MV Act: For Child Victims, Compensation Must Be Based on Minimum Wages of Skilled Worker, Says SC

The Supreme Court has held that for child victims of motor accidents, loss of income must be calculated based on the minimum wages payable to a skilled worker in the relevant State at the time of the accident, rather than treating the child as a non-earning individual.

A Bench of Justices Ujjal Bhuyan and N V Anjaria said the multiplier method should be applied based on the age of the victim to provide a realistic assessment of future earnings.

Court made the observations while enhancing compensation awarded to a child victim who suffered 100% functional disability following a motor accident.

Why should compensation for a child victim be assessed differently?

The Bench said cases involving child victims suffering permanent or near-total disability constitute a distinct and special category under the law relating to motor accident compensation.

"A child, by reason of age, vulnerability and complete dependence upon others, stands on an altogether different footing from an adult claimant," Court said.

It noted that catastrophic injuries suffered during childhood do not merely cause immediate physical impairment but can alter the entire course of a child's life. Therefore, claims involving injured children cannot be assessed through the same lens ordinarily applied to adult claimants.

Court said that in cases involving child victims suffering catastrophic permanent disability, compensation cannot be confined to conventional heads. The assessment must be realistic, humane and welfare-oriented, covering pecuniary and non-pecuniary losses including loss of future earnings, future medical expenses, attendant charges, loss of amenities and marriage prospects.

How should loss of future earnings be calculated?

Court held that the loss of income of a child victim should be assessed on the basis of the minimum wages payable to a skilled worker in the relevant State at the time of the accident. The multiplier method should then be applied according to the victim's age to arrive at a realistic assessment of future earnings.

"The expression ‘just compensation’ is not defined in the MV Act. However, the legislative intent is clear. Compensation awarded should be just, fair and reasonable. It should neither be a windfall nor a pittance. Since loss arising from death or permanent disability cannot be measured with mathematical precision, some amount of approximation and judicial discretion is inevitable," the Bench said.

Court also distinguished between medical or physical disability and functional disability.

It said functional disability concerns the effect of an injury on the victim's ability to live a normal life and pursue gainful employment. Therefore, even where physical disability is assessed at a particular percentage, the resulting functional incapacity may be total and may warrant treating the loss of earning capacity as 100%.

Multiplier method for lifelong attendant charges

Court also held that attendant charges for a victim suffering catastrophic injuries and requiring lifelong care should be calculated using the multiplier method.

It said this approach takes into account inflation, interest rates and the uncertainty of life, and therefore provides a more realistic and fair assessment than an ad hoc lump-sum payment.

The appeal was filed by Gayatree Pattnaik on behalf of the victim, Shreejita Pattnaik, challenging the January 11, 2023 judgment of the High Court of Orissa at Cuttack.

The minor girl was only six months old when the accident occurred on June 16, 2015. She was travelling in a car with her parents when it was hit by a tanker driven rashly and negligently.

The Motor Accident Claims Tribunal, Cuttack, had awarded compensation of Rs 30,12,960 with 6% annual interest. The high court enhanced the compensation by a further Rs 15,27,840, taking the total to Rs 45,40,800.

While the victim had suffered 90% physical disability, the Supreme Court held that she had suffered 100% functional disability.

Court ultimately enhanced the compensation payable by the insurance company from Rs 45,40,800 to Rs 83,38,360, with interest at 9% per annum.

Case Title: Gayatree Pattnaik for Shreejita Pattnaik Vs Arundhati Sahoo & Anr

Bench: Justices Ujjal Bhuyan and N V Anjaria

Date of Judgment: August 3, 2026