SUPREME COURT HOLDS THAT FIXING NOTIONAL INCOME FOR A HOMEMAKER IS IMPERATIVE FOR SOCIAL EQUALITY

The Three Judge Bench of the Hon’ble #SupremeCourt of India comprising of Justices NV Ramana, S Abdul Nazeer and Surya Kant passed a Judgment dated 05-01-2021 in the case of Kirti & Anr. Etc. v. Oriental Insurance Company Ltd. {Civil Appeal Nos. 19-20 of 2021 (Arising out of Special Leave Petition (C) Nos. 18728-29 of 2018)} and held that the #time #invested by a #homemaker in taking care of the #household must be recognized and valued and the notion that they do not add “#economicvalue” must be overcome.

In the present case, the Deceased Couple (Poonam and Vinod) was killed in a road accident on 12-04-2014. An FIR was registered under Sections 279 and 304 of the Indian Penal Code, 1860 (IPC). Subsequently, a Claim Petition was filed by the two-toddler daughters and the parents of the Deceased under Section 166 of the Motor Vehicles Act, 1988 (MV Act). The Insurance Company awarded a compensation of Rs. 6.47 Lakhs for the death of Deceased Poonam and Rs. 10.71 Lakhs for Deceased Vinod. Based on the evidences produced, the Motor Accident Claims Tribunal (Tribunal) held that the car-driver was guilty of rash driving and the Respondent-Insurer was under an obligation to award the compensation. As regards the amount of compensation, the Tribunal relied upon the age of the Deceased couple and awarded a compensation of Rs. 40.71 Lakhs for both Deceased to the Claimants.

The computation of compensation by the Tribunal was contested by the Respondent-Insurer before the High Court of Delhi (High Court), on the ground that the Tribunal erred in relying upon the minimum wage notified by the Government of NCT of Delhi as there was no proof that the Deceased Couple was employed in Delhi. The Respondent-Insurer inter alia contended that since the Deceased were a resident of Haryana, the minimum wage notified for the State of Haryana should be taken into consideration for the purpose of computing the compensation.

Agreeing to the contentions raised by the Respondent-Insurer and relying upon the lowest minimum wage fixed for unskilled workers in the State of Haryana, instead of Delhi, the High Court reduced the notional income for both the Deceased. Furthermore, future prospects were denied to both the Deceased and 1/3rd of Poonam’s income was deducted towards personal expenses. However, keeping in mind Poonam’s contribution towards household, 25% additional gratuitous income was added to her salary. Thus, the High Court vide Judgment dated 17-07-2017 reduced the amount of compensation and awarded a total of Rs. 22 lakhs as compensation to the Claimants.

Aggrieved, the three surviving Dependents of the Deceased (two minor daughters and father) filed an Appeal in the Hon’ble Supreme Court of India challenging the Judgment dated 17-07-2017 passed by the High Court whereby the compensation awarded to the Claimants was reduced from Rs. 40.71 lakhs to Rs. 22 lakhs.

Relying upon the contentions raised by the Parties to the dispute, the Apex Court opined that there are two different categories of situations where the Court determines the notional income of a victim. Under the first category of cases, the Court determines the notional income of the victim when she was employed, but the Claimants are unable to prove her actual income. In such a situation, the Court “guesses” the income of the victim by generally taking into consideration factors such as evidence on record, the quality of life being led by the victim and her family, the general earning of an individual employed in that field, the qualifications of the victim, etc. Under the second category of cases, the Court determines the income of a non-earning victim, such as a child, a student or a homemaker. In this context, the Bench noted that as per the 2011 Census, about 159.85 million women stated that “household work” was their main occupation, as compared to only 5.79 million men.

The Hon’ble Supreme Court held that a home maker undertakes a plethora of activities and a considerable amount of time and effort is dedicated by the women towards household work. A homemaker does many household chores such as preparing food for the entire family, managing the procurement of groceries and other shopping needs, cleaning and managing the house and its surroundings. She also undertakes works such as decorations, repairs, maintenance work, looking after the needs of children and aged members of the household, managing budgets etc. In rural households, a woman apart from doing other works also undertakes field activities such as sowing, harvesting and transplanting.

Further, the Apex Court held that “15. The issue of fixing notional income for a   homemaker, therefore, serves extremely important functions. It is a recognition of the multitude of women who are engaged in this activity, whether by choice or as a result of   social/cultural norms. It signals to society at large that the law and the Courts of the land believe in the value of the labour, services and sacrifices of homemakers. 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. It is a reflection of changing attitudes and mindsets and of our international law obligations. And, most importantly, it is a step towards the   constitutional vision of social equality and ensuring dignity of life to all individuals.”

Thus, the Bench opined that the contribution made by a homemaker cannot be neglected and in this regard made the following observations on calculating the notional income for homemakers and the grant of future prospects with respect to them.

  1. “Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law.
  2. Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special   significance. It becomes recognition of the work, labour and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation’s international law obligations and our constitutional vision of social equality and ensuring dignity to all.
  3. Various methods can be employed by the Court to fix the notional income of a homemaker, depending on the facts and circumstances of the case.
  4. The Court should ensure while choosing the method, and fixing the notional income, that the same is just in the facts and circumstances of the particular case, neither assessing the compensation too conservatively, nor too liberally.
  5. The granting of future prospects, on the notional income calculated in such   cases, is a component of just compensation.”

Based on the aforesaid Guidelines, the Hon’ble Supreme Court awarded a compensation of Rs.33.20 lakhs to the Claimants. Further, the Apex Court ordered that the amount of compensation shall be paid within a period of two months with interest @ 9% p.a. from the date of the filing of the Detailed Accident Report i.e. 23-05-2014 and shall be appropriated as per the terms laid down by the Tribunal.

Suchitra Upadhyay

Associate

The Indian Lawyer & Allied Services

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