Landmark Ruling on Compensation for Road Accident Victim with Foreign Earnings
The case of Shyam Prasad Nagalla & Ors. v. The Andhra Pradesh State Board Transport Corporation & Ors. involved a tragic accident in which a woman, Lakshmi Nagalla, lost her life while traveling with her family in Andhra Pradesh. The Supreme Court had to determine the appropriate compensation for her dependents, considering her employment in the United States and earnings in foreign currency.
Background of the Case
On June 13, 2009, Lakshmi Nagalla was traveling with her family in a Honda City car from Annavaram to Rajahmundry. Near Prathipadu Circle, an Andhra Pradesh State Transport Corporation (APSRTC) bus, driven in a rash and negligent manner, collided with their vehicle. The impact of the accident led to her immediate death and severe injuries to the other passengers.
Following the accident, Lakshmi’s husband and two daughters filed a claim before the Motor Accident Claims Tribunal (MACT), seeking Rs.9,00,00,000/- as compensation. They argued that Lakshmi, a resident of the United States, earned a substantial income of $11,600 per month, working as a software engineer at K-FORCE Services Corporation and as a real estate commission salesperson in Georgia.
Tribunal’s Decision
The MACT, after evaluating the evidence, held that the APSRTC was responsible for the accident and granted compensation of Rs.8,05,77,476/-, which included:
- Loss of income and future prospects: Rs.8,03,42,476/- ($16,88,960)
- Compensation under conventional heads: Rs.2,35,000/-
The Tribunal considered a monthly income of $11,600 for the deceased and applied a multiplier of 14 while fixing the future prospects at 30%.
Appeal Before the High Court
The APSRTC, dissatisfied with the Tribunal’s decision, challenged the compensation amount before the High Court. The transport corporation argued that:
- The Tribunal incorrectly determined liability.
- The multiplier of 14 was excessive given that the deceased earned in foreign currency.
The High Court, in its judgment on June 7, 2024, upheld the monthly income calculation but reduced the multiplier from 14 to 10, citing the Supreme Court’s ruling in United India Insurance Company Ltd. & Ors. v. Patricia Jean Mahajan. As a result, the compensation was reduced to Rs.5,75,68,982/-.
Supreme Court’s Observations
Unhappy with the reduction in compensation, the claimants approached the Supreme Court, raising the following key legal questions:
- Should the exchange rate be considered as on the date of the accident or the date of filing the claim?
- Was the High Court correct in reducing the multiplier from 14 to 10 for a person earning in foreign currency?
The Supreme Court analyzed the legal precedents and made the following observations:
Exchange Rate Consideration
The Court referred to Jiju Kuruvila v. Kunjujamma Mohan and DLF Ltd. v. Koncar Generators & Motors Ltd., ruling that the applicable exchange rate should be the one prevailing on the date of filing the claim petition. The Court fixed the exchange rate at Rs.57 per US dollar, which was the rate at the time of filing the claim.
Multiplier for Foreign Earners
The Supreme Court referred to National Insurance Co. Ltd. v. Pranay Sethi and ruled that the correct multiplier for a deceased aged 43 is 14, without any exception for foreign currency earners.
Key Verbal Arguments of the Court
“The date of filing of the claim petition is the proper date for fixing the rate of exchange for computing compensation.”
“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.”
Final Compensation Calculation
After applying the correct multiplier and exchange rate, the Supreme Court recalculated the compensation as follows:
| Compensation Head | Amount |
|---|---|
| Monthly Income (in dollars) | $11,600 |
| Yearly Income | $1,39,200 |
| Future Prospects (30%) | $1,80,960 |
| Deduction (1/3 for dependents) | $1,20,640 |
| Multiplier (14) | $16,88,960 |
| Exchange Rate (Rs.57) | Rs.9,62,70,720/- |
| Loss of Estate | Rs.18,150/- |
| Funeral Expenses | Rs.18,150/- |
| Loss of Consortium | Rs.96,8900/- |
| Total | Rs.9,64,52,220/- |
The Supreme Court noted the significant difference in compensation across different courts:
| Court | Compensation Awarded |
|---|---|
| MACT | Rs.8,03,42,476/- |
| High Court | Rs.5,75,68,982/- |
| Supreme Court | Rs.9,64,52,220/- |
Final Verdict
The Supreme Court allowed the appeal and ruled that:
- The compensation must be calculated at the exchange rate prevailing on the date of filing the claim petition.
- The correct multiplier of 14 must be applied, as established in Pranay Sethi.
- The total compensation payable to the appellants was Rs.9,64,52,220/-.
- The APSRTC was directed to pay the compensation along with interest as awarded by the Tribunal.
Impact of the Judgment
This ruling is significant for accident compensation cases involving foreign earners as it:
- Clarifies that the exchange rate at the time of filing the claim is applicable, ensuring consistency.
- Reaffirms that the multiplier method should be applied uniformly, regardless of currency type.
- Sets a precedent for higher compensation in cases involving expatriates.
- Protects the financial interests of families who lose a primary earner working overseas.
This judgment serves as an important reference for similar cases, ensuring just compensation for families of accident victims who earned in foreign currencies.
Petitioner Name: Shyam Prasad Nagalla & Ors..Respondent Name: The Andhra Pradesh State Board Transport Corporation & Ors..Judgment By: Justice Sanjay Karol, Justice Prashant Kumar Mishra.Place Of Incident: Andhra Pradesh.Judgment Date: 10-02-2025.
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