Manorma Sinha & Anr. vs The Divisional Manager, Oriental Insurance Company Limited & Anr.
Background
The appellants' 27-year-old relative died in a motor accident, and the Motor Accident Claims Tribunal at Muzaffarpur awarded compensation of Rs. 88,20,454. The Patna High Court, on appeal by the insurer, reduced this to Rs. 38,15,499. Liability to pay was not disputed; the only issue before the Supreme Court was whether the High Court was right to cut down the compensation amount.
Decision Breakdown
The Supreme Court reviewed the computation of the multiplier, the deceased's income, and the addition for future prospects, holding that the correct multiplier applicable given the deceased's age (27 years) was 17, not 18 as used by the Tribunal, but that the High Court was wrong to apply only a 40% addition for future prospects instead of the 50% mandated by the precedent in National Insurance Co. Ltd. v. Pranay Sethi for a salaried deceased under 40 at the time of the accident. Recalculating loss of dependency using the corrected multiplier and future-prospects addition, plus conventional heads (loss of estate, loss of filial consortium, funeral expenses) per Pranay Sethi rates, the Court enhanced the compensation to Rs. 74,43,631, with 6% annual interest from the date of the claim petition until payment.
Lesson Learnt
Motor accident compensation calculations must strictly follow the standardised formulas laid down in Pranay Sethi, including the correct age-based multiplier and the mandated percentage addition for future prospects, and courts cannot depart from these settled formulas without reason.