Summary of this article
The Punjab and Haryana High Court ruled that family pension is not part of the loss of dependency income calculations
The court reduced compensation by over Rs 55 lakh
Total compensation awarded was revised to Rs 21,43,000
The Punjab and Haryana High Court, in a recent judgment, reduced the compensation award by around Rs 55 lakh in a motor accident case. Justice Parmod Goyal evaluated the matter to calculate the award, taking into account loss of dependency and whether the pension received by a family member should be included as income in the dependency calculation.
The Court held, “The family pension received by the deceased has got no relation with the accident and resultant death on account of accident, and therefore, it was rightly held not liable to be deducted for the compensation awarded on account of loss of dependency. However, similarly the family pension cannot be treated as income of the deceased for determining loss of dependency. The matter in this regard is not res integra.”
Background
The case pertained to one Satheesh Kumar M., an ex-army man, who died in a car accident on October 2, 2020, near Kurukshetra, Haryana. The accident involved a Bolero and a mini bus, which the deceased was driving. The claimants (deceased person’s wife, children, and parents) sought compensation from the insurance company (ICICI Lombard General Insurance), and at last were awarded Rs 77,24,440 by the Motor Accidents Claims Tribunal (MCAT), Kurukshetra.
However, the insurance company (petitioner) filed an appeal against this massive amount of award by the MACT to claimants through the order dated July 9, 2025.
Argument
The counsel of the insurer argued that the compensation amount was erroneously calculated. It presented two grounds: erroneous age and multiplier used, and the deceased’s monthly pension amount addition in compensation calculation.
The counsel argued that the Tribunal determined the deceased’s age as 40 years, whereas his actual age was 41 years and 6 months 2 days at the time of death. According to the petitioner, this led to applying an incorrect multiplier of 15 instead of 14. Further, the future prospect was also considered 40 per cent instead of the mandated 25 per cent.
The second argument the insurer gave was that the Tribunal made an error by adding the deceased’s monthly pension of Rs 38,544 as his income for compensation calculation.
On the other hand, the claimants’ (respondents) counsel defended the Tribunal’s order, saying that the deceased’s pension should be added to his income for calculating loss of dependency. The counsel supported the argument with some previously settled cases.
Incidentally, the compensation amount in motor insurance claims is calculated based on the deceased’s income and expenses, age, age-based multiplier, future prospects, loss of consortium (loss of companionship, emotional care, and support), loss of estate, loss of dependency, funeral expenses, and interest if levied.
Court Observation
The court observed no contention between parties on the date of birth of the deceased, that is, March 30, 1979. It observed the Tribunal’s error in taking the deceased’s age as 40 instead of the actual 41 years and 06 months, and 2 days. Consequently, the multiplier and the future prospects considered were wrong. The court held that the multiplier should have been 14 instead of 15, and future prospects 25 per cent instead of 40 per cent.
The crucial part of the contention was the treatment of the deceased’s Rs 38,544 monthly pension and its inclusion in calculating the loss of dependency. The court noted that the deceased had retired two days before the accident and was not employed anywhere else. It found no fault of the Tribunal treating the deceased as a highly skilled person and determining his notional income as Rs 12,000 per month.
On the matter of family pension, the court ruled against adding it. It held, “Pension/family pension being received by claimant respondents cannot be deducted from the compensation amount determined by the Tribunal in a motor accident case.”
It clarified that family pension can neither be treated as income of the deceased in determining loss of dependency nor deducted from the compensation awarded to family due to loss of dependency. The court noted claimants’ entitlement to family pension, up to 60 per cent of the original pension, and it will be separate, having no relation to the insurance compensation.
Court Judgment
The court recalculated the compensation, based on correct age, multiplier 14, and future prospects at 25 per cent, and taking into account the notional income. So the calculated loss of dependency amount came out to be Rs 18,90,000 (Income Rs 12,000 per month + Rs 3,000 (25 per cent) future prospects-expenses of Rs 3,750 (1/4th) = Loss of dependency of Rs 18,90,000).
The total compensation, including Rs 44,000 each for spousal consortium, filial consortium, and parental consortium, and Rs 16,500 each for loss of estate and funeral expenses, came out to be Rs 21,43,000.
The court awarded the revised amount, reducing the original award from Rs 77,24,440 to Rs 21,43,000 (Rs 77,24,440 - Rs 55,81,440). The court maintained the 7.50 per cent per annum interest payment to the claimants (respondents) from the date of filing the claim petition till the fund’s realisation.
