Supreme Court Enhances Compensation in Motor Accident Case

The Supreme Court of India has enhanced the compensation awarded to the family of a deceased ambulance worker who died in a road accident. The Court modified the order of the High Court of Orissa and increased the compensation amount while also adjusting the applicable deductions and interest rate.

Background of the Case

The case arises from a motor accident that occurred on June 4, 2010. The deceased, Bichitra Nayak @ Bagula, was employed as a ‘Khalasi’ (assistant) in an ambulance bearing registration number OR-04-J-5604. While traveling from Chandikhol to Paradeep, the ambulance collided with the back of a truck (OR-13-4727). As a result, the driver of the ambulance sustained serious injuries, and Bichitra Nayak died on the spot.

His family, consisting of his wife, two sons, and his mother, filed a claim before the Third Motor Accident Claims Tribunal (MAC Tribunal), Jagatsinghpur, seeking compensation. At the time of his death, the deceased was earning Rs. 5,000 per month while working for ESSAR Steel Orissa Limited.

Tribunal’s Decision

The MAC Tribunal dismissed the claim, ruling that there was no rash or negligent act on the part of the truck driver. It held that the accident was not caused due to the fault of the truck’s driver and, therefore, neither the owner nor the insurer of the truck was liable to pay compensation. The tribunal also found that the employer of the deceased had already paid Rs. 6,25,000 to the bereaved family.

High Court’s Ruling

The family challenged the tribunal’s order before the High Court of Orissa. The High Court made the following observations:

The deceased was between 44 to 45 years of age at the time of the accident.
The appropriate multiplier for determining compensation was 14.
Future prospects were calculated at 25%.
One-third (1/3) of the deceased’s earnings were deducted as personal expenses.
The total compensation was determined at Rs. 8,30,000.
Since the family had already received Rs. 6,25,000 from the employer, the remaining balance of Rs. 2,05,000 was to be paid by the insurance companies with interest at 6% per annum.

Petitioner’s Arguments

The claimants appealed to the Supreme Court, arguing that the High Court made two errors:

The deduction for personal expenses should have been one-fourth (1/4) instead of one-third (1/3), as there were four dependents on the deceased.
Future prospects should have been calculated at 30% instead of 25%, as per the principles laid down in National Insurance Co. Ltd. v. Pranay Sethi.
The compensation awarded under the heads of loss of consortium, loss of estate, and funeral expenses was inadequate.

Supreme Court’s Observations

The Supreme Court, after reviewing the case, made the following key observations:

The deduction for personal expenses should be 1/4th instead of 1/3rd since there were four dependents on the deceased.
The future prospects should be calculated at 30% instead of 25%.
The amount awarded under non-pecuniary damages (loss of estate, loss of consortium, and funeral expenses) should be increased as per the formula set in Pranay Sethi.

The Court referred to the guidelines set in Pranay Sethi, stating:

“If the deceased was holding a permanent job, 30% addition to the actual salary is to be made when the age of the deceased is between 40 to 50 years.”

For the loss of consortium and other conventional heads, the Court applied an enhancement based on the inflation-adjusted figures:

Loss of consortium: Rs. 48,400 per dependent (totaling Rs. 1,93,600 for four dependents).
Funeral expenses and loss of estate: Rs. 36,300.

Revised Compensation Calculation

Heads	High Court Award	Supreme Court Award
Income	Rs. 5,000/month	Rs. 5,000/month
Future Prospects	25% (Rs. 15,000)	30% (Rs. 18,000)
Personal Expenses Deduction	1/3rd (Rs. 25,000)	1/4th (Rs. 19,500)
Multiplier	14	14
Loss of Dependency	Rs. 7,00,000	No Change
Loss of Consortium	Rs. 1,00,000	Rs. 1,93,600
Funeral Expenses + Loss of Estate	Rs. 30,000	Rs. 36,300
Total Compensation	Rs. 8,30,000	Rs. 10,06,900
Deduction (Amount Already Paid)	Rs. 6,25,000	Rs. 6,25,000
Final Amount to be Paid	Rs. 2,05,000	Rs. 3,81,900
Interest Rate	6%	7.5%

Final Judgment

The Supreme Court modified the High Court’s decision, enhancing the total compensation to Rs. 10,06,900.
After adjusting the amount already received, the final payable compensation is Rs. 3,81,900.
The interest rate was increased from 6% to 7.5% per annum.

Conclusion

The judgment reaffirms the principles established in Pranay Sethi regarding compensation calculations in motor accident cases. It ensures fair treatment for the dependents of accident victims by correcting the deductions and applying the correct formula for future prospects.

This ruling also serves as a precedent for tribunals and High Courts to follow appropriate guidelines while awarding compensation, ensuring that claimants receive just and reasonable amounts based on established legal principles.

Petitioner Name: Rojalini Nayak & Others.
Respondent Name: Ajit Sahoo & Others.
Judgment By: Justice C.T. Ravikumar, Justice Sanjay Karol.
Place Of Incident: Jagatsinghpur, Odisha.
Judgment Date: 07-08-2024.

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