Motor Accident Compensation: Supreme Court Decision on Fellowship Inclusion in Income Calculation

The case under consideration involves an appeal by the National Insurance Company Limited against the decision of the High Court of Uttarakhand in a motor accident compensation claim. The primary question before the Supreme Court was whether the fellowship amount received by the deceased should be included in the computation of loss of dependency for his parents. The case also addressed the appropriate deductions for personal expenses of a deceased bachelor, as per existing legal precedents.

Background of the Case

The deceased, Amol Verma, was a 26-year-old Fellow-‘A’ (Hydro Power) at the Indian Institute of Technology (IIT), Roorkee. He held an M.Tech degree and was employed at one of the most prestigious engineering institutes in the country. Tragically, he lost his life in a motor accident. His parents, Satish Kumar Verma and Indira Verma, filed a claim for compensation before the Motor Accidents Claims Tribunal (MACT).

The MACT initially computed the compensation based only on a salary of Rs.3,000 per month, excluding the fellowship amount of Rs.12,000 per month that the deceased was receiving. Dissatisfied with the exclusion, the claimants approached the High Court of Uttarakhand, which ruled in their favor, including the fellowship in the calculation of income and applying a multiplier of seventeen to arrive at the compensation amount.

The National Insurance Company Limited challenged this decision before the Supreme Court.

Petitioner’s Arguments

The National Insurance Company Limited contended that:

The MACT was correct in excluding the fellowship amount while computing the loss of dependency.
The deduction of only one-third of the income for personal expenses was incorrect, as the deceased was a bachelor, and according to the precedent set in National Insurance Company Limited v. Pranay Sethi, the appropriate deduction should be 50%.
The amount awarded for loss of love and affection and funeral expenses was excessive and should be reconsidered.

Respondents’ Arguments

The claimants, Satish Kumar Verma and Indira Verma, argued that:

The fellowship received by the deceased was a part of his consolidated income and should not have been excluded by the MACT.
The High Court rightly applied a multiplier of seventeen, considering the age of the deceased and his expected career growth.
The compensation amount should reflect the loss suffered by the parents, as their son was a bright young professional with immense potential.

Supreme Court’s Observations and Judgment

The Supreme Court, after hearing both parties, upheld the High Court’s decision to include the fellowship in computing the deceased’s income. The Court observed:

“The Motor Accidents Claims Tribunal had clearly erred in excluding the fellowship component notwithstanding the Annual Income Certificate issued by the Indian Institute of Technology (IIT), Roorkee, affirming that the deceased was being paid consolidated fellowship as Fellow-‘A’ (Hydro Power). Notably, late Amol Verma was having an M.Tech degree and was working in one of the most prestigious engineering institutes in the country. Given this background, a salary of Rs.3,000/- per month would be ridiculously low. The entire compensation package has to be taken into account.”

However, the Court agreed with the petitioner that the deduction for personal expenses should have been 50% instead of one-third, citing the precedent set in National Insurance Company Limited v. Pranay Sethi and Sarla Verma v. Delhi Transport Corporation. This adjustment reduced the compensation for dependency from Rs.34,00,000 to Rs.25,50,000.

The Court also examined the amounts awarded for loss of love and affection and funeral expenses, stating:

“We do not find any good ground and reason to interfere with the direction given by the High Court for payment of Rs.1,00,000/- towards loss of love and affection and funeral expenses of Rs.25,000/-. The reason being, this is an extraordinary case wherein the first and second respondents have lost a brilliant and young son who was barely 26 years of age.”

The Court exercised its discretion to retain this amount, considering that no additional compensation had been awarded for loss of filial consortium.

The final compensation payable by the insurance company was determined to be Rs.26,75,000, with an interest rate of 9% per annum from the date of filing of the claim petition until the actual date of payment. The Court ordered that any amount already paid should be adjusted.

Impact of the Judgment

Inclusion of Fellowship in Income Calculation: The ruling affirms that all components of a deceased’s income, including fellowships and stipends, must be considered while computing compensation.
Standardization of Personal Expense Deductions: The decision reinforces the principle that for bachelors, a 50% deduction towards personal and living expenses is appropriate when determining dependency benefits.
Recognition of the Loss of Future Potential: The Court acknowledged the future potential of the deceased and emphasized that compensation should be realistic and account for future prospects.
Precedential Value: This case provides clarity on the interpretation of income components and deductions in motor accident claims and will guide lower courts in similar cases.

Conclusion

The Supreme Court’s decision in this case is a significant ruling in the domain of motor accident compensation. It ensures that fellowships and similar income components are not disregarded in claims, reinforcing the principle that compensation should reflect the real financial loss suffered by dependents. By adhering to established legal precedents on deductions for personal expenses, the Court has also maintained consistency in compensation calculations.

For claimants and insurance companies alike, this judgment provides clarity on how income should be assessed and what deductions are appropriate. It upholds the principle of fair compensation while balancing the interests of both parties.

Petitioner Name: National Insurance Company Limited.
Respondent Name: Satish Kumar Verma and Indira Verma.
Judgment By: Justice Sanjiv Khanna, Justice Indira Banerjee.
Place Of Incident: Uttarakhand.
Judgment Date: 03-09-2019.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: National Insurance C vs Satish Kumar Verma a Supreme Court of India Judgment Dated 03-09-2019.pdf

Direct Downlaod Judgment: Direct downlaod this Judgment

See all petitions in Motor Insurance Settlements
See all petitions in Compensation Disputes
See all petitions in Negligence Claims
See all petitions in Judgment by Sanjiv Khanna
See all petitions in Judgment by Indira Banerjee
See all petitions in partially allowed
See all petitions in Modified
See all petitions in supreme court of India judgments September 2019
See all petitions in 2019 judgments

See all posts in Insurance Cases Category
See all allowed petitions in Insurance Cases Category
See all Dismissed petitions in Insurance Cases Category
See all partially allowed petitions in Insurance Cases Category