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M.R. Krishna Murthi v/s New India Assurance Co. Ltd: Changing Parameters For Grant Of Compensation

Facts of the case:
In the present case, the Hon'ble Supreme Court of India was hearing an appeal filed by M.R. Krishna Murthy (Appellant) against the order of Hon'ble High Court of Delhi. This plea arises from happening of a misfortunate accident of the Appellant when he was traveling from Delhi to Mussoorie in the year 1988. Despite several operations, the appellant is suffering from a 40% permanent disability of his left leg.

Thereafter, the appellant filed an application before the Motor Accidents Claims Tribunal, New Delhi (MACT) for claiming the compensation against the offending vehicle and its insurance company i.e. New India Assurance Co. Ltd (Respondents). The MACT on 23rd May 2007, decided the quantum of compensation and awarded Rs.4,08,000/- while taking into consideration the following:
  1. The loss of future income of the appellant to be Rs.2000 per month.
  2. Adopted the multiplier of 17, as the appellant was 17 years old at the time of the accident.
Aggrieved by the award of MACT, the appellant filed an appeal before the Hon'ble HC contending that the multiplier adopted by MACT is inaccurate as the appellant was 18 years old. On 19th May 2017, the Hon'ble HC accepted this plea and consequently, the amount of future loss of income came up to Rs.4,32,000.

Subsequently, the appeal was filed before the Hon'ble SC concerning the impugned judgment.

Citation: 2019 SCC OnLine SC 315 - Bench: Justice A.K. Sikri and Justice S.A.Nazeer - Date: 5th March 2019

Contentions of the appellant:
The contentions of the appellant before the Hon'ble SC were in two folds. Firstly, the Hon'ble HC failed to take into consideration various important factors while ascertaining the future income of the appellant viz. his family background, education, and potential to earn in the future.

Though the appellant was only a student at the time of the accident, his parents were practicing advocates in the Hon'ble SC. He was studying in one of the best schools in Delhi and wanted to pursue a career in the legal profession as of his parents.

The Hon'ble HC has erred in not considering the calibre and potential of the victim while ascertaining the loss of future income at only Rs.2000 per month. In the order to showcase the contended principal the appellant relied on the judgment of N.Manjegowda v. United India Insurance Co. Ltd (2014) 3 SCC 584. [1]

Secondly, the appellant raised the plea for the reformation of the existing system of payment of compensation to the victims of road accidents. The appellant contended that the court must ensure the timely delivery of justice along with awarding a reasonable compensation to the victim.

Further, the appellant suggested various solutions such as establishing a meditation authority for the case of motor accidents with the aim of speedy disposal of cases and ensuring that the compensation is received in the right hands. The compensation shall not be given in cash but as Annuity Certificate to ensure unabridged payment.

Questions Raised Before The Hon'ble Supreme Court
  1. What will be factors considered for determining the amount of future loss of income of a student?
  2. Why is the nature of injuries and the disabilities important while deciding the quantum of compensation?

Observation And Findings Of The Hon'ble Court
The Hon'ble SC after considering the catena of judgments concluded that while deciding the amount of loss of future income, it is necessary for a court to consider the prospect of such a victim. The court considered the fact that though the appellant is presently a practicing advocate; his earning capacity is impaired as he not as capable as his other companions. Further while considering the future prospects the loss of future income was raised from Rs.2000 to Rs.5000 per month and the multiplier of 18 was adopted. Therefore, the total compensation awarded was Rs.10,80,000/-.

Dealing with the second set of arguments, the Hon'ble SC gave the following suggestions to the Government of India (GOI):
  1. The GOI should consider enacting the Indian Mediation Act for setting up of provisions relating to the mediation.
  2. The GOI shall look for the possibilities of introducing Motor Accident Mediation Authority by making necessary amendments to the Motor Vehicles Act, 1988.
  3. The National Legal Service Authority will work with other authorities including Mediation and Conciliation Project Committee, State Legal Service Authority and other similar authorities for setting up of mediation cell and for implementation of the guidelines issued by the Hon'ble SC in the case of Jaiprakash v. National Insurance Company[2].
  4. To investigate the feasibility of the scheme and accessibility of the annuity certificate.

Critical Analysis
In the present case, the Hon'ble SC tried to inculcate a progressive approach while giving importance to the ADR mechanism for speedy disposal of cases. The intent of the Hon'ble SC while setting up the aforementioned suggestions was to reduce the harassment faced by the victim of such accidents due to the slow judicial process as well as the other lacunas in the implementation of policies in regards to the same.

On a similar line recently in August 2019, the Parliament has passed the Motor Vehicles (Amendment) Bill, 2019 for laying down strict provisions for rash driving, drinking, and driving, juvenile driving, etc.

Furthermore, it has enhanced the scope of Third-Party insurance and included driver's attendant in it. The insurance compensation has increased ten times from Rs.50, 000 to Rs.5,00,000. Moreover, the insurance companies are now liable to pay the compensation within a month.

These steps by the Hon'ble SC and the GOI are highly commendable for having a victim-centric approach by trying to eliminate the hardship faced by them. Now, considering the factor of lack of proper implementation of policies in our country it will be important to see how these suggestions will be implemented in the near future.

  1. J N.Manjegowda v. United India Insurance Company Limited, (2014) 3 SCC 584
  2. Jaiprakash v. National Insurance Company, (2010) 2 SCC 607

    Written By: Ms.Aaksha Sajnani

    Awarded certificate of Excellence
    Authentication No: AG023068129196-17-820

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