Holding

The deceased's income must be fixed at Rs 9,855 per month based on his Income Tax Return, with a 1/5 personal expense deduction, a 40% addition for future prospects, conventional heads increased by 10% every three years, and interest at 9%, resulting in total compensation of Rs 25,91,388.

Summary

The heirs of Rajesh, who died in a motor accident, filed a claim under Section 166 of the Motor Vehicles Act, 1988 seeking compensation. The Motor Accident Claims Tribunal fixed the deceased's monthly income at Rs 4,000 and awarded Rs 6,24,000, while the Madhya Pradesh High Court raised the income to Rs 5,000, added 40% future prospects and awarded Rs 11,41,000. The Supreme Court held that the Tribunal and High Court erred by ignoring the deceased's Income Tax Return, which showed an annual income of Rs 1,18,261 (≈Rs 9,855 per month). It applied a 1/5 deduction for personal expenses (seven dependents), affirmed the 40% addition for future prospects, and increased the conventional heads (spousal and parental consortium, loss of estate, funeral expenses) by 10% as per precedent, fixing interest at 9% per annum. Consequently, the Court awarded a total compensation of Rs 25,91,388 with interest, and allowed the appeal.

Issues considered

The appropriate method for determining the deceased's income, including the relevance of the Income Tax Return.
Whether the deduction for personal expenses should be 1/5 given seven dependents.
The correct percentage to be added for future prospects of a self‑employed deceased under 40 years.
The quantum and periodic increment for conventional heads of compensation.
The applicable rate of interest on the compensation award.

Legislation cited

Motor Vehicles Act, 1988s. 166, s. 168

Subjects

motor accident compensationjust compensationincome tax returnfuture prospectspersonal expense deductionconventional headsinterest ratedependencyspousal consortiumparental consortiumMotor Vehicles Act

Judgment

[2022] 16 S.C.R. 661 661

SMT. ANJALI & ORS. A
v.
LOKENDRA RATHOD & ORS.
(Civil Appeal No. 009014 of 2022)
DECEMBER 06, 2022 B
[KRISHNA MURARI AND BELA M. TRIVEDI, JJ.]
Motor Vehicles Act, 1988: s.168 – Fatal accident – Just and
Fair Compensation – Claimants (the heirs and legal representative
of the victim-deceased) sought compensation of Rs.20 Lakhs –
C
Tribunal estimated the deceased’s monthly income at Rs. 4000 and
allowed the claim of Rs. 6,24,000 with interest – High Court
increased monthly income of deceased to Rs. 5000 and awarded
compensation of Rs. 11,41,000 with interest – Hence instant appeal
– Held: The Tribunal and the High Court both committed grave
error while estimating the deceased’s income by disregarding the D
Income Tax Return (ITR) of the deceased – The ITR of deceased
reflected his annual income to be Rs.1,18,261/-, approx. Rs.9,855/
- per month – Since the deceased is survived by the seven
dependents, the appropriate deduction for personal expenses for
deceased ought to be 1/5 th only and not 1/4 th as applied by the
E
Tribunal and High Court – Further, Tribunal erred by not making
any additions to future prospects of the deceased, whereas High
Court by placing reliance on Sarla Verma and Pranay Sethi held that
since the deceased was under 40 years of age and was self-
employed, he is entitled to addition of future prospects of 40% of
his established income – There is no error in High Court’s reasoning F
for adding 40% of the deceased’s income towards future prospects
– Further, Tribunal awarded meagre sums of Rs.10,000/- and
Rs.2,000/- towards conventional heads and funeral expenses,
respectively, whereas High Court while placing reliance on Pranay
Sethi awarded Rs.70,000/- under conventional heads and Rs.10,000/
G
- towards funeral expenses of the deceased – Although, High Court
was correct in placing reliance on Pranay Sethi, High Court erred
by not granting an increment of 10% on the conventional heads in
every three years as directed in the Pranay Sethi – A three-Judge
Bench of this Court in United India Insurance Co. Ltd. vs. Satinder
Kaur after considering Pranay Sethi awarded spousal consortium at H
661
662 SUPREME COURT REPORTS [2022] 16 S.C.R.

A the rate of Rs.40,000/ and towards loss of parental consortium to
each child at the rate of Rs.40,000/- – The compensation under
these heads also needs to be increased by 10% – Thus, the spousal
consortium is awarded at Rs.44,000/ and towards parental
consortium at the rate of Rs.44,000/ each is awarded to the three
children – Thus the total compensation payable to the Appellants is
B
Rs.25,91,388/- with interest at 9% per annum from the date of filing
of the application till the date of payment of the compensation to
the appellants.
Motor Vehicles Act, 1988 – Beneficial Legislation – The Motor
Vehicles Act, 1988 is a beneficial legislation which has been framed
C with the object of providing relief to the victims or their families –
s.168 of the MV Act deals with the concept of ‘just compensation’
which ought to be determined on the foundation of fairness,
reasonableness and equitability.
Allowing the appeal, the Court
D
HELD: 1. The Tribunal and the High Court both committed
grave error while estimating the deceased’s income by
disregarding the Income Tax Return of the Deceased. The
appellants had filed the Income Tax Return (2009- 2010) of the
deceased, which reflects the deceased’s annual income to be
E Rs.1,18,261/-, approx. Rs.9,855/- per month. The deceased’s
annual income be fixed at Rs.1,18,261/-, approx. Rs.9,855/- per
month keeping in mind the deceased’s Income Tax Return for
the year 2009-2010. [Para 9][667-D-E, G]
2. The provisions of the Motor Vehicles Act, 1988 gives
F paramount importance to the concept of ‘just and fair’
compensation. It is a beneficial legislation which has been framed
with the object of providing relief to the victims or their families.
Section 168 of the MV Act deals with the concept of ‘just
compensation’ which ought to be determined on the foundation
G of fairness, reasonableness and equitability. Although such
determination can never be arithmetically exact or perfect, an
endeavor should be made by the Court to award just and fair
compensation irrespective of the amount claimed by the
applicant/s. [Para 10][667-G-H; 668-A-B]

H
SMT. ANJALI & ORS. v. LOKENDRA RATHOD & ORS. 663

3. Since the deceased is survived by the seven dependents, A
the appropriate deduction for personal expenses for deceased
ought to be 1/5th only and not 1/4th as applied by the Tribunal and
High Court. The Tribunal erred by not making any additions to
future prospects of the deceased, whereas the High Court by
placing reliance on Sarla Verma and Pranay Sethi held that since B
the deceased was under 40 years of age and was self-employed,
he be entitled to addition of future prospects of 40% of his
established income. Therefore there is no error in the High
Court’s reasoning for adding 40% of the deceased’s income
towards future prospects. [Paras 12 and 15][668-E-F; 669-E-F]
C
4. The Tribunal awarded meagre sums of Rs.10,000/- and
Rs.2,000/- towards conventional heads and funeral expenses,
respectively, whereas the High Court while placing reliance on
Pranay Sethi awarded Rs.70,000/- under conventional heads and
Rs.10,000/- towards funeral expenses of the deceased. Although
D
the High Court was correct in placing reliance on Pranay Sethi,
the High Court erred by not granting an increment of 10% on
the conventional heads in every three years as directed in the
Pranay Sethi. Hence the High Court ought to have added the
increment of 10% to the conventional heads as per the dictum in
Pranay Sethi. [Para 16][669-F-G] E

5. A three-Judge Bench of this Court in United India
Insurance Co. Ltd. vs. Satinder Kaur after considering Pranay Sethi
has awarded spousal consortium at the rate of Rs.40,000/ and
towards loss of parental consortium to each child at the rate of
Rs.40,000/-. The compensation under these heads also needs to F
be increased by 10%. Thus, the spousal consortium is awarded
at Rs.44,000/ (Forty-four thousand only), and towards parental
consortium at the rate of Rs.44,000/ each (Total Rs.1,32,000/) is
awarded to the three children. Thus the total compensation
payable to the Appellants is Rs.25,91,388/- with interest at 9% G
per annum from the date of filing of the application till the date of
payment of the compensation to the Appellants. [Paras 17 and
18][670-F-G; 671-E-F]

H
664 SUPREME COURT REPORTS [2022] 16 S.C.R.

A Malarvizhi & Ors. v. United India Insurance CO. Ltd.
& Ors. (2020) 4 SCC 228 : [2019] 16 SCR 1086; Sarla
Verma & Ors. v. Delhi Transport Corporation & Anr.
(2009) 6 SCC 121 : [2009] 5 SCR 1098; National
Insurance Co. Ltd. v. Pranay Sethi & Ors. (2017) 16
SCC 680 : [2017] 13 SCR 100; United India Insurance
B
Co. Ltd. v. Satinder Kaur @ Satwinder Kaur and Ors.
(2021) 11 SCC 780 – relied on.
Laxmi Devi & Ors. v. Mohammad Tabbar & Anr. (2008)
12 SCC 165 : [2008] 5 SCR 436 – referred to.
C Case Law Reference
[2008] 5 SCR 436 referred to Para 6
[2019] 16 SCR 1086 relied on Para 8
[2009] 5 SCR 1098 relied on Para 10
D
[2017] 13 SCR 100 relied on Para 11
(2021) 11 SCC 780 relied on Para 17
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9014
of 2022.
E
From the Judgment and Order dated 16.08.2018 of the High Court
of Madhya Pradesh, Bench at Indore in M.A. No. 2592 of 2013.
N. K. Mody, Sr. Adv., Prabuddha Singh Gour, Ms. Ishita M.
Puranik, Sukhamrit Singh, Suresh Kumar Bhan, Praveen Swarup, Advs.
F for the Appellants.
Ms. Meenakshi Midha, Ms. Pritika Juneja, Chander Shekhar Ashri,
Advs. for the Respondents.
The Judgment of the Court was delivered by
G KRISHNA MURARI, J.
Leave Granted
2. The present appeal arises from a judgment of the Madhya
Pradesh High Court dated 16th August, 2018in a First Appeal from the
decision of the Motor Accident Claims Tribunal, Indore.
H
SMT. ANJALI & ORS. v. LOKENDRA RATHOD & ORS. 665
[KRISHNA MURARI, J.]

3. The Appellants are the heirs and legal representatives of Rajesh A
(deceased) who died as a result of a motor accident on 15th August
2010. He was traveling in a Maruti Alto Car bearing Registration No.
MP-09-HE-3322, on reaching Badwah Road, a bus bearing Registration
No. MP-09-FA-3169 being driven by Respondent No.2 in a rash and
negligent manner crashed into the Rajesh’s car, resulting in Rajesh
B
(deceased) receiving grievous injuries on various body parts, he later
succumbed to the injuries during treatment. He is survived by his two
wives, three children and his parents, who are the appellants before this
Court.
4. The claimants/appellants filed a Claim Petition under Section
166 of the Motor Vehicles Act, 1988 before the Tribunal, seeking C
compensation in the amount of Rs.20 Lakhs. By its award dated 12th
July, 2013, the Tribunal estimated the deceased’s income at Rs.4000/-
per month and allowed the claim in the amount of Rs.6,24,000/- together
with interest at the rate of 6% per annum from the date of filing the
Claim Petition till the date of full realization of the decreed amount. D
The appellants filed a First Appeal before the High Court of Madhya
Pradesh, Indore Bench, wherein vide impugned judgment dated 16th
August, 2018 the High Court increased the deceased’s estimated
income to Rs. 5000/- per month and awarded a compensation of Rs.
11,41,000/- with interest at the rate of 6% per annum from the date of
filing the Claim Petition till the date of full realization of the decreed E
amount. Aggrieved by the judgment of the High Court, the claimants
are in appeal before this Court.
5. There is no dispute as to the occurrence of the accident and
the liability of the respondent- insurer to pay the compensation. In view
of this admitted position, it is unnecessary to narrate the factual aspects F
of the accident.
6. The deceased was aged 28 years at the time of the accident,
and he used to run a business of scrap and earned Rs. 15,000/- per
month as claimed by the appellants, in support the appellants had filed
the deceased’s Income Tax Return for financial year 2009-2010 before G
the Tribunal which showed the total income of deceased to be
Rs.1,18,261/-, approx. Rs.9855/- per month. The MACT disregarded
the deceased’s Income Tax Return on the ground that neither any ITR
prior to 2009-2010 nor any other document with regard to the deceased’s
income was filed before the Tribunal. The MACT while relying on this H
666 SUPREME COURT REPORTS [2022] 16 S.C.R.

A Court’s judgment in Laxmi Devi & Ors. Vs. Mohammad Tabbar &
Anr.1, held the deceased to be a skilled labour and fixed his income at
Rs.4000/- per month i.e., Rs.48,000/- per annum. The Tribunal applied a
multiplier of ‘17’ and deducted one-fourth (1/4th) of the income towards
his personal expenses for the purpose of calculation of the compensation
under the head of loss of dependency. A total sum of Rs.6,12,000/- was
B
awarded towards loss of dependency, to this Rs.10,000/- was added for
loss of pain & suffering and Rs.2,000/- for funeral expenses. The MACT
awarded a total sum of Rs.6,24,000/- (Rupees Six Lakh Twenty-Four
Thousand only) towards compensation with interest @ 6% per annum
from the date of the Claim Petition till date of realization.
C
7. However, the High Court held that the Tribunal was unjustified
in estimating the deceased’s income as Rs.4,000/- per month, considering
that the deceased was the sole bread earner of the family, the High
Court estimated the deceased’s income as Rs.5,000/- per month.
Furthermore, the High Court observed that the Tribunal failed to pass
D any award under the head of ‘future prospects’, hence the High Court
held that since the deceased was 28 years of age and self-employed,
he was entitled to future prospects of 40%. The High Court fixed the
monthly income of the deceased to Rs.5,000/- per month, added 40%
(Rs.2,000/-) of the deceased’s income towards future prospects and
E deducted one-fourth (1/4th) of the income towards personal expenses,
which totaled to Rs.63,000/-. It applied a multiplier ‘17’ for calculating
the dependency and awarded Rs.70,000/- under conventional head.
Accordingly, the High Court awarded a compensation of Rs.11,41,000/-
(Rupees Eleven Lakh Forty-One Thousand Only) with interest @ 6%
per annum from the date of the claim petition till date of realization.
F
8. Assailing the High Court’s impugned order dated 16th August,
2018, the learned Counsel appearing on behalf of the Appellants has
contended:-
a. The High Court and the Tribunal failed to consider the
G deceased’s Income Tax Return filed on 28.05.2010 for
the year 2009-2010, the HC rejected the ITR on the ground
that earlier returns were not filed while the Income Tax
Inspector was examined.

1
H (2008) 12 SCC 165
SMT. ANJALI & ORS. v. LOKENDRA RATHOD & ORS. 667
[KRISHNA MURARI, J.]

b. The High Court and Tribunal failed to observe that since A
the number of dependents exceeded 6 members, the
deduction made towards personal expenses ought to be one-
fifth (1/5th). In the present case there are 7 dependents of
the deceased.
c. The Tribunal failed to award any amount under the B
Conventional Heads and the High Court awarded a sum of
Rs.70,000/- in lumpsum under the Conventional Heads,
whereas the same ought to have been Rs.1,20,000/- as per
the Supreme Court’s judgment in Malarvizhi & Ors. Vs.
United India Insurance CO. Ltd. & Ors.2
C
d. Both the Tribunal and High Court awarded interest at the
rate of 6% per annum from the date of application while it
ought to have been 9% as held in Malarvizhi & Ors. Vs.
United India Insurance Co. Ltd. & Ors. (Supra).
9. The Tribunal and the High Court both committed grave error D
while estimating the deceased’s income by disregarding the Income Tax
Return of the Deceased. The appellants had filed the Income Tax Return
(2009-2010) of the deceased, which reflects the deceased’s annual income
to be Rs.1,18,261/-, approx. Rs.9,855/- per month. This Court in
Malarvizhi & Ors. (Supra) has reaffirmed that the Income Tax Return
is a statutory document on which reliance be placed, where available, E
for computation of annual income. In Malarvizhi (Supra), this Court
has laid as under:
“10. …We are in agreement with the High Court that the
determination must proceed on the basis of the income tax
return, where available. The income tax return is a statutory F
document on which reliance may be placed to determine the
annual income of the deceased.”
Hence, this Court is of the opinion that the deceased’s annual
income be fixed at Rs.1,18,261/-, approx. Rs.9,855/- per month keeping
in mind the deceased’s Income Tax Return for the year 2009-2010. G
10. The provisions of the Motor Vehicles Act, 1988 (for short,
“MV Act”) gives paramount importance to the concept of ‘just and
fair’ compensation. It is a beneficial legislation which has been framed
2
(2020) 4 SCC 228 H
668 SUPREME COURT REPORTS [2022] 16 S.C.R.

A with the object of providing relief to the victims or their families. Section
168 of the MV Act deals with the concept of ‘just compensation’ which
ought to be determined on the foundation of fairness, reasonableness
and equitability. Although such determination can never be arithmetically
exact or perfect, an endeavor should be made by the Court to award just
and fair compensation irrespective of the amount claimed by the applicant/
B
s. In Sarla Verma & Ors. Vs. Delhi Transport Corporation & Anr.3,
this Court has laid down as under:
“16. ...”Just compensation” is adequate compensation which
is fair and equitable, on the facts and circumstances of the
case, to make good the loss suffered as a result of the wrong,
C as far as money can do so, by applying the well settled
principles relating to award of compensation. It is not intended
to be a bonanza, largesse or source of profit.”
11. In Sarla Verma (Supra), it was further held that where the
deceased was married, the deduction towards personal and living
D expenses of the deceased should be one-third (1/3rd) where the number
of dependent family members is between 2 and 3, one-fourth (1/4th)
where the number of dependent family members is between 4 and 6,
and one-fifth (1/5th) where the number of dependent family members
exceeds six. The same has been affirmed by the Constitution Bench of
E this Court in National Insurance Co. Ltd. Vs. Pranay Sethi & Ors.4
12. In the instant case the deceased is survived by seven (7)
dependents, hence in view of the Sarla Verma (Supra) judgment and
the Constitution bench judgment of this Court in Pranay Sethi (Supra)
the appropriate deduction for personal expenses for deceased ought to
F be 1/5th only and not 1/4th as applied by the Tribunal and High Court.
13. Regarding the additions to be made for future prospects of
the deceased, in Sarla Verma (Supra), this Court has held that while
calculating the compensation, the courts should take into consideration
not only the actual income at the time of the death but should also make
G additions by taking note of future prospects. It was further held that
though the evidence may indicate a different percentage of increase, it
is necessary to standardize the addition to avoid disparate yardsticks
being applied or disparate methods of calculation being adopted.

3
(2009) 6 SCC 121
H 4
(2017) 16 SCC 680
SMT. ANJALI & ORS. v. LOKENDRA RATHOD & ORS. 669
[KRISHNA MURARI, J.]

14. In Pranay Sethi (Supra), this Court has not only approved A
the aforesaid observations made in Sarla Verma (Supra), but also held
as under:
“59.3. While determining the income, an addition of 50% of
actual salary to the income of the deceased towards future
prospects, where the deceased had a permanent job and was B
below the age of 40 years, should be made. The addition
should be 30%, if the age of the deceased was between 40 to
50 years. In case the deceased was between the age of 50 to
60 years, the addition should be 15%. Actual salary should
be read as actual salary less tax.
C
59.4. In case the deceased was self-employed or on a fixed
salary, an addition of 40% of the established income should
be the warrant where the deceased was below the age of 40
years. An addition of 25% where the deceased was between
the age of 40 to 50 years and 10% where the deceased was
between the age of 50 to 60 years should be regarded as the D
necessary method of computation. The established income
means the income minus the tax component.”
15. The Tribunal erred by not making any additions to future
prospects of the deceased, whereas the High Court by placing reliance
on Sarla Verma (Supra) and Pranay Sethi (Supra) held that since the E
deceased was under 40 years of age and was self-employed, he be
entitled to addition of future prospects of 40% of his established income.
We find no error in the High Court’s reasoning for adding 40% of the
deceased’s income towards future prospects.
16. The Tribunal awarded meagre sums of Rs.10,000/- and F
Rs.2,000/- towards conventional heads and funeral expenses, respectively,
whereas the High Court while placing reliance on Pranay Sethi (Supra)
awarded Rs.70,000/- under conventional heads and Rs.10,000/- towards
funeral expenses of the deceased. Although the High Court was correct
in placing reliance on Pranay Sethi (Supra), the High Court erred by G
not granting an increment of 10% on the conventional heads in every
three years as directed in the Pranay Sethi (Supra), it may be relevant
to extract the following observations :-
‘52…..The conventional and traditional heads, needless to
say, cannot be determined on percentage basis because that
H
670 SUPREME COURT REPORTS [2022] 16 S.C.R.

A would not be an acceptable criterion. Unlike determination
of income, the said heads have to be quantified. Any
quantification must have a reasonable foundation. There can
be no dispute over the fact that price index, fall in bank
interest, escalation of rates in many a field have to be noticed.
The court cannot remain oblivious to the same. There has been
B
a thumb rule in this aspect. Otherwise, there will be extreme
difficulty in determination of the same and unless the thumb
rule is applied, there will be immense variation lacking any
kind of consistency as a consequence of which, the orders
passed by the tribunals and courts are likely to be unguided.
C Therefore, we think it seemly to fix reasonable sums. It seems
to us that reasonable figures on conventional heads, namely,
loss of estate, loss of consortium and funeral expenses should
be Rs 15,000, Rs.40,000 and Rs.15,000 respectively. The
principle of revisiting the said heads is an acceptable
principle. But the revisit should not be fact-centric or quantum-
D
centric. We think that it would be condign that the amount
that we have quantified should be enhanced on percentage
basis in every three years and the enhancement should be at
the rate of 10% in a span of three years. We are disposed to
hold so because that will bring in consistency in respect of
E those heads.”
Hence, we are of the opinion that the High Court ought to have
added the increment of 10% to the conventional heads as per the dictum
in Pranay Sethi (Supra).
17. A three-Judge Bench of this Court in United India Insurance
F Co. Ltd. vs. Satinder Kaur @ Satwinder Kaur and Ors. 5 after
considering Pranay Sethi (Supra), has awarded spousal consortium at
the rate of Rs.40,000/- (Rupees forty thousand only) and towards loss
of parental consortium to each child at the rate of Rs.40,000/- (Rupees
forty thousand only). The compensation under these heads also needs to
G be increased by 10%. Thus, the spousal consortium is awarded at
Rs.44,000/- (Forty-four thousand only), and towards parental consortium
at the rate of Rs.44,000/- each (Total Rs.1,32,000/-) is awarded to the
three children.

5
H (2021) 11 SCC 780
SMT. ANJALI & ORS. v. LOKENDRA RATHOD & ORS. 671
[KRISHNA MURARI, J.]

18. In light of the above mentioned discussion, the Appellants are A
entitled to the following amounts:

Sl.No. Head Compensation Awarded
1. Income Rs. 9,855/- per month
2. Future Prospects Rs.3,942/- (i.e. 40% of the income) B
th
3. Deduction Towards personal Rs.2,300/- (i.e. 1/6 of Rs.9,855 +
expenses Rs.3,942)
4. Total Annual Income Rs.1,37,964/- [(i.e. 5/6th of Rs.9,855 +
Rs.3,942) x 12]
C
5. Multiplier 17
6. Loss of Dependency Rs.23,45,388/- (i.e. Rs.1,37,964 x 17)
7. Funeral Expenses Rs. 50,000/-
8. Loss of Estate Rs. 20,000/-
D
9. Loss of Spousal Consortium Rs. 44,000/-
10. Loss of Parental Consortium Rs. 44,000/- each
to each of the three children.
11. Total Compensation to be Rs.25,91,388/-.
Paid E

Thus the total compensation payable to the Appellants is
Rs.25,91,388/- with interest at 9% per annum from the date of filing of
the application till the date of payment of the compensation to the
Appellants. F
19. The appeal is allowed to the extent indicated above.

Devika Gujral Appeal allowed.
(Assisted by : Mahendra Yadav, LCRA)
G

H