Court’s Decision
The Supreme Court partly allowed the appeal by the claimants, enhancing the compensation from ₹1,17,20,200 to ₹1,60,15,280 by including the “future prospects” component as laid down in National Insurance Co. Ltd. v. Pranay Sethi. An additional ₹42,95,080 with 6% interest was directed to be paid by the insurance company within four weeks. The Court rejected the plea for applying a multiplier of 17 instead of 16, holding it consistent with Pranay Sethi.
Facts
The case arose from a fatal road accident on 31 August 2007 at Nirmal Kutia Chowk, Karnal, where the deceased — a 31-year-old U.S. national — died while travelling in a car that collided with a Swaraj Mazda truck driven rashly and negligently. The deceased, a self-employed driver running a U.S.-based transport company, was claimed to be earning $9,600 per month (₹4,25,000). Evidence included a U.S. permanent resident card, passport copies, and an employer’s letter. The claimants (wife, daughter, and parents) filed for compensation under Section 166 of the Motor Vehicles Act.
The Motor Accident Claims Tribunal (MACT) applied a multiplier of 16 but pegged income at ₹5,000 per month, holding there was no proof of daily wages in the U.S., awarding ₹7,80,000. The High Court, relying on U.S. minimum wage rates and income documents, fixed the monthly income at ₹78,300 and enhanced compensation to ₹1,17,20,200 without adding “future prospects”.
Issues
- Whether the High Court erred in excluding “future prospects” for a self-employed person working abroad.
- Whether the multiplier should have been 17 instead of 16.
- Whether the High Court’s assessment of income was justified.
Petitioners’ Arguments
The claimants contended that as per Pranay Sethi, 40% of the established income must be added towards “future prospects” for persons below 40 years, including self-employed individuals. They also argued that the multiplier should be 17, considering the deceased’s age. The petitioners emphasised that the High Court ignored binding precedent and awarded lesser compensation than what was legally due.
Respondent’s Arguments
The insurer argued that the High Court erred in taking the deceased’s weekly income at $2,150, contending that the authentication by the Indian Consulate did not vouch for content accuracy. They disputed that the deceased was the owner of the transport company and argued that the High Court’s income assessment was exaggerated.
Analysis of the Law
The Court reiterated that Pranay Sethi governs computation of “future prospects” both for salaried and self-employed persons. The Constitution Bench recognised the economic reality that self-employed individuals also enhance their income over time. The Court found the High Court’s income assessment evidence-based and upheld it, noting no cross-objection was filed by the insurer. The plea for a higher multiplier was rejected, aligning with the age-based chart in Pranay Sethi.
Precedent Analysis
- Chikkamma v. Parvathamma (2017) – Cited by the High Court to deny “future prospects” for self-employed persons, but this was pre-Pranay Sethi.
- National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680 – Constitution Bench laid down that 40% addition for future prospects is applicable for self-employed individuals below 40 years, and prescribed standard amounts for conventional heads.
Court’s Reasoning
The Court observed that while assessing future prospects of a self-employed person abroad is challenging due to different socio-economic conditions, the principle in Pranay Sethi must still apply in absence of contrary evidence. The deceased, aged 31, qualified for a 40% addition. The Court also applied the standardised amounts under conventional heads: ₹15,000 for loss of estate, ₹40,000 each for consortium, and ₹15,000 for funeral expenses.
Conclusion
The Supreme Court enhanced the total compensation to ₹1,60,15,280, granting an additional ₹42,95,080 with 6% interest. The insurer must deposit the amount within four weeks for the claimants to withdraw after due verification.
Implications
This judgment reinforces that Pranay Sethi applies to self-employed persons, including those working abroad. It clarifies that future prospects cannot be denied based on employment type and ensures parity in compensation standards.
FAQs
Q1. Can future prospects be added for self-employed individuals in motor accident cases?
Yes. As per Pranay Sethi, self-employed persons below 40 years get a 40% addition in income for future prospects.
Q2. Does the multiplier change for foreign nationals?
No. The multiplier is based on age as per Pranay Sethi, irrespective of nationality.
Q3. What are conventional heads in compensation calculation?
They include loss of estate, loss of consortium, and funeral expenses, with standard amounts fixed in Pranay Sethi.
