Just Compensation Must Be Awarded, Even If It Exceeds the Claimed Amount: Supreme Court

In a significant ruling the Supreme Court of India enhanced the compensation awarded to a primary school teacher injured in a road accident. The Court underscored that "the Tribunal or Court ought to award 'just' compensation which is reasonable in the facts relying upon the evidence produced on record. Therefore, less valuation, if any, made in the claim petition would not be an impediment to awarding just compensation exceeding the claimed amount."

The Motor Accident Claims Tribunal (MACT) had awarded ₹6,17,515 with 7% interest. The Orissa High Court marginally increased the amount by ₹60,000, but the Supreme Court found this to be inadequate. Applying established legal principles, the Court reassessed the appellant’s disability and loss of earning capacity and increased the compensation to ₹17,82,825/-.

On December 6, 2016, the appellant, Hare Krushna Mahanta, a 51-year-old primary school teacher, was riding his motorcycle on the left side of the road when a rashly driven vehicle (OR-19-M-4347) hit him head-on, causing serious leg injuries. He underwent extensive medical treatment, including surgery and the insertion of a nail in his leg.

Following the accident, an FIR (No. 100/2013) was registered under Sections 279, 337, and 338 of the IPC at Lahunipada Police Station. The appellant, claiming loss of income, medical expenses, and pain and suffering, sought ₹15,00,000/- as compensation under the Motor Vehicles Act, 1988.

The MACT awarded ₹6,17,515, assessing permanent disability at only 10%, while the High Court increased this by ₹60,000 but did not account for the full extent of the injuries. Aggrieved, the appellant moved the Supreme Court.

The Supreme Court examined two crucial legal questions:

Was the compensation awarded by the Tribunal and the High Court just and reasonable in light of the severity of injuries and financial loss suffered by the appellant?
Can courts award compensation beyond the amount originally claimed by the victim?
The Court reaffirmed that tribunals must prioritize justice over procedural technicalities, holding that:

“Despite the claimant accepting the High Court’s enhanced amount, courts must ensure just compensation is awarded in every case, considering loss of earning capacity and future prospects.”

Supreme Court’s Reassessment of Compensation
Rejecting the 10% disability assessment by the MACT, the Supreme Court corrected it to 40%, significantly impacting the final compensation. The Court also applied the multiplier method, future prospects calculation, and medical expenses reimbursement, arriving at a revised amount of ₹17,82,825.

"Compensation must be determined with reference to actual loss suffered, including future earning potential and the financial strain caused by permanent disability."

The revised compensation was calculated as follows:

Compensation Heads    Final Amount    Legal Basis
Monthly Income    ₹16,340/-    Salary Certificate
Yearly Income    ₹1,96,080/-    (Pranay Sethi, 2017)
Future Prospects (30%)    ₹58,824/-    (Pranay Sethi, 2017)
Multiplier (11)    ₹28,03,944/-    (Raj Kumar, 2011)
Permanent Disability (40%)    ₹11,21,578/-    (K.S. Muralidhar, 2024)
Medical Expenses    ₹3,08,827/-    (Kajal v. Jagdish Chand, 2020)
Attendant Charges    ₹1,79,740/-    (Sidram v. United India Insurance, 2023)
Special Diet & Transportation    ₹40,000/-    (Sidram, 2023)
Pain and Suffering    ₹1,00,000/-    (K.S. Muralidhar, 2024)
Loss of Income During Treatment    ₹32,680/-    (Raj Kumar, 2011)
Total Compensation    ₹17,82,825/-    -
The Supreme Court, while arriving at this figure, reiterated:

"Compensation cannot be a mere formality; it must be commensurate with the loss suffered. The legal framework exists to alleviate the hardship of victims, not to restrict their rightful claims."

The Supreme Court set aside the High Court’s order and modified the compensation to ₹17,82,825/- while maintaining the 7% interest rate awarded by the Tribunal. This ruling reaffirms the principle that courts have a duty to ensure that accident victims receive fair compensation beyond the claimed amount when justified by evidence.

This judgment is expected to have far-reaching implications for motor accident claims, ensuring that victims receive adequate compensation for permanent disabilities and financial hardships arising from road accidents.

Date of Decision: February 7, 2025