Motor Accident Compensation- Future Prospects Can Be Granted Even In Cases Pertaining To Notional Income: Supreme Court

The Supreme Court has held that future prospects can be granted even in cases pertaining to notional income.

The court observed thus while disposing an appeal arising out of Motor Accident Compensation Claim filed by heirs of a deceased couple who died in an accident. In this case, the Motor Accident Claims Tribunal awarded a total sum of Rs 40.71 lakhs for both deceased to the claimants. Partly allowing the appeal filed by Insurance Company, the High Court reversed the addition of future prospects.

Disagreeing with this approach, the bench comprising Justices NV Ramana, S. Abdul Nazeer and Surya Kant, in appeal filed by claimants,  observed:

"Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid. The argument that no such future prospects ought to be allowed for those with notional income, is both incorrect in law and without merit considering the constant inflation ­induced increase in wages"

In his separate concurring opinion, Justice Ramana observed that the rationale behind the awarding of future prospects is therefore no longer merely about the type of profession, whether permanent or otherwise, although the percentage awarded is still dependent on the same. The judge observed that granting of future prospects, on the notional income is a component of just compensation. The judge observed:

Once the victim has been proved to be employed at some venture, the necessary corollary is that they would be earning an income. It is clear that no rational distinction can be drawn with respect to the granting of future prospects merely on the basis that their income was not proved, particularly when the Court has determined their notional income.. When it comes to the second category of cases, relating to notional income for non­earning victims, it is my opinion that the above principle applies with equal vigor, particularly with respect to homemakers. Once notional income is determined, the effects of inflation would equally apply. Further, no one would ever say that the improvements in skills that come with experience do not take place in the domain of work within the household. It is worth noting that, although not extensively discussed, this Court has been granting future prospects even in cases pertaining to notional income, as has been highlighted by my learned brother.

The judge observed that awarding of future prospects is now a part of the duty of the Court to grant just compensation, taking into account the realities of life, particularly of inflation, the quest of individuals to better their circumstances and those of their loved ones, rising wage rates and the impact of experience on the quality of work.

The court also observed that the appropriate deduction for personal expenses for both deceased couple ought to be 1/4th only, and not 1/3rd as applied by the Tribunal and the High Court. It also observed that adoption of the lowest ­tier of minimum wage while computing income of the deceased was not justified. Holding thus, the bench enhanced the total motor accident compensation of Rs 22 lakhs awarded by the High Court to the claimant­s by Rs 11.20 lakhs to reach a new total of Rs 33.20 lakhs.

Case: Kirti vs. Oriental Insurance Company Ltd [CIVIL APPEAL NOS.19­20 of 2021]
Coram:  Justices NV Ramana, S. Abdul Nazeer and Surya Kant
Citation:  LL  2021 SC 3

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