Allowances benefiting the employee’s family must be included when computing motor accident compensation income.

Sandeep Kaila, aged 37 years, died in a motor accident occurring on the intervening night of 12–13 April 2015.

His wife, son, mother and father instituted a claim before the Motor Accident Claims Tribunal.

The Tribunal awarded total compensation of ₹70,89,212 with interest at 9% per annum, assessing the deceased’s monthly income at ₹52,000, applying a one-third deduction towards personal expenses, and denying future prospects.

The deceased was a highly qualified professional employed as Head of Production Planning and Control with M/s Aero Club Ltd. His appointment letter, salary statements, TDS certificate and employment details were proved through the company’s accountant. His last drawn salary was ₹1,45,000 per month, and he had completed his probation period.

The claimants appealed seeking enhancement on the grounds of incorrect assessment of income, excessive deduction towards personal expenses, and denial of future prospects.

1. Whether the deceased’s allowances, apart from transport allowance, were liable to be included in determining his monthly income for computation of loss of dependency.

2. Whether the deduction towards the deceased’s personal and living expenses ought to be one-fourth, having regard to the number and status of the dependants.

3. Whether the claimants were entitled to an addition towards future prospects despite the Tribunal’s finding that confirmation of employment had not been proved.

4. Whether the compensation under conventional heads, including consortium, loss of estate, funeral expenses and loss of care and guidance, required modification.

The Court applied the principle that salary-related allowances which accrue for the benefit of the employee and his family must ordinarily be included in assessing income for motor accident compensation, except allowances demonstrably intended solely to reimburse employment-related expenses.

It relied on Manorma Sinha v. The Divisional Manager, Oriental Insurance Co. Ltd., 2025 INSC 1237; Kavita Devi v. Sunil Kumar, 2025 INSC 938; Meenakshi v. Oriental Insurance Co. Ltd., 2024 SCC OnLine SC 1872; National Insurance Co. Ltd. v. Indira Srivastava, (2008) 2 SCC 763; and E. Neeta Devi v. Ashwani Kumar, 2026:DHC:5184.

The Court applied the rule that future prospects are to be added based on the deceased’s age and employment circumstances, granting 40% for a deceased aged 37 years.

It further applied the principles in Pranay Sethi for conventional heads and United India Insurance Co. Ltd. v. Satinder Kaur, (2021) 11 SCC 780, under which compensation for loss of care and guidance was not awardable in the circumstances.

A deduction of one-fourth was applied towards personal expenses because there were four dependants, including the deceased’s 68-year-old father.

The Court found that the deceased’s employment and salary were established through the employer’s accountant, the appointment letter, salary statements and TDS certificate.

It held that HRA, children’s education allowance and special allowance constituted income benefiting the family and were therefore includible.

However, the transport allowance of ₹3,000 per month was excluded because it was intended to meet the deceased’s commuting expenses.

The resulting monthly income was fixed at ₹1,42,000, after which annual income of ₹17,04,000 and income-tax deduction of ₹2,67,491 were taken into account.

Since the deceased was 37 years old, 40% future prospects were added.

The Court also treated the 68-year-old father as a dependant and consequently reduced the deduction for personal expenses from one-third to one-fourth.

Applying a multiplier of 15, the loss of dependency was recalculated at ₹2,26,25,025.

The Court further awarded consortium of ₹1,60,000 for four claimants, ₹15,000 for loss of estate, and ₹15,000 towards funeral expenses, while setting compensation for loss of care and guidance at nil.

The enhanced amount was ₹1,68,14,020, carrying interest at 9% per annum from the date of filing of the claim petition.

The insurer was directed to deposit the enhanced amount before the MACT within four weeks.

A lump sum of ₹10,00,000 was directed to be released to the claimants within two weeks thereafter, while the balance, together with accrued interest, was to be placed in staggered fixed deposits of ₹1,00,000 each for successive periods.

The appeal was accordingly disposed of, and pending applications were rendered infructuous.