Delhi High Court
Shriram General Insurance Co Ltd vs Shabir & Ors on 29 January, 2025
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 29th January, 2025
+ MAC.APP. 20/2015, CM APPL. 370/2015 & CM
APPL. 371/2015
SHRIRAM GENERAL INSURANCE
CO LTD .....Appellant
Through: Mr. Sameer Nandwani,
Adv. (through VC)
versus
SHABIR & ORS .....Respondents
Through: Mr. Shrey Chathly, Adv.
for R1 to R6
Mr. Dhirendra Singh &
Ms. Kirti Bhardwaj, Advs.
for R7 & R8
CORAM:
HON'BLE MR. JUSTICE AMIT MAHAJAN
AMIT MAHAJAN, J. (Oral)
1. The present appeal is filed challenging the order dated
16.07.2014 ('the impugned award') passed by the learned
Presiding Officer, Motor Accident Claim Tribunal Karkardooma
Courts, Delhi ('Tribunal') in MACT No.233/2012.
2. The impugned award is essentially challenged on the
ground that future prospects should not have been considered
while awarding the compensation since the deceased at the time
of death was working on a fixed salary.
3. The appellant in support of its contention relied upon the
Sarla Devi & Ors. v. DTC and Anr. : (2009) 6 SCC 121,
wherein it was held that when the deceased is working on a fixed
salary with no proof of periodical increase, the claimants are not
entitled to any element of future prospects being added in the
amount of compensation.
4. It is undisputed that the Hon'ble Apex Court in the case of
Santosh Devi v. National Insurance Co. Ltd. : (2006) 6 SCC
421, had held that the Courts/ Tribunals must take note of the
rising cost of living and that even self-employed persons cannot
be held to be remaining on a fixed salary throughout their lives.
The Hon'ble Apex Court took note of the fact that the salaries of
even those employed in private sector increases manifold with
passage of time and, thus, the income in regard to future
prospects has to be added in every case whether the deceased
was self-employed or salaried.
5. The view taken by the Hon'ble Apex Court in the case of
Santosh Devi v. National Insurance Co. Ltd. (supra) was,
thereafter, followed in National Insurance Company Ltd v.
Pranay Sethi & Ors. : (2017) 16 SCC 680.
6. Recently, the Hon'ble Apex Court in the case of Kavita
Nagar & Ors. v. The Oriental Insurance Co. Ltd. : Civil
Appeal No(s) --- of 2024 (arising out of SLP (Civil) No.
15643/2016), held that it is imperative to consider the future
prospects of persons earning potential while determining the
compensation. It was held that simply focusing on the person's
present income at the time of death, disregards the natural
"13. In motor accident claim cases, it is imperative to
consider the future aspects of a person's earning potential
when determining compensation. Simply focusing on a
deceased individual's current income at the time of death
disregards the natural progression of a career or the
intrinsic motivation to improve one's financial position over
time. Both self-employed individuals and those on fixed
salaries strive to increase their earnings, adapting to
economic changes such as inflation and the cost of living.
While individuals on a fixed salary may appear to have a
predictable income, this view overlooks the reality that
salaries, even for employees in permanent positions,
generally increase over time due to factors like inflation,
promotions, and company policies. For instance, a
government employee or someone in the private sector with a
fixed salary may still receive annual increments, benefits, or
adjustments based on performance, seniority, or pay
revisions. These incremental increases reflect the natural
progression of a person's career and the adjustment to cost-
of- living changes, making it unjust to disregard future
earning potential simply because an individual receives a
fixed salary. Similarly, those who are self-employed, though
lacking the certainty of a regular salary, are still motivated
to grow their income to maintain their standard of living in
an ever-changing economy. The view expressed in National
Insurance Company Ltd. (Supra),rightly emphasizes that
failing to account for these dynamics creates a distorted
view, where individuals in self-employment or fixed-income
roles are presumed to have a stagnant earning potential.
This outlook is fundamentally flawed because it negates the
drive for income growth, which is inherent to human
ambition and sustenance.
14. The need to factor in future prospects when
determining compensation becomes even clearer and more
pressing when considering the basic human drive to sustain
and improve one's life. A self-employed individual, just like
someone on a fixed salary, strives to increase their income to
meet growing expenses and to adapt to changing
circumstances. This is particularly important when
considering the purchasing power and quality of life, which
tend to increase as a person's career progresses. The notion
that a self-employed person's income will remain static is
flawed, as they, too, make efforts to raise their fees or
charges to keep pace with inflation and market demands. For
instance, someone working in a government role or another
fixed-income job might receive annual salary adjustments or
self-employed professional--such as a doctor, lawyer, or
small business owner--will often increase fees or expand
services to keep pace with rising costs. Recognizing these
future prospects ensures a fair and just compensation by
aligning with real-world economic dynamics, which Section
168 of the Motor Vehicles Act, 1988 seeks to uphold.
15. This drive to improve one's income is universal,
regardless of the employment status, and should be reflected
in the compensation calculations for motor accident claims.
As the precedent in the quoted judgment suggests, it is unjust
to disregard future prospects solely based on the perceived
static nature of the income. Instead, a degree-test should be
applied, accounting for factors like age, career growth, and
economic conditions, ensuring fair compensation that
reflects the individual's true earning potential over time.
16. In the present cases, owing to the age of the
deceased and the findings of the Tribunal with respect to his
salary, the principles of just compensation and
standardization need to be applied. It would be apposite to
hold that someone on a fixed salary would not be entitled to
the benefit of future prospects. Simply because there is no
certainty of periodic increase unlike those with permanent
employment with fixed annual increments, such a
comparison and distinction between the categories is unjust
and unreasonable, as increasing costs of living affect
everyone and everyone would make the effort increase their
income over time. Thus, we find no validity in the order of
the High Court to the extent of setting aside of the addition of
the future prospects owing to the deceased being employed
on a fixed salary."
7. It is also not disputed that the judgment passed by the
Hon'ble Apex Court in the case of Santosh Devi v. National
Insurance Co. Ltd. (supra) and the National Insurance
Company Ltd v. Pranay Sethi & Ors. (supra), has since been
followed and has been applied even in cases which were decided
prior to the said judgment being passed. Consequently, the
claimants are entitled to the benefit arising out of the judgment in
the case of National Insurance Company Ltd v. Pranay Sethi &
Ors. (supra).
8. In view of the above, I find no merit in the present appeal
and the appeal is, therefore, dismissed.
9. The Registry is directed to release the statutory amount
deposited by the appellant in terms of Section 173 of the Motor
Vehicles Act, 1988 in favour of the appellant.
10. The Registry is also directed to release the compensation
amount deposited before this Court along with all accrued
interest in favour of Respondent Nos. 1 to 6, after verification of
their identity.
AMIT MAHAJAN, J
JANUARY 29, 2025
"SS"
