Supreme Court clarifies compensation for death of Indian worker abroad in motor accident: United India Insurance Co. Ltd. vs. Satinder Kaur (2020)

Date of the Judgment: 30 June 2020

Citation: 2020 INSC 514

Judges: S. Abdul Nazeer, Indu Malhotra, Aniruddha Bose, JJ.

Can a court accurately assess the income of an Indian citizen working abroad when calculating compensation for a motor accident death? The Supreme Court of India addressed this complex question, setting aside previous judgments and clarifying the methodology for calculating compensation in such cases. This judgment provides essential guidance on how to determine the income of a deceased Indian worker employed overseas, especially when authentic salary documents are not available, and how to apply the correct multiplier and future prospects in compensation calculations.

Case Background

Satpal Singh, an Indian citizen, had been working in Doha, Qatar, since 1984. He was initially employed as a laborer and continued to work there until his death in a motor vehicle accident in India in November 1998. On 18 November 1998, while visiting India, Satpal Singh was riding a scooter with his wife as a pillion rider when a Maruti car coming from the opposite direction collided with them. Satpal Singh died on the spot, and his wife sustained serious injuries, resulting in a 25% permanent disability.

The First Information Report (FIR) was lodged against the driver and owner of the Maruti car, citing rash and negligent driving. Satpal Singh’s wife, Satinder Kaur, filed a claim petition before the Motor Accident Claims Tribunal (MACT), Patiala, seeking compensation for the death of her husband on behalf of herself and her three minor children.

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal (MACT), Patiala, initially determined that the accident was a result of contributory negligence by both Satpal Singh and the driver of the Maruti car. The MACT assessed Satpal Singh’s income as that of a skilled worker at Rs. 4,000 per month, applied a multiplier of 13, and awarded a total compensation of Rs. 1.90 lakhs, reduced by 50% due to contributory negligence. The High Court, on appeal, enhanced the compensation to Rs. 96,78,000, relying on a letter stating Satpal Singh’s income as $6,700 per month, and applied a multiplier of 12, while also deducting 50% for contributory negligence. Both the Insurance Company and the Claimants appealed to the Supreme Court.

Legal Framework

The judgment primarily relies on Section 166 of the Motor Vehicles Act, 1988, which deals with the procedure for claiming compensation in motor accident cases. The court also references several landmark judgments to establish the principles for assessing compensation in death cases. These include:

• Sarla Verma & Ors. v. Delhi Transport Corporation & Anr., [(2009) 6 SCC 121] which provides guidelines for determining income, deductions for personal expenses, and the appropriate multiplier.
• Reshma Kumari & Ors. v. Madan Mohan & Anr., [(2013) 9 SCC 65] which affirmed the standards fixed in Sarla Verma regarding deductions for personal living expenses.
• National Insurance Co. Ltd. v. Pranay Sethi & Ors., [(2017) 16 SCC 680] a Constitution Bench decision that further clarified the principles for assessing compensation, including future prospects and conventional heads.
• Magma General Insurance Co. Ltd. v. Nanu Ram & Ors., [(2018) 18 SCC 130] which defined “consortium” to include spousal, parental, and filial consortium.

The Court emphasized the need for uniformity and consistency in awarding compensation, and the importance of considering factors such as the age of the deceased, the number of dependents, and the income of the deceased at the time of death.

Arguments

Arguments by the Insurance Company:

• The Insurance Company contended that the High Court erred in relying on the letter from the High Speed Group, which was not attested by the Indian Embassy at Doha and was of suspicious nature.
• They argued that the High Court’s assessment of the deceased’s income was based on an unverified document and was excessively high.
• The Insurance Company maintained that the compensation awarded by the High Court was exorbitant and not in line with established principles for assessing compensation in motor accident cases.

Arguments by the Claimants:

• The Claimants sought further enhancement of the compensation awarded by the High Court, arguing that the High Court did not fully account for the loss suffered by the family.
• They maintained that the letter from the High Speed Group was a valid proof of the deceased’s income, and the High Court correctly relied on it.

[TABLE] of Submissions:

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the main issues that the court dealt with were:

1. How to determine the income of a deceased Indian worker employed overseas for the purpose of calculating compensation in a motor accident case, especially when authentic salary documents are not available.
2. Whether the High Court was correct in relying on the unverified letter from the High Speed Group to assess the deceased’s income.
3. What is the correct method for applying the multiplier and future prospects in compensation calculations?
4. How to apply the principles of contributory negligence in the assessment of compensation?

Treatment of the Issue by the Court:

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on the following authorities to arrive at its decision:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The court relied on Sarla Verma & Ors. v. Delhi Transport Corporation & Anr. [ (2009) 6 SCC 121]* to determine the method for calculating compensation.
• The court followed Reshma Kumari & Ors. v. Madan Mohan & Anr. [(2013) 9 SCC 65]* in affirming the standards fixed in Sarla Verma regarding deductions for personal living expenses.
• The court applied the principles laid down in National Insurance Co. Ltd. v. Pranay Sethi & Ors. [(2017) 16 SCC 680]* for assessing future prospects and conventional heads of compensation.
• The court used the definition of consortium in Magma General Insurance Co. Ltd. v. Nanu Ram & Ors. [(2018) 18 SCC 130]* to include spousal, parental, and filial consortium.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring a fair and just compensation to the dependents of the deceased, while also adhering to established legal principles. The Court emphasized the need for a consistent and uniform approach to calculating compensation in motor accident cases. The Court was particularly critical of the High Court’s reliance on unverified documents and its failure to follow the guidelines laid down in previous judgments. The Court also noted the need to consider the economic realities of the deceased’s employment in a foreign country, while calculating the compensation.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

Logical Reasoning:

The Court rejected the High Court’s reliance on the letter from the High Speed Group, citing its suspicious nature and lack of attestation by the Indian Embassy. The Court instead used the deceased’s initial employment contract from 1984 as the basis for calculating his income. The Court applied a 10% annual increment to the base salary to arrive at a notional income at the time of the accident. The Court deducted 50% for personal expenses, added 30% for future prospects, and applied a multiplier of 15 based on the deceased’s age. The Court also awarded compensation under the conventional heads of loss of estate, loss of consortium, and funeral expenses, and deducted 50% for contributory negligence.

The Supreme Court quoted from Sarla Verma: “The multiplier to be used should be as mentioned in column (4) of the Table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M -17 for 26 to 30 years, M -16 for 31 to 35 years, M -15 for 36 to 40 years, M -14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M -11 for 51 to 55 years, M -9 for 56 to 60 years, M-7 for 61 to 65 years and M -5 for 66 to 70 years.”

The Court also quoted from Pranay Sethi: “Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable.”

The Court quoted from Magma General: “The Motor Vehicles Act, 1988 is a beneficial legislation which has been framed with the object of providing relief to the victims , or their families, in cases of genuine claims. In case where a parent has lost their minor child, or unmarried son or daughter, the parents are entitled to be awarded loss of consortium under the head of Filial Consortium.”

There were no minority opinions in this case.

Key Takeaways

• When assessing compensation for the death of an Indian worker abroad, the court will rely on authenticated documents such as employment contracts certified by the Indian embassy.
• Unverified documents, such as letters from employers not attested by the Indian embassy, will not be considered as valid proof of income.
• The court will apply a 10% annual increment to the base salary to arrive at a notional income at the time of the accident, if there is no other proof of income.
• The principles laid down in Sarla Verma and Pranay Sethi regarding deductions for personal expenses, future prospects, and the application of the multiplier will be strictly followed.
• Compensation will be awarded under the conventional heads of loss of estate, loss of consortium (including spousal, parental, and filial consortium), and funeral expenses, as per the guidelines laid down in Pranay Sethi and Magma General.
• The court will deduct for contributory negligence if it is found that the deceased was also negligent in causing the accident.

Directions

The Supreme Court directed the Insurance Company to pay the balance amount of compensation within twelve weeks from the date of the judgment. The Court also directed that interest at 12% per annum be paid on the total compensation awarded, from the date of filing the claim petition until realization. The Court directed that 50% of the total compensation (inclusive of interest) be given to the widow of the deceased, and the balance 50% be divided equally among the three children.

Development of Law

The ratio decidendi of this case is that in cases involving the death of an Indian worker employed overseas, the courts must rely on authenticated documents to determine income. If such documents are not available, a reasonable method of calculating income, such as applying an annual increment to the base salary, should be used. The judgment also reaffirms the principles laid down in Sarla Verma, Reshma Kumari, Pranay Sethi, and Magma General, ensuring that compensation is calculated consistently and fairly. This case clarifies the legal position and provides a clear framework for assessing compensation in such cases, moving away from the High Court’s reliance on unverified documents and excessive compensation amounts.

Conclusion

The Supreme Court’s judgment in United India Insurance Co. Ltd. vs. Satinder Kaur provides a comprehensive framework for assessing compensation in motor accident cases involving the death of Indian workers employed abroad. The Court set aside the High Court’s judgment, which relied on an unverified document, and clarified that compensation should be calculated based on authenticated documents and established legal principles. This decision ensures uniformity and consistency in the calculation of compensation, providing much-needed guidance for tribunals and High Courts in similar cases.