"Deduction Towards Personal Expenses Must Reflect the Number of Dependents" – Punjab & Haryana High Court Enhances Motor Accident Compensation

“Tribunal Erred in Taking Carry-Home Pay Instead of Gross Salary” – Punjab and Haryana High Court delivered a significant judgment enhancing compensation awarded in a fatal motor accident claim under Section 166 of the Motor Vehicles Act, 1988. Justice Sudeepti Sharma found critical legal flaws in the Tribunal’s computation—especially regarding income assessment, personal expense deduction, and application of legal principles from Supreme Court rulings.
The Court declared: “Deduction towards personal expenses should have been 1/4th, not 1/3rd, considering the number of dependents. The Tribunal’s assessment is liable to be corrected in line with binding precedents.”

This appeal challenged the award dated 01.09.2006 passed by the Motor Accident Claims Tribunal, Sonepat, in a petition filed by the appellants on account of the death of Kehar Singh in a motor accident on 26.07.2005. The Tribunal had awarded ₹3,62,064/-, which the claimants argued was grossly inadequate.
The claimants contended that the deceased was 32 years old, employed with M/s Hindustan Everest Tools Pvt. Ltd., earning ₹4,000 per month, with an additional ₹2,000 from overtime. However, the Tribunal erroneously calculated income as ₹2,875, ignoring the gross salary established through documentary and witness evidence.

The High Court focused on several key legal errors in the Tribunal's award.
On the issue of salary determination, the Court observed: “A perusal of the award shows that the salary of the deceased is proved as ₹3,209/- per month through the testimony of PW-2 Manoj Bhargav… who proved the salary slip of the deceased as Ex.P-2. The Tribunal erred in assessing the monthly income as ₹2,875/- which was merely the carry-home salary.”

Regarding deduction for personal expenses, the Court held: “The Tribunal erred in deducting 1/3rd instead of 1/4th towards personal expenses of the deceased. This is contrary to the ratio in Sarla Verma where, for 4 to 6 dependents, the proper deduction is 1/4th.”

The Court further clarified the law on future prospects, stating: “As per Pranay Sethi, the deceased being aged 32 years and drawing a fixed salary, is entitled to 40% addition to income towards future prospects. The Tribunal failed to consider this.”
The Court also found the amounts awarded under conventional heads to be inadequate: “The Tribunal awarded insufficient compensation under loss of consortium and funeral expenses and did not award anything towards loss of estate. These are required to be corrected.”

Justice Sharma meticulously applied binding precedents including:
Sarla Verma v. DTC (2009) 6 SCC 121 – For proper application of multipliers and deductions based on dependents.
Pranay Sethi (2017) 16 SCC 680 – For future prospects and standard amounts under conventional heads.
Magma General Insurance Co. (2018) 18 SCC 130 – For recognising multiple types of consortium: spousal, parental, and filial.

The Court quoted Pranay Sethi: “Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be ₹15,000, ₹40,000 and ₹15,000 respectively… enhanced at the rate of 10% every three years.”
From Magma, the Court reiterated: “Consortium includes spousal, parental, and filial components… The right to consortium includes the company, care, help, comfort, guidance, solace, and affection of the deceased, which is a loss to the family.”

The Court revised the computation as follows:
Monthly income was fixed at ₹3,200 (rounded from ₹3,209) and 40% future prospects were added, taking total monthly income to ₹4,480. After deducting 1/4th for personal expenses, the effective monthly contribution became ₹3,360. Applying a multiplier of 16, the annual dependency came to ₹6,45,120.

To this, the Court added:
Loss of estate – ₹18,000
Funeral expenses – ₹18,000
Consortium (spousal, parental, filial) – ₹2,88,000
Total revised compensation – ₹9,69,120
Less amount awarded by Tribunal – ₹3,62,064
Enhanced amount granted – ₹6,07,056

Following the Supreme Court’s rulings in Dara Singh v. Shyam Singh Varma (2019 ACJ 3176) and R. Valli v. TNSTC (2022) 5 SCC 107, the Court awarded interest:
“The appellants are granted interest at the rate of 9% per annum on the enhanced amount from the date of filing of the claim petition till the date of its realization.”
The Insurance Company (Respondent No.3) was directed to deposit the enhanced compensation within two months and disburse it as per the original apportionment. It was further directed to pay its counsel’s fee as per the Court’s earlier order dated 18.07.2024.

In a well-reasoned and legally sound judgment, the Punjab and Haryana High Court corrected significant errors made by the Tribunal in assessing just compensation under the Motor Vehicles Act. Applying the law laid down in Sarla Verma, Pranay Sethi, and Magma Insurance, the Court ensured a fair recalibration of the compensation amount, reinforcing the principle that:
“Compensation must be just, fair and reasonable – reflective of actual income, family dependence, and intangible loss.”

Date of Decision: 6 March 2025