Wages of skilled workman to be computed in compensation to minor child in motor accident cases: Supreme Court

The Supreme Court has clarified that in motor accident cases where a minor child suffers death or permanent disability, the calculation of loss of income must be based on the minimum wages payable to a skilled worker in the respective State at the relevant point of time. The Court held that such a child cannot be treated as a non-earning individual for the purpose of awarding compensation simply because he or she was not engaged in gainful employment at the time of the accident.

A bench of Justices Sanjay Karol and Prashant Kumar Mishra delivered the ruling while hearing an appeal filed by Hitesh Nagjibhai Patel, who at the age of eight years suffered 90 per cent permanent disability in a road accident in 2012. The Motor Accident Claims Tribunal had awarded him Rs 8.65 lakh, and the Gujarat High Court upheld the award. The Supreme Court, however, held that both courts failed to award compensation under the head of loss of earnings and accordingly enhanced the compensation to Rs 35,90,489 by applying the minimum wages prevalent in Gujarat at the relevant time.

The Court noted that there was a substantial difference between the compensation granted by the courts below and what was payable under law once the principle of minimum wages for skilled workmen was applied. Referring to its earlier decisions in Kajal v Jagdish Chand (2020) and Baby Sakshi Greola v Manzoor Ahmad Simon (2024), the bench held that the principle was already settled that minors are entitled to computation of loss of income on the basis of skilled worker wages.

The Court observed, “We are constrained to observe that appeals to the High Court as well as to this Court were entirely avoidable, since the law had been amply clarified well before the order of the Tribunal was made on 17.10.2021 by way of the judgment rendered by this Court in Kajal decided on 05.02.2020. Both the courts were duty-bound to keep abreast with the law as clarified by this Court, ensuring that the judgments and orders passed by them are entirely in order therewith.”

The bench made it clear that when a Tribunal or a High Court in appeal is dealing with the case of a child who has suffered injury or death, the computation of compensation under the head of loss of income necessarily has to be made on the matrix of minimum wages payable to a skilled worker in the concerned State as notified for the relevant period. The Court further stated, “It is our hope that this restatement helps avoiding such errors and thereby obviates the necessity of this Court’s interference, applying well-established principles of law.”

Recognising the recurring problem of courts declining or failing to adopt minimum wages in such cases, the Supreme Court issued a further direction that where a claimant has failed to furnish appropriate details of income or adequate proof thereof, it would be the responsibility and obligation of the contesting party, particularly the insurance company, to produce before the Tribunal the applicable minimum wage notification issued by the competent government. The Court noted that in general, accidents involving adults also present similar difficulties, with disputes often arising on the calculation of income due to lack of ready access to minimum wage data. The bench said, “In general, i.e., accidents involving adults, we are often confronted with situations where the Minimum Wage Data is not readily available and every so often, the question that has been made up to this Court hinges only on the calculation of income.”

The Supreme Court directed that a copy of the judgment be sent by the Registrar Judicial to the Registrar Generals of all High Courts, who in turn will ensure circulation to all Motor Accident Claims Tribunals across the country so that the direction regarding production of minimum wage data by insurance companies is strictly followed. This directive is intended to standardise the application of the principle and reduce avoidable litigation.

Allowing the appeal, the Court modified the High Court’s order and directed that interest on the enhanced amount of compensation would be paid at the rate of 9 per cent per annum from the date of filing of the claim petition, as originally awarded by the Tribunal at Banaskantha.

The judgment establishes that in matters involving children, compensation cannot be symbolic or based on the assumption that a child is a non-earner. Instead, the structured basis for computation is the wage of a skilled workman in the State, as duly notified at the relevant time, ensuring that the award of compensation reflects a fair and lawful assessment of the loss suffered.

Case Title: Hitesh Nagjibhai Patel Vs Bababhai Nagjibhai Rabari & Anr

Judgment Date: September 3, 2025

Bench: Justices Sanjay Karol and Prashant Kumar Mishra