The Supreme Court of India clarified that the multiplier used to calculate compensation in motor accident claims must not be reduced simply because the deceased was earning in foreign currency. The Court also ruled that the exchange rate for converting foreign income to Indian rupees should be based on the date of filing the claim petition, not the accident date.
The Bench of Justices Sanjay Karol and Prashant Kumar Mishra delivered this ruling while hearing an appeal in Shyam Prasad Nagalla & Ors. v. The Andhra Pradesh State Road Transport Corporation & Ors.
The appellants were the husband and two daughters of Lakshmi Nagalla, a 43-year-old software engineer working in the U.S. She tragically died in a road accident in 2009 when an APSRTC bus, driven rashly, collided with her car.
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Her dependents filed a claim before the Motor Accident Claims Tribunal (MACT), seeking compensation for her untimely death. The Tribunal calculated her monthly income at $11,600, applied a 30% future prospects increase, and used a multiplier of 14 (based on her age), awarding Rs. 8.05 crores.
However, the Telangana High Court later reduced the multiplier to 10, arguing that her foreign earnings justified a lower calculation. This slashed the compensation to Rs. 5.75 crores, prompting the family to appeal to the Supreme Court.
The Supreme Court overturned the High Court’s decision, emphasizing two critical legal principles:
Multiplier Must Be Based on Age, Not Income Source
- Citing National Insurance Co. Ltd. v. Pranay Sethi (2017), the Court reiterated that the multiplier for a 43-year-old must be 14, regardless of whether the income was earned in India or abroad.
- The High Court’s reduction to 10 was unjustified, as foreign earnings do not alter the standard calculation method.
Exchange Rate Fixed on Claim Filing Date
- The Court relied on Jiju Kuruvila v. Kunjujamma Mohan (2013) and DLF Ltd. v. Koncar Generators & Motors Ltd. (2024) to confirm that the exchange rate should be as per the date of filing the claim petition (2012)—Rs. 57 per dollar—not the accident date.
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The Supreme Court recalculated the compensation as follows:
- Annual income (after deductions and future prospects):- $1,20,640
- Multiplier (14):- $16,88,960
- Converted to INR (Rs. 57/$):- Rs. 9.62 crores
- Additional amounts (loss of estate, funeral expenses, consortium):- Rs. 1.33 lakhs
- Total compensation:- Rs. 9.64 crores
This enhanced payout ensures that families of NRI victims receive fair compensation without arbitrary reductions based on their income source.
Case Title: Shyam Prasad Nagalla & Ors. v. The Andhra Pradesh State Board Transport Corporation & Ors.
