Facts
The deceased, aged 39 years, died in a motor accident on 29 May 2018 after his car was hit by a rashly driven truck. His legal representatives filed a claim under S.166 Motor Vehicles Act, 1988, asserting that he was a self-employed construction contractor earning approximately ₹15,00,000 annually. The MACT assessed his annual income on the basis of the ITR for AY 2018–19 and awarded compensation of ₹2,27,00,064/-. The High Court reduced the compensation by averaging the previous two ITRs and applying a lower multiplier. The claimants appealed before the Supreme Court.
Issues Framed
Whether, for assessing the annual income of a deceased or claimant under the Motor Vehicles Act, 1988, the previous year's ITR alone or the average of the previous two/three years' ITRs should be adopted.
Court's Reasoning
(a) Legal Rule
The Court held that there is no rigid formula for determining income from ITRs. While ITRs are important statutory evidence, the approach depends upon the nature of employment. For salaried individuals, the previous year's ITR ordinarily reflects the true earning capacity. For self-employed persons, whose income may fluctuate, the average of up to the previous three years' ITRs should ordinarily be taken, while also considering the nature, growth pattern, profitability and surrounding circumstances of the business.
(b) Precedents Relied Upon
The Court relied upon V. Pathmavathi v. Bharthi Axa General Insurance Co. Ltd., Reshma Kumari v. Madan Mohan, Anant v. Pratap, ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty, and National Insurance Co. Ltd. v. Pranay Sethi, reiterating that compensation under the Motor Vehicles Act must be "just and fair" and determined on realistic principles.
(c) Application
Since the deceased was carrying on his own construction business, the High Court erred in mechanically averaging two ITRs without considering the nature and growth of the business. Taking into account the available ITRs and the surrounding circumstances, the Court fixed the annual income at ₹14,00,000 and recalculated the compensation at ₹1,97,81,505.
(d) Treatment of Counterarguments
The Court rejected both the Tribunal's approach of relying solely on the latest ITR and the High Court's mechanical averaging exercise, holding that neither method, by itself, necessarily results in "just compensation" without considering the factual context of the business.
Held
The appeal was partly allowed. The High Court's award was modified, and the compensation payable to the claimants was enhanced to ₹1,97,81,505 with interest as awarded by the Tribunal.
Ratio
For computation of compensation under the Motor Vehicles Act, 1988, income of a salaried person is ordinarily determined from the previous year's ITR, whereas for a self-employed person, the average of up to the previous three years' ITRs, read with the surrounding circumstances of the business, should ordinarily be adopted to award just compensation.
Case Details
Citation: 2026 INSC 661
Decided on: 1 July 2026
Case Title: Rashmirekha Tripathy & Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Ltd. & Ors.
Court: Supreme Court of India
Bench: Sanjay Karol, J.; Nongmeikapam Kotiswar Singh, J.