The legal aftermath of Motor Vehicle Accidents.

The constitution bench of The Hon’ble Supreme Court in the matter of National Insurance Company Limited vs. Pranay Sethi and Ors. in its judgement (Judgement 31-Oct-2017) laid down guidelines as to the computation of compensation under the Motor Vehicle Act, 1988.

(Para 61)

  • While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.
  • In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
  • Where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependent family members is 4 to 6, and one-fifth (1/5th) where the number of dependent family members exceeds six.
  • Where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself. Even otherwise, there is also the possibility of his getting married in a short time, in which event the contribution to the parent(s) and siblings is likely to be cut drastically. Further, subject to evidence to the contrary, the father is likely to have his own income and will not be considered as a dependant and the mother alone will be considered as a dependant. In the absence of evidence to the contrary, brothers and sisters will not be considered as dependants, because they will either be independent and earning, or married, or be dependent on the father.
  • Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger non- earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third.
  • Multipliers according to age ( Para 19 & 20 ofJudgment in Sarla Verma and Ors. v. Delhi Transport Corporation & Ors. (2009) 6 SCC 121)
Age of Deceased Multiplier Scale
Upto 15 yrs. 15
15 to 20 yrs. 18
21 to 25 yrs. 18
26 to 30 yrs. 17
31 to 35 yrs. 16
36 to 40 yrs. 15
41 to 45 yrs. 14
46 to 50 yrs. 13
51 to 55 yrs. 11
56 to 60 yrs. 09
61 to 65 yrs. 07
Above 65 yrs. 05
  • The age of the deceased should be the basis for applying the multiplier.
  • Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years.

Recently, the Hon’ble Supreme court in the matter of Anant v. Pratap (25539_2017_Judgement_21-Aug-2018) was of the view that in case of a permanent injury or disablement caused due to a motor accident, the person so injured must be compensated for nonpecuniary losses as well in addition to the compensation for physical injury as the claimant who has suffered such an irreparable injury/disablement is unable to lead a full life due to such injury/disablement.

The claimant is entitled to be compensated for his inability to enjoy all those things and amenities which he won’t be able to enjoy in the future but which he would have enjoyed, had he been completely normal .The Hon’ble Apex Court further promulgated that the purpose of compensation under the Motor Vehicle Act is to fully restore the aggrieved person to the position prior to the accident.

Therefore while awarding compensations, it has to be kept in mind that if there is permanent/irreversible damage caused, then it is something, which the injured person would carry with himself/herself for the whole life thus such person should be aptly compensated.

(Para 5) In cases of motor accidents leading to injuries and disablements, it is a well settled principle that a person must not only be compensated for his physical injury, but also for the non­pecuniary losses which he has suffered due to the injury. The Claimant is entitled to be compensated for his inability to lead a full life, and enjoy those things and amenities which he would have enjoyed, but for the injuries.

(Para 6) The purpose of compensation under the Motor Vehicles Act is to fully and adequately restore the aggrieved to the position prior to the accident.

-Tushar Kaushik

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