In a significant step towards streamlining compensation for victims of motor accidents, the Supreme Court of India has directed all states and Union territories (UTs) to submit a comprehensive compilation of notifications issued on minimum wages. The bench, comprising Justices Sanjay Karol and N. Kotiswar Singh, emphasized that the absence of a uniform, readily accessible repository of minimum wage data has made it increasingly difficult for courts to adjudicate claims under the Motor Vehicles Act (MVA) in a timely and consistent manner.

The court noted that determining the appropriate quantum of compensation in motor accident claims often hinges on the income of the deceased, particularly in cases involving daily wage earners, self-employed individuals, informal workers, homemakers, and children, for whom documentary proof of income is rarely available. In such instances, courts rely on prevailing minimum wage notifications to estimate notional income, which forms the basis for calculating loss of dependency, the largest component of compensation in fatal accident cases.

Challenges in Adjudicating Claims

The Supreme Court highlighted the persistent difficulties it faces in locating the correct minimum wage notification applicable at the time of an accident. The bench pointed out that states revise their minimum wage schedules periodically, but updates are often uploaded inconsistently on official websites. Some states provide partial data for certain years, while others maintain consistent records only from a particular year onward. This fragmentation has led to delays, disputes, and inconsistent judicial outcomes.

“Once the information is received, the same should be scanned and kept in the custody of the Centre for Research and Planning, Supreme Court of India, from where it should be easily accessible to all concerned,” the bench directed. Additionally, the court mandated that authorities must electronically furnish periodically revised notifications, ensuring that the latest authoritative documents remain available for judicial reference.

Legal Context and Minimum Wages in Compensation Calculation

Over the years, the Supreme Court has moved away from rigid reliance on outdated statutory schedules and emphasized a realistic assessment of income based on contemporary economic conditions. While the Second Schedule to the Motor Vehicles Act, 1988, provided a framework for compensation, it was introduced in 1994 and has often been criticized for being disconnected from current ground realities. Courts now assess compensation on the basis of minimum wages fixed by states under the Minimum Wages Act, 1948, in addition to conventional heads like funeral expenses, loss of consortium, and loss of estate.

The absence of a centralised repository has meant that both tribunals and high courts have sometimes struggled to apply consistent standards, particularly when assessing notional income in the absence of documentary proof. By directing states to compile and submit complete wage notifications, the Supreme Court aims to ensure uniformity, transparency, and expediency in adjudicating motor accident claims.

Case Background: Fatal Motor Accident

The directions were issued during the hearing of an appeal arising from a tragic motor accident that occurred in July 2013, in which a father and his nine-year-old son died after a truck collided with the motorcycle they were travelling on. The rash and negligent driving of the truck and the insurer’s liability were not in dispute.

The Motor Accident Claims Tribunal (MACT), Gwalior, had initially passed a common award in January 2015 granting compensation to the family. While the award for the father was not challenged, the compensation relating to the minor son was contested before the Madhya Pradesh High Court, which enhanced the award by ₹1 lakh in May 2024, taking the total compensation to ₹3.5 lakh.

Still dissatisfied, the claimants approached the Supreme Court, contending that the calculation of notional income for the deceased child and the award under conventional heads were legally flawed. The bench observed that both the tribunal and the high court had relied on the outdated Second Schedule, which did not reflect current economic realities.

Supreme Court’s Assessment and Recalculation

The Supreme Court emphasized that in numerous judgments, including Puttamma Vs KL Narayana Reddy (2013) and Meena Devi Vs Nunu Chand Mahto (2023), the Second Schedule has been criticized for being disconnected from contemporary economic realities. The bench also noted that the high court had failed to apply the binding principles laid down in the Constitution Bench ruling of National Insurance Co Ltd Vs Pranay Sethi (2017), which outlined methods for calculating compensation under conventional heads such as loss of consortium, funeral expenses, and loss of estate.

In reassessing the compensation on the principle of “just and fair compensation”, the Supreme Court recalculated the notional income of the deceased child based on the minimum wages applicable to skilled labour at the relevant time, fixing the monthly income at ₹6,390. After accounting for interest and other components, the court ultimately awarded a total compensation of ₹11,96,068, directing that interest be paid from the date of filing of the claim petition and that the amount be released within eight weeks.

The bench recorded its appreciation for the assistance rendered by amici curiae, advocates Bhanu Thakur and Shalini Tripathi, for their valuable inputs in the case.

Significance of the Directions

The Supreme Court’s directions to compile minimum wage notifications mark a landmark step in standardizing compensation assessments across India. The initiative addresses multiple challenges:

1. Accessibility: Providing a central repository ensures that judges, tribunals, and litigants can easily access authoritative minimum wage data.
2. Consistency: Uniform information reduces discrepancies in compensation awards across different courts and tribunals.
3. Efficiency: Ready availability of wage notifications is expected to reduce litigation delays and avoid disputes over applicable income standards.
4. Fairness: By aligning compensation with contemporary economic conditions, awards are likely to better reflect realistic income levels, particularly for self-employed, informal, or child victims.

Experts note that this step also underscores the Supreme Court’s proactive role in ensuring that administrative gaps do not hinder the delivery of justice. By mandating electronic submission and continuous updating, the court aims to minimize ambiguity and disputes in cases where income data is crucial for calculating damages.

Broader Implications for Motor Accident Claims

Minimum wages play a critical role in motor accident claims, especially when the deceased did not have a formal salary or employment records. Courts often have to estimate notional income, which forms the foundation for calculating loss of dependency, the largest component in fatal accident compensation. By creating a comprehensive, accessible database, the Supreme Court’s directive will assist in:

• Determining realistic compensation for victims across India, particularly in rural and informal sectors.
• Reducing repetitive litigation on factual matters such as applicable wage levels.
• Ensuring equitable treatment of claimants, regardless of their geographical location or employment type.

Conclusion

The Supreme Court’s order to compel states and UTs to compile and update minimum wage notifications represents a significant effort to streamline adjudication under the Motor Vehicles Act. It addresses the chronic difficulties courts face in determining fair compensation, particularly in cases involving self-employed individuals, daily wage earners, and minors.

By providing a centralized, authoritative, and regularly updated repository, the judiciary seeks to ensure transparency, uniformity, and efficiency in compensation claims. The recent recalculation of compensation in the Gwalior motor accident case exemplifies how access to accurate wage data can directly impact the delivery of justice, providing victims’ families with awards that truly reflect contemporary economic realities.

The Supreme Court’s initiative is expected to have far-reaching consequences, reducing avoidable litigation, expediting claims, and ultimately strengthening the framework for fair compensation in motor accident cases across India.

---