Motor accident compensation must use salary after income-tax deductions, not take-home pay.

The appellants, dependants of Ramnath Thakare, appealed against the Motor Accident Claims Tribunal, Nashik’s award of ₹2,46,500 for his death in a collision involving a jeep and an MSRTC bus.

The Tribunal found both vehicles’ drivers negligent and apportioned liability equally between the jeep’s owner and insurer, on one side, and the MSRTC and its driver, on the other; that finding was not challenged.

The appeal was confined to quantum, principally the treatment of the deceased’s salary.

The Tribunal had assessed his monthly take-home income at ₹1,660, whereas the appellants argued that only income tax payable should be deducted from his salary.

1. Whether the Tribunal erred in assessing the deceased’s monthly income at ₹1,660 instead of deducting only the applicable income tax from his salary.

2. Whether the compensation should be recalculated, including the appropriate future prospects, deduction for personal expenses, multiplier, and conventional heads.

The Court relied on National Insurance Co. Ltd. v. Indira Srivastava, (2008) 2 SCC 763, for the principle that only income tax payable is to be deducted from the deceased’s salary and that relevant employment perks are to be included in income.

It applied Sarla Verma to select a multiplier of 16 for a deceased aged 31.

The judgment does not identify a specific statutory provision; it calculates compensation by adding 50% future prospects, deducting one-third for personal expenses, and assessing loss of estate, consortium, and funeral expenses.

The Court held that the Tribunal wrongly reduced the deceased’s monthly income to ₹1,660.

Taking the salary figure of ₹6,040 used in its calculation, it assessed annual income at ₹72,480, deducted tax of ₹4,496, and arrived at monthly income of ₹5,665.

It then added 50% for future prospects, deducted one-third for personal expenses, and applied a multiplier of 16 in accordance with Sarla Verma.

It added ₹18,000 for loss of estate, ₹1,44,000 for consortium, and ₹18,000 for funeral expenses, producing total compensation of ₹12,67,616.

Since the equal apportionment of liability was unchallenged, the enhanced amount was allocated equally between the two groups of respondents.

Respondents 1 and 2 were directed jointly and severally to pay ₹5,10,558, and respondents 3 and 4 were directed to pay ₹5,10,558, each with interest at 7.5% from the date of the claim petition until realization.

The appellants’ entitlement to the enhanced amount was subject to payment of deficit court fees.