NEW DELHI: The Supreme Court has held that the ‘future prospects’ of a road crash victim must be taken into account while computing the amount of compensation due to him under the Motor Vehicles Act.
At present, compensation is awarded by the Motor Accidents Claims Tribunal based on the victim’s income, personal living expenses and other factors at the time of death. However, the Supreme Court on Tuesday modified the guidelines to include the possibility of future increases in the victim’s income as well as improvement in his living standards.
Such increase will range between 30% and 50% of the victim’s income depending on his age at the time of death. The younger a victim is, the higher his compensation is likely to be. A five-judge constitution bench headed by CJI Dipak Misra issued guidelines that would include these factors while deciding claims in accident cases under the Motor Vehicles Act.
Interpreting Section 168 of the Act, the court said it must be ensured that the compensation amount is ‘just’ and has been determined on the foundation of fairness, reasonableness and equitability. “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 court said.
It held that all road crash victims, whether salaried or self-employed, should get the benefit of future prospects. On salaried employees, it said: “The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in private sector to enhance salary...”
About self-employed persons, the court observed: “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...”
The court specified that crash victims below the age of 40 years would get more compensation compared to older persons, and as one grew older in age, the compensation ratio would decline correspondingly.
It said reasonable figures on conventional heads, like loss of estate, loss of consortium and funeral expenses should be `15,000, `40,000 and `15,000, and the amounts should be enhanced at 10% every three years.
The current practice
MACT awards compensation after determining income of the deceased, the deduction to be made towards the personal living expenses of the deceased and the multiplier to be applied with reference to the age of the victim
The new guidelines
An addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and is below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40-50 years. In case the deceased was between 50-60 years, the addition should be 15 per cent