On October 15, the Supreme Court ruled that the amount of compensation 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 and should not act as an upper limit for the final award. In the present case, the compensation for a 32-year-old appellant, who suffered a severe neurological injury resulting in 100% functional disability, was increased to ₹52,31,000 with a 6% interest rate. The appellant had been awarded ₹30,99,873 by the High Court but had 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 based on income tax returns from two years before the accident. Instead, the Court held that his income should have been calculated using his income tax return from the year 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, which increased the compensation to ₹30,99,873. The High Court concluded that the appellant’s 60% neurological disability translated to a 100% functional disability, as it effectively ended his ability to work.
Supreme Court’s Decision:
The appellant contested that the Tribunal and the High Court had underestimated his income, which they 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 used for calculation and 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. It determined that an annual income of ₹2,00,000 should be used for calculating compensation, adjusting the monthly income to ₹16,666.
The Court further enhanced the compensation by considering future prospects, as 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. Noting that the appellant, now mentally disabled, was primarily cared for by his 60-year-old mother, the Court added ₹1,00,000 for future attendant charges.
Additionally, the Court awarded ₹1,00,000 for loss of marriage prospects and increased the amount for mental agony to ₹1,00,000. The total compensation was thus significantly enhanced across various categories.
