Punjab & Haryana High Court Enhances Motor Accident Compensation After Correcting Salary Assessment; Holds All Allowances Except Income Tax Must Be Counted

Case Name: Smt. Sonia and Others v. Mukesh Kumar and Others
Date of Judgment: 09 December 2025
Citation: FAO-1603-2024
Bench: Hon’ble Ms. Justice Sudeepti Sharma

Held: The Punjab and Haryana High Court allowed an appeal seeking enhancement of compensation awarded in a motor accident claim and held that while assessing loss of dependency, the entire taxable salary of the deceased, including allowances, must be taken into account, with only income tax being deductible. The Court further held that the Tribunal had awarded inadequate amounts under conventional heads and accordingly enhanced the compensation by applying settled principles laid down in Sarla Verma, Pranay Sethi, and Magma General Insurance.

Summary: The appeal was confined to the quantum of compensation awarded by the Motor Accident Claims Tribunal in a claim arising from the death of a BSF constable in a motor vehicular accident. The appellants contended that the Tribunal had erroneously reduced the income of the deceased by excluding allowances such as dearness allowance, dress allowance, and soap allowance, thereby resulting in an artificially depressed computation of loss of dependency.

The High Court examined the salary slips proved on record and reiterated the settled legal position that for the purpose of determining just compensation under the Motor Vehicles Act, the taxable income of the deceased must be considered in its entirety. Relying on Supreme Court precedent, the Court held that only income tax can be deducted from gross salary, and exclusion of other allowances is impermissible.

Applying the correct income, the Court recalculated the loss of dependency by adding future prospects, applying the appropriate multiplier based on the age of the deceased, and making deduction for personal expenses in accordance with Sarla Verma. The Court also found that the amounts awarded under the heads of loss of estate, funeral expenses, and loss of consortium were on the lower side and required enhancement in line with Pranay Sethi and Magma General Insurance.

On reassessment, the Court enhanced the total compensation substantially and held the claimants entitled to interest on the enhanced amount at the same rate as awarded by the Tribunal.

Decision: The appeal was allowed. The impugned award was modified, and the appellants were held entitled to enhanced compensation of ₹29,47,775 along with interest. The insurer was directed to deposit the enhanced amount with interest within the stipulated period, and the Tribunal was directed to disburse the same to the claimants in accordance with the original apportionment.