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DEBJIT GHOSH (SERVICE)     29 February 2024

Compensation on motor vehicle accident for permanent disability

Dear Lawyers

My nephew Diptamoy Pal (Age 26 years) lost his right hand in a road accident on 21.06.2022 while riding a motorcycle. The vehicle involved in the accident was a heavily loaded truck. The victim has a valid driving license but at the time of the incident the vehicle insurance of the victim expired. The vehicle, involved in the accident was insured with “ICICI Lambard Gen Insurance”.

Subsequently, a Case was filed to the “Motor Accident Claim Tribune” U/S 166 of the Motor Vehicle Act 1988. The total claim amount was Rs. 80 Lacs, copy enclosed

At the time of the accident, the victim just joined a small finance organization as a field executive through a manpower-supplying agency. The job was on a completely temporary basis but there was a chance of performance-based absorption, to a suitable post in the parent organization.

The accident happened before the victim’s first salary in that organization. The medical expenditures of the victim of this accident were fully carried out by his family members and close relatives.

After the accident and subsequent amputation, the victim’s regular service was discontinued. However, the employer continues a consolidated pay of Rs. 15 thousand/per month to the victim. The legal clause/binding of the organization to continue the victim’s monthly pay is unclear and supposed to be discontinued at any point in time as there is no legal binding on the part of the employer.

The queries are;

  1. Does the Victim should disclose his present pay before the court?
  2. There is no change in the victim’s remuneration on account of this accident. In these circumstances, is the victim entitled to claim compensation on account of his loss of income?
  3. What is the basis of the calculation of justified compensation in a motor accident?



 3 Replies

T. Kalaiselvan, Advocate (Advocate)     29 February 2024

In case of damage to property, the application for compensation must be made by the owner of the damaged property. It is implied that in case of death of the owner of the property, the legal representatives of the deceased owner can competently claim compensation. An application for compensation arising out of an accident under Section 166 of Motor Vehicles Act, 1988 may be made:- • People, who have been injured in accidents on the road, can themselves file for compensation or route the claims through their advocates. 

Section 166 –      This is a Fault Liability claim – Victim/Legal Heirs of victim have to prove in the Court of Law the wrongful act/negligence/default of the owner causing injury/death.  Compensation is based on age/income/dependency etc. 

A five-Judge Bench of the Supreme Court while hearing the case ‘National Insurance Company Limited v Pranay Sethi’ agrees with the view on the standardization of the addition to revenue against future prospects in accordance with Article 168 of the Motor Vehicle Act 1988. It also noted that the concept of “fair compensation” should be determined on grounds of fairness, reasonableness and on acceptable legal standards, since such a provision “can never be in arithmetical exactitude”. The key takeaways from the guidelines are : • While the income is determined to follow the doctrine of actual income at the time of death and not to add any amount of future prospects to income for the determination of multiplicand, it would be unfair. The determination of income in the calculation of remuneration must include future prospects so that the method will come into the line of just compensation as mentioned in terms of Section 168 of the Act. • An addition of 50% of actual salary to the deceased’s income relative to future prospects, where the deceased had a permanent job and was under 40 years old. The addition should be 30% if the age of the deceased was between 40 and 50 years. If the deceased was between the age of 50 and 60, the addition must be 15%. Actual salary must be read as actual salary less tax. • If the deceased was self-employed or on a fixed salary, an addition of 40% of the income should be the warrant where the deceased was less than 40 years old. An addition of 25% where the deceased between the ages of 40 to 50 years and 10% where the deceased was between the ages of 50 and 60 should be regarded as the required calculation method. The established income means the income less the tax component. 

1 Like

DEBJIT GHOSH (SERVICE)     01 March 2024

Thanks, Sir.

In this case, the Victim's employer is continuing the fixed pre-accident monthly pay of the victim, at its mercy. The pay can be discontinued as the victim is no more a regular employee of the organization.

If the calculation for compensation on account of loss of income will remain the same as you explained above?


1 Like

T. Kalaiselvan, Advocate (Advocate)     03 March 2024

The victim has to approach court of law with a petition to make his claim. 

The execution of the court order can be done only when the court passes appropriate orders 

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