Motor Vehicle Act- Just Compensation To Be Determined On Fairness, Reasonableness & Equitability: SC Reiterates

The Bench of Justice Krishna Murari and Justice Bela M. Trivedi further observed that the provisions of the Motor Vehicles Act, 1988 is a beneficial legislation that has been framed with the object of providing relief to the families of the victims or their families.

The Court thus held, "Section 168 of the MV Act deals with the concept of 'just compensation' which ought to be determined on the foundation of fairness, reasonableness and equitability. Although such determination can never be arithmetically exact or perfect, an endeavor should be made by the Court to award just and fair compensation irrespective of the amount claimed by the applicant/s."

An appeal was preferred before the Supreme Court assailing the order of the Madhya Pradesh High Court which had awarded the compensation of Rs. 11, 41, 000 with interest.

In this case, the victim died in a motor accident and was survived by his two wives, three children, and his parents (Appellants). The deceased was 28 years of age when he died and used to run a business of scrap and earned Rs. 15,000/- per month.

The Appellants-Claimants had approached the Tribunal by filing a claim petition under Section 166 of the MV Act and sought compensation of Rs. 20 lakhs. The tribunal had awarded Rs. 6, 24, 000 together with interest at the rate of 6% per annum from the date of filing the Claim Petition. Appellants then approached the High Court which enhanced the compensation to Rs. 11, 41, 000 with interest.

Advocate Praveen Swarup appeared for the Appellants while Advocate Chander Shekhar Ashri appeared for the Respondent before the Court.

The Apex Court noted that there is no dispute as to the occurrence of the incident and the liability of the Respondent–Insurer to pay the compensation.

The Court further noted that the Tribunal and the High Court both committed a grave error while estimating the deceased's income by disregarding the Income Tax Return of the deceased and thus held –

"The appellants had filed the Income Tax Return (2009- 2010) of the deceased, which reflects the deceased's annual income to be Rs.1,18,261/-, approx. Rs.9,855/- per month. This Court in Malarvizhi & Ors. (Supra) has reaffirmed that the Income Tax Return is a statutory document on which reliance be placed, where available, for computation of annual income."

The Court observed that the deceased's annual income be fixed at Rs. 1, 18, 261 keeping in the mind the IT return of the deceased for the relevant year.

Thus, the Court enhanced the compensation payable to the Appellants to Rs. 25, 91, 288/- and allowed the appeal.

Cause Title – Smt. Anjali & Ors. v. Lokendra Rathod & Ors.

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