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Rahul Sharma & Anr. v. National Insurance Company Ltd. & Ors.

Civil Appeal · 2021 INSC 291Decided 7 May 2021
Civil Appeal No. 1769 of 2021
Chief Justice N.V. Ramana · Justice Surya Kant · Justice Aniruddha Bose

Background

The appellants' mother died when the vehicle she was travelling in collided with a truck near Phagwara, Punjab. The Motor Accidents Claims Tribunal awarded about Rs. 41.5 lakh in compensation, adding 50% towards future prospects since the deceased (a self-employed woman, aged 37) had an income from which this was calculated. On the insurer's appeal, the Delhi High Court reduced the award to about Rs. 21.66 lakh, denying any future-prospects addition on the ground that she was self-employed, and deducting 50% (instead of one-third) towards her personal and living expenses.

Decision Breakdown

Applying the Constitution Bench ruling in National Insurance Co. Ltd. vs Pranay Sethi, the Supreme Court held that a self-employed person below 40 years of age is entitled to a 40% addition towards future prospects, and that the deduction for personal and living expenses for someone married with two dependents should be one-third, not one-half. Recalculating on this basis, the Court raised the total compensation to about Rs. 38.24 lakh, payable with 9% annual interest from the date the claim was filed.

Lesson Learnt

Standardised compensation formulas laid down by larger Supreme Court benches for future prospects and expense deductions must be applied uniformly in motor accident claims, including for self-employed victims: claimants should not receive a lower payout merely because a court below applied an outdated or inconsistent method.

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

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