Accident Claim Computation Norms Established by Supreme Court

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The Supreme Court has observed that any future prospect of an individual who is killed in any road accident will be taken into account while compensation is being awarded to his/her dependents. The standard criteria has been laid down for this purpose for computing claims.

This path-breaking verdict was delivered by Chief Justice Dipak Mishra and a constitution bench comprised of 5 judges. The bench was confronted with a vexatious query whether road accident dependents (either salaried/self-employed) can receive heightened compensation post addition of a particular salary percentage drawn by the person deceased. Taking into account the standardization principle, it states that while determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made.

The Supreme Court has stated that the addition will be 30% in case the age of the deceased was between 40-50 years. In case the deceased was between 50-60 years, the addition should be around 15%. The actual salary should be perceived as an actual salary less tax. The bench comprised of Justices A M Khanwilkar, A K Sikri, Ashok Bhushan and D Y Chandrachud and fixed the percentage of income/salary for self-employed individuals and people working in private sectors which would be worked out under the future prospect for granting compensation to dependents. In case the deceased was self-employed or on a fixed salary, an addition of 40% percent of the established income should be the warrant where the deceased was below the age of 40 years.

There will be an addition of 25% where the deceased is between 40-50 years and 10% where the deceased was between 50-60 years and this should be regarded as the computation method. The income determination method during the computation of compensation has to cover future prospects. As per the Court judgment, there can be a degree of difference with regard to the percentage that is applied to/meant for legal representatives claiming on behalf of the deceased holding a permanent job than a person on a fixed salary or self-employed.

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The Supreme Court has fixed the amount payable to dependents of victims of road accidents under heads such as funeral expenses and loss of consortium and there will be an increase of 10% in the amount after 3 years. The Court released a verdict of 49 pages where it stated that reasonable figures covering loss of consortiumloss of estate and funeral expenses should be INR 40, 000, INR 15, 000 and INR 15, 000 respectively. The amounts should be increased by 10% every three years. A batch of 27 petitions was unearthed by the judgment which includes one petition filed by the National Insurance Company Limited for an order issued by the Punjab and Haryana High Court that raised one common issue- if a standard threshold amount can be fixed under future prospect while compensation is being awarded to accident victim dependents. The MV Act has a provision for awarding compensation payable by insurance companies to victims or his/her family members in cases of accidents. Family members have to establish the income and age of the person deceased and the number of dependents while submitting the claim plea.

Shailesh Kumar

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