Children cannot be treated as 'non-earning' in motor accident compensation cases: Supreme Court

The Supreme Court recently held that children injured in motor accidents cannot be treated as “non-earning individuals” when calculating compensation [Hitesh Nagjibhai Patel Vs Bababhai Nagjibhai Rabari]..A Bench of Justices Sanjay Karol and Prashant Kumar Mishra underscored that tribunals must not ignore a child’s future earning potential when determining the compensation in motor accident cases."When a Tribunal or the High Court in appeal, is concerned with the case involving a child having suffered injury or having passed away, the calculation of loss of income necessarily has to be made on the matrix of minimum wages payable to a skilled worker in the respective State at the relevant point of time," the Bench said. Therefore, it enhanced the payout for an 8-year-old boy from ₹3.9 lakh to ₹35.90 lakh and also issued directions to ensure Motor Accident Claims Tribunals (MACTs) and High Courts to apply minimum wage standards in such cases..The judges also criticised both the Gujarat High Court and the MACT for failing to apply principles that had already been clarified in the 2020 judgment in Kajal v. Jagdish Chand..The case arose from an accident on October 14, 2012, when eight-year-old Hitesh Patel was standing with his father near a road in Gujarat's Banaskantha. A rashly driven vehicle struck him, causing a brain hemorrhage and amputation of his left leg. The injuries left him with 90 per cent permanent disability. His family subsequently filed a claim under Section 166 of the Motor Vehicles Act, 1988, seeking ₹10 lakh in compensation.In September 2021, the MACT awarded only ₹3.9 lakh, calculating disability at 30 per cent and granting limited sums under heads such as pain and suffering, parental earnings, medical expenses and future medical expenses. In August 2024, the Gujarat High Court enhanced the amount to ₹8.65 lakh, recognising 90 per cent disability and granting additional sums, including ₹2 lakh for an artificial limb and ₹5 lakh for loss of amenities.However, the Supreme Court took a different approach. It fixed Hitesh’s notional income at ₹6,836 per month, based on the minimum wages for skilled workers in Gujarat in 2012, added 40 per cent towards future prospects and applied a multiplier of 18. Factoring in 90 per cent permanent disability, the Court arrived at ₹18.60 lakh for loss of future earnings. It then awarded further compensation under other heads, including ₹5 lakh for pain and suffering, ₹3 lakh for loss of marriage prospects, ₹5 lakh towards the cost of an artificial limb, ₹1 lakh for special diet and transport, ₹80,000 towards medical and future expenses, ₹50,000 for loss of income during treatment and ₹2 lakh for loss of amenities..This recalculation brought the total compensation to ₹35.9 lakh payable with nine per cent interest from the date of filing the claim petition. The Court also said that lower courts had failed to follow binding precedent.Hence, it directed that in cases where claimants cannot establish income proof, insurance companies must provide the relevant minimum wage data before tribunals. “It is our hope that this restatement helps avoid such errors and obviates the necessity of this Court’s interference,” the Bench observed.The Registrar Judicial was asked to circulate the order to all High Courts and MACTs nationwide. The respondents were directed to deposit the enhanced compensation directly into Hitesh Patel’s bank account by September 30..The petitioner was represented by advocates Udian Sharma ,Sahil Saraswat, Manav Mitra, Vishesh Sapra and Harsha Sadhwani..The respondents were represented by advocates Awantika Manohar, Parul Dhurvey and Aman Kumar Pandey..[Read Judgment]