Motor Accident Claims | Arrears Cannot Be Included In Calculation Of Salary For The Purpose Of Compensation: Bombay High Court

The Bombay High Court recently held that arrears cannot be considered while calculating a person's salary for the purpose of compensation for a motor accident.

Justice Shivkumar Dige, while upholding enhancement of compensation to the family of a deceased in an accident, deducted the amount of arrears mentioned in his salary slip while calculating monthly income.

“This salary slip shows the arrears of Rs.8,900/- but Tribunal has considered this amount as salary of the deceased. In my view, arrears cannot be considered as salary. Hence, I am deducting this amount from the salary of deceased”, the court stated.

The court was dealing with an appeal filed by National Insurance Co. Ltd. against the Motor Accident Claims Tribunal's compensation in a fatal accident case.

The family claimed that on July 26, 2011, deceased Shashin Mogale was proceeding in his car on the way to his house. At about 1:55 am, a tanker came from the opposite direction in rash manner and collided with the car of the deceased. Mogale was admitted in the hospital but he succumbed to injuries. The Tribunal, considering his salary at Rs. 98,700 per month including arrears, awarded compensation of Rs. 88,22,000. The insurance company challenged it in the present appeal. The claimants also lodged a cross-objection, seeking enhancement of the compensation awarded.

The insurance company asserted that the Tribunal erroneously factored in arrears of salary when computing compensation and emphasized the contributory negligence of the deceased. The postmortem report mentions that there was a smell of alcohol showing that the deceased was under the influence of liquor but this fact is not considered by the Tribunal, the insurance company argued.

The claimants produced the Chemical Analysis Report, which indicated the absence of poison but did not mention alcohol. They sought a boost in compensation, challenging the deduction of 30 percent for future prospects as Income Tax and the quantum of the consortium amount.

The court held that the Tribunal's inclusion of arrears in the salary calculation was inappropriate. After deducting arrears, taxes and certain allowances, the court arrived at a revised monthly income of Rs. 75,812 for the deceased.

The court revisited the consortium amount based on the Supreme Court's precedent, awarding Rs. 48,000 for each claimant in addition to Rs. 36,000 for loss of estate and funeral expenses.

The court acknowledged the claimant's entitlement to future prospects, aligning its decision with the Supreme Court's precedent set in National Insurance Co. Ltd. vs. Pranay Sethi.

The court dismissed the insurance company's argument of contributory negligence, citing the spot-panchanama and sketch of the accident spot that indicated the offending truck had come on the wrong side of the road.

The court noted that the post-mortem report does not show that alcohol was found in the stomach along with food, but only states that there was the smell of alcohol. The court said that there is no conclusive evidence that the deceased was under the influence of alcohol, emphasizing that the Chemical Analysis Report of the blood did not confirm the presence of alcohol.

The court partially allowed the appeal and cross-objection, enhancing the compensation by Rs. 16,71,227 to Rs. 1,04,93,227. The court rejected the insurance company's plea to stay this order, considering the accident occurred in 2011.

Case no. – First Appeal No. 1067 of 2018

Case Title – National Insurance Co. Ltd. v. Lauretta Shashi Mogale and Ors.

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