Motor Accident Claims | If Claimant Doesn't Produce Income Proof, Insurer Must Furnish Applicable Minimum Wages Notification : Supreme Court

The Supreme Court recently increased the compensation awarded to a minor, who sustained permanent disability in a road accident, from ₹8.65 lakh to ₹35.90 lakhs, holding that a minor cannot be classified as a non-earning individual for determining income. Instead, the Court ruled that the minor's income should be treated as equivalent to the minimum wage for a skilled worker notified in the State where the cause of action arose.

“It is now a well-entrenched and consistently reiterated principle of law that a minor child who suffers death or permanent disability in a motor vehicle accident, cannot be placed in the same category as a non-earning individual for the purposes of assessing the amount of compensation because the child was not engaged in gainful employment at the time of the accident. In such a case, the computation of compensation under the head of loss of income ought to be made by adopting, at the very least, the minimum wages payable to a skilled workman as notified for the relevant period in the respective State where the cause of action arises.”, the court observed.

Also, a direction is issued by the Court that in cases where the income of the claimant/deceased has not been properly established, it shall be the obligation of the insurance company to furnish the schedule of minimum wages prevalent in the respective state where the cause of action arose. The Court asked circulation of a copy of the order to the High Courts, who in turn, will circulate one copy each to the respective Motor Accident Claims Tribunals in their State.

“in cases where the claimant has failed to furnish appropriate details of income or adequate proof thereof, it shall be the responsibility and obligation of the contesting party, more particularly the insurance company to furnish before the Tribunal the applicable minimum wage as duly issued by the concerned government.”, the court observed.

“In so far as the direction issued regarding the furnishing of the schedule of minimum wages by the insurance company in cases where the income of the claimant/deceased has not been properly established, let a copy of this order be sent by the Registrar Judicial of this Court to the learned Registrar Generals of the High Courts, who shall ensure that the a copy of this order is sent to all Motor Accident Claims Tribunals, to see that the direction is followed strictly.”, the court added.

Background

A bench of Justices Sanjay Karol and Prashant Kumar Mishra set aside the Gujarat High Court's decision which awarded compensation to the Appellant ignoring his head of loss of income treating him to be non-earning.

The Court referenced the case of Baby Sakshi Greola v. Manzoor Ahmad Simon and another 2024 LiveLaw (SC) 978, where it also awarded compensation to a minor girl, victim of a road accident, as per the minimum wage notified for a skilled worker at the time of the accident.

“Adverting to the facts at hand, the appellant was an 8- year-old child at the time of the accident. In view of the above exposition of law, we must advert to the prevailing minimum wages, which for the skilled ones, as in the year of accident, i.e., 2012, in Gujarat would be Rs.227.85p. per day, therefore, in the interest of justice, we deem it appropriate to determine the income of the appellant as Rs.6,835.5p. per month, rounding off to Rs.6,836/- per month.”, the court said.

On this basis, the Court fixed the minor's notional monthly income at ₹6,836, added 40% towards future prospects, applied a multiplier of 18, and factored in 90% permanent disability. It further awarded enhanced sums under non-pecuniary heads, including ₹5 lakh for pain and suffering, ₹3 lakh for loss of marriage prospects, and ₹5 lakh for an artificial limb.

Cause Title: HITESH NAGJIBHAI PATEL VERSUS BABABHAI NAGJIBHAI RABARI & ANR.

Citation : 2025 LiveLaw (SC) 871

Click here to read/download the order

Appearance:

For Petitioner(s) :Mr. Udian Sharma, AOR Mr. Sahil Saraswat, Adv. Mr. Manav Mitra, Adv. Mr. Vishesh Sapra, Adv. Mrs. Harsha Sadhwani, Adv.

For Respondent(s) :Ms. Awantika Manohar, AOR Ms. Parul Dhurvey, Adv. Mr. Aman Kr Pandey, Adv.