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2026 Supreme(SC) 732
SUPREME COURT OF INDIA
SANJAY KAROL, NONGMEIKAPAM KOTISWAR SINGH, JJ.
Rajani & Ors. – Appellants
Versus
Mukesh & Ors. – Respondents
Civil Appeal No. 8736 of 2026 (Arising out of SLP(C) No. 3088 of 2025)
Decided On : 01-07-2026
Important Points
Subject
Motor Accident Claims - Compensation Enhancement and Computation Methodology
Act Referred
Headnote
(B) Compensation - Future prospects - Deduction for personal expenses - Conventional heads - Determination of just compensation - Application of multiplier based on age - Inclusion of 25% for future prospects for person aged 49 years, 1/4th deduction for personal expenses, and 10% increase under conventional heads. (Para 12)
Facts of the case:
The claimants challenged the enhancement of compensation by the lower appellate court, contending that the methodology for determining the deceased's monthly income was flawed. The deceased, a professional, had earnings that fluctuated according to yearly performance, which the lower court failed to appropriately consider by averaging multiple tax returns.
Findings of Court:
The court determined that the assessment of the deceased’s income required a more accurate reflection of his professional earning capacity. By recalculating the annual income based on a three-year average of tax records and applying established benchmarks, the total compensation was increased to ensure it remained just and fair.
Issues: Whether the method of averaging multiple years of tax returns for a self-employed professional leads to an accurate income determination and whether the awarded compensation was sufficient under settled legal principles.
Ratio Decidendi: When determining the income of professionals whose earnings fluctuate based on performance, courts should avoid mechanical averaging of all available tax returns; rather, the calculation must reflect the most representative recent income trend to determine a fair and reasonable annual earning capacity.
Result: Appeal allowed.
For the Petitioner(s): Mr. Aditya Narayan Tripathy, Adv. Mr. Kedar Nath Tripathy, AOR Mr. Chand Qureshi, AOR Ms. Preeti Chauhan, Adv. Mrs. Arpana Soni, Adv. Mr. Mohit Yadav, Adv. Mrs. Aarti Pal, Adv. Mr. Md.imran Siddiqui, Adv. Mr. Saaket Jain, Adv. Ms. Shivangi Anand, Adv. Mr. Siddhartha Iyer, AOR
For the Respondent(s): Mr. Kshitij Mittal, Adv. Mr. Anand Sukumar, AOR Mr. Salil Paul, Adv. Ms. Manjeet Chawla, AOR Mr. Sahil Paul, Adv. Mr. Sandeep Dayal, Adv. Ms. Jyoti, Adv. Mr. Harmeet Singh Phillip, Adv. Mr. Raghav Nagar, Adv.
| Table of Content |
|---|
| 1. factual overview of accident and prior adjudication history. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. claimants’ challenge regarding the inadequacy of awarded compensation. (Para 8) |
| 3. correction of income assessment errors regarding professional variable earnings. (Para 9 , 10) |
| 4. determination of annual income and recalculation of compensation heads. (Para 11 , 12) |
| 5. final modification of compensation award and procedural payout instructions. (Para 13 , 14 , 15) |
JUDGMENT :
SANJAY KAROL, J.
1. Leave granted.
2. The appeal is directed against the judgment and order dated 24.09.2024 passed in Miscellaneous Appeal No. 1832 of 2022 by the High Court of Madhya Pradesh at Indore, which, in turn was preferred against the order dated 19.01.2022 in Claim Case No. 92/2019 by the Motor Accident Claims Tribunal1[Hereinafter ‘MACT’.], Manawar2[Hereinafter ‘the Tribunal’.].
3. The brief facts giving rise to this appeal are that on 08.01.2017, the deceased namely Sushil, then aged 49 years, was proceeding along with two others from Indore towards Manawar, in a vehicle bearing registration number MP 11 CC 2555, when the offending vehicle, a dumper bearing registration number MP 09 HG 9690 being driven by Respondent No. 1, dashed into the vehicle of the deceased from the opposite side in a rash and negligent manner. Consequently, the deceased lost his life on the spot due to serious injuries suffered on his head, chest and other parts of the body.
4. An application seeking compensation3[Claim Case No. 141/17.] was filed before MACT, Manawar, Dhar, Madhya Pradesh under Section 166 of the Motor Vehicles Act, 1988 by the claimant-appellants, being his legal representatives, seeking compensation to the tune of Rs. 2,41,00,000/-, stating therein that deceased was conducting business as an Insurance Agent and was the sole breadwinner of the family. It was stated therein that he used to earn Rs. 1,50,000/- per month.
5. The Tribunal awarded an amount of Rs. 49,77,000/-, vide award dated 19.01.2022, along with interest at the rate of 9% per annum from the date of filing of the claim petition. The Tribunal assessed the income of the deceased as Rs. 40,000/- per month.
6. Being aggrieved thereof, the claimant-appellants filed an appeal before the High Court of Madhya Pradesh at Indore, seeking enhancement of the amount of compensation awarded by the Tribunal.
7. The High Court vide the impugned order dated 24.09.2024 in Misc. Appeal No. 1832 of 2022 enhanced the total compensation payable by Rs. 26,32,500/-, to a total amount of Rs. 76,09,500/-. The monthly income of the deceased was enhanced to Rs. 62,500/-.
8. Yet dissatisfied, the claimant-appellants are now before us. The significant point of challenge is that the compensation awarded is inadequate, warranting interference in accordance with law.
9. Keeping in view the principles laid down by this Court in Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors, C.A. @ SLP (C) No. 27220 of 2024, we proceed to examine the issue at hand.
10. In the considered view of this Court, the High Court erred by taking the average income of the last four ITRs. Given that the deceased was working as an Insurance Agent, it is completely plausible that there was a hike in his income in a certain financial year, dependent on performance. The same would not become a reason to take an additional ITR into consideration for the purposes of computation of his annual income.
11. Upon a perusal of the ITRs on record, the income of the deceased for the AY 2015-16 stood at Rs. 4,03,180/-. For AY 2016-17, it stood at Rs. 9,59,665/- and for the previous AY 2017-18, it stood at Rs.7,00,559/-. Therefore, taking into consideration the average of these previous three years and the nature of profession of the deceased, his annual income is assessed as Rs.6,87,802/-.
12. In view of the aforesaid, the compensation now payable to the appellants would be recalculated as und
