Minimum Wages Cannot Be Ignored While Determining Just Compensation: Andhra Pradesh High Court Re-Fixes Income of Deceased Mason, Enhances Interest to 7.5%

“Claimants Not Entitled To ‘Loss of Love and Affection’ After Pranay Sethi” – In a significant ruling on the principles governing motor accident compensation, the Andhra Pradesh High Court re-determined compensation payable in a fatal accident claim by correcting the deceased’s income based on statutory minimum wages, while simultaneously disallowing amounts granted under impermissible conventional heads.

Justice T.C.D. Sekhar, while dismissing the appeal filed by the Insurance Company, enhanced the compensation to Rs.17,83,800/- with interest at 7.5% per annum from the date of petition till realization, emphasizing the Court’s duty to award “just compensation” under Section 166 of the Motor Vehicles Act, 1988.

The appeal arose from the award dated 07.12.2018 passed by the Motor Accidents Claims Tribunal-cum-Principal District Judge, Kadapa, in MVOP No.68 of 2018. The claim petition under Section 166 of the Motor Vehicles Act was filed by the wife and family members of one Derangula Sreenu, who lost his life in a road accident on 09.07.2017 involving a lorry bearing registration No. TN29BB9371.

The claimants sought compensation of Rs.20,00,000/-. The Tribunal awarded Rs.17,55,000/- under various heads, including Rs.3,00,000/- towards “loss of love and affection” and Rs.1,00,000/- towards “loss of expectancy of life.”

Aggrieved by the grant under these conventional heads, the Insurance Company preferred the present appeal.

The principal contention raised by the appellant-Insurance Company was that the Tribunal erred in awarding Rs.3,00,000/- towards loss of love and affection and Rs.1,00,000/- towards loss of expectancy of life, which were contrary to the law laid down by the Supreme Court in National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680.

The insurer argued that such heads were impermissible after Pranay Sethi, and therefore the award to that extent was unsustainable.

On the other hand, the claimants contended that though the deceased was earning Rs.20,000/- per month as a mason, the Tribunal had erroneously fixed his income at Rs.9,000/- per month, which was grossly inadequate and contrary to statutory minimum wage notifications.

The High Court framed the central inquiry in clear terms, observing:

“Before going into the contention raised by the counsel for appellant, it is just and necessary to see that whether the tribunal had awarded just compensation to the respondents in accordance with law or not.”

This approach underscored the appellate court’s independent obligation to ensure fairness in compensation.

Determination of Income – Statutory Minimum Wages Cannot Be Ignored

A pivotal aspect of the judgment concerns the determination of the deceased’s income.

Although the claimants asserted that the deceased was earning Rs.20,000/- per month as a mason, the Tribunal had fixed a notional income of Rs.9,000/- per month without adverting to statutory minimum wages.

Justice T.C.D. Sekhar found this approach unsustainable in law. Referring to Rule 25(v)(b) of the A.P. Contract Labour (Regulation & Abolition) Rules, 1971, and Gazette Notification No.1149 dated 13.03.2017, the Court noted that the Government of Andhra Pradesh had notified minimum wages including Variable Dearness Allowance (VDA) for the period 01.04.2017 to 30.09.2017.

The Court recorded: “On perusal of the same, mason was placed under Skilled Labour and the wage per month was considered as Rs.11,670/-. In that view of the matter, the Tribunal ought to have considered the income of the deceased as Rs.11,670/- per month.”

By re-fixing the income at Rs.11,670/- per month, the Court recalculated the compensation, leading to a higher total than what had been awarded by the Tribunal.

Conventional Heads – Application of Pranay Sethi

On the question of compensation under “loss of love and affection” and “loss of expectancy of life,” the High Court agreed with the Insurance Company.

The Court categorically held: “This Court is in agreement with the arguments advanced by the counsel for the appellant that the petitioners are not entitled to receive compensation of Rs.3,00,000/- towards love and affection and Rs.1,00,000/- towards loss of expectancy of life, as per the judgments of the Apex Court.”

In doing so, the Court reaffirmed the binding nature of the Supreme Court’s ruling in Pranay Sethi, which restricts compensation to specific conventional heads and standardized amounts, thereby eliminating non-permissible categories like “loss of love and affection.”

Just Compensation and Appellate Re-Determination

Despite disallowing Rs.4,00,000/- granted under impermissible heads, the recalculation of income on the basis of statutory minimum wages resulted in an enhanced overall compensation.

The High Court re-determined the compensation at Rs.17,83,800/-.

The judgment makes it clear that the guiding principle under Section 166 of the Motor Vehicles Act is “just compensation.” The Court observed that the Tribunal “did not take into consideration the factum of fixation of minimum wages by the Government of Andhra Pradesh,” necessitating appellate correction.

This reiterates that appellate courts are not confined to merely reducing awards upon insurer appeals but are duty-bound to ensure lawful and fair computation.

Enhancement of Interest – 7.5% as Consistent Practice

The Tribunal had awarded interest at 6% per annum. However, the High Court noted:

“This Court consistently is awarding interest at 7.5% per annum, whereas in the case on hand, the Tribunal has awarded interest at 6% per annum.”

Accordingly, the Court enhanced the interest rate to 7.5% per annum from the date of petition till realization and directed the Insurance Company to deposit the amount within two months.

The appeal filed by United India Insurance Company Limited was dismissed. However, the compensation was re-determined at Rs.17,83,800/- with interest at 7.5% per annum from the date of petition till realization.

The ruling stands as a crucial reminder that statutory minimum wages must form the basis of income determination in motor accident claims where evidence of earnings is disputed, and that post-Pranay Sethi, courts cannot award compensation under impermissible conventional heads like “loss of love and affection.”

The judgment harmonizes the twin principles of adherence to Supreme Court precedent and the statutory mandate of awarding “just compensation,” ensuring that technical corrections do not result in substantive injustice.

Date of Decision: 13/02/2026