Enhancing motor accident compensation from ₹3.85 lakh to ₹7.74 lakh the Andhra Pradesh High Court has held that future prospects must be added while calculating the income of a deceased person who was employed on a fixed salary.

The Court observed that the deceased, who was working as a security guard and earning ₹4,238 per month, was entitled to a 40% addition towards future prospects. It further held that the multiplier must be determined based on the age of the deceased, rather than the age of the deceased's mother.

A Single Judge Bench of Justice Alapati Giridhar allowed an appeal filed by the deceased's family, enhancing the compensation awarded by the Motor Accident Claims Tribunal and observed:

“The Tribunal has considered the monthly income of Rs.4,238/-, which is not in dispute before this Court, but declined to take future prospects into consideration.

The Pranay Sethi case supra, at paragraph 61(iv), held that, for the below age of 40 years, who was on a fixed salary, an addition of 40% of the income should be considered for future prospects, in this case also, he was on a fixed salary, working in the Company for about two years, and his age was 21 years. Thus, the law on future prospects at 40% to be applied in this case, as rightly contended by the learned counsel for the Claimants, which was also fairly conceded by the learned counsel for the Insurance Company. Thus, his income would be Rs.5,933/- per month (Rs.4,238/- + 40% towards future prospects), and his annual income would be Rs.71,196/- (Rs.5,933 x 12 months).”

The case arose from a fatal accident in which the deceased and his father were travelling towards their agricultural land. A tractor and harvester, allegedly driven rashly and negligently in the opposite direction, hit the deceased, crushing him under the vehicle and causing his death on the spot. A criminal case was registered in connection with the accident.

Following the accident, the deceased's parents and brother approached the Motor Accident Claims Tribunal seeking ₹6 lakh in compensation. They submitted that the deceased was 20 years old and worked as a security guard with a private security services company in Hyderabad.

The vehicle owner disputed the accident and the deceased's age and income, arguing that the insurer alone was liable. The insurer disputed the claimants' relationship with the deceased, his employment and income, and the vehicle's ownership. It also questioned whether he was an unauthorised passenger, alleged that the driver lacked a valid licence, disputed coverage and termed the claim excessive.

The Tribunal held that the accident resulted from the rash and negligent driving of the offending vehicle and awarded ₹3,85,420, with interest at 7.5% per annum. The vehicle owner and insurance company were held jointly and severally liable.

Aggrieved by the quantum of compensation, the claimants approached the High Court, arguing that the Tribunal had failed to consider future prospects and award adequate compensation under conventional heads, including loss of consortium, loss of estate and funeral expenses.

To establish the deceased's income, the claimants relied on the testimony of his employer, who confirmed that he had worked as a security guard from April 2007 until his death in January 2009, earning ₹4,238 per month. The employer had also produced his salary certificate and identity card.

On examining the evidence, the Court noted that the deceased's employment and monthly income were undisputed. It held that a 40% addition towards future prospects was warranted and recalculated his monthly income at ₹5,933 and annual income at ₹71,196. After deducting 50% towards personal and living expenses, the annual loss of earnings was assessed at ₹35,598/- per annum.

The Court also held that the Tribunal had erred in applying a multiplier of 12 based on the mother's age. Since the deceased was a bachelor aged 21, the multiplier had to be determined with reference to his age. Applying a multiplier of 18, the Court assessed the loss of dependency at ₹6,40,764.

Turning to the conventional heads of compensation, the Bench awarded ₹48,000 each to the deceased's parents towards loss of consortium, totalling ₹96,000. It further awarded ₹18,000 towards loss of estate and ₹18,000 towards funeral expenses, while maintaining the ₹2,000 awarded towards transportation charges.

On this revised assessment, the Court enhanced the total compensation to ₹7,74,764 from ₹3,85,420, retaining interest at 7.5% per annum from the date of filing of the claim petition until realisation.

The Bench directed the claimants to pay the additional court fee on the amount exceeding their original claim of ₹6 lakh within 30 days of receiving the judgment. It further directed that the compensation be apportioned in accordance with the Tribunal's order, except for the consortium amounts awarded to the parents.

The appeal was accordingly allowed with costs of ₹20,000.

Counsel for the Appellants: N. Chandra Sekhar Reddy

Counsel for the Respondents: T.V.P. Sai Vihari