Notional income of a deceased engineering student must reflect educational qualifications and future earning potential.

Gagandeep Singh, aged 19 years and studying in the first year of an engineering course, died in a motor-vehicle accident in 1998 due to the rash and negligent driving of respondent No. 2, who was driving Government Gypsy No. HR-01F-121 owned by the State of Haryana.

The Motor Accident Claims Tribunal, Ambala, awarded the appellants—his parents—lump-sum compensation of ₹2,22,000 with interest at 9% per annum from the date of filing of the claim petition.

The finding that the accident resulted from the negligence of respondent No. 2 was not challenged by the respondents and therefore was not interfered with in appeal.

The parents appealed seeking enhancement of compensation on the ground that the deceased was an engineering student with significant future earning potential.

Whether the compensation of ₹2,22,000 awarded by the Tribunal was inadequate and required reassessment on the basis of the deceased’s educational qualifications and future earning potential?

Whether the deceased’s notional income, future prospects, personal-expense deduction and multiplier were required to be determined in accordance with the principles in Sarla Verma and Pranay Sethi?

What amount was payable to the parents under the conventional heads of compensation, including consortium, loss of estate and funeral expenses?

The Court applied the principle of “just compensation” under the law governing motor-accident claims, holding that compensation must be reasonable, evidence-based and connected to the loss suffered, and must not be arbitrary, punitive or a source of profit, as explained in Syed Basheer Ahamed v. Mohd. Jameel.

Relying on Sarla Verma v. Delhi Transport Corporation, the Court applied a multiplier of 18 for a deceased aged 19 years and deducted 50% of the income towards the personal and living expenses of a bachelor.

Under National Insurance Co. Ltd. v. Pranay Sethi, 40% was added towards future prospects for a deceased below 40 years of age.

For assessing the notional income of an engineering student, the Court relied on Smt. Meena Pawaia v. Ashraf Ali, Navjot Singh v. Harpreet Singh and Mohinder Kaur v. Brij Lal Arora, recognising that income may be assessed by reference to educational background, social status and future earning potential rather than minimum wages.

The Court further applied Magma General Insurance Co. Ltd. v. Nanu Ram and United India Insurance Co. Ltd. v. Satinder Kaur in awarding parental consortium.

The Court held that the Tribunal erred in awarding a lump-sum amount merely because the deceased was not earning at the time of his death.

Since he was a first-year engineering student, his notional income had to reflect his educational qualifications and probable future earnings.

Considering that the accident occurred in 1998, the Court assessed his monthly income at ₹7,500.

It added 40% for future prospects, resulting in a monthly income of ₹10,500.

As the deceased was unmarried, 50% was deducted for personal expenses, leaving a monthly dependency of ₹5,250 and an annual dependency of ₹63,000.

Applying the multiplier of 18 appropriate to his age of 19 years, the loss of dependency was calculated at ₹11,34,000.

The Court additionally awarded ₹50,000 to the mother under the conventional heads and ₹30,000 to the father towards parental consortium, resulting in total compensation of ₹12,14,000.

The total compensation was enhanced from ₹2,22,000 to ₹12,14,000.

The enhanced amount of ₹9,92,000, over and above the Tribunal’s award, was directed to carry interest at 9% per annum from 22 October 1998, the date of filing of the claim petition, until realization.

The enhanced compensation was to be shared equally by the appellants and was made payable by respondents Nos. 1 and 2 jointly and severally.

Pending miscellaneous applications, if any, were disposed of.