Supreme Court: Compensation Can Exceed Claimed Amount If Just And Reasonable

Supreme Court on compensation can exceed claimed amount if just and reasonable:

On October 15, the Supreme Court ruled that the amount of claimed by a plaintiff in a motor accident case is not a limitation on what the Motor Accident Claims Tribunal or the High Court can award, provided the compensation is found to be “just and reasonable.” The Court emphasised that it is the responsibility of courts to calculate fair compensation, as affirmed in the 2022 case Meena Devi vs. Nunu Chand Mahto.

The Court reiterated that the compensation claim is merely a rough estimate. They added that it should not act as an upper limit for the final award. In the present case, the court increased the compensation for a 32-year-old appellant, who suffered a severe neurological injury resulting in 100% functional disability, to ₹52,31,000 with a 6% interest rate. The High Court awarded the appellant ₹30,99,873. He had later challenged this amount, arguing that the income calculation was flawed.

The Supreme Court found that both the High Court and the Tribunal had incorrectly assessed the appellant’s income. This was based on income tax returns from two years before the accident. Instead, the Court held that they should calculate his income using his income tax return from that year. This was just prior to the accident, which reflected a higher, progressive income.

Case Background:

The case involved an appeal for higher compensation by the appellant, who had sustained a traumatic brain injury in a 2014 motor vehicle accident. The appellant, a Branch Manager at Padma Infrastructure Private Limited, was initially awarded ₹20,60,385 by the Claims Tribunal for loss of future income (₹15,59,232), medical expenses (₹3,51,153), mental suffering (₹50,000), and future medical expenses (₹1,00,000). The Tribunal recognized that the appellant had suffered 60% physical disability.

Both the appellant and the insurance company appealed the Tribunal’s decision in the High Court. This led to an increase in compensation to ₹30,99,873. The High Court concluded that the appellant’s 60% neurological disability translated to a 100% functional disability.

Supreme Court’s Decision:

The appellant contested that the Tribunal and the High Court had underestimated his income. They had calculated at ₹1,62,420 per annum from his 2010-11 income tax returns. However, the appellant argued that his income had risen to ₹22,000 per month (₹2,64,000 per annum) before the accident in 2014. The Supreme Court agreed, ruling that his compensation should have been based on the higher income from the year just before the accident.

The Court found that both lower courts had overlooked the two-year gap between the income tax returns. They used it for calculation, noting the accident date, which showed a rising income trend. The Court reasoned that the appellant, likely having left his business for a managerial job, was earning more at the time of the accident. The committee determined that they should use an annual income of ₹2,00,000 to calculate compensation, adjusting the monthly income to ₹16,666.

The Court further enhanced the compensation by considering future prospects. This is outlined in the 2017 ruling in National Insurance Company Limited v. Pranay Sethi. It awarded the appellant an additional 40% for future income prospects, alongside an increased award for medical expenses. The report notes that the appellant now has a mental disability. The Court added ₹1,00,000 for future attendant charges, noting that his 60-year-old mother primarily cared for him.

Additionally, the Court awarded ₹1,00,000 for loss of marriage prospects and increased the amount for mental agony to ₹1,00,000. Thus, the authorities significantly enhanced the total compensation across various categories