National Insurance Company Limited vs Pranay Sethi - Case Law

 National Insurance Company Limited vs Pranay Sethi - Supreme Court Important Judgment on Compensation - 


On 31st October, 2017, in the case of National Insurance Company Limited v. Pranay Sethi and Ors. [Special Leave Petition (Civil) No. 25590 of 2014], the issue for consideration was: addition to income in regard to future prospects for determination of compensation where the deceased had a permanent job or where the deceased was self-employed / on a fixed salary without provision for annual increments. 

A five Judge Constitution Bench held that “while determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.” It was further held that “in case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was

between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.” 

On the issue pertaining to award of compensation under conventional heads, the Bench held that “reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively” however “the aforesaid amounts should be enhanced at the rate of 10% in every three years.” 

On apposite multiplier and multiplicand, the Bench held that “the age of the deceased should be the basis for applying the multiplier” and the selection of multiplier shall be as indicated in the Table in Sarla Verma case read with paragraph 42 of that judgment and further that for determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paragraphs 30 to 32 of Sarla Verma case. 


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