SC on Quantification of Motor Vehicle Accident Compensation

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March 08, 2018

Case name: ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty & Anr.

Date of Judgement: March 06, 2018

In the instant case, in a claim for compensation under Section 166 of the Motor Vehicles Act, 1988, arising out of disability sustained by the claimant as a result of a motor accident, the Tribunal awarded an amount of Rs. 22,85,322/-. The High Court in appeal filed by the Insurance company reduced the compensation to Rs. 12,00,000/- and did not render any proper reasoning for reducing the amount of compensation awarded by the Tribunal.

Also read Accident Claims – How to get compensation under Motor Vehicles Act

Also read Sample questions on Motor Vehicle Compensation

The Three-Judge Bench of the Supreme Court headed by Chief Justice Dipak Misra set aside the High Court’s order for non-application of mind and for passing a non-reasoned order. The Court in the case made the following observations with reference to quantification of compensation:

  • That in arriving at the quantification of compensation, the Courts shall be guided by the well-settled principle that compensation can be granted both on account of permanent disability as well as loss of future earnings, because one head relates to the impairment of the person’s capacity and the other to the sphere of pain and suffering on account of loss of enjoyment of life by the person himself.
  • Reference was made to the case of Sri Laxman @ Laxman Mourya v Divisional Manager, Oriental Insurance Co. Ltd.[1], wherein the Supreme Court held that if the victim of an accident suffers permanent or temporary disability, then efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the pain, suffering and trauma caused due to accident, loss of earnings and victim’s inability to lead a normal life and enjoy amenities, which he would have enjoyed but for the disability caused due to the accident.
  • That if the victim of the accident suffers permanent disability, then efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the loss of earning and his inability to lead a normal life and enjoy amenities, which he would have enjoyed but for the disability caused due to the accident.

Also read Landmark Judgments on Motor Vehicle Act in 2017

The case can be accessed here.

[1] 2011 (12) SCALE 658