Summary and Analysis of Smt Manjula & Ors vs The Branch Manager Oriental Insurance Company Ltd & Anr 2025 INSC 1093
1. Heading of the Judgment
Case Name: Smt. Manjula & Ors. vs The Branch Manager, Oriental Insurance Company Ltd. & Anr.
Citation: 2025 INSC 1093 (Civil Appeal No. 11425 of 2025, arising from SLP (C) No. 1733 of 2021)
Court: Supreme Court of India
Judges: Hon'ble Mr. Justice K. Vinod Chandran and Hon'ble Mr. Justice N.V. Anjaria
Nature of Case: Civil Appeal challenging the quantum of compensation awarded in a motor accident claim case.
2. Related Laws and Sections
This case pertains to the calculation of compensation under the Motor Vehicles Act, 1988. The judgment does not cite specific sections of the Act but is fundamentally based on the principles for compensation computation established in landmark Supreme Court judgments:
National Insurance Co. Ltd. vs. Pranay Sethi (2017) 16 SCC 680: A Constitution Bench judgment that laid down standardized guidelines for calculating various components of compensation, including future prospects, conventional heads (funeral expenses, loss of estate), and loss of consortium.
Ramachandrappa vs. Royal Sundaram Alliance Insurance Co. Ltd. (2011) 13 SCC 236: A judgment that guided the estimation of income in cases where exact income is not fully proven.
New India Assurance Company vs. Somwati and Ors. (2020) 9 SCC 644: A judgment that expanded the entitlement of 'loss of consortium' to not just the spouse but also to children and parents of the deceased.
3. Basic Judgment Details
Appellants (Claimants): Smt. Manjula (wife) and other legal heirs of the deceased.
Respondents (Opposite Parties): The Branch Manager, Oriental Insurance Company Ltd. (The insurer of the offending vehicle) and another.
Subject of Dispute: The correct determination of the monthly income of the deceased for the purpose of calculating compensation.
Lower Courts' Decisions:
Motor Accident Claims Tribunal (MACT): Determined the deceased's monthly income to be Rs. 6,000.
High Court: Reduced the monthly income to Rs. 5,500 without providing any reasoning or reference to evidence.Supreme Court's Decision: Allowed the appeal. Enhanced the monthly income to Rs. 12,000 and recalculated the total compensation accordingly.
4. Explanation of the Judgment
Core Legal Issue
The central question before the Supreme Court was the correct and just method for determining the notional income of a deceased person when the exact income is not conclusively proven by documentary evidence.
Background Facts
The deceased, along with three friends, died in a tragic accident on July 25, 2010, when their car was hit by a rashly and negligently driven goods lorry. The negligence of the lorry driver and the insurance coverage were not in dispute. The appeal concerned only the quantum of compensation awarded to the deceased's family (his wife, minor daughter, and two parents).
The claimants argued that the deceased was a multi-faceted professional: a proprietor of a medical shop, a partner in a pharmaceutical distributorship, and a director of a cooperative bank, claiming his income was around Rs. 2,25,000. However, the evidence to substantiate this exact figure was lacking:
His license for the medical shop had been cancelled two years before the accident.
While the partnership in the distributorship was proven, the income from it was not authenticated, and the partners were not examined.
The claim regarding directorship and sitting fees in the cooperative bank was not fully substantiated.
Faced with this, the MACT adopted a conservative estimate of Rs. 6,000 per month. The High Court, perplexingly, reduced this to Rs. 5,500 without any justification.
The Supreme Court's Analysis and Reasoning
The Supreme Court found the High Court's approach arbitrary and devoid of reasoning. It undertook a principled analysis to arrive at a fair and reasonable estimate of the deceased's income:
Rejection of Arbitrary Reduction: The Court first condemned the High Court's unsupported reduction of the income from Rs. 6,000 to Rs. 5,500, noting it was done without any reference to material on record.
Principle of Reasonable Estimation: The Court emphasized that in the absence of concrete proof of exact income, a judicial estimate must be based on reason and prevalent standards. It relied on the precedent set in Ramachandrappa, where it was held that even a coolie (manual labourer) was earning Rs. 4,500 per month in 2004.
Calculating a Baseline: Applying an incremental increase of Rs. 500 per year from the 2004 baseline, the Court calculated that a coolie would have earned at least Rs. 7,500 per month in 2010 (the year of the accident).
Factoring in the Deceased's Profile: The Court then considered the deceased's specific circumstances, which were undoubtedly above that of a manual labourer:
He held a Diploma in Pharmacy.
He was involved in a pharmaceutical distributorship as a partner.
He was associated with a cooperative bank.
He had previously run a medical shop.Arriving at a Fair Figure: Considering his qualifications and business associations, the Court concluded that a monthly income of Rs. 12,000 was a fair and reasonable estimate to sustain his family of five dependents.
Recalculation as per Established Precedents: Using this new income figure, the Court recalculated the compensation by rigorously applying the guidelines from Pranay Sethi and Somwati:
Multiplier: 14 (as the deceased was 43 years old).
Future Prospects: 25% addition (for a person aged 40-50 in a non-salaried job).
Deduction for Personal Expenses: 1/4th (as he had 4 dependents).
Conventional Heads: Rs. 15,000 each for funeral expenses and loss of estate.
Loss of Consortium: Rs. 40,000 each for the wife, minor daughter, and two parents (totaling Rs. 1,60,000), as per the expanded definition in Somwati.
Supreme Court's Directions and Conclusion
The Supreme Court held that the High Court's order was unsustainable as it arbitrarily reduced the income without justification. The Court's own calculation, based on evidence and legal precedent, was deemed fair.
Final Decision: The Supreme Court:
Allowed the appeal filed by the claimants.
Enhanced the total compensation to Rs. 20,80,000.
Directed the insurance company to pay the enhanced amount, after deducting any amount already paid, with interest at 6% per annum from the date of the application until the date of payment.
Ordered that the payment be made within three months.