Accurate Financial Assessment Crucial in Motor Accident Claims,” Orissa High Court Affirms in Revised Compensation Award

High Court adjusts compensation to ₹30,88,592, highlighting the importance of precise income calculation and adherence to legal standards.

The Orissa High Court has revised the compensation awarded in a motor accident claim, addressing significant errors in the income calculation of the deceased and reaffirming the insurance company’s liability. The judgment, delivered by Justice R.K. Pattanaik, emphasizes the necessity of accurate financial assessments in determining fair compensation for victims’ families.

The appeals arose from the award in M.A.C. Case No. 63 of 2017, which involved a fatal motor vehicle accident on July 28, 2016. The deceased, while returning home on a motorcycle, was struck by a speeding tanker truck, leading to his immediate death due to grievous injuries. The claimants sought compensation under Section 166 of the Motor Vehicles Act, 1988. The Tribunal initially awarded ₹33,58,657, which was contested by both the claimants for enhancement and the insurance company challenging the liability and quantum.

The court noted that the Tribunal had erroneously considered four years of Income Tax Returns (ITR) instead of the standard three years when calculating the deceased’s income. “The annual income should have been assessed based on the last three years’ ITRs, which are more reflective of the deceased’s financial status at the time of death,” the bench emphasized. Consequently, the annual income was reassessed to ₹1,76,496, leading to an adjusted total compensation.

Regarding income from the deceased’s heavy goods vehicles, the court accepted the appellant’s plea for a higher presumptive income under Section 44-AE of the Income Tax Act. An additional amount of ₹22,500 was added, acknowledging the recent purchase of the vehicles and their contribution to the deceased’s overall income.

The Tribunal’s decision to apply a 7% annual interest rate on the compensation amount was upheld. The court rejected the appellants’ request for a higher interest rate of 9% per annum and disallowed any penal interest, deeming it unwarranted.

The insurance company’s argument that there was a policy violation due to unauthorized driving of hazardous substances was dismissed. “The Tribunal found no substantial evidence for policy breach, and the insurance company’s liability remains intact,” the court stated, affirming the insurer’s obligation to pay the modified compensation.

Following Supreme Court precedents, the court applied a 40% addition towards future prospects, as the deceased was below 40 years old. A multiplier of 16 was used to calculate the loss of dependency, in line with the guidelines established in Smt. Sarla Verma and Others v. Delhi Transport Corporation.

Justice Pattanaik remarked, “Accurate assessment of income is crucial in awarding fair compensation, ensuring justice for the dependents of the deceased.”

The Orissa High Court’s decision to modify the compensation award to ₹30,88,592 reinforces the judiciary’s commitment to precision in financial assessments in motor accident claims. By addressing calculation errors and affirming the insurance company’s liability, the judgment sets a significant precedent for future compensation cases. The insurance company has been directed to deposit the revised compensation amount within eight weeks, ensuring timely justice for the claimants.
 

Date of Decision ;  21 May 2024