Motor Accident Compensation: Pranay Sethi Judgment Doesn't Limit Operation Of Statute Providing Greater Benefits: Supreme Court

The Supreme Court observed that the judgment in Pranay Sethi does not limit operation of a statutory provision granting greater benefits in the matter of Motor Accident Compensation.

If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid., the bench of Justices Uday Umesh Lalit and Ajay Rastogi observed.

The Court dismissed an Insurance Company's appeal challenging the award by Motor Accidents Claim Tribunal, Allahabad of Rs.24,43,432/- was awarded with 7% interest, while considering the claim in respect of an accident which resulted in the death of one Jairam Shukla. The Allahabad High Court, had dismissed the First appeal earlier.

In this appeal, the Insurance Company had contended that sub-rule 3(iii) of Rule 220A  of Uttar Pradesh Motor Vehicles Rules, 1998 is contrary to the conclusions arrived at by the Constitution Bench of this Court in National Insurance Company. Ltd. vs. Pranay Sethi (2017) 16 SCC 680. As per the said Rule, the future prospects of a deceased, shall be added in the actual salary or minimum wages of the deceased. If the deceased was more than 50 years of age: 20% of the salary has to be added.

Therefore, the question considered by the court was whether sub-Rule 3(iii) of Rule 220A of the Rules must be given restricted scope or it must be allowed to operate fully?

To answer this, the bench noted that the judgment in Pranay Sethi was from the standpoint of arriving at "just compensation" in terms of Section 168 of the Motor Vehicles Act, 1988.

"11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot 7 be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. The prescription of 15% in cases where the deceased was in the age bracket of 50-60 years as stated in Pranay Sethi cannot be taken as maxima. In the absence of any governing principle available in the statutory regime, it was only in the form of an indication. If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid.", the court said while rejecting Insurance Company's contention.

Observing thus, the bench dismissed the appeal.

Pranay Sethi Judgment

In Pranay Sethi, the Constitution bench had considered the question about the addition as regards the future prospects" in a case where the deceased was self-employed or was a person on fixed salary without provision for annual increment, etc. ? The Court had held as follows:

1. 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 48 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.
2. 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.
   
3. For determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paragraphs 30 to 32 of Sarla Verma which we have reproduced hereinbefore.
4. The selection of multiplier shall be as indicated in the Table in Sarla Verma read with paragraph 42 of that judgment. (vii) The age of the deceased should be the basis for applying the multiplier. 
5. 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.

Case: New India Assurance Co. Ltd. vs. Urmila Shukla ; CA 4634 OF 2021
Coram: Justices Uday Umesh Lalit and Ajay Rastogi
Citation: LL 2021 SC 359
Counsel: Adv Viresh B. Saharya, Sharve Singh, Adv Pradeep Misra, Adv A.D.N. Rao (Amicus Curiae )

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