[Motor accident compensation] Future rise in income applicable even if deceased wasn't earning at time of death: Supreme Court

The Supreme Court on Thursday held that future rise in income should be considered while determining future income for calculating compensation in motor accident claims, even with respect to a deceased who was not earning, working or self-employed at the time of death (Smt. Meena Pawaia vs. Ashraf Ali)..A Bench of Justices MR Shah and Sanjiv Khanna placed reliance on an earlier judgment of the top court in National Insurance Company v. Pranay Sethi to hold that legal heirs of a deceased will be entitled to future prospects by 40 percent future rise in income if the deceased was below 40 years of age, even if the deceased was not earning any income at the time of his death. "We are of the opinion that even in case of a deceased who was not serving at the time of death and had no income at the time of death, their legal heirs shall also be entitled to future prospects by adding future rise in income as held by this court in the case of Pranay Sethi i.e. addition of 40% of the income determined on guesswork considering the educational qualification, family background etc., where the deceased was below the age of 40 years," the Court held.The Court was hearing an issue which arose when one Prashant, son of the claimants, died in an accident at the age of 21. Prashant was pursuing civil engineering and was in the third year of his course at the time of his death.After his death, the mother, father, brother and sister of the deceased filed a claim-petition before the Motor Accidents Claims Tribunal (MACT) for ₹25 lakh compensation. However, the MACT in toto awarded ₹12,85,000 with 7.5 per cent interest per annum.When the aggrieved claimants appealed against the same before the Madhya Pradesh High Court, the amount was reduced to ₹6,10,000 assessing the income of the deceased at ₹5,000 per month.Dissatisfied with order of the High Court, the claimants approached the apex court..The counsel for the claimants argued that in view of the educational qualifications of the deceased and his bright future, the High Court had committed an error in fixing the future income at ₹5,000 per month especially considering that even labourers get ₹5,000 per month under the Minimum Wages Act.Further, it was submitted that the High Court did not consider any future rise in income..On the other hand, the counsel appearing for the Union submitted that since the deceased was not earning anything at the time of the accident, there would not be any future rise in income while determining the future loss of income..However, the Bench was not convinced with this argument. At the very outset, the Supreme Court observed that the deceased was a 21 year old civil-engineering student with a bright future. Therefore, awarding the future economic loss to the claimants considering the income of the deceased as ₹5,000 was not sustainable..The Court placed reliance on several Supreme Court decisions, income for future economic loss is to be done through guesswork while considering circumstances such as educational qualification, family background etc. Further, it was not expected that the income of a deceased who was not serving would remain stagnant.".. to have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time.”.Therefore, the Bench stated, “We are of the opinion that the income of the deceased at least ought to have been considered at least ₹10,000 per month, more particularly considering the fact that the labourers/skilled labourers were getting ₹5,000 per month even under the Minimum Wages Act in the year 2012.”.With regard to future rise in income, it was concluded that the legal heirs of a deceased, who was not working at the time of death and had no income, would still be entitled to future prospects by adding future rise in income. In this regard, the Court adverted to a Constitution Bench decision in the case of National Insurance Company Limited vs. Pranay Sethi in which it was held that in case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years.The same principle should apply even to a deceased who was not serving and/or was not having any income at the time of accident, the Court held."We see no reason why the aforesaid principle may not be applied, which apply to the salaried person and/or deceased self employed and/or a fixed salaried deceased, to the deceased who was not serving and/or was not having any income at the time of accident/death. In case of a deceased, who was not earning and/or not doing any job and/or self employed at the time of accident/death, his income is to be determined on the guesswork. Once such an amount is arrived at he shall be entitled to the addition over the future prospect/future rise in income. It cannot be disputed that the rise in cost of living would also affect such a person," the Court opined.It is not expected that if a deceased who was not serving at all, his income is likely to remain static and stagnant forever, the Court added.Therefore, the Court directed that the claimants shall be entitled to a sum of ₹15,82,000 with interest at the rate of 7 per cent per annum..[Read Judgment]