MACT Compensation Must Reflect Earning Capacity, Reasonable Medical Costs Beyond Bills, and Minimum-Wage Benchmark for Deceased Child Income
1) Introduction
The Supreme Court of India in Karuna Parmar v. Prakash Sinha & Ors. (2025 INSC 1244, decided on 11-02-2025)
revisited the computation of compensation under the Motor Vehicles Act, 1988 arising out of a 07-03-2014 accident.
The appellants were (i) Karuna Parmar (injured claimant), (ii) Ramchand Singh Parmar (injured claimant),
and (iii) the parents collectively claiming for their deceased daughter Kumari Avika Parmar (aged 6 years).
The offending truck (Tata 713) was driven by respondent No.1 Prakash Sinha.
The core dispute was the correct assessment of “just compensation”, particularly:
- whether Karuna Parmar’s income should include her prior salary as a professor though she was not employed as such at the accident date;
- whether medical expenses can be reasonably awarded beyond produced bills;
- how income should be assessed for a deceased child—especially whether “notional income” is appropriate or whether minimum wages should be used.
Procedurally, the Tribunal (MACT) decided the claims collectively; the High Court partly enhanced compensation only for Karuna Parmar and did not meaningfully address enhancement for the deceased child.
The Supreme Court substantially modified compensation for all three heads (injury to Karuna, injury to Ramchand, and death of Avika).
2) Summary of the Judgment
The Supreme Court allowed the appeals and enhanced compensation as follows:
- Karuna Parmar: from MACT’s Rs.3,84,792/- (High Court: ~Rs.5.41 lakh) to Rs.9,09,000/-.
- Ramchand Singh Parmar: from MACT’s Rs.27,320/- to Rs.94,320/-.
- Deceased child Avika Parmar: from MACT/High Court’s Rs.5,30,000/- to Rs.11,44,628/-.
Interest was directed to be paid as awarded by the Tribunal. The Court’s recalculation turned on three doctrinal moves:
(i) income must reflect earning capacity and not be artificially depressed by a temporary employment gap,
(ii) medical expenses should not be mechanically restricted to bills, and
(iii) for a deceased child, income assessment should follow the minimum wage for a skilled worker rather than a low “notional” figure.
3) Analysis
3.1 Precedents Cited
(a) National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680 Para 42 & 59
Pranay Sethi is the foundation for structured calculation of compensation, especially the standardized approach to
future prospects and conventional heads in death cases.
In this judgment, it was used to justify adding future prospects (e.g., 25% for the injured claimant’s income base, and 40% for the child’s income computation as applied by the Court).
The decision reflects the Court’s continuing preference for rule-based uniformity over ad hoc enhancements.
(b) Kajal v. Jagdish Chand (2020) 4 SCC 413 Para 19 and 25
The Court relied on Kajal v. Jagdish Chand to reject the narrow approach that medical expenses must be capped strictly at produced bills.
The principle extracted is that limiting medical expenses to bills can be unreasonable where the record shows extensive treatment,
and tribunals must ensure compensation is realistic and restorative.
Raj Kumar v. Ajay Kumar is the leading authority on assessing compensation in injury cases—particularly the distinction between
permanent disability and its effect on loss of earning capacity, and the need to compensate for
loss of income during treatment.
Here, it was used specifically for the “loss of income during treatment” head, reinforcing that temporary loss of earnings is separately compensable.
(d) Sidram v. Divisional Manager, United India Insurance Ltd. (2023) 3 SCC 439 Para 89
Sidram supports awarding reasonable amounts under ancillary heads such as special diet and transportation,
acknowledging the practical, out-of-pocket burdens on injured claimants that are frequently under-compensated.
This authority was used to justify non-pecuniary damages for pain and suffering, signalling that courts must meaningfully account
for the human impact of injuries beyond income loss and bills.
(f) Baby Sakshi Greola v. Manzoor Ahmad Simon and Another 2024 SCC Online SC 3692
This precedent was pivotal to the deceased child’s claim. The Supreme Court extracted the proposition (building on Kajal) that taking a low
notional income is not appropriate; instead, courts should use the minimum wages payable to a skilled workman in the concerned State
as a benchmark for what the child would at least have earned on attaining majority.
This is a strong corrective against historically depressed awards in child-death cases.
3.2 Legal Reasoning
(I) Income must reflect earning capacity, not a snapshot of employment status
The Tribunal excluded Karuna Parmar’s prior salary as a professor (Rs.16,000/- per month) because she was not employed as a professor for 2–3 years before the accident.
The Supreme Court reversed this logic: the relevant inquiry is the claimant’s earning capacity and the lost potential attributable to the accident.
The Court emphasized that she had not abandoned the education field—she continued imparting tuition—so the prior professorial income better reflected her capacity.
Consequently, the Court accepted a combined monthly income of Rs.26,000/- (salary + tuition).
Doctrinal significance: the Court implicitly discourages a rigid “employed on the accident date” test and moves toward a more functional inquiry:
whether past employment evidences a realistic earning trajectory that the accident disrupted.
(II) Medical expenses are not confined to documentary bills when treatment is evident
The Court found it unjust to restrict medical expenses strictly to produced bills when the record showed extensive treatment at two hospitals.
Invoking Kajal v. Jagdish Chand, it treated medical expenses as a head where tribunals must apply reasonableness informed by evidence of treatment,
not merely invoices.
On this basis, it enhanced medical expenses for Karuna Parmar to the claimed Rs.5,00,000/- in reasoning,
while the computation table reflects Rs.3,50,000/-—a minor internal inconsistency in the order’s arithmetic presentation.
Practical takeaway: claimants should still file bills, but courts are reminded to award amounts that reflect the likely real cost of treatment,
especially where treatment history is proved and billing may be incomplete.
(III) Deceased child income: minimum wages for skilled worker, not arbitrary notional income
The Tribunal adopted a very low prospective annual income (Rs.21,000/-). The Supreme Court rejected this, applying
Baby Sakshi Greola v. Manzoor Ahmad Simon and Another 2024 SCC Online SC 3692.
It looked to the Minimum Wages Act notification (skilled worker, 2014) at Rs.223 per day, computed monthly income at Rs.6,690/-,
and recalculated dependency compensation using multiplier methodology with future prospects, deduction, and multiplier.
Doctrinal significance: this approach standardizes child-death compensation around objective wage data,
countering systemic undervaluation of children’s lives in compensation awards.
(IV) Structured computation and conventional heads
Across claims, the Court adhered to structured heads: future prospects, multiplier, disability impact, special diet/transport, pain and suffering,
and loss of income during treatment. For the death claim, it included conventional heads such as loss of estate, funeral expenses, and consortium.
3.3 Impact
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Earning capacity approach for injured claimants: The judgment supports inclusion of credible prior earnings (even if not contemporaneous),
where they better reflect earning capacity and the accident’s impact. This may lead to higher, fairer awards for claimants with employment gaps
(e.g., contractual workers, those between jobs, or those temporarily out of formal employment).
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Medical expenses beyond bills: MACTs and appellate courts are nudged toward a “proof of treatment + reasonableness” standard,
reducing under-compensation where documentation is incomplete.
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Child death compensation recalibration: By anchoring income to minimum wages for skilled workmen, the decision will likely increase awards in child fatality cases
and reduce variance between tribunals.
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Appellate scrutiny of omissions: The High Court’s lack of discussion on the deceased child’s enhancement was implicitly corrected,
reinforcing that material issues raised in appeal require reasoned adjudication.
4) Complex Concepts Simplified
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Multiplier method: A standardized calculation where annual loss (dependency or earning loss) is multiplied by a number based on age
(the “multiplier”) to estimate long-term loss.
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Future prospects: An addition to current income to account for likely future growth in earnings.
The percentages are guided by Supreme Court precedent to promote consistency.
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Permanent disability vs. loss of earning capacity: Medical disability (a bodily assessment) may not equal economic disability.
Courts assess how the injury affects actual ability to earn.
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Notional income: A presumed income used when actual income is unproved. The judgment discourages arbitrary low notional figures for children
and prefers minimum-wage benchmarks.
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Consortium: Compensation for loss of relationship, care, companionship and affection. In death cases, parents may receive consortium for loss of a child.
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Conventional heads (loss of estate, funeral expenses): Standard amounts awarded for unavoidable consequences of death, distinct from dependency loss.
5) Conclusion
Karuna Parmar v. Prakash Sinha & Ors. strengthens “just compensation” jurisprudence in three practical ways:
it (i) treats income assessment as an inquiry into earning capacity rather than a rigid employment-status snapshot,
(ii) recognizes that medical costs may be reasonably awarded beyond strict bill production when treatment is clearly established,
and (iii) recalibrates compensation for a deceased child by using minimum wages for a skilled worker instead of depressed notional income.
The judgment is likely to be cited to correct undervaluation in MACT awards—especially in cases involving employment gaps, incomplete medical documentation, and child fatalities.