Workman’s insurance benefits and owner payments cannot be deducted from motor accident compensation.

Budhram Yadav died on 23 October 2018 after being struck from behind by a Hydra vehicle bearing registration No. KA-34-M-9743 while he was performing work-related duties at the NMDC, Nagarnar Steel Plant. He was taken to Medical College, Dimrapal, where he succumbed to his injuries.

His widow, five children and father filed a claim under the Motor Vehicles Act, 1988, asserting that he was approximately 39 years old, employed as a mechanic/labourer with RBPR/KR VPR Construction Company, and earning about Rs.15,000 per month.

The Claims Tribunal assessed his monthly income at Rs.10,400, added 40% towards future prospects, deducted one-fifth towards personal expenses, applied a multiplier of 15, and awarded compensation after deducting Rs.9,18,560 received or allegedly payable under a separate workman insurance policy and amounts paid by the vehicle owner.

The claimants appealed under Section 173 of the Motor Vehicles Act seeking enhancement.

Whether the deceased’s monthly income should have been assessed at Rs.10,925 instead of Rs.10,400 on the basis of the proved salary record?

Whether the claimants were entitled to an addition of 50%, or only 40%, towards future prospects?

Whether the deceased was rightly treated as a third party under the motor vehicle insurance policy, making the insurer liable for the motor accident compensation?

Whether the amounts payable under the separate workman insurance policy and the sums paid by the vehicle owner could be deducted from the compensation payable under the Motor Vehicles Act?

What was the proper amount of compensation payable to the claimants?

Section 173 of the Motor Vehicles Act, 1988 permits an appeal against an award of the Claims Tribunal.

Under National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, future prospects may be added to established income, with the applicable percentage depending on the nature of employment and age; for a non-permanent employee in the relevant circumstances, 40% was appropriate.

Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121, governs deductions for personal expenses and selection of the multiplier; where there are several dependants, one-fifth deduction and multiplier 15 were upheld in the present case.

Magma General Insurance Co. Ltd. v. Nanu Ram, (2018) 18 SCC 130, supports consortium awards to the spouse, children and parents.

Relying on Managing Director, KSRTC v. P. Chandramouli, 2026 SCC OnLine SC 375, the Court held that benefits arising from an independent employer-provided insurance or social-security contract are not “pecuniary advantages” deductible from statutory compensation under the Motor Vehicles Act, as they lack the requisite nexus with the motor accident compensation.

The Court found that the testimony of the employer’s General Manager and the pay slip established that Budhram was paid a monthly salary of Rs.10,925, notwithstanding that his attendance reflected 26 working days; therefore, the Tribunal’s assessment of Rs.10,400 was reduced incorrectly.

However, the evidence did not establish permanent employment, and consequently the Court retained the 40% addition towards future prospects rather than granting the claimants’ request for 50%.

The deceased was engaged in loading and unloading work and was injured due to the rash and negligent driving of the offending vehicle; hence, he was correctly treated as a third party and the insurer’s objection to liability failed.

Applying the approved income of Rs.10,925, adding 40% future prospects, deducting one-fifth for personal expenses and applying multiplier 15, the Court calculated the loss of dependency at Rs.22,02,480.

It upheld Rs.2,80,000 towards consortium for seven claimants, Rs.15,000 towards loss of estate and Rs.15,000 towards funeral expenses.

The Court further held that Rs.7,68,560 deposited under the workman insurance policy and Rs.1,50,000 paid by the owner could not be deducted because those amounts arose from separate contractual or independent arrangements and were not motor accident compensation.

The total compensation was enhanced from Rs.14,88,080 to Rs.25,12,480, resulting in an additional award of Rs.10,24,400 in favour of the claimants.

The enhanced amount was directed to carry interest at 6% per annum from the date of filing of the claim petition until realization.

The deduction of Rs.9,18,560 was set aside, while the Tribunal’s findings on the multiplier, deduction for personal expenses, consortium and other conventional heads were upheld.

The Registry was directed to communicate the enhanced amount to the claimants in Hindi, with assistance from paralegal workers if necessary.