effect thereof is ultimate returns yield therefrom. Thus, the
actual loss to the business on account of death of the deceased
would have to be considered for the determination of the loss of
dependency in absence of any such case being made out, the
determination of loss of dependency on income earned by
deceased is done, then it would lead to creation of artificial and
double income from one business i.e. the actual income derived
from conduct of business and income created by order of the
tribunal.
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15. This Court therefore, finds no substance in the
contention of the claimants that, the entire income of the
deceased from business should be taken for the purpose of
computation of loss of dependency. An amount to the extent of
10% to 15% and even more in appropriate cases can be
considered as the managerial loss on account of death of the
deceased. This loss is rightly estimated by the tribunal to the
extent of Rs. 1,80,000/- p.a. The tribunal however, was not
justified in deducting 10% amount towards income tax. An
amount of 1,80,000/- therefore, needs to be taken into
consideration for the purpose of computation of loss of
dependency. By following dictum in case of National Insurance
Company Ltd. Vs. Pranay Sethi & Anr., 2017 SCC Online SC
1270 an addition of 10% would have to be given towards future
prospects. The deceased was aged 52 years, the appropriate
multiplier as per Sarla Verma judgment is '11'. There were 3
dependents on the deceased and hence 1/3rd income deserves
deduction towards personal expenses of deceased. According to
judgment in case of Pranay Sethi, all claimants would also be
entitled to receive Rs. 40,000/- each towards consortium, apart
from compensation towards loss of estate and funeral expense.
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Sr. Particulars Amount ( in
No. Rs.)
1 Income (per annum) 1,80,000/-
2 Add: Future Prospect (10%) 18,000/-
Total 1,98,000/-
3 Less personal expenses (1/3rd) 66,000/-
4 Multiplier ( 1,32,000/- X 11) 14,52,000/-
5 Add. Consortium 1,20,000/-
6 Loss of estate 15,000/-
7 Funeral Expenses 15,000/-
Total 1,50,000/-
Grand Total (14,52,000/- + 16,02,000/-
1,50,000/-)
16. The compensation granted by Tribunal therefrom require
modification accordingly. The rate of interest granted by Tribunal
being reasonable does not need any modification.
17. Hence, the following order:-
ORDER
a) Appeal stands partly allowed.
b) The original claimants shall be entitled to receive a sum of
Rs. 16,02,000/- (Sixteen Lacs Two Thousand only) with interest at
the rate of 7.5% per annum from the date of the filing petition to
till realization of the amount. This amount of compensation be
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deposited/ paid to the claimants within 8 weeks from the date of
uploading of this order.
c) Claimants to pay additional fee as per rules.
(R. M. JOSHI, J.)
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