A five-judge Constitution Bench on Tuesday spelt relief to families who were given a raw deal by insurance companies just because their loved one was either self-employed or salaried at the time of death in a road accident.
So far, the pre-liberalisation Motor Vehicles Act of 1988 had computed motor accident claims on the basis that self-employed persons and the salaried have no “future prospects”, and if alive, their income over the years would hardly have seen any drastic improvements.
The courts would only take the actual income drawn by the victim at the time of death. A departure could be made only in “rare and exceptional cases involving special circumstances.”
New circumstances
Changing the over two-decade long perception, the Constitution Bench led by Chief Justice of India Dipak Misra took into consideration the changed life circumstances of a globalised world of private entrepreneurs, high salaries in the private sector, rise in cost of living and even inflation.
The Bench, in an authoritative and unanimous judgment, held that law should recognise and give credit to the competitive attitude of the modern Indian, his ability to garner his resources, live with dynamism and enterprise, move and change with time.
The Bench also comprised Justices A.K. Sikri, A.M. Khanwilkar, D.Y. Chandrachud and Ashok Bhushan.
“The purchasing capacity of a salaried person on permanent job increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees,” Chief Justice Misra, who wrote the judgment for the Bench, observed.
“Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with the same facilities. To have the perception that he is likely to remain static and his income also will be stagnant is contrary to the fundamental concept of human attitude,” the verdict observed.
The Constitution Bench fixed guidelines for computing motor accident claims for self-employed and salaried persons.
If the road accident victim had a permanent job at the time of his or her death in a road accident, 50% of his actual salary will be added towards future prospects if his age is below 40 years, 30% if the age of the victim is between 40 to 50 years and 15% if the age is in the 50-60 bracket. Actual salary should be read as actual salary less tax.
Similarly if thevictim was self-employed or on a fixed salary, 40% will be added to his established income if his or her age was below 40 years at the time of death; an addition of 25% if the victim was in the 40-50 age bracket and 10% if he or she was between 50 to 60 years. The established income means the income minus the tax component.
