Court case(2017) 16 SCC 680

Conflicting decisions of benches of the Supreme Court - in particular on whether an addition for future prospects could be made where the deceased was self-employed or on a fixed salary, and on the amounts to be awarded under the conventional heads - led to a reference to a Constitution Bench. The appeals arose from awards of Claims Tribunals and High Courts in fatal motor accident claims under s. 166 of the Motor Vehicles Act, in which insurers, including National Insurance Co. Ltd., challenged the additions made for future prospects and the claimants sought higher compensation.

The Constitution Bench held that just compensation must take account of the future prospects of the deceased whatever his employment, because the loss of the prospect of rising income is a real loss. It fixed the additions: where the deceased had a permanent job, 50% of the established income if below 40 years, 30% between 40 and 50, and 15% between 50 and 60; where the deceased was self-employed or on a fixed salary, 40%, 25% and 10% respectively. The deduction for personal expenses and the multiplier are to follow Sarla Verma (as approved in Reshma Kumari). The conventional heads were fixed at Rs 15,000 for loss of estate, Rs 40,000 for loss of consortium and Rs 15,000 for funeral expenses, to be enhanced at the rate of 10% every three years. The Court stressed that standardisation of these elements promotes consistency and fairness.