Pension Cannot Be Excluded From Deceased’s Income While Calculating Motor Accident Compensation: Supreme Court

The Supreme Court held that statutory retirement benefits like pensions cannot be excluded or deducted when determining the loss of dependency in accidental death claims.

The Court held that such amounts are secured rights as it forms a legitimate and continuing component of the income which the dependents would have otherwise received, and hence the pension amount as receivable at the time of the accident, by the deceased, has to be considered while calculating the loss of income

The Bench of Justice Sanjay Karol and Justice Satish Chandra Sharma held, "while determining the loss of dependency, the pension amount cannot be excluded or deducted, as it forms a legitimate and continuing component of the income which the dependents would have otherwise received, and hence the pension amount as receivable at the time of the accident, by the deceased has to be considered while calculating the loss of income and hence in the present case as the deceased was receiving a pension of Rs.5,839/- per month, and accordingly the same has to be added to the salary as received by the deceased from his private job."

AOR Ravindra S. Garia appeared for the Appellants, while Advocate Jagdish Chandra appeared for the Respondents.

Brief Facts

The appeal arose out of a vehicular accident wherein the deceased was travelling on a motorcycle along with his family members. When they parked their vehicle on the roadside, a bus being driven in a rash and negligent manner dashed into their vehicle. As a result of the impact, the deceased sustained severe injuries and succumbed to them on the spot, leading to the registration of a First Information Report against the driver of the offending vehicle.

The legal representatives of the deceased preferred a claim petition before the Motor Accident Claim Tribunal under the Motor Vehicles Act, seeking compensation for the loss of dependency. It was asserted that the deceased was gainfully employed in a private company and was also drawing a monthly pension, having retired from the Border Security Force. The Tribunal determined the monthly income at a lower rate, deducted one-fourth towards personal expenses, applied the relevant multiplier, and awarded a specific sum along with interest.

Dissatisfied with the quantum, the claimants preferred an appeal before the High Court for enhancement. The High Court partly allowed the appeal, re-assessing the income slightly higher and adding amounts under the heads of future prospects and conventional heads, which further enhanced the compensation. Still aggrieved by the assessment of income, the claimants approached the Supreme Court.

Contentions of the Parties

The claimant-appellants contended that both the Courts below committed a grave error in assessing the monthly income of the deceased by failing to consider the actual salary slips and various allowances payable to him. It was further urged that the High Court completely overlooked the fact that the family pension was reduced to half of what the deceased would have been entitled to had he survived, thereby causing additional financial distress to the family.

On the contrary, the Respondents supported the impugned judgments, submitting that since the wife of the deceased continued to receive the family pension after his demise, no real pecuniary loss on account of the pension had been proved by the claimants, and thus the concurrent findings required no interference.

Findings of the Court

The Court observed that the findings of the lower courts regarding the assessment of the annual income of the deceased required judicial interference. It was noted that the salary slips and pensioner's identity card clearly established the dual income of the deceased from his private service as well as his military pension.

The Court observed that a pension is a recurring and assured source of income arising out of past services, constituting an integral part of the pecuniary benefits of a deceased individual. Relying on settled legal precedents, the Court held that statutory retirement benefits such as provident fund, pension, and insurance are secured rights that cannot be treated as a "pecuniary advantage" liable for deduction or exclusion while computing compensation under the Motor Vehicles Act.

The Court further observed that the lower courts made unwarranted deductions from the private salary of the deceased.

"As far as the income from the private service is concerned, the Courts below have made certain unwarranted deductions in calculating the income. We therefore fix the income of the deceased from his private service at Rs.32,673/- per month, and as a result, the total monthly income of the deceased is re-fixed at Rs. 38,512/- for the computation of compensation. The claimant-appellant(s) are also entitled to compensation under other heads in accordance with the settled principles of law", the Court said.

Consequently, the Court re-fixed the total monthly income by adding the full pension amount to the actual private salary. Applying the settled principles concerning future prospects, deductions for personal expenses, and the appropriate multiplier, the Court recalculated the dependency and enhanced the total compensation under the loss of income, estate, funeral expenses, and consortium heads.

Cause Title: Kirosata Devi & Ors. v. Ram Ji Lal & Ors. [SLP(C) No. 25497/2025]

Appearances:

Appellants: AOR Ravindra S. Garia and Advocate Shashank Singh

Respondents: Advocate on Record Vishal Meghwal, Advocate Jagdish Chandra, Advocate Aishwarya Sinha, Advocate Maanya Saxena.

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