In a verdict intended to provide “just” compensation to victims of road accidents, the Supreme Court ruled on Tuesday that compensation will be based on the future prospects of a deceased person rather than only loss of present income.
A five-judge bench comprising Chief Justice Dipak Misra and Justices A K Sikri, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan framed guidelines for making an estimate 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 ruling settles the controversy in the light of contradictory verdicts by different SC benches.
It 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. This is to be enhanced at the rate of 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 multiplicand would be unjust.
The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Motor Vehicles Act,” the bench said.
“In case of a deceased who had held a permanent job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite,” it said.
The apex court said it is a wrong perception that compensation under the head of future prospects should not be given in case where the deceased was self-employed or having a fixed salary job.
“Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not really deserve acceptance,” the bench said.
It, 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.
“In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation granted cannot be an apology for compensation. It cannot be apittance,” it said.