The Madhya Pradesh High Court has reinforced binding precedents on compensation calculation in motor accident claims, mandating strict adherence to Supreme Court guidelines on multiplier and future prospects. This judgment provides critical clarity for practitioners navigating claims involving permanent disability and age-based earnings projections.
Background & Facts
The Dispute
Two separate claims arose from a single road accident on 20 July 2020 involving a motorcycle collision. Deceased Avadhnarayan Meena, aged approximately 45, was riding his motorcycle with Ashok, aged 40, as a pillion rider. The accident resulted in Meena’s death and serious, permanent injuries to Ashok, including 50% permanent disability. Survivors of the deceased and Ashok filed separate claims before the Motor Accident Claims Tribunal, Indore.
Procedural History
- 20 July 2020: Road accident occurred; police complaint registered.
- 2020: Claim petitions filed before XXII Member, Motor Accident Claims Tribunal, Indore (MACC Nos. 1906/2020 and 1909/2020).
- 10 November 2022: Tribunal delivered common award, awarding compensation but applying a multiplier of 17 for the deceased and 14 for Ashok, with future prospects at 25%.
- 2023: Both claimants filed appeals before the Madhya Pradesh High Court challenging the quantum of compensation.
Relief Sought
The appellants sought enhancement of compensation on three grounds: (1) application of higher multiplier (15 instead of 14) for Ashok; (2) increase in future prospects from 25% to 40%; and (3) higher award for loss of amenities and future earnings. The respondents contended the Tribunal’s findings were factually and legally sound.
The Legal Issue
The central question was whether the Motor Accident Claims Tribunal was bound to apply the multiplier of 15 and 40% future prospects for a 40-year-old claimant with 50% permanent disability, as mandated by the Supreme Court in Smt. Sarla Verma v. Delhi Transport Corporation and National Insurance Co. Ltd. v. Pranay Sethi.
Arguments Presented
For the Appellant
The appellant’s counsel argued that the Tribunal erred in applying a multiplier of 14, contrary to Smt. Sarla Verma, which prescribes a multiplier of 15 for claimants aged 40 with permanent disability. Further, the Tribunal’s application of 25% future prospects violated Pranay Sethi, which mandates 40% for claimants under 40 with regular employment. Counsel emphasized that these are not discretionary guidelines but binding precedents.
For the Respondent
The Insurance Company contended that the Tribunal had correctly assessed the claimant’s income evidence and applied multiplier and future prospects based on available documentation. It argued that deviations from Supreme Court norms were permissible where income proof was uncertain, and that the Tribunal’s discretion should not be disturbed absent manifest error.
The Court's Analysis
The Court undertook a rigorous review of the Supreme Court’s jurisprudence on compensation calculation. It held that the principles laid down in Smt. Sarla Verma and Pranay Sethi are not advisory but constitute mandatory benchmarks for Tribunals. The Court observed:
"The multiplier and future prospects are not matters of judicial discretion but are fixed by settled legal principles to ensure uniformity and justice in compensation awards. Tribunals cannot deviate from these norms without compelling reasons, which are absent here."
The Court distinguished the Tribunal’s reliance on uncertain income documentation from the established rule that future prospects are calculated on the basis of age and nature of employment, not solely on pay slips. It noted that Ashok, aged 40 at the time of accident, was in the prime earning bracket and suffered 50% permanent disability - conditions squarely covered by Pranay Sethi. The Court further held that the award of Rs.1,00,000 for loss of amenities was inadequate given the severity of injuries and the claimant’s young age, and directed an enhancement to Rs.1,50,000.
The Court rejected the Insurance Company’s argument that Tribunals retain unfettered discretion to ignore Supreme Court norms, emphasizing that such deviation undermines the very purpose of uniform compensation standards.
The Verdict
The appellant won. The Madhya Pradesh High Court held that a multiplier of 15 and 40% future prospects are mandatory for a 40-year-old claimant with 50% permanent disability under Smt. Sarla Verma and Pranay Sethi. Compensation was enhanced by Rs.3,58,838, with loss of amenities increased to Rs.1,50,000. The Tribunal’s award was otherwise upheld.
What This Means For Similar Cases
Multiplier Is Not Discretionary
- Practitioners must insist on multiplier of 15 for claimants aged 40 with permanent disability, regardless of income documentation gaps.
- Tribunals cannot reduce multiplier below 15 for this age group without explicit, documented justification.
- Cite Smt. Sarla Verma and Pranay Sethi as binding authority in all pleadings.
Future Prospects Must Be 40% for Working-Age Claimants
- For claimants under 40 with regular employment, 40% future prospects must be applied unless the claimant is a non-earning homemaker or retired.
- 25% is now legally untenable for active professionals; any lower rate must be challenged as contrary to precedent.
- Future prospects are calculated on the basis of the claimant’s age and occupation, not solely on salary slips.
Loss of Amenities Must Reflect Severity and Age
- Awards under Rs.1,50,000 for loss of amenities in cases of 50% permanent disability are likely to be set aside.
- Courts will increasingly consider the claimant’s age, life expectancy, and impact on quality of life when assessing this head.
- Advocate for minimum Rs.1,50,000 in cases involving permanent disability, especially for younger claimants.
