The Supreme Court heard an appeal against the High Court's reduction of compensation in a motor accident claim case. The Tribunal had awarded Rs. 88,20,454, which the High Court reduced to Rs. 38,15,499. The Supreme Court found that the High Court erred by excluding allowances from income computation, applying a 40% future prospects rate instead of 50%, and making a flat 30% income tax deduction. The Court restored the Tribunal's award, holding that allowances are part of income, future prospects for a 27-year-old deceased should be 50%, and income tax must be deducted based on applicable slabs. The appeal was allowed, and the Insurance Company was directed to pay the original compensation with interest.
Motor Vehicles Act, 1988-- Fatal accident-- Claim for compensation-- Award passed by tribunal-- Challenged by insurance before High court in an appeal-- High was pleased to reduced the amount of compensation-- Aggrieved-- Challenged by claimant before Supreme court-- Determination of compensation-- Computation of income of deceased-- Age of deceased was 27 years old at the time of accident-- No illegality in application of multiplier of 17-- Term of "Income"-- Error committed by High court in excluding the allowances from the income of deceased-- Deduction towards income tax should be at such rate which the annual income may be subjected to in the relevant year-- Case of Ranjana Prakash (Supra) referred-- Deceased was serving as an engineer in PSU-- Addition towards future prospect at the rate of 50% as deceased was below 40 years-- Amount of compensation towards conventional heads granted as per Judgment of Pranay Sethi (Supra)-- Amount of compensation enhanced- Appeal Allowed
Para-- 11-16
The Supreme Court allowed the appeal and restored the compensation awarded by the Motor Accident Claims Tribunal -- The Court held that allowances form part of income for compensation computation under the Motor Vehicles Act, 1988 -- Future prospects for a deceased aged 27 years should be added at 50% as per established precedent -- Income tax deduction must be calculated based on the applicable tax slabs prevailing at the time of the accident, not a flat rate -- The multiplier of 17 adopted by the High Court was correct -- The judgment references National Insurance Co. Ltd. v. Indira Srivastava & Ors. and Vijay Kumar Rastogi v. Uttar Pradesh State Roadways Transport Corporation on inclusion of benefits in income -- The case involves interpretation of Section 166 of the Motor Vehicles Act, 1988 -- The decision emphasizes just compensation principles in motor accident claims
The Supreme Court allowed the appeal, restored the compensation awarded by the Tribunal of Rs. 88,20,454 with interest at 6% per annum, and dismissed the Insurance Company's appeal
Citation: 2025 LawText (SC) (10) 55
Case Number: Civil Appeal No. ...... of 2025 (@ Special Leave to Appeal (C) No. 19878/2022)
Date of Decision: 2025-10-15
Case Title: Whether the High Court was justified in reducing the compensation payable to the appellants by excluding allowances, applying a lower future prospects rate, and making a flat income tax deduction
Before Judge: Pamidighantam Sri Narasimha J. , Manoj Misra J.
Equivalent Citations: 2025 INSC 1237
Advocate(s): Not specified
Appellant: Manorma Sinha & Anr.
Respondent: The Divisional Manager, Oriental Insurance Company Limited & Anr.
Nature of Litigation: Appeal against reduction of compensation in a motor accident claim case
Remedy Sought: Appellants sought restoration of the compensation awarded by the Tribunal, which was reduced by the High Court
Filing Reason: The High Court reduced the compensation from Rs. 88,20,454 to Rs. 38,15,499, leading to the appeal
Previous Decisions: Tribunal awarded Rs. 88,20,454; High Court reduced it to Rs. 38,15,499; Supreme Court restored the Tribunal's award
Issues: Whether allowances should be included in income for compensation computation Whether future prospects should be 50% or 40% for a deceased aged 27 years Whether income tax deduction should be a flat rate or based on applicable slabs
Submissions/Arguments: Appellants argued that allowances should be included and income tax deduction should be based on slabs, not a flat rate Respondents argued that allowances should be excluded and income tax deduction is required as per precedent
Ratio Decidendi: Allowances form part of income for compensation under the Motor Vehicles Act, 1988; future prospects for deceased below 40 years are 50%; income tax deduction must be based on applicable tax slabs; multiplier of 17 is correct for age 27 years
Judgment Excerpts: Held that the term income includes allowances and benefits for compensation computation Held that future prospects for a deceased aged 27 years should be added at 50% Held that income tax deduction must be based on applicable slabs, not a flat rate
Procedural History: Claim Case No. 196 of 2011 filed before Tribunal; Tribunal awarded compensation on 04.07.2022; High Court reduced compensation in Miscellaneous Appeal No. 804 of 2017; Supreme Court granted leave and heard appeal in Civil Appeal No. ...... of 2025
