Supreme Court Enhances Compensation in Fatal Accident Case, Clarifies Insurance Liability

The Supreme Court of India recently delivered a significant judgment in the case of Amarveer Kaur & Ors. vs. Reliance General Insurance Company Limited & Ors., modifying the compensation awarded to the family of a deceased victim in a motor accident case. The Court also clarified the liability of insurance companies in cases involving disputed driving licenses. This judgment provides important insights into the calculation of compensation and the rights of claimants under motor accident claims.

The case involved the death of a man in a motor accident, leaving behind his wife, two minor children, and both parents as dependents. The Motor Accidents Claims Tribunal initially awarded ₹23,15,000 as compensation, holding the insurance company liable. However, the High Court reduced the compensation amount significantly, leading to appeals by both the claimants (for enhancement) and the insurance company (challenging its liability).

The claimants’ counsel, Mr. Anamay Mishra and Mr. C.B. Gururaj, argued that the deceased was earning ₹15,000 per month as an accountant in a rice mill, as evidenced by his employer’s testimony. They contended that the High Court erred in reducing this amount to ₹3,700 (minimum wages for unskilled workers) without proper justification. They also argued for higher compensation under various heads, including loss of consortium for all family members, not just the spouse.

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The insurance company, represented by Ms. Prerna Mehta, maintained that the High Court’s compensation was appropriate. Their primary contention was that the driver’s license was fake, and therefore, the liability should not fall on them. They sought recovery rights from the vehicle owner if ordered to pay compensation.

The Supreme Court, in its judgment delivered by Justices Sudhanshu Dhulia and K. Vinod Chandran, made several important observations. Regarding income calculation, the Court noted: “The High Court then proceeded to compute the income at ₹3,700/- as applicable to an unskilled worker looking at the minimum wages fixed by the State of Punjab for such workers. It is not clear as to from which document or notification such income was taken by the Tribunal.”

The Court applied the principles established in Pranay Sethi and Ramachandrappa cases to determine a more realistic income figure. It observed: “Applying the said logic, we are of the opinion that even if the deceased was working in an unspecified job like a coolie considering the increase of cost of living and economic advancements over the years, it can be safely assumed that even a coolie would be eligible for incremental enhancement of wages of least ₹500/- per month in every subsequent year.” The Court fixed the monthly income at ₹7,500.

On the question of consortium, the Court expanded the compensation beyond just spousal consortium, stating: “As far as loss of consortium it has been held in New India Assurance Company v. Somwati apart from spousal consortium, filial and parental consortium loss also must be compensated, thus entitling children and parents of the deceased.” The Court awarded ₹40,000 each to the children and parents.

Read also: https://judgmentlibrary.com/supreme-court-restores-higher-compensation-in-fatal-accident-case-key-legal-analysis/

Regarding the insurance liability dispute, the Court found that the driver’s license was not valid for transport vehicles at the time of accident, noting: “We need not hence go into the question of whether the license was fake or not since it was not established that as on the date of accident, there was a valid license for driving a transport vehicle, as held by the driver.” However, it upheld the Tribunal’s order allowing the insurance company to recover the amount from the vehicle owner.

The final compensation was calculated as follows: Loss of dependency (₹7,500 x 12 x 17 x 140% x 3/4) = ₹16,06,500; Consortium (₹40,000 x 5) = ₹2,00,000; Loss of estate and funeral expenses (₹15,000 each) = ₹30,000; totaling ₹18,36,500. The Court allowed the appeals with these modifications, providing much-needed relief to the deceased’s family while balancing the rights of the insurance company.

Petitioner Name: Amarveer Kaur And Ors..
Respondent Name: Reliance General Insurance Company Limited And Ors..
Judgment By: Justice Sudhanshu Dhulia, Justice K. Vinod Chandran.
Place Of Incident: Punjab.
Judgment Date: 29-04-2025.
Result: allowed.

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