Minimum Wages Only Guiding Benchmark: Delhi High Court Issues Guidelines For Income Assessment In MACT Cases

The Bench noted that in matters involving the informal sector, where wages are frequently paid in cash and formal records are scarce, the Court must engage in "intelligent guesswork" based on a holistic assessment of the victim’s age, nature of work, and family standard of living. Accordingly, enhanced the benchmark income from ₹7,400 to ₹9,381 per month (minimum wages for a skilled worker in U.P.). The total compensation was revised to ₹20,51,309, resulting in an enhancement of ₹3,74,409.

Justice Anish Dayal rejecting the notion that the inability of an informal employer to produce an attendance register or ITR should imperil a family’s right to just compensation, observed, “In the informal sector, it may not always be possible to produce documentary proof of employment and payment of wages, which are usually paid in cash…If documentary proof has not been filed, the Court can use the minimum wage benchmark of an appropriate category i.e., unskilled, skilled, matriculate, etc., as a benchmark for assessment, but not be constrained to grant the lowest tier”.

Advocate Vaibhav Verma appeared for the appellant and Advocate Pankaj Seth appeared for the respondent.

On January 18, 2018, Ashok Kumar was traveling from Noida to his village on a motorcycle when he was struck from behind by an offending vehicle near the Yamuna Expressway. He was declared brought dead at the hospital. The deceased, aged 37, was survived by his wife, three children, and mother. Claimants asserted he worked as a supervisor at M/s Kanta Enterprises earning ₹15,000 per month.

The MACT, Patiala House Courts, awarded ₹16,76,900 in compensation. However, the Tribunal disregarded the salary claim of ₹15,000 because the proprietor (PW-3) could not produce a wage register or ITR proof. Consequently, the Tribunal assessed income based on the minimum wages of an "unskilled worker" in Uttar Pradesh, taken at ₹7,400 per month. The appellants approached the High Court seeking enhancement.

The Court observed that in the informal sector, it is often impossible to produce formal appointment letters or salary slips. Relying on Supreme Court precedents like Chandra v. Mukesh Kumar Yadav, the Court held that guesswork must not be totally detached from reality. Justice Dayal noted that the deceased was traveling on a motorcycle for duty and was described as a helper/supervisor by witnesses.

The Bench formulated the following principles:

A. Lack of Documentary Proof

i. In the informal sector, documentary proof of employment or wages may not always be available, as wages are often paid in cash.

ii. Where documentary proof of employment in Delhi is unavailable, courts may rely on surrounding facts and circumstances to determine whether the victim was residing and working in Delhi on the date of the accident, supported by documents such as a driver’s licence, voter ID, etc. In such cases, minimum wages of the place of work may be considered.

iii. In the absence of documentary proof, courts may use the minimum wage benchmark of an appropriate category (unskilled, skilled, matriculate, etc.) for income assessment, but are not bound to adopt the lowest tier.

B. Oral Testimony of Family Members or Employers

i. Income may also be assessed on the basis of statements made by immediate legal heirs of the deceased, such as the spouse, father, or other close family members, along with the statement of the employer, if any. Such testimonies must be consistent and remain unrebutted by the insurer or contesting party.

ii. If such testimonies are unreliable, courts may again use the minimum wage benchmark of the relevant category, without being constrained to the lowest slab.

C. Proof of Employment

i. Where documentary evidence such as salary/wage certificates, Income Tax Returns (ITRs), or similar records are available, courts shall consider them.

ii. In the absence of such documents, income assessment may be based on intelligent guesswork and need not be confined strictly to minimum wages, after a holistic evaluation of evidence such as place of employment, co-worker testimony, or other supporting witnesses.

iii. Income determination in such cases inherently involves a degree of approximation and cannot always be mathematically exact.

iv. Courts may rely on State-specific legislation and minimum wage notifications to classify the victim’s vocation as skilled or unskilled work.

D. Age, Occupation, and Educational Background of the Victim

i. Where the victim was a student, courts must consider the educational background and likely future employment prospects that were lost due to the accident.

ii. In the absence of employment proof, reliance may be placed on documents and testimonies relating to the victim’s educational qualifications and background.

E. Standard of Living of the Deceased

i. In claims by dependents of a deceased breadwinner, courts must assess income by considering the family’s standard of living before the accident and the financial void created by the death, so as to appropriately support surviving dependents.

The Court held that the "lowest tier" of minimum wages should not be the default mechanism when circumstances suggest higher skills. While the oral testimony of the proprietor lacked documentary support for a ₹15,000 salary, it was sufficient to establish that the deceased was not an unskilled laborer. Therefore, the Court found it appropriate to categorize the deceased as a "skilled worker" rather than "unskilled".

The Court directed the Insurance Company to deposit the enhanced amount with 7.5% interest within four weeks.

Cause Title: Savita & Ors. v. National Insurance Company Ltd. (Neutral Citation: 2026:DHC:3626)

Appearances:

Appellant: Vaibhav Verma and Tanya Singh, Advocates.

Respondent: Pankaj Seth, Advocate.

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