Compensation for Road Accident Victims: Supreme Court Enhances Award for Deceased Pillion Rider

The case of Smt. Sunita Tokas & Anr. vs. New India Insurance Co. Ltd. & Anr. revolves around the issue of compensation for road accident victims under the Motor Vehicles Act. The Supreme Court’s ruling clarifies the correct methodology for computing compensation, particularly the application of the multiplier, future prospects, and deduction of personal expenses.

The main legal issue in this case was whether the compensation awarded by the lower courts was just and reasonable, considering the deceased’s potential future income and the dependency of his parents.

Background of the Case

The deceased, Pradeep Tokas, was a 21-year-old student and a trained swimmer who had won prizes in state-level competitions. On May 11, 2004, he was traveling as a pillion rider on a two-wheeler when it collided with a stationary truck on Upper Ridge Road, Karol Bagh, New Delhi, around 1:05 AM. The truck was parked in the middle of the road without any indicator lights, making it invisible at night. Both the deceased and the driver of the two-wheeler died on the spot.

The parents of the deceased, the appellants, filed a claim petition before the Motor Accident Claims Tribunal (MACT), Patiala House Courts, New Delhi, seeking compensation for the loss of their son.

MACT’s Decision

The MACT, in its award dated May 25, 2009, granted compensation of Rs. 14,87,140 with interest at 7% per annum. The compensation was awarded under the following heads:

Notional income assessed at Rs. 16,246 per month, with 50% addition for future prospects.
50% deduction for personal expenses since the deceased was a bachelor.
Application of the multiplier of 15 based on the age of the deceased’s mother.
Rs. 25,000 for loss of love and affection.
Rs. 10,000 for loss of estate and consortium.
Rs. 5,000 for funeral expenses.

High Court’s Modification

The appellants filed an appeal before the Delhi High Court (MAC. APP. No. 323 of 2017) seeking enhancement of compensation. The respondent insurance company also filed a cross-appeal for a reduction in compensation.

On August 1, 2017, the High Court partially allowed the insurance company’s appeal and reduced the compensation to Rs. 9,25,000, making the following modifications:

Reduced the notional income of the deceased to Rs. 7,500 per month.
Applied a multiplier of 15 instead of 18, based on the mother’s age.
Awarded Rs. 2,00,000 for loss of love and affection.
Awarded Rs. 50,000 for loss of estate and funeral expenses.

Supreme Court’s Observations

The Supreme Court examined the methodology adopted by the High Court and made the following key observations:

The High Court erroneously applied a multiplier of 15 based on the age of the mother, whereas the law mandates that the multiplier should be applied based on the age of the deceased.
According to the principles established in Sarla Verma v. Delhi Transport Corporation and reaffirmed in Pranay Sethi, the correct multiplier for a 21-year-old is 18.
The High Court also failed to account for future prospects when determining income, which is crucial for assessing a young victim’s potential earnings.
The deceased was a trained swimmer with potential earnings, justifying a higher notional income than Rs. 7,500 per month.
The awarded amounts under loss of love and affection, loss of estate, and funeral expenses were maintained.

Key Ruling and Verdict

The Supreme Court set aside the High Court’s order and enhanced the compensation, ruling that:

The correct multiplier is 18, based on the deceased’s age.
The deceased’s notional income should be fixed at Rs. 12,000 per month.
A 40% addition for future prospects should be applied, as per the Pranay Sethi judgment.
The following calculations should be applied:

Revised Compensation Calculation:

Income: Rs. 12,000 per month
Future Prospects: 40% addition (Rs. 4,800)
Deduction for personal expenses: 50%
Annual income after deductions: Rs. 8,400 x 12
Multiplier: 18
Total loss of future income: Rs. 18,14,400
Loss of love and affection: Rs. 2,00,000
Loss of estate and funeral expenses: Rs. 50,000
Total Compensation: Rs. 20,64,400
Enhanced Amount: Rs. 11,39,400 (difference from High Court award)

The Court ordered:

“The respondent insurance company shall pay the enhanced amount of Rs. 11,39,400 to the appellants within one month from the date of this judgment, with simple interest at 7% per annum from the date of filing the claim petition till realization.”

Implications of the Judgment

This judgment sets a significant precedent in motor accident compensation cases:

Correct Application of Multiplier: Courts must apply the multiplier based on the age of the deceased, not the dependents.
Future Prospects in Compensation: Future earning potential must be considered when assessing compensation for young victims.
Protection of Victim’s Rights: Courts should ensure fair compensation based on proper legal principles rather than arbitrary reductions.
Insurance Companies’ Obligations: Insurers cannot evade liability by seeking unreasonable reductions in compensation.

The Supreme Court’s ruling ensures that accident victims’ families receive just compensation, reinforcing the principle that loss of life must be adequately compensated by recognizing future earning potential.

Petitioner Name: Smt. Sunita Tokas & Anr..
Respondent Name: New India Insurance Co. Ltd. & Anr..
Judgment By: Justice Indu Malhotra, Justice Sanjiv Khanna.
Place Of Incident: New Delhi.
Judgment Date: 16-08-2019.

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