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National Insurance Company Ltd. v. Satish Kumar Verma & Anr.

Civil Appeal · 2019 INSC 995Decided 3 Sept 2019
Civil Appeal No. 7032 of 2019
Justice Indira Banerjee · Justice Sanjiv Khanna

Background

A young IIT Roorkee research fellow, Amol Verma, died in a motor accident. His parents claimed compensation, and the Motor Accidents Claims Tribunal computed his income based only on his nominal stipend of Rs. 3,000/month, excluding a separate Rs. 12,000/month fellowship component. The High Court corrected this and recalculated the compensation at a higher annual income, prompting the insurance company to appeal to the Supreme Court.

Decision Breakdown

The Supreme Court upheld the High Court's view that the fellowship amount should be included in computing income, since excluding it would make the deceased's assessed earnings "ridiculously low" given his qualifications and institute. However, the Court found one error: since the deceased was an unmarried bachelor, the standard deduction for personal expenses should have been 50% (not the 1/3rd applied by the High Court), following the Constitution Bench ruling in Pranay Sethi. The Court accordingly reduced the dependency compensation from Rs. 34 lakh to Rs. 25.5 lakh, while leaving undisturbed the awards for loss of love/affection, funeral expenses, and 9% interest, bringing the total payable to Rs. 26.75 lakh.

Lesson Learnt

In motor accident compensation claims, courts must count a deceased person's full income (including scholarships or fellowships, not just token stipends), but the percentage deducted for personal living expenses depends strictly on marital status, 50% for a bachelor versus a lower deduction for a married person with dependents, per the settled Pranay Sethi formula.

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

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