Notional income of minor deceased to be assessed on minimum wages of skilled worker with multiplier of 18.

In brief

The question

1. Whether the notional income of a minor child should be assessed on the basis of minimum wages for skilled workers rather than a fixed static figure

The court held

The Court allowed the appeal and enhanced the compensation from ₹5,60,000/- to ₹11,81,252/-. It held that for a minor's death, the income must be based on skilled minimum wages, future prospects of 40% must be added, and a multiplier of 18 is mandatory

It also directed

The Respondent/Insurance Company was directed to deposit the enhanced amount of ₹6,21,252/- with 9% interest per annum within four weeks

01Facts

The appellants are the legal representatives of a minor child, Durga Kumari, who passed away following a motor vehicle accident on February 19, 2018

pp. 1-2

While playing on a service road in Narela, Delhi, the deceased was hit by a truck (Reg. No. KA-01-AD-9401) driven in a rash and negligent manner

¶ 2

The Motor Accident Claims Tribunal (MACT) awarded a total compensation of ₹5,60,000/- by fixing notional income at ₹42,000/- per annum, applying a multiplier of 10, and deducting 1/3rd for personal expenses

¶ 5

The appellants challenged this award, seeking enhancement based on the minimum wages of a skilled worker and a higher multiplier

¶ 6

02Issues

i.1. Whether the notional income of a minor child should be assessed on the basis of minimum wages for skilled workers rather than a fixed static figure

¶ 10

ii.2. Whether a multiplier of 18 is applicable for the death of a minor child below the age of 15 years

¶ 11

iii.3. Whether future prospects and revised non-pecuniary damages ought to be awarded as per settled law

¶ 33-34

03Law Applied

The Court applied the principles from Sarla Verma v. DTC and Reshma Kumari v. Madan Mohan, which established that the multiplier must be based on the age of the deceased to ensure standardization.

p. 9, 11

It relied on Kajal v. Jagdish Chand and Master Ayush v. Reliance General Insurance to rule that a minor's notional income should be pegged to the minimum wages of a skilled worker.

p. 6, 8

Furthermore, it applied the mandate of the Constitution Bench in National Insurance Co. Ltd. v. Pranay Sethi regarding the addition of 40% for future prospects, a 1/2 deduction for personal expenses for bachelors, and standardized amounts for loss of consortium, estate, and funeral expenses

¶ 33-35

Provisions in the judgment · 2

Indian Penal Code, 1860 Section 279, 304A

Motor Vehicles Act, 1988 Section 110-B, 168

04Reasoning

The High Court observed that the Tribunal erred by applying a static notional income of ₹42,000/-. Following the precedent in Kajal, the Court held that since a child’s future potential is unknown, the benchmark must be the minimum wages of a skilled worker in the state of residence (Uttar Pradesh), which was ₹7,085/- per month at the time

¶ 10, 32

Regarding the multiplier, the Court rejected the Insurance Company's reliance on Devendra Kumar Tripathi, noting it did not consider previous Supreme Court rulings like Karuna Parmar which applied a multiplier of 18 for children below 15

¶ 18-20, 29

The Court reasoned that standardized multipliers prevent arbitrariness and that no distinction exists between death and injury cases for multiplier application under the Sarla Verma framework

¶ 28, 30

Finally, the Court adjusted the non-pecuniary heads and personal deductions (increasing deduction from 1/3rd to 1/2) to align with Pranay Sethi

¶ 35-36