Supreme Court Holds Pension Not Deductible From Salary; Enhances Motor Accident Award To Rs.67.36 Lakh

A bench of Justices Surya Kant and Nongmeikapam Kotiswar Singh heard appeals arising from a Karnataka High Court judgment dated 14.11.2019 that partly allowed appeals against an award of the Motor Accident Claims Tribunal in MVC No.5024/2010; the appeals challenged the quantum of compensation, the assessment of disability and the computation methodology in a claim arising out of a 2010 road accident.

The Court allowed the appeals in part, enhanced the compensation to Rs.67,36,084 and directed Respondent No.2 (the insurer) to pay the amount with simple interest at 7% per annum within six weeks, with liberty to recover from Respondent No.1. The Court held that pensionary benefits could not be deducted as a “pecuniary advantage” while computing loss of earnings; it accepted the Tribunal-appointed commissioner’s assessment of 78% disability (77.72% rounded) over the Medical Board’s earlier 61.94% and applied a 30% addition for future prospects (appellant aged 43). The Court applied multiplier 14 to the adjusted annual income and retained other heads awarded by the High Court with modifications to rate of interest. The Court, in its reasoning, observed: "As regards computing the loss of income, in the light of the above referred decisions, it would not be permissible to deduct the pensionary amount of Rs. 15,247/- from the salary of Rs. 36,231/- as was done by the High Court. Hence, for the purpose of computing the loss of earning, the said monthly salary of Rs. 36,231/- has to be accepted without deducting the pension amount."

Background

The original appellant, then a Sub‑Inspector (MIN) in CRPF at Yelahanka, met with an accident on 10.05.2010 when his motorcycle collided with an Omni car. He suffered grievous injuries, underwent surgery and was medically boarded with an initial disability assessment of 61.94%; he was later discharged from service and drew pension. The appellant filed MVC No.5024/2010 claiming Rs.74 lakhs; the MACT initially awarded Rs.3,28,422 (31.01.2014) and on remand, after a commissioner’s assessment fixed total disability at 77.72%, the MACT awarded Rs.31,64,896 (31.01.2016). The commissioner (CW1) who examined the claimant in Columbia AsiaReferral Hospital gave the higher disability assessment; the tribunal nonetheless adopted 50% disability in first instance to "meet the ends of justice" and the High Court later computed compensation at Rs.27,47,700 with interest at 6% by deducting pension from salary and adopting 61.94% disability.

The Supreme Court reviewed precedent including Sarla Verma and Pranay Sethi on methodology for income, multiplier and future prospects and Helen C. Rebello and subsequent cases on non‑deduction of pension/retirement benefits. Applying those principles, the Court held that pension and other statutory retirement benefits were not to be deducted from salary for loss‑of‑earning computations, allowed an addition of 30% for future prospects (claimant aged 43), accepted the 78% disability assessed by the Tribunal‑appointed commissioner (whose evidence remained unshaken), and applied multiplier 14. The Court enhanced interest from the High Court’s 6% to 7% per annum (simple) from date of filing of claim until realisation. The insurer was made jointly and severally liable and was given liberty to recover from the owner as per law.

Case Details: Case No.: 2025 INSC 682 Case Title: HANUMANTHARAJU B (DEAD) BY LR. v. M AKRAM PASHA & ANR. Appearances: For the Petitioner(s): Not indicated in the judgment For the Respondent(s): Not indicated in the judgment