Case Title: New India Assurance Co. Ltd. v. Urmila Shukla
The Supreme Court stated that the Pranay Sethi decision does not limit the use of a statutory provision awarding larger compensation in the case of Motor Accident Compensation.
The bench of Justices Uday Umesh Lalit and Ajay Rastogi remarked that if a statutory instrument designed a formula that provides better or higher benefit, a such statutory instrument must be permitted to operate unless the statutory instrument is otherwise determined to be unlawful.
The Court denied an Insurance Company's appeal contesting the award of Rs.24,43,432/- by the Motor Accidents Claim Tribunal, Allahabad, with 7% interest while assessing the claim in respect of an accident that resulted in the death of one Jairam Shukla. Previously, the Allahabad High Court dismissed the first appeal.
The Insurance Company argued in its appeal that sub-rule 3(iii) of Rule 220A of the Uttar Pradesh Motor Vehicles Rules, 1998 is inconsistent with the decisions reached by the Constitution Bench of this Court in National Insurance Company. Ltd. vs. Pranay Sethi. According to the stated Rule, a deceased's future potential must be factored into his or her actual compensation or minimum wage. If the deceased was over the age of 50, 20% of the deceased's wage must be added.
As a result, the court examined whether sub-Rule 3(iii) of Rule 220A of the Rules should be limited in scope or allowed to function fully.
To respond, the bench stated that the decision in Pranay Sethi was made to determine "fair compensation" under Section 168 of the Motor Vehicles Act, 1988.
In Pranay Sethi, the Constitution Bench reviewed the issue of "added as regards prospects" in a case where the dead was self-employed or on a fixed wage with no provision for annual raise, etc.
The following was the Court's decision:
1. When calculating income, add 50% of the dead's actual wage to his or her income for prospects if the deceased had steady employment and was under the age of 40. If the deceased was between the ages of 40 and 50, the increment should be 30%. If the deceased was between the ages of 50 and 60, the increase should be 15%. Actual salary should be interpreted as actual salary minus taxes.
2. If the deceased was self-employed or on a regular salary, 40% of the established income should be warranted if the deceased was under the age of 40. The necessary technique of computation should be an addition of 25% where the deceased was between the ages of 40 and 50, and 10% where the deceased was between the ages of 50 and 60. The income minus the tax component is referred to as the established income.
3. Traditional amounts for loss of estate, loss of consortium, and funeral expenditures should be Rs. 15,000/-, Rs. 40,000/-, and Rs. 15,000/-, respectively. The aforementioned sums should be increased by 10% every three years.