Supreme Court issues guidelines on future prospects of compensation payable to motor accident victims
November 01, 2017Recently, the Supreme court ruled that that compensation given to a victim of road accident will be based on the future prospects of a deceased person rather than only loss of present income.
The five-judge bench headed by Chief Justice Dipak Misra, Justice A K Sikri, Justice A M Khanwilkar, Justice D Y Chandrachud and Justice Ashok Bhushan framed guidelines for fixation of future prospects mandatory, irrespective of whether the victim had a permanent job or was self-employed. The amount under the head of future prospects has been capped at 50% of income in case of a permanent job and 40% in case of self-employed or a fixed salary job (where there is no provision for revision).
The present ruling of National Insurance Company Ltd vs Pranay Sethi & Ors. has finally settled the controversy in the light of earlier contradictory rulings by different Supreme Court benches.
The ruling has also fixed compensation under the conventional heads of loss of estate, loss of consortium (deprivation of benefits of a family relationship) and funeral at Rs 15,000, Rs 40,000 and Rs 15,000, respectively. The court in its order has enhanced the rate of this compensation by 10% every three years.
"To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of compensation would be unjust and led to failure of justice” the bench observed.
“The determination of income while calculating compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as under Section 168 of the Motor Vehicles Act," the bench said.
The court, however, agreed that compensation for future prospects could not be same for all and the amount granted to family members of a deceased who had a permanent job must be higher than for someone who is self-employed or on a fixed salary.
The five-judge bench headed by Chief Justice Dipak Misra, Justice A K Sikri, Justice A M Khanwilkar, Justice D Y Chandrachud and Justice Ashok Bhushan framed guidelines for fixation of future prospects mandatory, irrespective of whether the victim had a permanent job or was self-employed. The amount under the head of future prospects has been capped at 50% of income in case of a permanent job and 40% in case of self-employed or a fixed salary job (where there is no provision for revision).
The present ruling of National Insurance Company Ltd vs Pranay Sethi & Ors. has finally settled the controversy in the light of earlier contradictory rulings by different Supreme Court benches.
The ruling has also fixed compensation under the conventional heads of loss of estate, loss of consortium (deprivation of benefits of a family relationship) and funeral at Rs 15,000, Rs 40,000 and Rs 15,000, respectively. The court in its order has enhanced the rate of this compensation by 10% every three years.
"To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of compensation would be unjust and led to failure of justice” the bench observed.
“The determination of income while calculating compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as under Section 168 of the Motor Vehicles Act," the bench said.
The court, however, agreed that compensation for future prospects could not be same for all and the amount granted to family members of a deceased who had a permanent job must be higher than for someone who is self-employed or on a fixed salary.
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