Future Earning Capacity of Meritorious Students in Motor Accident Cases Cannot Be Assessed on Minimum Wages or Meagre Notional Income

Case Name: Mohinder Kaur (D) Through L.R. v. Brij Lal Arora and Ors.

Citation: 2026 INSC 477

Date of Judgment/Order: 12 May 2026

Bench: Justice S.V.N. Bhatti and Justice Vijay Bishnoi

Held: The Supreme Court held that while determining compensation in motor accident cases involving deceased students with strong academic credentials and promising career prospects, courts cannot mechanically assess notional income on the basis of minimum wages or nominal assumptions applicable to unskilled workers. The Court held that future earning potential of a meritorious engineering student must be assessed realistically by considering educational qualifications, specialised technical training, and employability prospects. The Court further held that future prospects under Pranay Sethi are equally applicable even where income is notionally assessed, and deduction towards personal expenses must still be made in accordance with settled principles under Sarla Verma.

Summary: The appeal arose from a fatal motor accident that occurred on 28 May 2000 in which Karan Pal Singh, a 22-year-old third-year mechanical engineering student, died after a rashly driven truck collided with his motorcycle near Mathura. The deceased had completed a diploma course in Plastic Mould Technology from the Central Institute of Plastic Engineering and Technology, Chennai, had secured exemption for one academic year in his engineering degree on account of his diploma qualification, and also possessed an AutoCAD certification. The claimant-mother asserted that the deceased was additionally earning by imparting computer training and had substantial future earning prospects. The Motor Accident Claims Tribunal assessed his monthly income at merely INR 3,000 and awarded total compensation of INR 2,23,000. The Punjab and Haryana High Court enhanced compensation to INR 13,44,000 by taking notional income at INR 6,000 per month but declined future prospects on the ground that income was notional. Before the Supreme Court, reliance was placed on precedents including Arvind Kumar Mishra, Joginder Singh, Navjot Singh, Pranay Sethi and Magma General Insurance. The Supreme Court held that the deceased’s educational qualifications and technical skills clearly established substantial earning potential and that denial of future prospects merely because income was notionally determined was legally unsustainable.

Decision: The Supreme Court partly allowed the appeal and enhanced the compensation to INR 19,25,070. The Court reassessed the deceased’s monthly income at INR 12,000, added 40% future prospects, deducted one-half towards personal expenses as the deceased was a bachelor, and applied multiplier 18, thereby computing loss of dependency at INR 18,14,400. The Court further awarded INR 15,000 towards loss of estate, INR 40,000 towards filial consortium, INR 30,000 towards funeral expenses, and enhanced motorcycle damage compensation to INR 25,670 in accordance with the surveyor’s report. The rate of interest fixed by the High Court at 7.5% per annum was upheld. The respondents were directed to jointly and severally pay the enhanced compensation within eight weeks from the date of the judgment, and all pending applications stood disposed of.