Supreme Court increases compensation in motor-accident death, fixes monthly income at Rs.15,000 and raises interest to 7.5%

A bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah heard appeals against a Karnataka High Court order that had partly allowed the insurer’s challenge and reduced the Motor Accidents Claim Tribunal’s award in a fatal road-accident claim. The appeals arose from a claim for dependency and other conventional heads filed after the death of the breadwinner in a collision between a motorcycle and a car; the primary issue was the correct assessment of the deceased’s income for computation of compensation.

The Court held that both the MACT and the High Court erred in understating the deceased’s income and that the proper monthly income to be taken for computation of dependency was Rs.15,000. The Court therefore modified the impugned order by fixing the deceased’s monthly income at Rs.15,000, applying a multiplier of 16, awarding loss of dependency and conventional heads, and increasing the rate of interest from 6% to 7.5% per annum from the date of filing of the claim petition till realization. The Court observed that the High Court’s fixation of Rs.8,000 per month "cannot be justified" and that the MACT’s notional figure of Rs.10,000 was also unsustainable on the record. The Court, in its reasoning, observed: "… Motor Vehicles Act of 1988 is a beneficial and welfare legislation that seeks to provide compensation as per the contemporaneous position of an individual which is essentially forward-looking. Unlike tortious liability, which is chiefly concerned with making up for the past and reinstating a claimant to his original position, the compensation under the Act is concerned with providing stability and continuity in peoples’ lives in the future. …" Applying the accepted principles in Smt. Sarla Verma v DTC and National Insurance Co. Ltd. v Pranay Sethi, the Court arrived at a total compensation of Rs.35,66,600 and partly allowed the appeals in those terms.

Background The deceased, K.H.M. Virupakshaiah, died on 05.05.2012 when his Bajaj motorcycle was hit on the right side by a Ford car alleged to have been driven rashly by the respondent driver. The claimants (wife, minor children, aged parents and others) filed MVC No.73 of 2012 seeking Rs.77,15,000. The MACT awarded Rs.25,49,000 with 6% interest. The claimants appealed before the High Court seeking enhancement; the insurer also appealed. The High Court dismissed the claimants’ appeal and partly allowed the insurer’s appeal, reducing the award to Rs.20,61,320 and fixing monthly income at Rs.8,000.

On appeal to this Court, claimants urged that the deceased had multiple income streams — agriculture yielding around Rs.6 lakh annually, milk vending (about Rs.6,000 per month shown in cooperative society passbook), and income from hiring a tractor — and that the MACT and High Court had ignored documentary and oral evidence including bank loan records and sale receipts. The insurer contended that the deceased’s income should be divided among joint-family members and that Rs.8,000 per month was reasonable.

This Court reviewed depositions of PW3–PW6, bank documents showing an agricultural loan of Rs.4.2 lakh, and vendor receipts indicating substantial banana sales. The Court found that the cumulative evidence showed the deceased played a major role in the family’s agricultural, milk-vending and tractor-hiring activities and that neither Rs.10,000 (MACT) nor Rs.8,000 (High Court) reflected the contemporaneous position. The Court therefore "may be reasonably assumed that the deceased was having a monthly income of Rs.15,000" and applied a 40% addition for future prospects, one-fifth deduction for personal expenses, a multiplier of 16 and awarded conventional heads (funeral expenses, loss of estate) and loss of consortium, arriving at Rs.35,66,600. The rate of interest was increased to 7.5% per annum from the date of filing till realization. The Court allowed I.A. for filing additional documents and dismissed exemption from translation as infructuous. Parties were directed to bear their own costs.

Case Details: Case No.: 2025 INSC 357; Civil Appeal Nos. (Special Leave Petition (C) Nos.12193-12194 of 2024) Case Title: Shivaleela and Others v The Divisional Manager, United India Insurance Co. Ltd. & Others Appearances: For the Petitioner(s): Counsel not indicated in the judgment For the Respondent(s): Counsel not indicated in the judgment