SUPREME COURT REJECTS MINIMUM WAGE CALCULATION AND PROVIDES THAT A STUDENT’S FUTURE CANNOT BE MEASURED BY AN UNSKILLED WORKER’S WAGE
A two Judge Bench of the Hon’ble Supreme Court comprising of Justice Sanjay Karol and Justice Manmohan passed a judgement dated 10.02.2025 in the matter of Deepak Singh alias Deepak Chauhan V. Mukesh Kumar & Ors. C.A. No. 2255/2025 wherein the Bench held that compensation in motor accident claims should be fair and also be reflective of the future earnings of the person.
Facts
The case originated from a motor vehicle accident that took place on 12.10.2012 wherein the Appellant, Deepak Singh, was traveling on a motorcycle with his friend Bhagwan Singh and with a SUV Scorpio which was driving rashly and negligently. The SUV came from the wrong side collided with the Appellant’s motorcycle. Appellant’s friend, Bhagwan Singh died on the spot, and the Appellant suffered grievous injuries.
A FIR No. 213 was registered on 13.10.2012, under Sections 279 (Rash driving or riding on a public way), 337 (Causing hurt by act endangering life or personal safety of others), 304-A (Causing death by negligence), and 427 (Mischief causing damage to the amount of fifty rupees) of the Indian Penal Code (IPC). The Appellant filed a Motor Accident Compensation Claim (MACT Case No. 3/2013) on 07.01.2013, before the Motor Accident Claims Tribunal (MACT), Gurgaon. The learned MACT framed four issues for consideration, concerning-
- Whether the accident was caused by the negligence of the vehicle driver?
- Whether the claimant was entitled to compensation?
- Whether the insurer (insurance company) was liable to pay?
- Whether the driver had a valid driving license?
The MACT awarded a compensation of Rs. 7,09,303/- (Seven lakhs, Nine Thousand, Three Hundred and Three only) with 7.5% annual interest. The liability was jointly and severally fixed on the driver, owner, and insurer of the offending vehicle, but the insurance company was primarily responsible for the payment.
The total compensation by MACT was supposed to be provided 50% in cash and 50% in a Fixed Deposit for three years. Moreover, the Ld. Tribunal also granted lawyer’s fee amounting to Rs. 11,000/- to the Appellant.
The Appellant dissatisfied with the compensation filed an Appeal before the Punjab & Haryana High Court bearing no. FAO No. 4651/2014. The Hon’ble High Court relied on the precedents and the medical testimony of Dr. Arvind Mehra (PW6). Subsequent to this, the Hon’ble High Court enhanced the compensation to Rs. 23,90,719/- while keeping the interest rate unchanged at 7.5% per annum.
Later, the Appellant approached the Hon’ble Supreme Court, arguing that the High Court erred in using minimum wages as the basis for computing his notional income. The Appellant relied on the Supreme Court ruling in Navjot Singh v. Harpreet Singh (2020), where it was held that a student should not be equated with an unskilled worker. The relevant paragraph of the judgement is as follows-
“13. But we do not think that the notional income of a student undergoing a Degree course in Engineering from a premier institute should be taken to be equivalent to the minimum wages admissible to an unskilled worker. Students recruited through campus interviews are atleast offered a sum of Rs.20,000/- per month. Even if we do not go on the said basis, the High Court could have fixed the notional income atleast at Rs.10,000/- per month.
- Therefore, in the facts and circumstances of the case, and by exercising our power under Article 142 of the Constitution of India, we take the notional monthly income of the appellant as Rs.10,000/ per month.”
Issues
- Whether the Hon’ble High Court erred in passing a judgement and undervalued the amount of compensation to be granted to the Appellant
- Whether reliance can be placed on minimum wages while deciding the amount of compensation in a motor accidents case?
Decision by the Supreme Court
The Hon’ble Apex Court took consideration of the present facts and circumstances and the Bench came to the conclusion that the notional income of an engineering student who is undergoing a degree course should not be kept on the same platform as any earning unskilled labour. Moreover, the Supreme Court agreed that a young student’s income should not be based on minimum wages of labours.
The Bench also provided that students recruited through campus interviews are at least offered a sum of Rs.20,000 per month. Following the precedent in Harpreet Singh (supra), the Court fixed the notional monthly income at ₹10,000 and also provided multiple other monetary benefits like medical expenses, loss of income, pain and suffering etc.
The Apex Court also laid down the following points-
- Compensation should be based on a reasonable assessment of future earning potential.
- Minimum wages should not be the basis for compensation when the claimant is a student or has higher future prospects.
- Interest was granted from the date of filing of the claim but excluding the delay period (642 days) in filing the Appeal before the Supreme Court.
Thus, the Hon’ble Supreme Court by allowing the Appeal filed by the Appellant and set aside the Order and Judgement in case bearing no. FAO No.4651 of 2014 (O&M) dated 9th January, 2020 passed by the Punjab and Haryana High Court and thus granted a sum of Rs. Rs.34,56,110/- (Rupees Thirty-Four Lakhs, Fifty-Sex Thousand, One Hundred and Ten only) along-with interest @ 7.5% per annum to the Appellant.
The delay in filing the Appeal was also condoned by the Hon’ble Bench and all the pending applications were disposed of.
Conclusion
The Supreme Court upheld the principle that compensation in motor accident claims should be fair and reflective of actual potential earnings. It ruled against using minimum wage as a basis for students and instead considered their future prospects, ultimately increasing the compensation significantly for the injured claimant. The Hon’ble Supreme Court also ruled that Courts cannot equate the notional income a graduation student with an unskilled worker.
ARJAV JAIN
ASSOCIATE
THE INDIAN LAWYER & ALLIED SERVICES
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