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Motor Accident Compensation LawSupreme Court of India

Santosh Devi and Ors. v. Mahaveer Singh and Ors.

Civil Appeal · 2018 INSC 679Decided 9 Aug 2018
Civil Appeal No. 7279 of 2018
Chief Justice Dipak Misra · Justice A.M. Khanwilkar · Dr. Justice D.Y. Chandrachud

Background

Puran Chand, a 38-year-old man who sold desi ghee and namkin bhujia for a living, died in a road accident on 30 December 1992 when a government jeep being driven rashly on the wrong side of the road collided with his moped. His widow and children sought Rs. 10 lakhs in compensation under Section 166 of the Motor Vehicles Act. The Motor Accident Claims Tribunal assessed his income at only Rs. 1,200/month (since he ran an unnamed shop in a small village and paid no tax) and awarded Rs. 1,15,200, which the Punjab and Haryana High Court later increased to Rs. 1,85,000 by applying a higher multiplier but a lower interest rate.

Decision Breakdown

The Supreme Court held that the Tribunal's income assessment of Rs. 1,200/month was unrealistically low and revised it upward to Rs. 2,500/month, taking a more realistic view of the nature of his business and the time period involved. Applying the correct multiplier of 16 for a 38-year-old deceased, and following the Constitution Bench ruling in National Insurance Company Ltd. v. Pranay Sethi, the Court added 40% for future prospects, deducted one-third for personal expenses, and added a standard sum for "conventional heads" (loss of consortium/estate/funeral expenses), arriving at a total revised compensation of Rs. 5,23,000 with 9% annual interest from the date of the claim petition.

Lesson Learnt

In motor accident compensation claims, courts will realistically reassess an informally-employed or self-employed victim's income rather than mechanically relying on the absence of tax records or a named business, and the standard formula set out in Pranay Sethi (multiplier based on age, plus a fixed percentage addition for future prospects, plus conventional-head compensation) governs how such awards are calculated.

Santosh Devi and Ors. v. Mahaveer Singh and Ors. – Legal Case Shots | LegalAware