Supreme Court Enhances Compensation in Accident Case Involving Foreign Income: Shyam Prasad Nagalla vs. APSRTC (2025)

Date of the Judgment: February 11, 2025
Citation: 2025 INSC 193
Judges: Sanjay Karol, J., Prashant Kumar Mishra, J.

When an accident occurs involving a victim earning in a foreign currency, how should compensation be calculated? The Supreme Court of India addressed this question in a recent case, focusing on the exchange rate and the multiplier used to determine the final compensation amount. The court’s decision clarifies the method for calculating compensation in such cases, aiming to provide fair restitution to the dependents of the deceased. The judgment was delivered by a bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra.

Case Background:

On June 13, 2009, Lakshmi Nagalla was traveling with her family from Annavaram to Rajahmundry in a Honda City car. Near Prathipadu, a bus owned and operated by the Andhra Pradesh State Road Transport Corporation (APSRTC) collided with their car due to rash and negligent driving. Lakshmi Nagalla died instantly, and other occupants sustained injuries.

Lakshmi Nagalla, aged 43, held a Master’s Degree in Computer Science from Southern College of Technology University of Georgia (U.S.A) and was a permanent resident of the U.S.A. She worked as a Software Engineer in K-FORCE Services Corporation, U.S.A and as a Real Estate commission salesperson in the State of Georgia, earning $11,600 per month. Her husband and two daughters filed a claim petition seeking Rs. 9,00,00,000/- as compensation.

Timeline:

Course of Proceedings:

The Motor Accidents Claims Tribunal (MACT) at Secunderabad initially awarded Rs. 8,05,77,476/-. The Andhra Pradesh State Road Transport Corporation (APSRTC) appealed this decision, arguing that the Tribunal incorrectly determined rash driving and applied an incorrect multiplier. The High Court affirmed the monthly income of the deceased but reduced the multiplier from 14 to 10, awarding Rs. 5,75,68,982/-. The Claimant-Appellants, still dissatisfied, appealed to the Supreme Court.

Legal Framework:

This case primarily concerns the assessment of compensation under the Motor Vehicles Act, 1988, particularly focusing on how to calculate compensation when the deceased was earning in a foreign currency. The key aspects involve determining the appropriate exchange rate for converting foreign income into Indian Rupees and selecting the correct multiplier based on the deceased’s age.

Arguments:

Appellant’s Arguments:

• The petitioner argued that the compensation should be calculated using the exchange rate on the date of the accident or the date of filing the petition, whichever is more beneficial.
• The petitioner also contended that the High Court erred in reducing the multiplier from 14 to 10, as the standard multiplier for a 43-year-old should be 14, irrespective of whether the person earns in foreign currency.

Issues Framed by the Supreme Court:

1. Whether the petitioner would be entitled to compensation at the exchange rate of currency as on the date of the accident or on the date of the filing of the Petition?
2. Whether the High Court was justified in reducing the multiplier to ‘10’ from ‘14’ as taken by the Tribunal?

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Authorities:

The court relied on the following cases to address the issues:

• Jiju Kuruvila v. Kunjujamma Mohan [(2013) 9 SCC 166]: This case was cited to determine the appropriate date for fixing the exchange rate for computing compensation.
• DLF Ltd. v. Koncar Generators & Motors Ltd [2024 SCC OnLine SC 1907]: This case also supported the principle that the date of filing the claim petition should be used for fixing the exchange rate.
• National Insurance Co. Ltd. v. Pranay Sethi [(2017) 16 SCC 680]: This case was referenced to affirm that the multiplier for a person aged 43 should be 14, regardless of whether they earn in foreign currency.
• United India Insurance Company Ltd & Ors. v. Patrica Jean Mahajan [(2002) 6 SCC 281]: This case was cited by the High Court to reduce the multiplier to 10 on account of the deceased earning in foreign currency.

Judgment:

What weighed in the mind of the Court?:

The Supreme Court’s decision was primarily influenced by established legal precedents and the need for consistency in applying compensation calculation methods. The court emphasized the importance of adhering to the guidelines set in National Insurance Co. Ltd. v. Pranay Sethi [(2017) 16 SCC 680] regarding the multiplier and Jiju Kuruvila v. Kunjujamma Mohan [(2013) 9 SCC 166] regarding the exchange rate.

Logical Reasoning:

The Supreme Court allowed the civil appeal, modifying the High Court’s order. The compensation was recalculated as follows:

• Monthly Income: $11,600
• Yearly Income: $1,39,200
• Future Prospects (30%): $1,80,960
• Deduction (1/3 for 3 dependents): $1,20,640
• Multiplier (14): $16,88,960
• Conversion to INR (at Rs. 57): Rs. 9,62,70,720
• Additional Amounts:
  • Loss of Estate: Rs. 18,150
  • Funeral Expenses: Rs. 18,150
  • Loss of Consortium: Rs. 96,800
• Total: Rs. 9,64,52,220

The court enhanced the compensation to Rs. 9,64,52,220/-, emphasizing adherence to established legal principles.

“The conversion rate is therefore fixed at Rs.57/-, which was the prevalent figure at the time of filing the claim petition.”

“On the second issue, as per National Insurance Co. Ltd. v. Pranay Sethi the law is settled that the multiplier for a person aged 43 must be 14. No exception is made for a person earning in foreign currency.”

“In view of the aforesaid, the compensation now payable to the claimant-appellant would be recalculated as under”

Key Takeaways:

• The exchange rate for calculating compensation in accident cases involving foreign income earners should be the rate on the date of filing the claim petition.
• The multiplier used for calculating compensation should be based on the age of the deceased, without exceptions for those earning in foreign currency, as per National Insurance Co. Ltd. v. Pranay Sethi [(2017) 16 SCC 680].
• This judgment reinforces the importance of adhering to established legal precedents to ensure fair and consistent compensation in motor accident claims.

Development of Law:

The ratio decidendi of this case clarifies the method for calculating compensation in cases involving foreign income earners, ensuring adherence to established precedents regarding exchange rates and multipliers. The Supreme Court has reinforced the principles laid down in National Insurance Co. Ltd. v. Pranay Sethi [(2017) 16 SCC 680] and Jiju Kuruvila v. Kunjujamma Mohan [(2013) 9 SCC 166], providing a clear framework for future cases.

Conclusion:

The Supreme Court’s judgment in Shyam Prasad Nagalla vs. APSRTC (2025) clarifies the calculation of compensation in accident cases involving individuals earning in foreign currency. By affirming the use of the exchange rate on the date of filing the claim petition and applying the standard multiplier based on the deceased’s age, the court ensured a more equitable outcome for the appellants. This decision reinforces the importance of consistent application of legal precedents in determining fair compensation.