Motor accident : Legal representatives entitled to just compensation, not be exorbitant or a mere pittance

Supreme Court Revises Compensation in Motor Accident Claim, Balancing Justice and Fairness Supreme Court rules in favor of National Insurance Co. Ltd., adjusting compensation based on verifiable income evidence and legal precedents.

In a significant ruling, the Supreme Court of India has recalibrated the compensation awarded to the legal representatives of a deceased individual in a motor accident case. The judgment, delivered by Justices Ahsanuddin Amanullah and K. Vinod Chandran, addresses the complexities of determining fair compensation for loss of life in traffic accidents under the Motor Vehicles Act, 1988.

The case, titled "M/s National Insurance Co. Ltd. v. Neeru Devi and Ors.," revolved around the calculation of the deceased's income, which formed the basis for the compensation amount. The deceased, a reputed transporter owning two trucks, died in a road accident on August 29, 2017. The Tribunal originally computed a monthly income of Rs. 95,000 for the deceased, leading to a substantial compensation amount.

The Insurance Company contested this computation, arguing that the income determination lacked concrete evidence such as income tax returns, which are crucial for verifying claims of high earnings. The company's counsel highlighted the deceased's defaults on EMI payments as an indicator of irregular income.

The Supreme Court acknowledged the absence of income tax returns as a critical gap in the evidence provided by the claimants. The Court underscored the necessity of basing compensation on verifiable evidence, rather than assumptions or conjecture. It cited the precedent set in "National Insurance Co. Ltd. v. Pranay Sethi," emphasizing that compensation must strike a balance, avoiding both excessive awards and inadequate amounts.

In its judgment, the Court reduced the total compensation to Rs. 50,00,000, deposited by National Insurance Co. Ltd., considering it sufficient for loss of dependency. Additionally, the Court awarded 9% annual interest on the compensation amount from the date of the claim petition. The claimants were also entitled to Rs. 1,60,000 for loss of consortium, loss of estate, and funeral expenses, following the principles outlined in "Magma General Insurance Co. Ltd. v. Nanu Ram."

The judgment reinforces the importance of aligning compensation with factual evidence and legal standards, ensuring justice is served without turning tragedy into undue financial gain.

Bottom Line:

In motor accident claims, the legal representatives of the deceased are entitled to just compensation, which should not be exorbitant or a mere pittance, taking into account the evidence provided regarding income, dependency, and other factors.

Statutory provision(s): Motor Vehicles Act, 1988

M/s National Insurance Co. Ltd. v. Neeru Devi, (SC) : Law Finder Doc Id # 2822109