New Delhi: The Supreme Court of India, in a significant ruling on motor accident compensation, has enhanced the award for a student who was rendered paraplegic, holding that his notional income should be based on reasonable earning potential rather than the minimum wage applicable to a skilled worker. A bench of Justice K. Vinod Chandran and Justice N.V. Anjaria modified the High Court’s order, increasing the total compensation and directing the payment for additional medical expenses incurred over two decades.
Case Background
The case originates from a motor vehicle accident in 2001 where a 20-year-old man, then a final year B.Com student also enrolled with the Institute of Chartered Accountants of India, was severely injured. While travelling as a pillion rider, his bike was hit from behind by a negligently driven car. The accident resulted in a C4-5 fracture, leaving him with 100% disability due to paraplegia. The victim remained bedridden for 20 years until his demise in 2021. The present appeal was pursued by his mother as his legal representative.
The Motor Accidents Claims Tribunal had initially awarded a total compensation of Rs. 18,03,512. The High Court later enhanced this amount to Rs. 32,46,388. The victim’s representative then approached the Supreme Court, challenging the quantum of the award, specifically the determination of the victim’s income and the provision for medical expenses.
Arguments of the Parties
The appellant argued that the Tribunal and the High Court erred in adopting the minimum wage to calculate the loss of income. It was contended that this approach failed to consider the victim’s bright academic record and career prospects as a potential Chartered Accountant. The appellant also sought reimbursement for substantial medical expenses incurred after the High Court’s decision and for certain bills that could not be produced earlier.
The respondent Insurance Company contested the claim for additional medical expenses, questioning the authenticity of bills from hospitals in Goa when the victim’s permanent residence was in Delhi. The company’s counsel expressed an inability to verify these bills and argued that no explanation was offered for seeking treatment far from his hometown. On the issue of income, the company maintained that the amount determined, based on the minimum wage for a graduate or skilled worker in Delhi in 2001, was appropriate.
Court’s Analysis and Observations
The Supreme Court addressed two primary issues: medical expenses and loss of income.
Regarding the medical bills from Goa, the court was “not impressed with the contention that there was no possibility of the company verifying the bills.” It accepted the appellant’s explanation that the victim had to be shifted from Delhi to Goa due to adverse climatic conditions that could have aggravated his pneumonia, a consequence of his paraplegic state. After directing the Insurance Company to verify the submitted bills, an amount of Rs. 21 lakhs was found to be genuine. The Court, therefore, ordered an additional payment of Rs. 20 lakhs towards these expenses.
On the pivotal issue of determining notional income, the Court rejected the High Court’s methodology. The bench observed that the minimum wage for a skilled worker was not a suitable benchmark for a student with significant potential. The judgment states, “We are not convinced that even that can be adopted for a graduate who was in the process of sitting for the Chartered Accountant examination which would have placed him in a good employment with immense prospects.”
The Court further noted, “The aspirations of the young man were shattered by the accident which left him paraplegic and fighting for breath.”
The bench concluded that a more reasonable estimate of his monthly income in 2001, had he graduated, would be Rs. 5,000. Applying the principles laid down by the Constitution Bench in National Insurance Company Limited vs. Pranay Sethi and Others, the Court added 40% for future prospects and used a multiplier of 18 to calculate the total loss of income.
Final Decision
The Supreme Court recalculated the loss of income to be Rs. 15,12,000 (Rs. 5,000 x 140% x 12 x 18). This amount, added to the Rs. 14 lakhs granted by the High Court under conventional heads (pain and suffering, loss of amenities, etc.) and the previously awarded medical expenses of Rs. 11,22,356, resulted in a total compensation of Rs. 40,34,356.
The Court directed this enhanced amount to be paid to the appellant with 9% per annum interest from the date of filing the petition until realisation.
In addition, the Court ordered the Insurance Company to pay a further Rs. 20 lakhs for the subsequent medical expenses. This amount is to be paid within four months, failing which it will attract interest at 9% from the date of the Supreme Court’s judgment. The civil appeal was accordingly allowed with the aforesaid modifications.
