The Supreme Court, applying the principles established in National Insurance Co. Ltd. v. Pranay Sethi, held that a self-employed person, even one working abroad, is entitled to an addition of 40% of their established income towards future prospects when computing compensation in motor accident claims. The Court enhanced the compensation by recalculating the loss of dependency and conventional heads as per the standardized formula mandated by the Constitution Bench.
Facts Of The Case:
The case arose from a motor accident that occurred on 31st August 2007 at approximately 3:00 a.m. at Nirmal Kutia Chowk, Karnal. The deceased, Rajinder Singh Mihnas, a 31-year-old U.S. national, was travelling in a car from Delhi to Hoshiarpur when it was struck by a rashly and negligently driven Swaraj Mazda truck. The accident resulted in his tragic death. His wife, daughter, and son, the original claimants and appellants before the Supreme Court, filed a claim petition under Section 166 of the Motor Vehicles Act. They contended that the deceased was a driver and ran a transport company in the U.S.A. named West End Express Inc., earning a substantial income. The Motor Accident Claims Tribunal assessed his income at a conservative Rs. 5,000 per month, awarding a total compensation of Rs. 7,80,000. On appeal, the Punjab & Haryana High Court significantly enhanced the compensation to Rs. 1,17,20,200 by reassessing the monthly income to Rs. 78,300 based on evidence of his U.S. earnings. However, the High Court denied the claimants the benefit of future prospects, leading to the appeal before the Supreme Court.
Procedural History:
The procedural history of the case began with the filing of a claim petition by the appellants under Section 166 of the Motor Vehicles Act before the Motor Accident Claims Tribunal (MACT). The MACT, while accepting the claim, assessed the deceased’s income conservatively at Rs. 5,000 per month and awarded a total compensation of Rs. 7,80,000. Dissatisfied, the appellants filed an appeal (FAO No. 6692 of 2010) before the High Court of Punjab & Haryana. The High Court, in its judgment dated August 8, 2017, significantly enhanced the compensation to Rs. 1,17,20,200 by reassessing the monthly income based on evidence of U.S. earnings. However, it denied the claim for future prospects. This partial denial led the appellants to file the present Civil Appeal No. 820 of 2019 before the Supreme Court, which partly allowed the appeal by granting an additional compensation for future prospects.
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Court Observation:
The Court observed that the High Court correctly reassessed the deceased’s income based on evidence of his earnings in the U.S. but erred in denying the benefit of future prospects. Relying on the constitutional bench decision in National Insurance Co. Ltd. v. Pranay Sethi, the Court held that the principle of standardisation applies equally to self-employed persons, including those working abroad, to ensure just compensation. It was emphasized that refusing future prospects for a self-employed person based on a perceived lack of certainty is contrary to the dynamic nature of income and human enterprise. Consequently, the Court mandated a 40% addition to the established income for future prospects, as the deceased was below 40 years of age, and also recalculated the conventional heads in accordance with the standardized norms laid down in Pranay Sethi.
Final Decision & Judgement:
The Supreme Court partly allowed the appeal. It upheld the High Court’s assessment of the deceased’s income but held that the claimants were erroneously denied the benefit of future prospects. Applying the law from National Insurance Co. Ltd. v. Pranay Sethi, the Court added 40% to the established income towards future prospects and recalculated the conventional heads as per mandated standardized amounts. Consequently, the total compensation was enhanced from Rs. 1,17,20,200/- to Rs. 1,60,15,280/-. The respondent Insurance Company was directed to deposit this additional compensation of Rs. 42,95,080/- with interest at 6% per annum within four weeks.
Case Details:
Case Title: Kulwinder Kaur & Ors. vs. Parshant Sharma & Anr. Citation:2025 INSC 950 Civil Appeal No.: Civil Appeal No. 820 of 2019 Date of Judgement: August 08, 2025 Judges/Justice Name: Justice N.V. Anjaria, and Justice K. Vinod Chandran
Download The Judgement Here