Court’s Decision
The Supreme Court allowed the appeal and enhanced the compensation awarded to the claimant to ₹34,56,110/-, along with an interest rate of 7.5% per annum from the date of filing of the claim petition. However, the Court excluded 642 days of delay in filing the appeal while calculating interest.
The Court held that the notional income of a student cannot be equated to that of an unskilled worker and applied its previous ruling in Harpreet Singh v. Navjot Singh (2020), which fixed the notional income at ₹10,000 per month instead of relying on minimum wages. The Supreme Court also granted additional compensation under various heads, including:
- Medical expenses
- Loss of future earning capacity
- Pain and suffering
- Loss of amenities and prospects of marriage
The Supreme Court set aside the High Court’s approach of using minimum wages as the basis for computing the compensation and recalculated the amount using the multiplier method.
Facts
- The accident occurred on October 12, 2012, when the claimant was traveling with his friend on a motorcycle.
- The motorcycle was hit by a rashly driven Scorpio SUV coming from the wrong side.
- As a result, the claimant suffered grievous injuries, while his friend died on the spot.
- An FIR No.213/2012 was registered under Sections 279 (rash driving), 337 (causing hurt by endangering life), 304-A (causing death by negligence), and 427 (mischief causing damage) of the Indian Penal Code (IPC).
- The claimant filed a compensation claim on January 7, 2013, before the Motor Accident Claims Tribunal (MACT), Gurgaon.
- The MACT awarded ₹7,09,303/- as compensation, holding the driver, owner, and insurance company jointly and severally liable to pay the amount.
- Dissatisfied, the claimant appealed before the Punjab & Haryana High Court, which enhanced the compensation to ₹23,90,719/-. However, the High Court used minimum wages to calculate the income, which the claimant contended was incorrect.
- The claimant then appealed before the Supreme Court, seeking a higher compensation amount by considering his status as a student and applying future earning potential.
Issues Before the Supreme Court
- Whether the High Court erred in calculating the notional income of the claimant based on minimum wages, instead of considering his status as a student?
- Whether the compensation awarded should be further enhanced considering the permanent disability, medical expenses, and loss of future earning capacity?
- Whether the Tribunal and High Court properly assessed future prospects and other heads of compensation?
- Whether interest should be granted for the entire period, including the 642-day delay in filing the appeal?
Petitioner’s Arguments
The claimant’s counsel made the following arguments:
- The High Court wrongly equated the notional income of a student to minimum wages. The claimant was a student in his twenties, and his future earning potential was far greater than an unskilled worker’s income.
- Reliance was placed on Harpreet Singh v. Navjot Singh (2020), where the Supreme Court held that notional income of a student should not be equated to an unskilled worker. Instead, the notional income should be ₹10,000 per month.
- The compensation failed to adequately consider future loss of earnings, as the claimant suffered a disability that affected his ability to work.
- The claimant suffered permanent disability, which should entitle him to higher compensation under loss of amenities and prospects of marriage.
- The interest on enhanced compensation should not be excluded for the 642-day delay, as the delay was due to genuine procedural reasons.
Respondent’s Arguments
The insurance company and other respondents contended that:
- The High Court had already enhanced the compensation adequately, and there was no reason for further enhancement.
- The minimum wages approach was correct, as there was no documentary proof of the claimant’s future earning potential.
- The delay of 642 days in filing the appeal was unreasonable, and interest should not be granted for this period.
- The insurance company should not be burdened with excessive compensation, as the MACT and High Court had applied standard compensation principles.
Analysis of the Law
The Supreme Court relied on its own precedent in Harpreet Singh v. Navjot Singh (2020), where it was held:
“The notional income of a student undergoing a degree course in Engineering should not be taken to be equivalent to the minimum wages admissible to an unskilled worker.”
The Court observed that students pursuing higher education have greater earning potential than unskilled workers, and therefore, minimum wages cannot be the benchmark for assessing their income.
The multiplier method, as established in Sarla Verma v. DTC (2009) and Pranay Sethi v. National Insurance Co. (2017), was applied to recompute the compensation.
Precedent Analysis
The Supreme Court applied the following precedents:
- Raj Kumar v. Ajay Kumar (2011) 1 SCC 343 – Established principles for assessing disability compensation, emphasizing proper calculation of future loss of earnings.
- Harpreet Singh v. Navjot Singh (2020) – Held that students should not be equated with unskilled workers for compensation purposes.
- Sarla Verma v. DTC (2009) 6 SCC 121 – Provided the multiplier method for determining compensation.
- Pranay Sethi v. National Insurance Co. (2017) 16 SCC 680 – Provided guidelines for future prospects in compensation cases.
The Court followed these rulings and revised the compensation calculations accordingly.
Court’s Reasoning
- Error in Income Calculation
- The High Court erred in using minimum wages instead of considering the claimant’s future earning potential.
- The Supreme Court fixed the notional income at ₹10,000 per month based on Harpreet Singh’s ruling.
- Revised Compensation Calculation
| Heads of Compensation | Final Compensation |
|---|---|
| Income | ₹10,000 per month |
| Annual Income | ₹1,20,000 per year |
| 70% of Income (Permanent Disability) | ₹84,000 per year |
| Future Prospects (40% Addition) | ₹1,17,600 per year |
| Multiplier (18) | ₹21,16,800 |
| Medical Expenses | ₹5,69,303 |
| Attendant Charges | ₹50,000 |
| Loss of Amenities | ₹5,00,000 |
| Pain and Suffering | ₹2,00,000 |
| Special Diet | ₹20,000 |
| Total Compensation | ₹34,56,110 |
- Exclusion of Interest for Delay
- The Court excluded 642 days of delay from the interest calculation.
Conclusion
The Supreme Court enhanced the compensation to ₹34,56,110/- and reiterated that:
- Students should not be equated with unskilled workers for compensation purposes.
- Future loss of earnings and disability must be properly accounted for in motor accident claims.
- Tribunals and High Courts must apply correct legal principles to ensure fair compensation.
The appeal was allowed, and higher compensation was awarded to the claimant.