What Should Be The Notional Income Of A 5-Yr-Old Minor In A Motor Accident Claim? Kerala High Court Answers

The Insurance Company challenged the Tribunal's decision to fix the notional income to rupees 8,000 per month.

Justice Easwaran S. referred to Master Ayush v. The Branch Manager, Reliance General Insurance Co. Ltd and Others (2022) wherein the Apex Court granted over 50 lakh rupees as compensation to a 5 year old victim who was paralysed for life in an accident. Relying on it, the High Court observed that Courts must undertake a progressive thinking while fixing notional income of a minor child and must not apply a restrictive mind.

“As far as the State of Kerala is concerned, the Government has brought the minimum rates at which the wages are to be paid. In G.O.(P).No.56/2017/Fin dated 28.04.2017, the Government of Kerala had revised the minimum wages for skilled workers w.e.f 01.04.2016 and the same is fixed at ₹17,325/- per month. Therefore, this Court is of the considered view that the notional income of the claimant can be fixed as ₹17,325/-. By formulating the above proposition, this Court would hope that the same would bring succor to the claimants in cases where fixation of notional income of the minor child is involved.”

Background Facts

In this case, a 5-year-old boy who was studying in UKG was hit by a car in the year 2016 which was being driven rashly and negligently. The boy is in a vegetative state for the past 8 years and has lost his childhood. The Medical Board assessed that the boy has a 77 per cent disability.

The Tribunal fixed the notional income of the minor boy as 8,000 rupees per month and ordered for a compensation of rupees 44,94,223. Both the claimant and insurance company have preferred appeals challenging the compensation awarded by the Tribunal.

The Insurance Company contended that the notional income of rupees 8,000 fixed by the Tribunal is high. It was also argued that Tribunal erred in granting interest on compensation for future medical treatment. It was also stated that granting compensation for disability, alongside allowing compensation towards loss of earning power was impermissible.

On the other hand, the claimants argued that since the minor boy is in a vegetative state, functional disability should have been fixed at 100 percent, instead of 77 per cent. The compensation granted under various heads was also challenged as insufficient.

Observations

The Court found that the Tribunal had not given any reasoning before fixing rupees 8,000 as notional income. It stated that there are no precedents before the Court for fixing the notional income of a minor boy who was losing his childhood in a vegetative state.

The Court stated that Courts and Tribunals have to grant fair and just compensation per the principles enshrined under the Motor Vehicles Act.

Relying upon the Apex Court decision in Mater Ayush (supra) and provisions of the Minimum Wages Act, the Court fixed the notional income as 17, 325 rupees per month. It further clarified thus, “This Court is conscious of the fact that by referring to the provisions of the Minimum Wages Act 1948, for the purpose the notional income of a minor child, this Court has never ignored the future of a blooming young mind nor has closed its eyes over the bright future of the child and the prospects which he may have secured but for this fatal accident. The above exercise is purely intended to serve as a guidance for the purpose of calculation of the notional income without which the claimants would be left foundered.”

Further, the stated that the Insurance Company cannot fix meagre amount of rupees 5000 as attendant charges as this was not an appeal for enhancement against a minor injury. The Court stated cautioned that the Insurance Companies have corporate social responsibility and stated that multiplier system must be applied for calculation of attendant charges/bystander expenses by relying upon the Apex Court decision in Kajal v. Jagdish Chand and Others (2020).

“Hence this Court is of the view that while fixing attendant charges there is no absolute rule that only Rs.5,000/- alone can be granted. The Court cannot shut its eyes to the realities of life and simply believe that for attending a child in paraparesis state, services of an attendant will be readily available for Rs 5,000/”, added the Court.

The Court clarified that the attendant charges have to be fair and reasonable and emphasized that it need not be calculated solely relying upon the Minimum Wages Act. The Court stated that solely relying upon the Act would bring an anomalous situation where compensation awarded would go out of proportion, since minimum wages in Kerala are among the highest in the country.

The Court thus fixed rupees 10, 500 as monthly income for calculating the attendant charges and stated that it was appropriate to fix attendant charges for two persons to take care of the paralysed child.

Relying upon various precedents, the Court stated that the child has to be assessed with a functional disability of 100 per cent and thus modified the quantum of compensation awarded by the Tribunal.

Further, the Court referred to Kothandapani Vs Tamil Nadu Road Transport Corporation Limited (2011), S.Manickam Vs Metropolitan Transport Corporation Limited (2013), Minor Basid VS K.C.Sanu and Another (2018) to state that claiming compensation under the head loss of earning as well as for permanent disability was maintainable. It stated that Motor Vehicles Act must be given beneficial interpretation, instead of restrictive interpretation by relying upon archaic principles.

The Court stated, “It cannot be ignored that the permanent disability leads to the loss of enjoyment of the amenities and comfort in life. Though the person suffering from permanent disability is entitled to claim compensation, in a given case where the nature of permanent disability is in such a proportion that may incapacitate the person from earning in his life, the Court cannot turn a blind eye towards the debilitating physical condition of the child…. Apart from the fact that the permanent disability affects the earning capacity of the person concerned, undoubtedly, one has to forego other personal comforts and even for normal activities they need to depend on others.”

The Court went on to fix rupees 15 lakh towards pain and suffering by relying upon Apex Court decision in Kajal (supra). It also noted that the child in a paraparesis state would have specific dietary requirements and fixed rupees 3 lakhs towards dietary expenses and rupees 3 lakhs for future treatment. It also noted that the multiplier has to be fixed at 15 by relying upon various precedents.

The Tribunal had awarded interest at 7 per cent from the date of application till realisation. The High Court increased the interest from 7 per cent to 9 per cent.

Accordingly, the Court dismissed the appeal of the Insurance Company and partly allowed the claimant's appeal by enhancing the compensation from approximately 45 lakhs to 85 lakhs.

“Accordingly, the appellant/claimant is awarded an additional compensation of Rs.84,87,100/- (Rupees eighty four lakhs eighty seven thousand one hundred only) over and above the compensation awarded by the Tribunal with interest @ 9% per annum from the date of petition till realization together with proportionate costs.”

Case Number: MACA NO. 223 OF 2021 & Connected Matter

Case Title: Master Jyothis Raj Krishna @ Jyothi Krishna v Sunny George & Connected Matter

Citation: 2024 LiveLaw (Ker) 753

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