In a significant judgment dated August 6, 2025, the Supreme Court of India, in the case of Kavita Devi & Others vs. Sunil Kumar & Another, enhanced the compensation amount for the family of a motor accident victim, Lokender Kumar. The Court emphasized the importance of considering actual income, including allowances, while computing compensation in fatal accident cases under the Motor Vehicles Act.
The deceased, Lokender Kumar, aged 35, was employed at R.M. Manpower Services, Gurgaon, and was also engaged in agricultural work. He tragically died on 16 February 2009 in a road accident when a Santro car, driven rashly by the respondent, hit him on Sohna-Gurgaon road. His wife and two minor children approached the Motor Accident Claims Tribunal seeking ₹25 lakhs in compensation.
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The Tribunal initially awarded only ₹2,54,720, calculating his income as ₹3,665/month, excluding allowances like HRA. Dissatisfied, the claimants appealed to the Punjab and Haryana High Court, which increased the compensation to ₹7,23,680, considering future income prospects but still excluding certain allowances and agricultural income.
"The High Court enhanced the amount but failed to apply all principles laid down in previous landmark cases, thus resulting in an underestimation of compensation," the apex court observed.
Representing the appellants, advocate Mr. Fuzail Ahmad Ayyubi argued that the High Court failed to apply the principles set in National Insurance Co. Ltd. v. Pranay Sethi, particularly regarding fixed amounts under various heads like consortium and estate loss. He also contended that income from agriculture and full monthly earnings including allowances were wrongly ignored.
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The Supreme Court critically examined the salary records and reiterated that perks and allowances, if used for family welfare, must be included in the deceased's income. Referring to multiple precedents, including Sarla Verma and Indira Srivastava, the Court clarified the legal meaning of "just compensation" and emphasized a broader and more realistic income evaluation.
"Loss caused to the family on the death of a near and dear one can hardly be compensated in monetary terms... allowances used for the benefit of the family must be considered as part of income," the Court noted.
Taking the monthly income as ₹6,500 and applying a multiplier of 16 with 50% addition for future prospects, the Supreme Court awarded ₹12,48,000 under the head of loss of dependency. Further, the Court awarded ₹18,150 each for loss of estate and funeral expenses. In addition, ₹48,400 was granted as spousal consortium to the wife and ₹96,800 as parental consortium to the two children.
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In total, the family was awarded ₹14,29,500 in compensation.
The Court directed that the insurance company must deposit the amount within eight weeks, with 7% annual interest from the date of petition filing—excluding the delay period in filing the appeal. The compensation was ordered to be distributed in a 50:25:25 ratio among the widow and two children, with minors’ shares secured in fixed deposits.
Case Title: Kavita Devi and Others vs. Sunil Kumar and Another