Court’s Decision
The Supreme Court partly allowed the appeal filed by the claimants and held that the High Court erred in refusing to grant the mandatory 40% addition towards future prospects for a 31-year-old self-employed individual who was earning in the United States. The Court recalculated the compensation using the principles laid down in Pranay Sethi, enhanced the total payable amount to ₹1,60,15,280, and awarded additional compensation of ₹42,95,080 with 6% interest. The insurer must deposit the enhanced amount within four weeks.
Facts
The deceased, a 31-year-old U.S. resident, died in a road accident at Nirmal Kutia Chowk, Karnal. He was travelling in a car when it collided with a Swaraj Mazda truck driven rashly. Evidence showed that he was working in the United States as a driver/operator at West End Express Inc. and earning approximately $9,600 per month. His permanent resident card, passport, salary letters, and U.S. wage standards were produced to establish his income. The Tribunal fixed his income at ₹5,000 per month due to lack of “proof of U.S. wages,” whereas the High Court adopted the minimum U.S. wage benchmark and enhanced income to ₹78,300 per month but declined future prospects.
Issues
- Whether the High Court erred in refusing to add future prospects for a self-employed deceased aged 31.
- Whether the High Court correctly assessed income based on U.S. wage standards.
- Whether the claimants were entitled to revised compensation consistent with Pranay Sethi.
Petitioner’s Arguments
The claimants contended that the High Court wrongly denied the mandatory future prospects component. They argued that the Constitution Bench in Pranay Sethi makes it clear that 40% addition must be granted for individuals below 40, even if self-employed. They further submitted that the multiplier should be 17, not 16. They emphasised that the deceased’s income was fully supported by documentary evidence, including salary certificates, tax records, and employment verification.
Respondent’s Arguments
The insurer argued that the High Court had over-assessed the income and that the salary certificate lacked authentication because the Indian Consulate explicitly stated it did not verify the contents. It also contended that the deceased was shown as a driver, not an owner, and his stated income was inflated. The insurer defended the High Court’s refusal to grant future prospects, relying on an earlier Supreme Court decision (Chikkamma) where benefits to self-employed persons were withheld pending a larger Bench decision.
Analysis of the Law
The Court reaffirmed that Pranay Sethi governs the field for determining future prospects. The judgment laid down that income of a self-employed person cannot be assumed to remain stagnant because human life and livelihood evolve with time.
The Court reiterated that the multiplier for a 31-year-old is 16, not 17, as per Pranay Sethi. However, it categorically held that the High Court should have added 40% of the established income towards future prospects. Further, the Court noted that though the deceased was employed abroad, the absence of foreign-specific economic data does not dilute the mandatory nature of the Pranay Sethi principles.
Precedent Analysis
1. National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680
The Constitution Bench held that:
- 40% addition must be made for deceased persons under 40.
- The principle applies equally to salaried and self-employed individuals.
- Standardized compensation promotes uniformity, fairness, and certainty.
The Court relied heavily on paragraphs 53–57, where it was emphasized that assuming static income is “contrary to human attitude and economic reality.”
2. Chikkamma v. Parvathamma (2017)
Earlier, future prospects for self-employed persons were doubted pending larger Bench consideration. However, after Pranay Sethi, this view no longer holds the field. The Court clarified that Pranay Sethi supersedes such earlier hesitation.
Court’s Reasoning
The Supreme Court held that:
- The High Court’s assessment of income at ₹78,300 per month was justified because it relied on official U.S. wage standards and corroborated evidence.
- The High Court’s refusal to apply future prospects was contrary to the binding Constitution Bench decision in Pranay Sethi.
- The deceased being a U.S. national does not dilute the applicability of standardised Indian legal principles for motor accident compensation.
- The deceased’s dependents (wife, daughter, parents) were entitled to consortium of ₹40,000 each.
- Conventional heads must follow the revised figures laid down in Pranay Sethi.
- When the insurer did not file cross-objections, the High Court’s assessment of income could not be challenged in the claimants’ appeal.
Ultimately, after applying 40% future prospects and revising all conventional heads, the Supreme Court enhanced the total compensation to ₹1,60,15,280.
Conclusion
The Supreme Court allowed the appeal in part and held that future prospects must be granted even to self-employed individuals, irrespective of whether they work in India or abroad. The Court recalculated compensation strictly in terms of Pranay Sethi and awarded an additional ₹42,95,080 with 6% interest, directing the insurer to deposit it within four weeks. The judgment reinforces the principle that compensation must reflect economic realities and not hypothetical stagnation.
Implications
- The ruling strengthens the rights of families of self-employed deceased persons, especially NRIs, by reaffirming that future prospects are mandatory, not discretionary.
- Tribunals and High Courts must strictly adhere to Pranay Sethi.
- Foreign employment documents cannot be rejected merely because of consular disclaimers, as long as credibility is supported by other evidence.
- This judgment provides clear guidance for compensation cases involving expatriates and high-earning professionals abroad.