The Supreme Court has referred the question of enhancing compensation under conventional heads to a Larger Bench, expressing doubt whether the 10 percent triennial increase fixed in Pranay Sethi should apply retrospectively to pre-2017 accidents, motor accident claims nationwide.
New Delhi: The Supreme Court has referred a significant legal issue to a Larger Bench regarding the enhancement of compensation under ‘conventional heads‘ in motor accident cases, after expressing uncertainty over whether the ‘10% enhancement formula’ laid down in National Insurance Co. Ltd. v. Pranay Sethi (2017) can be applied retrospectively.
A Division Bench consisting of Justice Ahsanuddin Amanullah and Justice K. Vinod Chandran considered whether the directive in Pranay Sethi mandating a 10% increase every three years in amounts awarded under conventional heads would extend to accidents that took place before the 2017 ruling.
Even as it referred the matter for authoritative consideration, the Court granted interim relief to the claimants, increasing the compensation payable under conventional heads to ₹1,50,000 with interest at 8%.
Background of the Case
This matter arises from a motor accident that took place in 1998. The petitioners, the deceased victim’s wife and two children approached the Supreme Court seeking an increase in compensation granted under conventional categories such as:
- Loss of Estate
- Loss of Consortium
- Funeral Expenses
They placed reliance on the Constitution Bench ruling in Pranay Sethi Case, which fixed standardized amounts for these categories and further directed a “10% enhancement every three years” to address inflation. The petitioners also cited the decision in Rojalini Nayak & Ors. v. Ajit Sahoo & Ors. to support their claim.
The petitioners argued that:
- All three dependents were eligible to receive compensation for loss of consortium, including filial consortium for the children, relying on the precedent set in Magma General Insurance Co. Ltd. v. Nanu Ram & Ors.
- The “10% enhancement” stipulated in Pranay Sethi should be implemented regardless of when the accident occurred.
On the other hand, the respondent insurer, National Insurance Co. Ltd., submitted that:
- The “10% enhancement” was intended to function prospectively and should therefore be confined to accidents that took place after the 2017 judgment.
- Although the standardized compensation amounts determined in Pranay Sethi could be applied, the incremental enhancement should not be retrospectively extended to earlier accident claims.
The Bench undertook a detailed examination of the ruling in Pranay Sethi, wherein the Constitution Bench had directed that the fixed amounts awarded under conventional heads should be increased by 10% every three years, keeping in view factors such as inflation, decline in interest rates, and rising expenses.
Authoring the judgment, Justice K. Vinod Chandran remarked that extending this enhancement to accidents that occurred many years earlier, merely because the adjudication concluded later, would create significant anomalies.
The Court remarked,
“The escalation cannot depend upon the date of the order by which the claim petition is finally disposed of…”
The Bench also expressed reservations about an interpretation that would permit accidents from earlier years such as 2010 to receive multiple increments solely based on the timing of the claim’s disposal.
Dissenting from the view that permits retrospective application of enhancement, the Bench concluded that the matter needed a conclusive ruling by a Larger Bench.
The Court stated that,
“Being a co-ordinate Bench, we would only refer the matter to a Larger Bench, which we do.”
Consequently, the Court directed the Registry to place the case before the Chief Justice of India for necessary administrative directions.
This development is poised to significantly impact motor accident compensation jurisprudence, especially in cases pertaining to incidents that occurred before the 2017 Pranay Sethi decision.
Case Title: Hasina Yasmin & Ors. v. National Insurance Co. Ltd. & Anr.
Read Attachment:
FOLLOW US FOR MORE LEGAL UPDATES ON YOUTUBE
