2025 (1) TMI 1562 - SC - Indian Laws

Supreme Court upholds enhanced motor vehicle accident compensation for 14-year-old who lost three family members

New India Assurance Co. Ltd. Versus Sonigra Juhi Uttamchand

The SC dismissed appeals challenging enhanced compensation awarded by HC in a motor vehicle accident case. The deceased parents and son left behind a ... Seeking enhancement of quantum of compensation granted by the Motor Vehicles Accident Tribunal - failure to deduct 1/3 of the income of the deceased regarding personal expenditures where the deceased has a minor daughter and old aged parents as the dependents - no proof of income - HELD THAT:- It is a fact that while calculating the monthly income, in respect of the father and mother of the appellant, the Tribunal as also the High Court did not consider the future prospects, may be because both of them were not salaried persons. There cannot be any doubt with respect to the position that in the case of self-employed persons too, fixation of monthly income, taking the factor of future prospects cannot be denied. The position is that, in the case of selfemployed persons below the age group of 40 years, 40% of the income assessed for fixation is grantable taking into account towards future prospects and in the case of persons within age group of 40 to 50 years an addition of 25% is grantable on that count, in terms of the decision in Pranay Sethi’s case [2017 (10) TMI 1276 - SUPREME COURT]. In the case of the father SLP (C) No. 30491 of 2018 Etc. Page 13 of 15 of the appellant, the multiplier was correctly taken with reference to his age. However, in the case of her mother, the multiplier was not correctly taken by both the Tribunal and the High Court. The age of mother of the appellant was taken as 38 years. The multiplier was taken as ‘16’ by the Tribunal and as ‘13’ by the High Court. To put it succinctly, while considering the compensation for the death of the parents of the appellant, additions and deductions have to be made taking into account the aforesaid aspects which is held not considered in the light of the contentions of the respondent-insurer as also the factors with reference to the contentions made on behalf of the appellant. The appellant was aged only 14 years when she lost her parents as also her younger brother. But then, the plight and fate on account of such solitude was considered by the Tribunal and the High Court. She will have to experience the same for long. That apart, while calculating compensation it is to be borne in mind that Section 168 of the Motor Vehicles Act mandates grant of ‘just compensation’. In a family of 4 members, viz., the parents and two children including the appellant, three of them died, leaving the appellant. After bestowing our anxious consideration on all aspects, we are of the considered view that after taking into account all parameters, just compensation was assessed and granted by the High Court as per the impugned common judgment by way of enhancement, which cannot be said to be excessive or exorbitant. Conclusion - The Court dismissed all appeals, maintaining the enhanced compensation awarded by the High Court, while directing that the one-third deduction for personal expenses be applied in future calculations. It is not appropriate to interfere with justice done to the appellant by the High Court by granting enhanced compensation - appeal dismissed. The core legal questions considered by the Court in these appeals arising from a motor vehicle accident involving the death of three family members were:1. Whether the High Court erred in not deducting one-third of the deceased parents' income towards their personal and living expenses while enhancing compensation, particularly given the presence of minor and elderly dependents.2. Whether the High Court was justified in assessing the income of the deceased parents on an assumed basis in the absence of admissible proof of income, specifically rejecting xerox copies of Income Tax Returns.3. Whether the High Court erred in awarding amounts exceeding the conventional heads of compensation (loss of estate, loss of consortium, funeral expenses) as fixed by this Court in precedent decisions.4. Whether the appellant was entitled to further enhancement of compensation for the death of the younger brother beyond the amount already awarded by the High Court.5. Whether the appellant was entitled to enhancement of compensation for the death of the parents, considering factors such as future prospects, multiplier application, and just compensation under the Motor Vehicles Act.Regarding the first issue, the legal framework is grounded in the precedent set by this Court in Sarla Verma & Ors. v. Delhi Transport Corporation & Anr., which mandates deduction of personal and living expenses from the deceased's income when calculating compensation. The standard deduction varies depending on the number of dependents: one-third for 2-3 dependents, one-fourth for 4-6 dependents, and one-fifth for more than six dependents. The Court noted that the Tribunal had deducted one-third of income for the deceased parents, but the High Court did not apply this deduction when enhancing compensation without assigning specific reasons. The Court held that such deduction is mandatory and the High Court ought to have deducted one-third of the income in accordance with Sarla Verma's case. This establishes the principle that deductions for personal expenses cannot be ignored even in enhancement proceedings.For the second issue, the Court examined the approach to income assessment when direct proof is unavailable. The deceased parents were self-employed and not salaried, and the appellant produced only xerox copies of Income Tax Returns, which were not accepted as admissible evidence. The Tribunal fixed monthly incomes of Rs. 12,000 and Rs. 8,000 for the father and mother respectively, based on surrounding circumstances rather than the tax returns. The High Court enhanced these to Rs. 18,000 and Rs. 9,000 respectively. The Court emphasized that while hypothetical assessments are necessary in such cases, they must be objective and based on evidence or reliable inference. It was held that the Tribunal's and High Court's approach was reasonable and not legally improper, as the tax returns alone, without proof of tax payment, cannot conclusively establish income. The Court thereby endorsed the principle that income can be assumed on a rational basis when direct proof is lacking, especially for self-employed persons.On the third issue concerning conventional heads of compensation, the Court referred to its ruling in National Insurance Co. Ltd. v. Pranay Sethi & Ors., which fixed the total compensation under conventional heads at Rs. 70,000 (Rs. 15,000 for loss of estate, Rs. 40,000 for loss of consortium, and Rs. 15,000 for funeral expenses) with a direction to revisit and increase these amounts by 10% every three years. The Court acknowledged that the Tribunal and High Court awards exceeded these amounts, but noted that their judgments predated the Pranay Sethi decision. The Court further clarified that once this principle is enunciated, it applies to all pending cases regardless of stage, unless matters have attained finality. Thus, the Court did not fault the earlier awards for exceeding the fixed conventional heads but clarified that future awards must conform to the updated standards.Regarding the fourth issue on compensation for the deceased brother, the Court noted the High Court's enhancement from Rs. 2,45,000 to Rs. 5,00,000 based on the precedent in Kishan Gopal & Anr. v. Lala & Ors. Considering the brother's young age (approximately 10 years), the Court found no grounds to further enhance the compensation. This indicates the Court's adherence to established principles for compensation for minors and the sufficiency of the High Court's award.The fifth and crucial issue pertained to the appellant's entitlement to enhanced compensation for the death of her parents. The Court analyzed the application of future prospects and multiplier factors. It held that even for self-employed persons, future prospects must be considered, with a 40% addition for those below 40 years and 25% for those aged 40-50 years, as per Pranay Sethi. The father's multiplier was correctly applied, but the mother's multiplier was incorrectly taken (16 by Tribunal, 13 by High Court) despite her age being 38 years. The Court emphasized that additions for future prospects and correct multiplier application are necessary for just compensation. However, upon reworking the compensation with these factors, the Court found that any adjustment would likely reduce the quantum slightly, not substantially.The Court further considered the appellant's personal circumstances: at 14 years old, she lost both parents and a younger brother, leaving her with only a paternal grandfather. The Court recognized the hardship and solitude faced by the appellant and noted that the Tribunal and High Court had factored this into their awards. The Court stressed that Section 168 of the Motor Vehicles Act mandates 'just compensation,' which includes consideration of the claimant's plight. Balancing all parameters, the Court concluded that the enhanced compensation granted by the High Court was just, reasonable, and not excessive or exorbitant. It declined to interfere with the High Court's award either by reducing or further enhancing it, emphasizing the interest of justice and the limited difference any recalculation would make.In summary, the Court's significant holdings include:'While calculating the quantum of compensation for death, deduction is bound to be effected towards personal and living expenses... where the deceased was married, the deduction towards personal and living expenses... should be one-third where the number of dependent family members is 2 to 3.''Monthly income could be fixed taking into account the tax returns only if the details of payment of tax are appropriately brought into evidence so as to enable the Tribunal/Court to calculate the income in accordance with law.''Under the conventional heads, only a total amount of Rs. 70,000/- ... is grantable... the amounts thus fixed under the conventional heads should be revisited every three years and the enhancement should be at the rate of 10% in a span of three years.''In the case of self-employed persons below the age group of 40 years, 40% of the income assessed for fixation is grantable taking into account towards future prospects and in the case of persons within age group of 40 to 50 years an addition of 25% is grantable.''Section 168 of the Motor Vehicles Act mandates grant of 'just compensation'... after bestowing our anxious consideration on all aspects, we are of the considered view that after taking into account all parameters, just compensation was assessed and granted by the High Court... which cannot be said to be excessive or exorbitant.'Consequently, the Court dismissed all appeals, maintaining the enhanced compensation awarded by the High Court, while directing that the one-third deduction for personal expenses be applied in future calculations consistent with Sarla Verma's precedent. The Court's reasoning balances legal principles on income assessment, deduction for personal expenses, application of multipliers and future prospects, and the statutory mandate of just compensation, thereby providing a comprehensive framework for assessing compensation in fatal motor vehicle accident claims involving self-employed deceased persons with dependents.