Madras High Court· 12 August 2026
Under the Motor Vehicles Act, on what income is the addition towards Future Prospects applied in a death claim?
SAVITHA BARARIA v. KALAIRAJ.V
CMA.1219/2025 · CMA No. 1219 of 2025
Coram: Justice N.Sathish Kumar · Justice M.Jothiraman
Answer
On the established income, which means the income minus the tax component. The addition is fixed by the age of the deceased at the time of accident: as laid down in Pranay Sethi, an addition of 25% is made where the deceased was between the age of 40 to 50 years, and no reason warrants enhancement of the Loss of Future Prospects awarded by the Tribunal. Components such as house rent allowance and contribution to provident fund, being beneficial to family, are added while considering the basic salary to arrive at the dependency factor, while the statutory amount of tax payable is deducted.
Headnote
Motor Vehicles Act, 1988 — Motor Accidents Claims Tribunal — Compensation — Income Tax Returns — Average Gross Income — Future Prospects — Established income — Personal Expenses —
Motor Vehicles Act, 1988 — Compensation — Income of the deceased — Average of the previous three assessment years —
Held: Where the income of the deceased is shown by Income Tax Returns, the annual income is the Average Gross Income of the previous 3 Assessment years, and not the income shown in one such return. (¶14, 15)
Motor Vehicles Act, 1988 — Compensation — Future Prospects — Age of the deceased at the time of accident —
Held further: The addition towards Future Prospects is fixed by the age of the deceased at the time of accident and is applied to the established income, which means the income minus the tax component. (¶16)
Motor Vehicles Act, 1988 — Compensation — Components of income — Statutory amount of tax deducted —
Held further: Allowances beneficial to the family are added while considering the basic salary to arrive at the dependency factor, while the statutory amount of tax payable must be deducted. Compensation modified; the Insurance Company's appeal is dismissed. (¶12, 19)
In the Court's own words
Paragraph 10In this regard, it is relevant to refer the judgment of the Hon’ble Supreme Court in Meenakshi v. Oriental Insurance Co., Ltd. [2024 SCC OnLine SC 1872] wherein the Hon’ble Supreme Court has held as follows: "9. Recently in a judgment dated 11th July 2024 in National Insurance Company Ltd., Vs. Nalini and Ors. [Petition for Special Leave to Appeal (C) No.4230/2019], this Court held that allowances under the heads of transport allowance, house rent allowance, provident fund loan, provident fund and special allowance ought to be added while considering the basic salary of the victim/deceased to arrive at the dependency factor. 10. Therefore, components of house rent allowance, flexible benefit plan and company contribution to provident fund have to be included in the salary of the deceased while applying the component of rise in income by future prospects to determine the dependency factor. The Accident Claims Tribunal was justified in factoring these components into the salary of the deceased, before applying 50% rise by future prospects due to future prospects, while calculating the total compensation payable to the appellant.” https://www.mhc.tn.gov.in/judis ( Uploaded on: 14/08/2026 03:39:30 pm )
Paragraph 12It is also relevant to refer the judgment of the Hon’ble Supreme Court in National Insurance Company ltd. v. Indira Srivastava and Others [2008 (1) TN MAC 166 (SC)], wherein it has been held that the reimbursement of rent, bonus payable as part of salary, contribution to provident fund, superannuation benefits, contribution towards gratuity, insurance of medical policy for self and family and education scholarships are beneficial to family. However, the medical reimbursement would not come within purview of benefits to the family and the statutory amount of tax payable must be deducted from amount of income of the deceased.
Paragraph 16The learned counsel appearing for the claimants would contend that the Tribunal ought to have granted compensation towards Loss of Future Prospects and the income of the deceased has gradually raised and awarded 20% towards Future Prospects would not be proper. In this regard, it is relevant to refer the judgment of the Hon’ble Supreme Court in National Insurance Co. Ltd., v. Pranay Sethi [AIR 2017 SC 5157], wherein it was held as follows:
Acts & Sections
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