Motor Accident Claims | Duty Of Court To Assess Fair Compensation Not Limited By Claimant's Rough Calculation: Supreme Court

The Supreme Court on October 15 held that the amount of compensation claimed is not a bar to the Motor Accident Claims Tribunal and High Court awarding more than what is claimed, provided it is found to be "just and reasonable."

It added that the court has a duty to calculate fair compensation, as held in Meena Devi vs. Nunu Chand Mahto (2022).

"It is a settled proportion of law, that the amount of compensation claimed is not a bar for the Tribunal and the High Court to award more than what is claimed, provided it is found to be just and reasonable. It is the duty of the Court to assess fair compensation. Rough calculation made by the claimant is not a bar or the upper limit," the Court stated.

In this case, the Court enhanced the compensation to Rs. 52,31,000 at a rate of 6% of a 32-year appellant who suffered 60% neurological disability and became unsound. As a result, he was found to be with 100% functional disability. 

The High Court awarded him Rs. 30,99,873, but the Court found that the High Court and Tribunal had calculated his annual income based on his income tax return from two years ago. It should have been calculated based on income tax return 1 year prior to the accident which reflected that the appellant's income was progressive 

The compensation was enhanced under various headers including for the loss of marriage prospects and the income of the appellant is progressive in nature.

Brief facts

As per brief facts, the present appeal has been filed by the appellant seeking enhancement of compensation in a motor vehicle accident case which led to a brain injury and ultimately, he became unsound.

The 32-year-old appellant was awarded Rs. 20, 60, 385 by the Claims Tribunal for the loss of future income (Rs.15,59,232), medical expenses (Rs.3,51,153), mental agony caused (Rs.50,000)and future medical expenses (Rs.1,00,000). It was found that the appellant suffered from 60% disability.

Against this, the appellant as well as the insurance company preferred appeals before the High Court, which opined that the appellant suffered 100% functional disability in terms of the loss of earning capacity, even if the disability from persistent neurocognitive is 60%.

The appellant was working as a Branch Manager at Padma Infrastructure Private Limited.

The High Court therefore modified the compensation to Rs. 30,99,873, whereas, the compensation for the loss of future income became Rs.25,98,720.

In the present SLP, the appellant has stated that the Tribunal and the High Court failed to appreciate that the income claimed by the appellant was Rs. 22,000 per month, that is, Rs. 2,64,000 per annum. However, the assessment of compensation made by the Tribunal was made at Rs.1,62,420 per annum, pertaining to the financial year 2010-11. Whereas, the accident took taken in 2014, two years from the said financial year. 

What did the Supreme Court say?

A bench of Justices J.K. Maheshwari and Rajesh Bindal first held that the assessment of income should be made on enhanced income. The Tribunal and High Court had calculated based on the annual income of Rs. 1,62,420, which was two years prior to the incident. However, a year prior to the accident, the annual income came out to be Rs.2,64,000 per annum.

The Court said: "In this regard, the appellant has produced on record his income tax returns for the assessment years 2010-11 and 2011-12 as Exhibits 14 and 15, respectively. As per the records, for the assessment year 2010-11 (the financial year will be 2009-10), the income shown by the appellant was to the tune of ₹1,65,100/-. For the assessment year 2011-12 (the financial year will be 2010-11), the income was shown as ₹1,77,400/-.

Further, as per the Salary Certificate Exhibit-22 placed on record by the appellant, he was working as Branch Manager for Padma Infrastructure and he was getting a consolidated salary of ₹22,000 one year prior to the date of accident. Now, it is to be noted that the accident took place on 16.01.2014, in the financial year 2013-14. If we calculate the annual income considering ₹22,000, it would come out to ₹2,64,000/- per annum."

It found that both courts failed to consider the fact that there is a gap of approximately 02 years and 09 months between the said income tax returns and the date of the accident. The Court noted: "It can be seen that the income of the appellant, based on the income tax returns so produced on record is progressive, there is a possibility that he may have left his business and join service to improve his income. Thus, in our view, it would be reasonable to take the income of the appellant at ₹2,00,000/- per annum, i.e., ₹16,666.67 per month."

As for the other headers, the Court found that the appellant was entitled for enhancement of compensation on account of future prospects. In line with the law laid down in National Insurance Company Limited v. Pranay Sethi and others (2017), the Court held that he is entitled to 40% future prospects. 

The Court also stated that under the header of medical expenses, he was merely granted Rs.10,000 for medical attendance at the time of treatment. However, since now he is a 40-year-old mentally disabled person with a mother of 60 years old as his primary caretaker, a reasonable lumpsum of Rs.1,00,000 should be granted for future attendant charges.

Further, an additional Rs.1,00,000 was awarded for the loss of marriage prospects. Moreover, it enhanced the amount of mental agony to Rs.1,00,000.

Case Details: Chandramani Nanda v. Sarat Chandra Swain And Another, Civil Appeals Arising Out of S.L.P. (C) No. 3050 of 2023

Citation : 2024 LiveLaw (SC) 803

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