Supreme Court: In a case dealing with motor vehicle accident resulting into the death of a 21 year old engineering student who was not serving and earning at the time of accident/death and hence, it was argued that nothing further is to be added towards the future prospect/future rise in income, the bench of MR Shah* and Sanjiv Khanna, JJ, refused to accept such contention and held that even in case of a deceased who was not serving at the time of death and had no income at the time of death, their legal heirs shall be entitled to future prospects by adding future rise in income i.e. addition of 40% of the income determined on guesswork considering the educational qualification, family background etc., where the deceased was below the age of 40 years.

Factual Background

The deceased at the time of accident i.e. in 2012, was a bachelor, aged 21 years and was studying in 3rd year of B.E. The original claimants – mother, father, brother and  sister of  the deceased had claimed Rs.25 lakhs as compensation on different heads. The fact that the deceased at the relevant time was getting Rs.25,000/¬ as salary from one Nectal Construction Company and was earning Rs.8,000/¬ per month as he was engaged in tuition of other students was disbelieved by the Courts.

The Tribunal assessed the monthly income   of   the   deceased   as   Rs.15,000/¬   per   month, considering the young age and the educational qualification, the nature of work to be done by him in future and his future   prospect. Applying the multipliers and other expenses, the Tribunal in all awarded Rs.12,85,000/¬ with 7.5% interest per annum.

The Madhya Pradesh High Court, however, reduced the amount of compensation from Rs.12,85,000/¬ to Rs.6,10,000/¬, determining the future loss of income at Rs.5,000/¬ per month, original claimants have preferred the present appeal.

While the Union of India fairly conceded that assessing the income of deceased at Rs.5,000/¬ per month for the purpose of awarding the compensation under the head of future economic loss was at lower side and as such is not justifiable, it argued that since he was not earning at all at the time of death, there shall not be any future rise in income while determining the future loss of income.

Analysis

Award of future loss of income at Rs.5,000/¬ per month unjustified

The Court took note of the fact that the deceased at the time of accident was aged 21¬22 years and that he was a 3rd year student in civil engineering. Therefore, looking to his educational qualification he was having a bright future and hence, awarding the future economic loss to the claimants considering the income of the deceased as Rs.5,000/¬ was not sustainable at all.

It was further noticed that even the labourers/skilled labourers were getting Rs.5,000/- per month under the Minimum Wages Act in the year 2012. Hence,

“As the deceased was studying in the 3rd/4th semester of civil engineering, he cannot be considered worse than the labourers/skilled labourers.”

Looking to the educational qualification and the family background, the Court noticed that the deceased was having a bright future studying in the 3rd year of civil engineering, hence, the income of the deceased at least ought to have been considered at least Rs.10,000/- per month, more particularly considering the fact that the labourers/skilled labourers were getting Rs.5,000/¬ per month even under the Minimum Wages Act in the year 2012.

Future rise in income in case of death of an unemployed person

The Court held that the same principle which is applied to the salaried person and/or deceased self   employed and/or a fixed salaried deceased has to be applied to the deceased who was not serving and/or was not having any income at the time of accident/death.

In case of a deceased, who was not earning and/or not doing any job and/or self employed at the time of accident/death, his income is to be determined on the guesswork. Once such an amount is arrived at he shall be entitled to the addition over the future prospect/future rise in income. It cannot be disputed that the rise in cost of living would also affect such a person.

As observed by this court in National Insurance Company Limited V. Pranay Sethi, (2017) 16 SCC 680, 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.

“In case of a deceased who had held a permanent job with inbuilt grant of annual increment and/or in case of a deceased who was on a fixed salary and/or self-employed would only get the benefit of future prospects and the legal representatives of the deceased who was not serving at the relevant time as he died at a young age and was studying, could not be entitled to the benefit of the future prospects for the purpose of computation of compensation would be inapposite. Because the price rise does affect them also and there is always an incessant effort to enhance one’s income for sustenance. It is not expected that the deceased who was not serving at all, his income is likely to remain static and his income would remain stagnant.”

It was noticed that to have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human  attitude which always intends to live with dynamism and move and change with the time.

Therefore, even in case of a deceased who was not serving at the time of death and had no income at the time of death, their legal heirs shall also be entitled to future prospects.

Enhanced Award

The Court held that the claimants shall be entitled to future economic loss at Rs.14,000/¬ per month. The deceased at the time of accident was aged between 21¬22 years. In total, the claimants shall be entitled in all a sum of Rs.15,82,000/- with interest thereon at the rate of 7% per annum from the date of claims petition till realization.

[Meena Pawaia v. Ashraf Ali, 2021 SCC OnLine SC 1083, decided on 18.11.2021]


*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

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