Supreme Court Enhances Compensation in Motor Accident Case: Sangeetha vs. OMR Travel Access (2020)

Date of the Judgment: 05 June 2020

Citation: (2020) INSC 413

Judges: Dr Dhananjaya Y Chandrachud, Hemant Gupta, Ajay Rastogi, JJ.

Can a higher salary certificate be discarded if there are other salary certificates showing a lower salary? The Supreme Court recently addressed this question while determining the compensation in a motor accident claim. The core issue revolved around the correct assessment of the deceased’s income for calculating compensation. The court had to decide whether the High Court was justified in discarding the most recent salary certificate showing a higher income. This judgment was delivered by a three-judge bench comprising Justices Dr Dhananjaya Y Chandrachud, Hemant Gupta, and Ajay Rastogi.

Case Background

The case involves a motor accident that occurred on 21 June 2012, resulting in the death of an individual. The appellants, the wife and mother of the deceased, filed a claim for compensation before the Motor Accident Claims Tribunal. The Tribunal initially awarded a compensation of Rs 20,11,000, which was later enhanced to Rs 33,07,000 by the High Court of Judicature at Madras. The High Court, while enhancing the compensation, determined the deceased’s monthly income to be Rs 15,000, discarding a salary certificate for May 2012, which indicated a higher salary of Rs 23,419. The appellants contested this decision, arguing that the High Court should have accepted the May 2012 salary certificate as it was the most proximate to the date of the accident.

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal initially awarded a compensation of Rs 20,11,000, based on a monthly salary of Rs 9,000. On appeal, the High Court of Judicature at Madras enhanced the compensation to Rs 33,07,000, increasing the monthly income to Rs 15,000. The High Court discarded the salary certificate for May 2012, which showed a salary of Rs 23,419, citing that other salary certificates for the anterior period showed a lower salary. The appellants, dissatisfied with the High Court’s decision, appealed to the Supreme Court, challenging the rejection of the May 2012 salary certificate.

Legal Framework

The legal framework for this case primarily involves the principles of determining compensation in motor accident claims. The key aspects include:

• Assessment of Income: The court must determine the actual income of the deceased at the time of the accident to calculate the loss of dependency.
• Future Prospects: The court considers the future prospects of the deceased to account for potential income growth.
• Multiplier Method: The court uses a multiplier based on the age of the deceased to calculate the total compensation.
• Standard Additions: The court may add standard amounts for loss of consortium, loss of love and affection, and funeral expenses.

Arguments

Arguments by the Appellants:

• The appellants argued that the High Court was not justified in discarding the salary certificate for May 2012, which showed a net pay of Rs 23,419.
• They contended that this certificate was for the period proximate to the accident and should have been the basis for determining the monthly income of the deceased.
• The appellants also submitted that the salary certificates and bank statements were duly proved and marked, and no effort was made by the insurer to discredit them.

Arguments by the Respondents (Insurer):

• The insurer argued that the Tribunal had noted that the deceased was employed with Sauter Race Technologies Private Limited, while the salary certificate produced was of Carrier Race Technologies Limited.
• The insurer contended that the High Court was correct in not accepting the May 2012 salary certificate, as it was inconsistent with the salary certificates for the anterior period.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court was justified in discarding the salary certificate for the month of May 2012, which indicated a higher salary, and instead relying on a lower monthly income for the purpose of determining 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:

Judgment

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

How each authority was viewed by the Court?

• The judgment in National Insurance Company Limited v Pranay Sethi [(2017) 16 SCC 680]* was followed to determine the multiplier, future prospects, and standard additions.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the most proximate and duly proved evidence of income should be considered when calculating compensation in motor accident claims. The court emphasized that the salary certificate for May 2012 was the most relevant evidence, as it was for the period immediately before the accident. The court also noted that the insurer did not make any effort to discredit the salary certificate, which further strengthened its validity.

Fact:Law Ratio

Logical Reasoning:

The Supreme Court found that the High Court erred in discarding the salary certificate for May 2012, which indicated a net pay of Rs 23,419. The Court noted that this certificate was for the period proximate to the accident and was duly proved. The Court stated, “Since the bank statements and the certificates were duly proved and marked, there was no reason or justification for discarding the salary certificate for the month of May 2012, which indicates that the net pay of the deceased was Rs 23,419.” The Court also observed that the insurer did not make any effort to discredit the salary certificate. The Court further stated, “The compensation awarded by the High Court must hence be enhanced in accordance with the legal principles which emerge from the decisions of this court.” The Supreme Court recomputed the compensation based on the May 2012 salary, adding future prospects and standard additions as per the guidelines laid down in National Insurance Company Limited v Pranay Sethi [(2017) 16 SCC 680]*. The Court concluded, “In view of the above discussion, we direct that the appellants shall be entitled to a total compensation of Rs 45,28,981 rounded off to Rs 45.29 lakhs on which interest shall be payable at nine per cent per annum from the date of filing of the claim petition until payment.”

Key Takeaways

• The most proximate and duly proved evidence of income should be considered when calculating compensation in motor accident claims.
• Salary certificates for the period immediately preceding the accident are highly relevant.
• If the insurer does not make any effort to discredit the documents, they should be considered valid.
• The principles laid down in National Insurance Company Limited v Pranay Sethi [(2017) 16 SCC 680]* should be followed for determining the multiplier, future prospects, and standard additions.

Directions

The Supreme Court directed that the appellants shall be entitled to a total compensation of Rs 45,28,981, rounded off to Rs 45.29 lakhs, with interest at nine percent per annum from the date of filing of the claim petition until payment. The enhanced amount was to be paid in equal proportion to the appellants.

Development of Law

The ratio decidendi of the case is that the most proximate and duly proved evidence of income, particularly the salary certificate for the period immediately preceding the accident, should be the basis for calculating compensation in motor accident claims. This case reinforces the importance of considering the most recent and relevant evidence when determining the loss of dependency. This case does not change the previous position of law, but reinforces the importance of considering the most recent and relevant evidence when determining the loss of dependency.

Conclusion

The Supreme Court allowed the appeal, enhancing the compensation payable to the appellants to Rs 45.29 lakhs. The court emphasized the importance of considering the most recent and duly proved salary certificate for the period proximate to the accident. This judgment clarifies the approach to be taken when determining compensation in motor accident claims, ensuring that the most relevant evidence is given due weight.