The Supreme Court has reiterated that addition of 40% income must be given towards future prospects while computing motor accident compensation if the deceased was self-employed and was aged less than aged 40 years.

"This Court in a Five Judge Bench decision in National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680,clearly held that in case the deceased is self­-employed and below the age of 40, 40% addition would be made to their income as future prospects. In the present case, the deceased was self-­employed and was 37 years old, therefore, warranting the addition of 40% towards future prospects", the Supreme Court observed.

The High Court had held that the deceased in the case was ineligible for future prospects as she was self-employed.

The High Court had also deduced 50% towards personal expenses of the deceased. The Supreme Court found fault with this approach, as the Pranay Sethi judgment had held that deduction towards personal expenses must be 1/3rd of the income when the deceased was married with two dependents.

The Supreme Court reworked the compensation by granting 40% addition towards future prospects and deducting 1/3rd towards personal expenses.

Case Details

Title : Rahul Sharma and another vs National Insurance Company Ltd and others

Coram : CJI NV Ramana, Justices Surya Kant and Aniruddha Bose

Citation : LL 2021 SC 252

Click here to read/download the judgment