Supreme Court Enhances Compensation in Motor Accident Case: S. Vasanthi vs. Adhiparasakthi Engg. College (2022)

Date of the Judgment: 11 October 2022
Citation: 2022 INSC 480
Judges: B.R. Gavai, J. and C.T. Ravikumar, J.

The Supreme Court of India recently addressed a critical question in motor accident compensation cases: How should the notional income of a deceased student be determined when calculating compensation? This case arose from a tragic accident where a young MBA student lost his life. The court’s decision significantly impacts how future earnings are assessed for students and young individuals who are not yet employed, ensuring that compensation is just and equitable. The judgment was delivered by a two-judge bench comprising Justice B.R. Gavai and Justice C.T. Ravikumar, with Justice Gavai authoring the opinion.

Case Background

On May 22, 2010, S. Sathiyanarayan was riding his motorcycle on GST Road, Tambaram, when a bus owned by M/s Adhiparasakthi Engineering College, driven rashly and negligently, hit him from behind. S. Sathiyanarayan was dragged under the wheels of the bus and died on the spot. The deceased’s parents, S. Vasanthi and her husband, filed a claim petition before the Motor Accident Claims Tribunal, Poonamallee, seeking compensation of Rs. 30,00,000 for the loss of their son.

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal awarded a compensation of Rs. 7,48,052, fixing the notional monthly income of the deceased at Rs. 7,000. The parents of the deceased, dissatisfied with the compensation, appealed to the High Court of Judicature at Madras. The High Court enhanced the notional income to Rs. 10,000 per month, increasing the compensation to Rs. 16,27,000. The parents, still aggrieved, then approached the Supreme Court.

Legal Framework

The claim petition was filed under Section 166 of the Motor Vehicles Act, 1988. This section allows the legal representatives of a person who has died in a motor vehicle accident to claim compensation. The court also referred to the principles laid down in Sarla Varma (Smt.) and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121], regarding the deduction of personal and living expenses, and the Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680], which upheld the principles in Sarla Varma.

Arguments

Arguments by the Appellants (Parents of the Deceased):

• The appellants argued that both the Tribunal and the High Court had erred in calculating the notional monthly income of the deceased at Rs. 10,000.
• They submitted that the High Court should have considered the affidavit filed by the first appellant, stating that two of her son’s classmates were employed in reputed companies with monthly salaries of approximately Rs. 40,000.
• The appellants provided salary certificates of the classmates as evidence.
• They contended that the deceased, an engineering graduate pursuing an MBA, would have secured a well-paying job had he been alive.
• The appellants relied on the judgment in Kurvan Ansari Alias Kurvan Ali and Another vs. Shyam Kishore Murmu and Another [(2022) 1 SCC 317], to support their claim for enhanced compensation.

Arguments by the Respondents (Insurance Company):

• The respondents argued that the Tribunal and High Court were correct in assessing the notional income at Rs. 7,000 and Rs. 10,000 per month, respectively.
• They contended that the deceased was not employed and was merely a second-year MBA student at the time of the accident.

Submissions Table

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court was justified in fixing the notional income of the deceased at Rs. 10,000 per month.

Treatment of the Issue by the Court

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

Authorities

Cases Relied Upon by the Court:

• Sarla Varma (Smt.) and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121] – Supreme Court of India: This case was referred to regarding the principles for deducting personal and living expenses from the income of the deceased while calculating compensation.
• National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680] – Supreme Court of India: This Constitution Bench decision upheld the principles laid down in Sarla Varma.
• Kurvan Ansari Alias Kurvan Ali and Another vs. Shyam Kishore Murmu and Another [(2022) 1 SCC 317] – Supreme Court of India: This case was relied upon by the appellants to support their claim for enhanced compensation.

Legal Provisions Considered by the Court:

• Section 166 of the Motor Vehicles Act, 1988: This section provides for the filing of a claim petition for compensation in case of death or injury caused by a motor vehicle accident.

Authorities Table

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 Varma (Smt.) and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121]* for the principle of deducting personal expenses.
• The Court followed the Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]* which upheld the principles in Sarla Varma.
• The Court considered the judgment in Kurvan Ansari Alias Kurvan Ali and Another vs. Shyam Kishore Murmu and Another [(2022) 1 SCC 317]* in determining the appropriate compensation.

What weighed in the mind of the Court?

The Supreme Court emphasized the potential earning capacity of the deceased, considering his qualifications and the employment status of his classmates. The court noted that the deceased was a young, qualified engineering graduate pursuing an MBA, indicating a high likelihood of securing a well-paying job. The court also expressed empathy for the parents, noting that no parent should suffer the loss of their child, especially their only child. The Court was of the view that the monthly income as calculated by the High Court was inadequate.

Fact:Law Ratio

Logical Reasoning

Judgment

The Supreme Court found that the High Court had erred in not giving due weightage to the evidence presented by the appellants regarding the earning potential of the deceased. The Court enhanced the notional monthly income of the deceased to Rs. 30,000, stating that “Had the deceased S. Sathiyanarayan not met with the unfortunate accident, he would have surely drawn a salary equivalent to that of his classmates or at least an amount near the said amount.” The court also observed that “Since no parent should have to suffer through the death of their children, much less their only child, we are of the considered view that the monthly income as calculated by the High Court is inadequate.” The Court also noted that, “the deceased was the only issue of the appellants.”

The Court then applied the principles laid down in Sarla Varma and Pranay Sethi, deducting 50% of the income towards personal and living expenses. The Court also awarded Rs. 40,000 for loss of consortium, Rs. 30,000 for funeral expenses and loss of estate, and Rs. 5,000 for transportation expenses. The total compensation awarded was Rs. 46,11,000. The enhanced compensation of Rs. 29,84,000, along with interest at 7.5% per annum, was directed to be paid to the appellants within three months.

Key Takeaways

• The Supreme Court has emphasized the importance of considering the potential earning capacity of young, qualified individuals in motor accident compensation cases.
• Evidence of the earning potential of peers can be used to determine the notional income of a deceased student or young professional.
• Courts should take a more empathetic approach, especially in cases where parents have lost their only child.

Directions

The Supreme Court directed that the enhanced compensation of Rs. 29,84,000, along with interest at the rate of 7.5% per annum, shall be paid to the appellants within a period of three months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that in cases involving the death of a young, qualified individual, the courts should consider the potential earning capacity of the deceased, including evidence of the earnings of their peers, to determine the notional income. This judgment reinforces the principles of fair and just compensation in motor accident cases, especially for students and young professionals.

Conclusion

The Supreme Court’s judgment in S. Vasanthi vs. Adhiparasakthi Engg. College is a significant step towards ensuring that motor accident compensation is just and equitable. By enhancing the notional income of the deceased and considering the evidence of his potential earning capacity, the court has set a precedent for future cases involving young, qualified individuals. This decision underscores the importance of considering all relevant evidence to arrive at a fair assessment of compensation, providing much-needed relief to the bereaved parents.

Category

Parent Category: Motor Vehicle Accident Law
Child Category: Compensation Calculation, Section 166, Motor Vehicles Act, 1988

FAQ

Q: What is notional income in motor accident cases?
A: Notional income is the estimated income of a person who was not earning at the time of the accident. It is used to calculate compensation for loss of income.

Q: How did the Supreme Court determine the notional income in this case?
A: The Supreme Court considered the deceased’s qualifications (engineering graduate pursuing an MBA) and the salaries of his classmates to determine his potential earning capacity, enhancing the notional income to Rs. 30,000 per month.

Q: What is the significance of this judgment?
A: This judgment emphasizes the importance of considering the potential earning capacity of young, qualified individuals and using evidence of peer earnings to determine notional income in motor accident cases.

Q: What is the relevance of Section 166 of the Motor Vehicles Act, 1988?
A: Section 166 of the Motor Vehicles Act, 1988 allows the legal representatives of a person who has died in a motor vehicle accident to claim compensation.