SC standardises future prospects and compensation in motor accident claims

National Insurance Company Limited Vs Pranay Sethi And Ors. (Supreme Court of India)

Summary: The five-Judge Bench of the Supreme Court considered a reference arising from conflicting three-Judge Bench decisions in Reshma Kumari and others v. Madan Mohan and another and Rajesh and others v. Rajbir Singh and others, after a two-Judge Bench in National Insurance Company Limited v. Pushpa and others referred the issue for authoritative determination. The principal controversy concerned the addition towards future prospects in cases where the deceased was self-employed or was on a fixed salary without provision for annual increments, together with the related principles governing deduction for personal and living expenses, selection of multiplier and conventional heads of compensation under the Motor Vehicles Act, 1988.

The Court examined the development of the law through decisions including Sarla Verma and others v. Delhi Transport Corporation and another, Reshma Kumari, Santosh Devi, Rajesh and Munna Lal Jain. It held that a coordinate Bench cannot take a contrary view from an earlier coordinate Bench without the matter being referred to a larger Bench. On that basis, the Court held that Rajesh, having not taken note of the earlier Reshma Kumari decision, was not a binding precedent on the coordinate Bench. The Court also reaffirmed the importance of judicial discipline and the doctrine of binding precedent, referring to several Constitution Bench and other decisions concerning conflicting judgments and the proper course where an earlier decision is considered incorrect.