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Meenakshi vs The Oriental Insurance Co. Ltd.

Not available · 2024 INSC 573Decided 23 Jul 2024
Not available
Justice Hima Kohli · Justice Sandeep Mehta

Background

The appellant's son died in a road accident in 2013 while employed as a service consultant. The Motor Accident Claims Tribunal at Kalaburagi awarded her about Rs. 1.04 crore in compensation as the sole dependent mother, calculating his income (including allowances like house rent allowance and provident fund contribution) with a 50% addition for future prospects. The Karnataka High Court, on the insurance company's appeal, slashed this to about Rs. 49.57 lakh by excluding those allowances from the future-prospects calculation and using a lower base salary figure.

Decision Breakdown

The Supreme Court held that the High Court was wrong to strip out components like house rent allowance, flexible benefit plan, and provident fund contribution before applying the future-prospects addition, since these perks rise proportionately with an employee's basic salary over time just as the salary itself does. Relying on its precedents recognising that "income" for compensation purposes includes such perquisites, the Court restored the fuller salary base used by the Tribunal, but agreed with the High Court that income tax should be deducted from the gross salary. Recalculating on this basis, it fixed the final compensation at about Rs. 93.66 lakh, reversing the High Court's reduction and largely restoring the Tribunal's award (adjusted only for tax).

Lesson Learnt

When calculating motor accident compensation, the deceased's full package of employment perks and allowances, not just the bare basic salary, should ordinarily be counted as "income" for computing loss of dependency and future prospects.

Official source (sci.gov.in)View Judgment (PDF)

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