Dependents of self-employed persons or professionals working on a fixed salary in the private or unorganised sector are set to benefit now as the Supreme Court has ruled that ‘future prospects’ of a person killed in a road accident would be considered while awarding compensation. “The determination of income while computing compensation has to include future prospects so that the method comes within the ambit and sweep of just compensation as postulated under the provision of the Motor Vehicle Act,” a five-judge constitution bench headed by Chief Justice Dipak Misra said and also laid down standard criteria for computation of such claims, according to a PTI report.
Here are five things to know about this new ruling and also the criteria for computation of such claims:
1. The Supreme Court has ruled that ‘future prospects’ of a person killed in a road accident would be considered while awarding compensation. It has also laid down standard criteria for computation of such claims.
2. The Court has ruled that while determining the income, an addition of 50 per cent of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30 per cent, if the age of the deceased was between 40 and 50 years. In case the deceased was between the age of 50 and 60 years, the addition should be 15 per cent. Actual salary should be read as actual salary less tax.
3. In case the deceased was self-employed or on a fixed salary, an addition of 40 per cent of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25 per cent where the deceased was between the age of 40 and 50 years and 10 per cent where the deceased was between the age of 50 and 60 years should be regarded as the necessary method of computation.
4. The apex court has also fixed the amount to be paid to the dependents of road accident victims under heads such as loss of consortium and funeral expense, and said that there would be 10 per cent raise in the amount after every three years. “Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs 15,000, Rs 40,000 and Rs 15,000 respectively. The aforesaid amounts should be enhanced at the rate of 10 per cent in every three years,” the court said.
5. The Motor Vehicle Act provides for award of compensation to be paid by the insurance firms to the victim or his or her family in accident cases by using the methodology provided in the statute itself. In the claim plea, the family members have to establish the age and income of the deceased and the number of dependents.
