Can Motor Accident Compensation Be Claimed on Agricultural Income Without Proof? Supreme Court Answers

The Supreme Court has held that where there is no concrete evidence of income from agricultural operations, the income of an injured claimant for determining compensation under the Motor Vehicles Act should be assessed on the basis of established notional income standards for labourers, rather than on speculative claims.

A Bench of Justices N Kotiswar Singh and K Vinod Chandran made the observation while determining the monthly income of a skilled agricultural landowner who sought enhanced compensation after suffering permanent disability in a motor accident.

The appellant suffered grievous injuries and was left with 78% permanent disability after a car collided with the motorcycle on which he was travelling as a pillion rider. The negligence of the car driver was established, and the vehicle was insured.

Why did the Supreme Court refuse to treat the claimant's income as that of a farmer?

The claimant argued that he was earning Rs 10,000 per month as a farmer and produced documents showing ownership of 7.8200 hectares of agricultural land.

However, the tribunal found there was no evidence that he was personally carrying out agricultural operations. During cross-examination, the claimant admitted that he had given the land to another person for farming. The documents also showed that he owned only a 1/16th share in the total extent of the property.

"We cannot hence accept the plea of the appellant having earned Rs 10,000 as a farmer," the bench observed.

Court held that, in the absence of proof of actual agricultural income, his earnings had to be assessed as those of a labourer.

How was the compensation recalculated?

The Motor Accident Claims Tribunal (MACT) had assessed the claimant's notional monthly income at Rs 3,000, treating him as a labourer instead of a farmer. Although the claimant had sought compensation based on a monthly income of Rs 10,000, the tribunal awarded a total compensation of Rs 4,00,000.

The tribunal, however, reduced the compensation by holding the claimant 50% contributorily negligent.

The high court later set aside the finding of contributory negligence, enhanced the claimant's monthly income, and increased the compensation under various heads, awarding a total of Rs 8,90,683.

While considering the appeal, the Supreme Court referred to its decision in Ramachandrappa v. Royal Sundaram Alliance Insurance Co. Ltd. (2011), where it had held that a coolie would be entitled to a monthly income of Rs 4,500 in 2004. Applying a nominal increase of Rs 500 per year, Court held that a labourer in 2011 would reasonably be taken to have a monthly income of Rs 8,000.

The bench also found that the multiplier of 9 adopted by the tribunal and the high court was correct, considering the claimant was 57 years old. It also upheld the addition of 10% towards future prospects.

Accordingly, Court recalculated the compensation for loss of earning capacity due to disability as:

Rs 8,000 × 12 × 9 × 110% × 78% = Rs 7,41,312.

"The other amounts awarded by the high court under various heads stands as it is. We have enhanced the compensation for the loss of income due to disability caused," the bench said.

Allowing the appeal, Court directed that the enhanced compensation be paid with interest at 8% per annum, as ordered by the high court, after adjusting the amount already paid.

Case Title: Jagdish Narayan Vs Karan Singh & Ors

Bench: Justices N Kotiswar Singh and K Vinod Chandran

Date of Judgment: July 07, 2026