Supreme Court Restores Tribunal Awards, Sets Aside Madras HC Reduction in Motor-Accident Compensation

A bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah heard appeals against a Division Bench judgment of the Madras High Court that had markedly reduced compensation awarded by the Motor Accidents Claims Tribunal in two claims arising from a fatal collision near Namakkal. The appeals involved challenges to the High Court’s assessment of income, multiplier and future prospects in claims filed by the daughters of the deceased parents.

The Court allowed the appeals, set aside the Impugned Judgment of the High Court and restored the Tribunal’s awards. The Supreme Court held that the Tribunal’s assessment was "well-considered" and that the High Court’s approach “militates against settled law.” The Court emphasised that the question whether dependents would be able to continue a deceased’s business must be examined with regard to experience, maturity and realistic prospects of decline in profitability, and that Income Tax Returns remain a reliable guide to assess income. The Court, in its reasoning, observed: "Having examined the matter, the Court finds that the Award rendered by the Tribunal is well-considered. Though the claimed compensation was Rs.1,00,00,000/- (Rupees One Crore) each with regard to the father and the mother, the Tribunal granted Rs.58,24,000/-(Rupees Fifty-Eight Lakhs Twenty-Four Thousand) re the father and Rs.93,61,000/-(Rupees Ninety-Three Lakhs Sixty-One Thousand) re the mother. The documents produced by the appellants and the reasoning given by the Tribunal as well as the Karnataka High Court’s Division Bench judgment in B Parimala (supra) indicate, and in our opinion, rightly so, that merely because the appellants stepped into the shoes of the deceased, by such factum itself, the appellants would not be capable of running the Mill. It would be of relevance as to whether due to their lack of experience and maturity, real/expected downfall in the profitability of the firm or the business would ensue. Such factor, while considering a claim pertaining to loss of future income/earnings, would have to be dealt with. In the present cases, even the monthly incomes of the parents as claimed by the appellants i.e.. income of the father being Rs.25,00,000/-(Rupees Twenty-Five Lakhs) per year and the mother’s being Rs.20,00,000/- (Rupees Twenty Lakhs) per year, the notional income fixed by the Tribunal of Rs.60,000/- (Rupees Sixty Thousand) each per month, is much more reasonable. It is no longer res integra that Income Tax Returns are reliable evidence to assess the income of a deceased..." The Court directed the insurer to pay amounts awarded by the Tribunal after adjusting any payments already made within six weeks.

Background The parents of the appellants died when a Tempo Traveller insured with respondent-insurer collided with an oncoming Tamil Nadu State (Anna) Transport Corporation bus which was uninsured. The appellants, four daughters, filed two separate MCOPs claiming Rs.1 crore each for the deaths of their father and mother, relying on the parents’ partnership in Sri Ganga Mills, partnership deed and Income Tax Returns for AYs 2007–2012. The Tribunal awarded Rs.58,24,000 for the father and Rs.93,61,000 for the mother with interest. Oriental Insurance (R1) challenged the awards before the Madras High Court, which allowed the insurer’s appeals in part and reduced the awards to Rs.26,68,600 (father) and Rs.19,22,680 (mother), applying lower notional incomes and smaller multipliers. The High Court treated the continued receipt of business benefits as indicating no substantial pecuniary loss to the claimants.

The appellants argued before the Supreme Court that the High Court, without adequate reasoning, ignored evidence of decline in the Mill’s profitability, reduction in workforce and admissions by the firm’s chartered accountant of a substantial loss, and erroneously relied on the notion that the appellants had fully stepped into the business. The insurer contended the Tribunal’s awards were excessive and justified the High Court’s reductions. The Supreme Court reviewed authorities including K. Ramya and the Karnataka decision in B. Parimala, reiterated that assessment of "just" compensation under Section 168 is fact-sensitive and forward-looking, and held that appellate interference is warranted only where awards are arbitrary or exorbitant. Concluding that the Tribunal’s award satisfied judicial conscience and that the High Court’s approach conflicted with settled principles, the Court restored the Tribunal awards and dismissed the High Court order. No costs were ordered.

Case Details: Case No.: CIVIL APPEAL NOS. 1162 - 1163 OF 2025 (Special Leave Petition (Civil) Nos. 33049-33050 of 2018) Case Title: S. VISHNU GANGA & ORS. v M/S ORIENTAL INSURANCE COMPANY LIMITED REP. BY ITS DIVISIONAL MANAGER & ORS. Appearances: For the Petitioner(s): Advocates not indicated in the reported judgment For the Respondent(s): Advocates not indicated in the reported judgment