Claims & Liabilities Under Motor Vehicles Act Crystallise At Time Of Accident: Supreme Court

  • Lawbeat News Network
  • 02:59 PM, 15 Jan 2021

A 3 Judge Bench of Justice Surya Kant, Justice N.V. Ramana and Justice S. Abdul Nazeer, while determining rightful compensation in an motor vehicle accidental claim, relied on the computation scheme enumerated in National Insurance Co. v. Pranay Sethi, (2017) 16 SCC 680 and further clarified, “Claims and legal liabilities crystallise at the time of the accident itself, and changes post thereto ought not to ordinarily affect pending proceedings.”

The Bench increased the compensation from Rs 22 lakhs awarded by the High Court to Rs 33.20 lakhs and mandated the payment of same with 9% rate of interest from date of filing of the detailed accident report.

Brief outline of the case

The present civil appeal was moved by three surviving dependants (two minor daughters and father) of the two deceased, impugning the judgment dated 17.07.2017 of the Delhi High Court through which the motor accident compensation of Rs. 40.71 lakhs awarded by the Motor Accidents Claims Tribunal was reduced to Rs 22 lakhs. This reduction has been assailed by the counsel for the claimants with a prayer for re-computation as per the settled precedent of Pranay Sethi rebutted by counsel for the respondent-insurer stating that the High Court’s decision was a consent order and the appellants had conceded to a lower computation under the head of loss of dependency, which cannot be challenged now before the present Court.


Justice Surya Kant made an analysis on various aspects, as put briefly hereunder:

  • With respect to deduction of expenses, it was observed that the subsequent death of the deceased’s dependent mother cannot be a reason for reduction of motor accident compensation. Further, any amount awarded by the Court in this regard ought to be just, reasonable and must be guided by the principles of fairness, equity and good conscience. Court also noted that the family of the deceased, in fact consisted of four dependants, one of whose life was tragically extinguished in the womb of the mother in the said accident, and therefore the appropriate deduction ought to be 1/4th and not 1/3rd as applied by the Tribunal and the High Court.
  • On assessment of monthly income, it was said that no matter the claimants have been unable to place on record any document reflecting deceased’s income, it would be incorrect to adopt the lowest-tier of minimum wage while calculating his income, as, from the statement of witnesses, documentary evidence on record and circumstances of the accident, it shows that the deceased was comparatively more educated and skilled.
  • Considering addition of future prospects, 40% of established income was allowed relying on dictum laid by Constitutional bench in Pranay Sethi case, “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.”
  •  Upon Other heads and division of compensation, no deviation from the High Court finding was noted.

In his concurring judgment, Justice Ramana mentioned the two categories wherein the Court is called to determine the notional income of a victim; (i) where the victim was employed but the claimants cannot prove the actual income (ii) where the victim was unemployed/non-earning like a student, child or a homemaker. While in the former case, Court ‘guesses’ the income on the basis of evidence adduced/standard of living of the victim etc, assessing compensation for latter is more difficult and varies as per facts and circumstances of each case. Reliance was placed on Arun Kumar Agarwal v. National Insurance Co. Ltd., (2010) 9 SCC 218, where the Supreme Court made the said observation while deciding compensation for homemakers, as in the present case,

“In India the courts have recognised that the contribution made by wife to the house is invaluable and cannot be computed in terms of money. The gratuitous services rendered by the wife with true love and affection to the children and her husband and managing the household affairs cannot be equated with the services rendered by others. A wife/mother does not work by clock. She is in the constant attendance of the family throughout the day and night… It is not possible to quantify any amount in lieu of the services rendered by the wife/mother to the family i.e. the husband and children. However, fir the purpose of award of compensation to the dependants, some pecuniary estimate has to be made of the services of the housewife/mother.”

Conclusively, the issue of calculation of notional income for homemakers and the grant of future prospects was summarized in the following points:

“A. Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law.

B. Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special significance. It becomes a recognition of the work, labour and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation’s international law obligations and our constitutional vision of social equality and ensuring dignity to all.

C. Various methods can be employed by the Court to fix the notional income of a homemaker, depending on the facts and circumstances of the case.

D. The Court should ensure while choosing the method, and fixing the notional income, that the same is just in the facts and circumstances of the particular case, neither assessing the compensation too conservatively, nor too liberally.

E. The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation.”


Case Title: Kirti & Anr. v. Oriental Insurance Company Ltd. | CIVIL APPEAL NOS. 19-20 of 2021

Full Bench: Justice Surya Kant, Justice N.V. Ramana, Justice S. Abdul Nazeer

Delivered on: January 5, 2021

Statute/Law point involved: Motor Vehicles Act, 1988