A landmark ruling by the Gujarat High Court has redefined how future earning potential is assessed in motor accident compensation cases involving young students. The Court held that even in the absence of current employment, a deceased engineering student’s academic promise and projected career trajectory must inform the calculation of loss of dependency, rejecting rigid adherence to documented income alone.
Background & Facts
The Dispute
The deceased, Alaybhai, was a 21-year-old student pursuing a Bachelor of Engineering in Mechanical Engineering at the time of his death in a road accident on 21 February 2010. He was not employed but had substantial interest income from fixed deposits held in the name of his Hindu Undivided Family (HUF), as reflected in his Income Tax Returns for 2007-08 and 2008-09. His parents and sister filed a claim petition seeking compensation for loss of dependency, loss of consortium, and other heads.
Procedural History
- 2010: Motor Accident Claim Petition filed before Motor Accident Claims Tribunal (Auxiliary), Anand
- 2021: Tribunal awarded Rs.15,67,000/-, treating deceased’s income at Rs.10,000/month, applying 40% future prospects, and awarding Rs.25,000/- for "loss of love and affection"
- 2022: Appeal filed before Gujarat High Court challenging quantum of compensation
Relief Sought
The appellants sought enhancement of compensation on four grounds: (1) higher income assumption based on potential earnings under 6th/7th Pay Commission; (2) 50% future prospects instead of 40%; (3) increased interest rate from 9% to 12%; and (4) higher award under loss of consortium.
The Legal Issue
The central question was whether future prospects in compensation calculations under the Motor Vehicles Act, 1988 can be granted to a deceased who was a student with no formal employment, and whether loss of consortium extends to siblings under Indian jurisprudence.
Arguments Presented
For the Appellant
The appellants argued that the Tribunal erred in ignoring the deceased’s academic potential and high earning capacity as an engineering graduate. They cited Narender Dev Poonia v. Hasan Mohd. (2025) to support the proposition that future prospects must reflect the victim’s realistic career trajectory, not just current income. They contended that Rs.10,000/month was arbitrary and that Rs.15,000/month was a conservative estimate given market trends for engineers. They also urged recognition of filial consortium for parents and siblings.
For the Respondent
The insurance company argued that the deceased had no formal income and that interest income from HUF deposits was not attributable to his personal labor. Relying on Sarla Verma and Pranay Sethi, they maintained that only actual income at the time of death can form the basis of compensation. They further contended that loss of consortium is limited to spouses and children, not siblings, and that the Tribunal’s award of Rs.25,000/- for "love and affection" was adequate.
The Court's Analysis
The Court began by reaffirming the principle from Sarla Verma that compensation must reflect "just compensation" grounded in fairness, reasonableness, and proximity to reality - not arithmetical precision. It held that while interest income from HUF deposits continued post-death and thus did not constitute a loss of dependency, it could not be used to negate the deceased’s earning potential.
"The conception of ‘just compensation’ has to be viewed through the prism of fairness, reasonableness and non-violation of the principle of equitability."
The Court distinguished Sarla Verma’s application to salaried persons and clarified that its ratio does not preclude future prospects for students with demonstrable academic promise. Citing Narender Dev Poonia, the Court observed that a young engineering student with bright prospects is reasonably expected to enter a high-income profession, and that future prospects must be calibrated to the victim’s potential, not merely their present status.
The Court rejected the 50% future prospects claim as excessive but increased the multiplier from Rs.10,000 to Rs.15,000/month, applying 40% future prospects, resulting in a net dependency of Rs.10,500/month. It further held that the Tribunal’s award of Rs.25,000/- under "loss of love and affection" was inadequate in light of Magma General Insurance v. Nanu Ram and Janabai Wd/o Dinkarrao, which recognize filial consortium as a distinct head of compensation. The Court awarded Rs.48,400/- each to the parents, totaling Rs.96,800/-, while denying the claim for the sister, as siblings are not entitled to consortium under settled law.
The Court declined to enhance interest from 9% to 12%, noting that Section 171 grants Tribunals wide discretion in this regard.
The Verdict
The appellants succeeded in part. The Gujarat High Court enhanced the total compensation from Rs.15,67,000/- to Rs.24,01,100/-, adding Rs.8,34,100/- primarily through higher loss of dependency and loss of consortium awards. The Court affirmed the 40% future prospects and 9% interest rate, but established that future prospects for students must reflect realistic professional potential, not just documented income.
What This Means For Similar Cases
Future Prospects Apply to Students Without Formal Income
- Practitioners must now argue future prospects based on academic qualifications, not just employment history
- For engineering, medical, or other high-income professional students, Rs.15,000 - 20,000/month is a reasonable baseline even without current earnings
- Tribunals must consider educational trajectory, not just tax returns or salary slips
Filial Consortium Is Recognized for Parents, Not Siblings
- Loss of consortium now explicitly includes parents of deceased minors or young adults
- Siblings remain excluded from consortium claims under current precedent
- Awards of Rs.48,400/- per parent are now the standard benchmark in such cases
Documentation Must Reflect Potential, Not Just Past Income
- Submit academic records, admission letters, scholarship proofs, and career counseling reports
- Use expert affidavits on industry salary norms for the victim’s field
- Avoid reliance on HUF interest income to argue against future prospects
