The Uttarakhand High Court clarified that for assessing the income of a deceased in motor accident claims, the highest and latest proven Income Tax Return, not an average of past years, must be adopted to reflect actual earning capacity. The judgment also mandates payment of consortium at ₹40,000 per dependent, and defines the correct heads and quantum for loss of estate, conforming to Supreme Court precedent; these clarifications are binding on tribunals within the state.
Summary
| Category | Data |
|---|---|
| Case Name | AO/286/2019 of ARUNA GARG Vs SHRI ARVIND KUMAR |
| CNR | UKHC010104222019 |
| Date of Registration | 09-07-2019 |
| Decision Date | 30-10-2025 |
| Disposal Nature | PARTLY ALLOWED |
| Judgment Author | Hon’ble Mr. Justice Alok Mahra |
| Court | High Court of Uttarakhand |
| Precedent Value | Binding on Motor Accident Claims Tribunals within Uttarakhand |
| Overrules / Affirms |
|
| Type of Law | Motor Accident Compensation—Personal Injury Law |
| Questions of Law |
|
| Ratio Decidendi |
The court held that the actual earning capacity of a deceased for compensation purposes must be determined by the latest and highest proven ITR, and that averaging incomes of previous years is impermissible. The judgment reaffirms that “consortium” must be awarded at ₹40,000 per claimant and “loss of estate” at ₹15,000, strictly per Supreme Court guidelines (Pranay Sethi, Magma General, Satinder Kaur). Addition for future prospects in such cases must follow the Supreme Court’s prescribed percentage. The compensation amounts should be enhanced by 10% every three years as directed. |
| Judgments Relied Upon | National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680; Magma General Insurance Co. Ltd. v. Nanu Ram (2018) 18 SCC 130; United India Insurance Co. Ltd. v. Satinder Kaur (2020) 11 SCC 1 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Relied on Supreme Court precedents for compensation heads, quantum, and methodology for income calculation and future prospects. |
| Facts as Summarised by the Court | Deceased was traveling in an Alto car when a negligent Swift car collided head-on, causing his death on the spot. The Tribunal had calculated compensation by averaging ITRs of the deceased, used lower percentage for future prospects, and awarded inadequate amounts for consortium and loss of estate. Facts regarding ITR amounts and dependency were established by evidence. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All Motor Accident Claims Tribunals and subordinate courts in Uttarakhand |
| Persuasive For | Other High Courts and the Supreme Court (regarding the method of income calculation) |
| Follows | National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680; Magma General Insurance Co. Ltd. v. Nanu Ram (2018) 18 SCC 130; United India Insurance Co. Ltd. v. Satinder Kaur (2020) 11 SCC 1 |
| Distinguishes | Tribunal’s method of averaging ITRs rejected; appropriate method reaffirmed as per binding Supreme Court law |
What’s New / What Lawyers Should Note
- The judgment clarifies that for self-employed deceased individuals, the highest and latest Income Tax Return must be used for income determination; averaging past ITRs is not legally correct.
- Consistently applies the Supreme Court’s direction regarding “consortium”—₹40,000 per dependent rather than a lump sum for the family.
- “Loss of estate” compensation is fixed at ₹15,000 as per Pranay Sethi.
- Explicit direction that compensation under various heads (consortium, loss of estate) is to be enhanced by 10% every three years.
- The judgment may be cited to challenge any award where a Tribunal has averaged income or misapplied compensation heads contrary to Supreme Court principles.
Summary of Legal Reasoning
- The court examined the deceased’s income as proved by the latest ITR for the relevant assessment year (2015-16), finding it to be ₹4,80,670/-.
- Held that the Tribunal’s approach of averaging previous ITRs was erroneous; the highest/latest proven income reflects actual earning capacity at the time of the accident, consistent with settled law.
- Applied the Supreme Court’s binding precedents of Pranay Sethi, Magma General Insurance, and Satinder Kaur to hold:
- Future prospects for self-employed individuals under 50 must be 25%, not 10%.
- Consortium is payable to each claimant/dependent at ₹40,000.
- Loss of estate is to be compensated at ₹15,000.
- Directed that such compensation heads must be periodically updated in accordance with the Supreme Court’s escalation formula (10% increment every three years).
- Modified the tribunal’s award accordingly and directed the insurer to settle the enhanced amount after adjusting deposits.
Arguments by the Parties
Petitioner / Appellants
- Tribunal erred in averaging income; the latest ITR should determine actual income.
- Only 10% was added for future prospects instead of 25% as per Supreme Court norms.
- Inadequate amounts awarded for consortium and no amount for loss of estate.
- Highest of recent ITRs should be used, reflecting earning capacity at the time of accident.
Respondent (Insurance Company)
- Supported the tribunal’s order as well-reasoned and based on correct appreciation of evidence.
- Contended that only 10% addition for future prospects was appropriate.
Factual Background
On 12 July 2015, Anand Mohan Garg died in a road accident when his Alto car was hit head-on by a Swift car driven rashly and negligently on the wrong side, near Muzaffarnagar Bypass. His family filed a compensation claim. The Tribunal awarded compensation based on an average of the ITRs for prior years, gave only 10% for future prospects, and granted sub-par amounts for consortium and loss of estate. Claimants sought enhancement before the High Court, disputing the calculation method and reliance on average figures.
Statutory Analysis
- The court interpreted and applied the Motor Vehicles Act provisions regarding compensation quantum and calculation methodology.
- Specifically relied on Supreme Court interpretations of “future prospects” (Pranay Sethi) and the heads “consortium” and “loss of estate” (Pranay Sethi; Magma General Insurance; Satinder Kaur).
- Followed the precise wording and escalation formula (10% increase every three years) set by the Supreme Court for non-pecuniary damages.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions recorded. The judgment was delivered by a single judge.
Procedural Innovations
No new procedural innovations or directions are recorded in this judgment.
Alert Indicators
- Precedent Followed – The judgment affirms and precisely applies Supreme Court binding precedents (Pranay Sethi, Magma General, Satinder Kaur) on assessment of income and quantum for consortium and loss of estate.