Ownership of Trucks Does Not Mean Windfall Compensation: Supreme Court Slashes Inflated Motor Accident Award in Absence of Documentary Proof

“Loss of Life Cannot Justify Speculative Multipliers — Just Compensation Must Be Realistic, Not Hypothetical”, In a vital pronouncement on motor accident compensation claims, the Supreme Court  overturned an exaggerated compensation award, cautioning tribunals and High Courts against “unconscionable computation of income based on assumptions devoid of documentary evidence.”

Justice K. Vinod Chandran, writing for the Bench also comprising Justice Ahsanuddin Amanullah, delivered a sharp rebuke to the assumption that mere ownership of trucks by the deceased automatically implied a substantial monthly income.

“The computation of Rs.95,000/- per month as income, solely based on EMIs paid for two trucks owned by the deceased, is speculative and unsupported by any documentary proof,” the Court ruled.

“Mere Ownership Does Not Mean the Business Died With the Owner” – Court Rejects Complete Dependency Theory

The deceased was stated to be a “reputed transporter” owning two trucks and allegedly driving additional trucks for others. However, the Court noted that no independent evidence, not even Income Tax Returns, had been produced to substantiate these claims.

“A person with such income would definitely fall within the taxable bracket. No income tax returns were filed. That absence is telling,” observed the Court, setting aside the income assumption as “mere surmise.”

The Court also reasoned that the death of the owner does not mean the business becomes defunct:

“In the very circumstance of the deceased having owned two trucks, he would have been engaging a driver. The death would not have put a stop to the income that could be generated from his business,” said the Court, decisively rejecting the widow’s deposition that the trucks remained idle after the accident.

“Just Compensation is Not a Windfall, Nor a Pittance”: Apex Court Applies Pranay Sethi Principle

Referring to the Constitution Bench judgment in National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680, the Supreme Court reiterated that:

“The legal representatives of the deceased in a motor vehicle accident cannot expect a windfall from a tragedy, nor can the amounts granted be a mere pittance.”

Upholding this balance, the Court held that the Rs. 50,00,000 already deposited by the insurance company would suffice for loss of dependency — which the tribunal had earlier inflated beyond double — based on presumed earnings.

Children Also Entitled to Filial Consortium: Magma Insurance Followed

The Court awarded an additional Rs. 1,60,000 towards loss of consortium, loss of estate, and funeral expenses, clarifying that:

“Not only the wife, but the children are also entitled to compensation for filial consortium,” citing Magma General Insurance Co. Ltd. v. Nanu Ram & Ors., (2018) 18 SCC 130.

Total Compensation Recalibrated — Tribunal’s Exaggerated Income Basis Struck Down

The apex court allowed the appeal and fixed compensation as follows:

• Rs. 50,00,000 for loss of dependency (already deposited)
• Rs. 1,60,000 towards conventional heads (consortium, estate, funeral)
• Interest at 9% per annum on the total sum from the date of the claim petition
• Balance to be paid within one month

“The Tribunal and High Court erred in proceeding on imaginary figures. The award must be based on proven income or a justifiable notional income — not abstract financial arithmetic,” concluded the Supreme Court.

Date of Decision: December 15, 2025