The Chhattisgarh High Court has clarified that in motor accident claims involving deceased unskilled workers, the notional monthly income must be anchored to the statutory minimum wage, not arbitrary estimates. This ruling reinforces the principle that compensation must reflect economic reality, not judicial guesswork, and sets a binding precedent for tribunals across the state.
Background & Facts
The Dispute
The claimants, widow and minor children of Girdhar Yadav, sought compensation after he died in a road accident on 4 March 2022. He was a pillion rider on a scooty when a car driven by Respondent No. 1, registered to Respondent No. 2 and insured by Respondent No. 3, collided with it. Girdhar Yadav, aged 34, worked as a shop worker earning Rs. 12,000 per month, according to the claimants. No documentary proof of income was submitted.
Procedural History
- March 2022: Fatal accident occurred in Durg district
- 2022: Claim petition filed before Seventh Motor Accident Claims Tribunal, Raipur
- 14 June 2024: Tribunal awarded Rs. 18,02,800/- based on a notional income of Rs. 8,000/month
- 2024: Appeal filed before Chhattisgarh High Court under Section 173 of the Motor Vehicles Act, 1988
Relief Sought
The appellants sought enhancement of compensation by revising the notional monthly income to reflect the statutory minimum wage for unskilled laborers in Chhattisgarh as of March 2022, which was Rs. 9,540 per month.
The Legal Issue
The central question was whether the notional income of an unskilled deceased worker, for the purpose of calculating compensation under the Motor Vehicles Act, may be fixed below the statutory minimum wage applicable in the state at the time of death, in the absence of documentary proof of earnings.
Arguments Presented
For the Appellant
Counsel for the appellants argued that the Tribunal erred in fixing notional income at Rs. 8,000/month when the Chhattisgarh Minimum Wages Notification for unskilled laborers in March 2022 mandated Rs. 9,540/month. He contended that tribunals must use the statutory floor as the baseline for notional income, citing National Insurance Co. Ltd. v. Laxmi Narain and Karnal Transport Co. v. Smt. Sushila Devi, which emphasize adherence to wage matrices in the absence of proof.
For the Respondent
The insurer’s counsel conceded that no documents were filed but argued that the Tribunal’s assessment of Rs. 8,000/month was reasonable and consistent with past awards. He maintained that notional income is inherently speculative and should not be rigidly tied to minimum wage, especially where claimants fail to substantiate actual earnings.
The Court's Analysis
The Court examined the methodology for calculating compensation under Section 168 of the Motor Vehicles Act, 1988, particularly the principles laid down in Rajkumar v. Smt. Sunita Devi and Sarla Verma v. Delhi Transport Corporation. It held that while actual income must be proven, in its absence, the minimum wage serves as the most reliable, objective, and constitutionally grounded benchmark.
"The statutory minimum wage is not merely a labor law provision; it is a socio-economic floor established by the State to ensure dignity of labor. To disregard it in compensation calculations is to undermine the very purpose of the Act."
The Court rejected the notion that notional income can be arbitrarily reduced below the statutory minimum. It emphasized that the Tribunal’s reliance on Rs. 8,000 was inconsistent with the state’s wage policy and lacked legal justification. The Court recalculated the compensation using Rs. 9,540/month as the base, applying the standard multiplier of 16, 40% future prospect, and 1/4 deduction for personal expenses. It affirmed the Tribunal’s awards under conventional heads - loss of consortium, funeral expenses, and loss of estate - as fair and undisturbed.
The Verdict
The appellants succeeded in part. The Court held that notional income must be based on the statutory minimum wage in the absence of proof of actual earnings. The compensation was enhanced from Rs. 18,02,800/- to Rs. 21,13,264/-, with the insurer directed to pay the additional Rs. 3,10,464/- within 60 days.
What This Means For Similar Cases
Minimum Wage Is the Floor for Notional Income
- Practitioners must now cite the applicable state minimum wage notification as the default baseline for notional income calculations
- Tribunals cannot justify lower figures without compelling reasons tied to occupation, region, or industry-specific norms
- Failure to use minimum wage as reference may render awards liable to revision on appeal
Documentary Evidence Is Not Always Required
- In cases involving unskilled laborers, lack of payslips or bank statements does not justify arbitrary income assumptions
- Courts will now presume the statutory wage as the minimum viable income for compensation purposes
- Claimants need only establish the deceased’s occupation category (unskilled, semi-skilled, skilled) to trigger the correct wage matrix
Future Prospect and Multiplier Remain Unchanged
- The 40% future prospect addition and multiplier of 16 for a 34-year-old remain standard
- This ruling does not alter existing multipliers but corrects the foundational income figure
- Practitioners should now prepare wage notifications as part of their claim dossier, not merely affidavits
