Each Dependent Must Be Counted as a Full Unit, Even if Minor: Allahabad High Court Upholds Compensation Award

“The dependency is to be calculated on a single unit basis, irrespective of the age of the dependents” — In a significant ruling that reinforces the supremacy of constitutional bench decisions over conflicting subordinate legislation, the Allahabad High Court dismissed an appeal by the insurer challenging a compensation award made under the Motor Vehicles Act, 1988, holding that minor dependents are to be treated as full units while computing dependency and that consortium is rightly payable to all dependents as per binding precedent.

The Court, speaking through Justice Sandeep Jain, held that the binding decisions of the Supreme Court in Pranay Sethi, Sarla Verma, and Magma Insurance Co. Ltd. must override Rule 220-A(2)(iii) of the Uttar Pradesh Motor Vehicle Rules, 1998, which provides for counting minors as only half units. Noting that the Motor Vehicles Act is a beneficial legislation, the Court concluded that any interpretation that favors the claimants must prevail.

In the instant matter, the Tribunal had awarded compensation of ₹23,98,774/- with 7% interest per annum to the dependents of deceased Sanjeev Kumar, who succumbed to injuries sustained in a motor accident on 15.01.2023. The deceased, aged 27, worked as a delivery boy and earned approximately ₹11,000 per month. Based on minimum wage norms, the Tribunal assessed his income at ₹9,743 per month, added 40% for future prospects, applied the multiplier of 17, deducted 1/4th for personal expenses, and awarded additional amounts under loss of estate, funeral expenses, consortium, and medical treatment.

The insurance company filed the appeal under Section 173 of the Motor Vehicles Act, challenging primarily:

1. The dependency unit calculation, claiming minor children should be treated as half units under Rule 220-A(2)(iii) of the UP Motor Vehicle Rules.

2. The award of consortium of ₹40,000 each to four claimants — the widow, two minor sons, and the mother — which the insurer contended was not legally tenable.

Supreme Court Precedents Take Precedence Over Contradictory Subordinate Rules

Addressing the first issue, the High Court cited the Constitution Bench ruling in Pranay Sethi v. National Insurance Co. (2017) 16 SCC 680, which endorsed the earlier ratio of Sarla Verma v. DTC (2009) 6 SCC 121. These cases have settled the law that each dependent, irrespective of age, must be treated as one full unit for the purposes of computing dependency.

Justice Jain rejected the insurer’s argument that Rule 220-A(2)(iii) permits counting minor dependents as only half units:

“There is no differentiation in the manner, in which the dependency is to be calculated, insofar as age of the dependents is concerned.”

The Court reasoned that Supreme Court judgments, having constitutional force, must prevail over subordinate statutory rules:

“Since... the provisions laid down by the Apex Court in the case of Sarla Verma as affirmed in Pranay Sethi are more beneficial than the statutory provisions enacted under Rule 220-A(2)(iii)... the dependency is to be calculated on a single unit basis.”

This aligns with the broader judicial policy that welfare statutes such as the Motor Vehicles Act must be interpreted in a claimant-friendly manner, even if that means disregarding rigid application of statutory rules when they offer lesser benefits.

Consortium Payable to All Dependents — Spousal, Parental and Filial Recognized

On the second issue, the Court upheld the award of ₹40,000 as consortium to each of the four claimants, in line with the Supreme Court’s ruling in Magma General Insurance Co. Ltd. v. Nanu Ram (2018) 18 SCC 130. That judgment clearly held that spousal, parental and filial consortium are independently payable to the widow, parents, and children of the deceased.

Justice Jain observed:

“The Tribunal has awarded consortium of ₹40,000/- each to all the four claimants, which cannot be said to be erroneous, keeping in view the law laid down by the Apex Court in the case of Magma General Insurance Company Limited (supra).”

This recognition of individual consortium rights for each family member upholds evolving jurisprudence on non-pecuniary heads of compensation, aimed at providing solace for the loss of companionship, affection, and care suffered by the bereaved.

When Precedent and Rules Conflict, Beneficial Precedent Must Prevail

A central thread in the judgment is the emphasis on beneficial interpretation of statutes. The Court explicitly relied on New India Assurance Co. Ltd. v. Urmila Shukla (2021) 20 SCC 800, which held that:

“If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision... the claimants are to be awarded compensation as per the law, which is more advantageous to them.”

Thus, Rule 220-A(2) was held not binding to the extent it contradicts the more liberal Supreme Court interpretation.

Appeal Dismissed — Tribunal’s Award Affirmed in Full

In light of the above reasoning, the Court dismissed the insurer’s appeal at the admission stage, refusing to interfere with an award grounded in binding constitutional precedent:

“This appeal has got no merit and is liable to be dismissed at the admission stage.”

The impugned judgment dated 08.08.2025 of the MACT, Rampur, was fully affirmed. The Court also directed the return of statutory deposit made by the appellant:

“Office is directed to remit back the statutory deposit made by appellant to the Tribunal concerned, forthwith.”

This judgment reiterates the primacy of the Supreme Court’s binding authority over conflicting subordinate legislation in matters of compensation under the Motor Vehicles Act. The High Court’s refusal to allow dilution of claimant rights under Pranay Sethi, Sarla Verma, and Magma Insurance cements the principle that claimants must receive the most beneficial interpretation available, especially under welfare legislation.

By upholding the full unit status of minor dependents and affirming individual consortium grants, the Court ensures just compensation to victims’ families, reinforcing both judicial consistency and constitutional compassion in accident claim jurisprudence.

Date of Decision: 27 October 2025