[2026] 7 S.C.R. 494 : 2026 INSC 661 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. (Civil Appeal No. 8735 of 2026) 01 July 2026 [Sanjay Karol* and Nongmeikapam Kotiswar Singh, JJ.] Issue for Consideration Issue arose that for assessing the annual income of a deceased person or claimant under the Motor Vehicles Act, the ITRs for the previous year appropriate or average of the past two/three years to be taken into consideration. Headnotes† Motor Vehicle Act, 1988 – s.166 – Compensation – Computation of annual income of the deceased victim on the basis of ITRs – Victim aged 39 years, sole breadwinner, running his own construction business, met with a road accident and succumbed to his injuries – Tribunal ascertained his income at Rs.15 lakhs pa considering his previous year’s ITR and awarded Rs.2.27 crores – However, the High Court reduced the compensation to Rs.1.87 crores taking the average of the previous two ITRs on record, instead of only the previous ITR – Correctness:

Held: ITRs being a statutory document are an important reference point when it comes to assessing one’s income, for the purposes of compensation under the Motor Vehicle Act – There must be a bifurcation made between salaried individuals and self-employed individuals when it comes to assessment of annual income – For salaried individuals, only the ITR of the previous year will be sufficient for showcasing the annual income from salary since the financial impact of promotions is significant and may be reflected in the ITR for only that year – When it comes to self-employed/ individuals carrying out their own business, the average of the income specified in the ITRs of up to the previous three years is to be taken as a reference point for assessment of annual income from their business – Where only one or two ITRs have been filed, and there * Author [2026] 7 S.C.R. 495 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

is fluctuation of income, surrounding circumstances-nature of the business; growth pattern of the business; impact of death on the business; potential growth of business; negative income, to be taken into consideration – Date when the ITRs are filed would also become a relevant consideration, as there may be scenarios where inflated income is showcased after death/injury – In these circumstances, the surrounding factors of the business would become more relevant – However, if sufficiently supported by financial statements, such ITRs may be taken into consideration – On facts, the appellants brought on record two ITRs for AY 2017-18 and AY 2018-19, and High Court took the average of these to assess the annual income of the deceased as Rs.13,33,226/- – No reference made to other factors relating to the nature of business – Thus, with a view to awarding just and fair compensation, his annual income is fixed as Rs.14,00,000/- – In view thereof, the compensation payable to the appellants would be Rs.1,97,81,505 – Impugned award modified accordingly. [Paras 17-23] Case Law Cited ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty and Anr. [2018] 3 SCR 42 : (2018) 3 SCC 686; V. Pathmavathi and Ors. v. Bharthi Axa General Insurance Co. Ltd. and Anr., 2026 INSC 131 : 2026 SCC OnLine SC 158; Anant v. Pratap and Anr. [2018] 10 SCR 11 : (2018) 9 SCC 450 – referred to. List of Acts Penal Code, 1860; Motor Vehicle Act, 1988. List of Keywords

Assessment of the annual income of deceased person or claimant; ITRs for the previous year or average of the past two/three years; Compensation; Computation of annual income of the deceased victim on the basis of ITRs; Construction business; Previous year’s ITR; Average of the previous two ITRs. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8735 of 2026 From the Judgment and Order dated 25.04.2024 of the High Court of Orissa at Cuttack in MACA No. 452 of 2023 496 [2026] 7 S.C.R. Supreme Court Reports Appearances for Parties Advs. for the Appellant(s): Kedar Nath Tripathy, Aditya Narayan Tripathy, Chand Qureshi, Mujahid Ahmad, Md.Imran Siddiqui, Ms. Preeti Chauhan, Mrs. Arpana Soni, Mrs. Parveen Qureshi, Mohit Yadav, Mrs. Aarti Pal, M.Tajdar Siddiqui, Saaket Jain, Ms. Shivangi Anand, Siddhartha Iyer, Chhatresh Kumar Sahu. Advs. for the Respondent(s): Kshitij Mittal, Anand Sukumar, Salil Paul, Sahil Paul, Ms. Manjeet Chawla, Sandeep Dayal, Ms. Kiran Bala Agarwal, Hritik Sejwal. Judgment / Order of the Supreme Court Judgment Sanjay Karol, J. 1. Leave granted. 2. This appeal is directed against the judgment and order dated 25.04.2024 passed in MACA No. 452 of 2023 by the High Court of Orissa at Cuttack, which, in turn was preferred against the order dated 24.02.2023 in MAC Case No. 92/2019 by the Motor Accident Claims Tribunal1, Behrampur2.

3. The brief facts giving rise to this appeal are that on 29.05.2018, the deceased, namely Mr. Manoranjan Pandey, aged 39 years, was travelling from Behrampur to Bhubaneswar in his vehicle bearing registration number OD-02H-7929. Near Kaliabali Chakka on the National Highway, the offending vehicle, a truck bearing registration number AP-05TD-2112, being driven in a rash and negligent manner, struck the vehicle of the deceased. As a result of the said accident, he suffered injuries and passed away during treatment. 4. In connection with the same, an FIR came to be registered at Chamakhandi Police Station, bearing number Case No. 55/2018, under Sections 279, 337, 338, 304-A of the Indian Penal Code, 1860. 1 Hereinafter ‘MACT’. 2 Hereinafter ‘the Tribunal’. [2026] 7 S.C.R. 497 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. 5. An application seeking compensation was filed by the claimant-appellants, being the legal representatives of the deceased, before the Tribunal under Section 166 of the Motor Vehicle Act, 1988, to the tune of Rs.2,25,00,000/-. It was stated therein that the deceased was running his own construction business and earning Rs. 15,00,000/-per annum. He was the sole breadwinner of his family.

6. The Tribunal, vide its order dated 24th February, 2023, held Respondent No.2, Insurance Company, liable to pay a compensation of Rs. 2,27,00,064/- along with 6% interest per annum, to the claimant-appellants from the date of filing of the claim petition i.e., from 7th May 2019. The income of the deceased was ascertained as Rs. 15,00,000/- per annum considering his Income Tax Return3 for the Assessment Year4 2018-19. A deduction of 1/3rd was made considering 3 dependents and a multiplier of ‘16’ was applied, considering the age of the deceased. The Tribunal further awarded compensation towards conventional heads, in accordance with law. 7. Aggrieved thereof, Respondent No. 2 the Insurance Company filed an appeal before the High Court seeking reduction in compensation awarded by the Tribunal. It was submitted therein that the Tribunal erred in computing the income of the deceased and applied the wrong multiplier, as the age of the deceased was 39 as per his PAN card. 8. The High Court, vide, the impugned judgment, allowed the appeal and reduced the compensation awarded by an amount of Rs. 39,24,914/- to Rs. 1,87,75,150/- along with 6% interest per annum. The Court reduced his annual income as Rs. 13,33,226/-. For this purpose, the Court took the average of the previous two ITRs which were on record, instead of only the previous ITR, which was taken into consideration by the Tribunal. Furthermore, the Court applied a multiplier of 15.

9. Dissatisfied, the claimant-appellants are now before us. The significant ground of challenge taken is that the Courts below, have erred in assessing the income of the deceased. 10. We have heard the learned counsel for the parties. 3 Hereinafter ‘ITR’. 4 Hereinafter ‘AY’. 498 [2026] 7 S.C.R. Supreme Court Reports 11. The issue which arises before this Court is whether for assessing the annual income of a deceased person or claimant under the Motor Vehicles Act 1988, the ITRs for the previous year is appropriate or average of the past two/three years is to be taken into consideration? 12. In view of the importance of the issue involved, vide order dated 07.02.2025, this Court appointed Mr. J.R. Midha, learned senior counsel and Mr. Salil Paul, learned counsel as amicus curiae, both experts in this field, to assist in this matter.

13. Mr. J.R. Midha, learned senior counsel, has submitted that there is no uniformity in the principles relating to the computation of annual income on the basis of ITRs. Some Courts take the average of the last three years, whereas some Courts take the last return filed to assess the income of the deceased. He further submitted that while the ITR is the prima facie evidence of the deceased’s income, it does not always reflect the true income of the deceased. Factors such as business income pattern, growth pattern and nature of business5 also warrant consideration. Moreover, in cases where the ITR has been filed after the death, it would be appropriate to call for the ITRs for the past three years along with balance sheets of the concerned person/entity. 14. Mr. Salil Paul, learned amicus curiae has submitted that this Court in ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty and Anr.6 relied upon the average income of the ITRs for the previous three years to compute the income of the claimant therein.

15. At the outset, we must reiterate that it is settled law that the objective behind the claim process in the Motor Vehicles Act 1988 is to grant ‘just and fair compensation’. Recently, a two-judge Bench of this Court in V. Pathmavathi and Ors. v. Bharthi Axa General Insurance Co. Ltd. and Anr.7 had succinctly summarised this position and observed: “12. We ought to remind ourselves, at the outset, that when an individual dies as a result of a fatal road accident 5 Nature of business would also include businesses and professions where negative income in the initial years is common and does not reflect the true financial standing of the individual. 6 (2018) 3 SCC 686. 7 2026 SCC OnLine SC 158. [2026] 7 S.C.R. 499 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

and his distressed dependents apply for compensation either from the owner of the vehicle responsible for the death or the insurance company with whom such vehicle is insured, no amount of money can truly compensate for the loss. Compensation is nothing but a rough estimate, being a token attempt to ease the financial burden on the dependents. Take consortium, for example. It is impossible to put a price on the loss of a loved one’s companionship. Spousal, filial or parental compensation are all about acknowledging the emotional void but the payout can never be more than a rough approximation. It is like trying to measure the immeasurable. Considering the income of the deceased, the needs of his dependents and the emotional toll of the loss, the best that can be ensured is that the compensation is fair and reasonable, without being either arbitrary or niggardly. This would be in accord with the foundational principle governing the determination of “just compensation” under Section 168 of the Act.

13. In Reshma Kumari v. Madan Mohan [(2013) 9 SCC 65], a three-Judge Bench of this Court held that the purpose of award of compensation under section 166 read with section 168 of the Act is to place the distressed dependents of the victim of a fatal road accident, if the victim had been the sole bread earner, in almost the same position financially if he lived his natural span of life. It is obviously not intended to put such distressed dependents in a better financial position in which they would otherwise have been if the accident had not occurred. At the same time, the determination of compensation is not an exact science and the exercise involves an assessment based on estimation and conjectures, here and there, as many imponderable factors and unpredictable contingences have to be taken into consideration. Obviously, award of damages in each case would depend on the particular facts and circumstances of the case but the element of fairness in the amount of compensation so determined is the ultimate guiding factor.” (emphasis supplied) 500 [2026] 7 S.C.R. Supreme Court Reports 16. Similarly, another two-judge Bench of this Court in Anant v. Pratap and Anr.8, had expounded that ‘the purpose of compensation under the Motor Vehicles Act is to fully and adequately restore the aggrieved to the position prior to the accident.’

17. In the considered view of this Court, there can be no hard and fast formula for computing the annual income of a deceased person/ claimant. ITRs being a statutory document are an important reference point when it comes to assessing one’s income, for the purposes of compensation under the Motor Vehicle Act. 18. We find force in the submission put forth by Mr. J.R Midha, learned senior counsel. There must be a bifurcation made between salaried individuals and self-employed individuals when it comes to assessment of annual income. In our view, for salaried individuals, only the ITR of the previous year will be sufficient for showcasing the annual income from salary. The reason for considering only the preceding year is that the financial impact of promotions is significant and may be reflected in the ITR for only that year. A situation may also arise whereby the deceased/claimant might not have completed a year in the promoted position before the accident or might not have filed ITR for such period. In such cases the Court concerned shall take reference to the promotion letter and other corroboratory financial statements.

19. When it comes to self-employed / individuals carrying out their own business, in our view, the average of the income specified in the ITRs of up to the previous three years is to be taken as a reference point for assessment of annual income from their business. There may also be a scenario where only one or two ITRs have been filed. Given such scenarios and the fluctuation of income in these professions, surrounding circumstances are also to be taken into consideration. These would include: a) The nature of the business (including geographic location, category etc.); b) Growth pattern of the business and impact of death on the business; 8 (2018) 9 SCC 450. [2026] 7 S.C.R. 501 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. c) Potential growth of business (for instance certain businesses are capital intensive at the outset and are profitable at scale/ in the future); d) Negative income (certain businesses may require losses in the initial years, which may not reflect the true financial standing); and e) Any other relevant factor relating to the business.

20. The date when the ITRs are filed would also become a relevant consideration, as there may be scenarios where inflated income is showcased after death/injury. In these circumstances, the surrounding factors of the business would become more relevant. However, if sufficiently supported by financial statements, such ITRs may also be taken into consideration. 21. Coming to the facts at hand, the claimant-appellants have brought on record two ITRs for AY 2017-18 and AY 2018-19, whereby the annual income of the deceased is Rs. 11,59,882/- and Rs.15,06,571/-respectively. 22. The High Court took the average of these two years to assess the annual income of the deceased as Rs. 13,33,226/-. There was no reference made to other factors relating to the nature of business. It is borne from the record that the deceased was running his own construction business. Therefore, with a view to awarding just and fair compensation, we fix his annual income as Rs. 14,00,000/-. In view thereof, the compensation payable to the claimant-appellants would be as follows: CALCULATION OF COMPENSATION Compensation Heads Amount Awarded In Accordance with Yearly Income Rs.14,00,000/- Future Prospects (40%) 14,00,000/- + National Insurance (Age being 39) 5,60,000/- Co. Ltd. v. Pranay Sethi = Rs.19,60,000/- (2017) 16 SCC 680 Deduction (1/3) 19,60,000 – 6,53,333 Para 37, 39, 41, 42 and 59.4 = Rs.13,06,667/- Multiplier (15) 13,06,667 x 13 = Rs.83,82,582/- 502 [2026] 7 S.C.R. Supreme Court Reports

Loss of Income of the Rs.1,96,00,005 Deceased Loss of Estate Rs.18,150/- National Insurance Co. Ltd. v. Pranay (10% increase) Sethi Loss of Funeral Rs.18,150/- (2017) 16 SCC 680 Expenses (10% increase) Para 59.8 Loss of Consortium 48,400 X 3 National Insurance Co. Ltd. v. Pranay (10% increase) Sethi = Rs. 1,45,200/- (2017) 16 SCC 680 Para 59.8 United India Insurance Co. Ltd. v. Satinder Kaur, (2021) 11 SCC 780 Para 37.12 Rajwati alias Rajjo and Ors v. United India Insurance Company Ltd. and Ors. 2022 SCC Online SC 1699 Para 34 Total Rs.1,97,81,505 Thus, the difference in compensation would be as under: MACT High Court This Court Rs.2,27,00,064/- Rs.1,87,75,150/- Rs.1,97,81,505/- 23. The Civil Appeal is allowed in the aforesaid terms. The impugned award dated 24.02.2023 passed in M.A.C. Case No. 92 of 2019 by MACT, Behrampur, as modified by the High Court of Orissa at Cuttack vide the impugned order dated 25.04.2024 in MACA No. 452 of 2023, stands modified accordingly. Interest on the enhanced amount is to be paid, as awarded by the Tribunal. [2026] 7 S.C.R. 503 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

24. The amount be directly remitted into the bank account of the claimant-appellants. The particulars of the bank account are to be immediately supplied by the learned counsel for the appellants to the learned counsel for the respondents. The amount be remitted positively within a period of four weeks thereafter. 25. Pending application(s), if any, shall stand disposed of. Result of the case: Appeal allowed. †Headnotes prepared by: Nidhi Jain

[2026] 7 S.C.R. 494 : 2026 INSC 661 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. (Civil Appeal No. 8735 of 2026) 01 July 2026 [Sanjay Karol* and Nongmeikapam Kotiswar Singh, JJ.] Issue for Consideration Issue arose that for assessing the annual income of a deceased person or claimant under the Motor Vehicles Act, the ITRs for the previous year appropriate or average of the past two/three years to be taken into consideration. Headnotes† Motor Vehicle Act, 1988 – s.166 – Compensation – Computation of annual income of the deceased victim on the basis of ITRs – Victim aged 39 years, sole breadwinner, running his own construction business, met with a road accident and succumbed to his injuries – Tribunal ascertained his income at Rs.15 lakhs pa considering his previous year’s ITR and awarded Rs.2.27 crores – However, the High Court reduced the compensation to Rs.1.87 crores taking the average of the previous two ITRs on record, instead of only the previous ITR – Correctness:

Held: ITRs being a statutory document are an important reference point when it comes to assessing one’s income, for the purposes of compensation under the Motor Vehicle Act – There must be a bifurcation made between salaried individuals and self-employed individuals when it comes to assessment of annual income – For salaried individuals, only the ITR of the previous year will be sufficient for showcasing the annual income from salary since the financial impact of promotions is significant and may be reflected in the ITR for only that year – When it comes to self-employed/ individuals carrying out their own business, the average of the income specified in the ITRs of up to the previous three years is to be taken as a reference point for assessment of annual income from their business – Where only one or two ITRs have been filed, and there * Author [2026] 7 S.C.R. 495 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

is fluctuation of income, surrounding circumstances-nature of the business; growth pattern of the business; impact of death on the business; potential growth of business; negative income, to be taken into consideration – Date when the ITRs are filed would also become a relevant consideration, as there may be scenarios where inflated income is showcased after death/injury – In these circumstances, the surrounding factors of the business would become more relevant – However, if sufficiently supported by financial statements, such ITRs may be taken into consideration – On facts, the appellants brought on record two ITRs for AY 2017-18 and AY 2018-19, and High Court took the average of these to assess the annual income of the deceased as Rs.13,33,226/- – No reference made to other factors relating to the nature of business – Thus, with a view to awarding just and fair compensation, his annual income is fixed as Rs.14,00,000/- – In view thereof, the compensation payable to the appellants would be Rs.1,97,81,505 – Impugned award modified accordingly. [Paras 17-23] Case Law Cited ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty and Anr. [2018] 3 SCR 42 : (2018) 3 SCC 686; V. Pathmavathi and Ors. v. Bharthi Axa General Insurance Co. Ltd. and Anr., 2026 INSC 131 : 2026 SCC OnLine SC 158; Anant v. Pratap and Anr. [2018] 10 SCR 11 : (2018) 9 SCC 450 – referred to. List of Acts Penal Code, 1860; Motor Vehicle Act, 1988. List of Keywords

Assessment of the annual income of deceased person or claimant; ITRs for the previous year or average of the past two/three years; Compensation; Computation of annual income of the deceased victim on the basis of ITRs; Construction business; Previous year’s ITR; Average of the previous two ITRs. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8735 of 2026 From the Judgment and Order dated 25.04.2024 of the High Court of Orissa at Cuttack in MACA No. 452 of 2023 496 [2026] 7 S.C.R. Supreme Court Reports Appearances for Parties Advs. for the Appellant(s): Kedar Nath Tripathy, Aditya Narayan Tripathy, Chand Qureshi, Mujahid Ahmad, Md.Imran Siddiqui, Ms. Preeti Chauhan, Mrs. Arpana Soni, Mrs. Parveen Qureshi, Mohit Yadav, Mrs. Aarti Pal, M.Tajdar Siddiqui, Saaket Jain, Ms. Shivangi Anand, Siddhartha Iyer, Chhatresh Kumar Sahu. Advs. for the Respondent(s): Kshitij Mittal, Anand Sukumar, Salil Paul, Sahil Paul, Ms. Manjeet Chawla, Sandeep Dayal, Ms. Kiran Bala Agarwal, Hritik Sejwal. Judgment / Order of the Supreme Court Judgment Sanjay Karol, J. 1. Leave granted. 2. This appeal is directed against the judgment and order dated 25.04.2024 passed in MACA No. 452 of 2023 by the High Court of Orissa at Cuttack, which, in turn was preferred against the order dated 24.02.2023 in MAC Case No. 92/2019 by the Motor Accident Claims Tribunal1, Behrampur2.

3. The brief facts giving rise to this appeal are that on 29.05.2018, the deceased, namely Mr. Manoranjan Pandey, aged 39 years, was travelling from Behrampur to Bhubaneswar in his vehicle bearing registration number OD-02H-7929. Near Kaliabali Chakka on the National Highway, the offending vehicle, a truck bearing registration number AP-05TD-2112, being driven in a rash and negligent manner, struck the vehicle of the deceased. As a result of the said accident, he suffered injuries and passed away during treatment. 4. In connection with the same, an FIR came to be registered at Chamakhandi Police Station, bearing number Case No. 55/2018, under Sections 279, 337, 338, 304-A of the Indian Penal Code, 1860. 1 Hereinafter ‘MACT’. 2 Hereinafter ‘the Tribunal’. [2026] 7 S.C.R. 497 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. 5. An application seeking compensation was filed by the claimant-appellants, being the legal representatives of the deceased, before the Tribunal under Section 166 of the Motor Vehicle Act, 1988, to the tune of Rs.2,25,00,000/-. It was stated therein that the deceased was running his own construction business and earning Rs. 15,00,000/-per annum. He was the sole breadwinner of his family.

6. The Tribunal, vide its order dated 24th February, 2023, held Respondent No.2, Insurance Company, liable to pay a compensation of Rs. 2,27,00,064/- along with 6% interest per annum, to the claimant-appellants from the date of filing of the claim petition i.e., from 7th May 2019. The income of the deceased was ascertained as Rs. 15,00,000/- per annum considering his Income Tax Return3 for the Assessment Year4 2018-19. A deduction of 1/3rd was made considering 3 dependents and a multiplier of ‘16’ was applied, considering the age of the deceased. The Tribunal further awarded compensation towards conventional heads, in accordance with law. 7. Aggrieved thereof, Respondent No. 2 the Insurance Company filed an appeal before the High Court seeking reduction in compensation awarded by the Tribunal. It was submitted therein that the Tribunal erred in computing the income of the deceased and applied the wrong multiplier, as the age of the deceased was 39 as per his PAN card. 8. The High Court, vide, the impugned judgment, allowed the appeal and reduced the compensation awarded by an amount of Rs. 39,24,914/- to Rs. 1,87,75,150/- along with 6% interest per annum. The Court reduced his annual income as Rs. 13,33,226/-. For this purpose, the Court took the average of the previous two ITRs which were on record, instead of only the previous ITR, which was taken into consideration by the Tribunal. Furthermore, the Court applied a multiplier of 15.

9. Dissatisfied, the claimant-appellants are now before us. The significant ground of challenge taken is that the Courts below, have erred in assessing the income of the deceased. 10. We have heard the learned counsel for the parties. 3 Hereinafter ‘ITR’. 4 Hereinafter ‘AY’. 498 [2026] 7 S.C.R. Supreme Court Reports 11. The issue which arises before this Court is whether for assessing the annual income of a deceased person or claimant under the Motor Vehicles Act 1988, the ITRs for the previous year is appropriate or average of the past two/three years is to be taken into consideration? 12. In view of the importance of the issue involved, vide order dated 07.02.2025, this Court appointed Mr. J.R. Midha, learned senior counsel and Mr. Salil Paul, learned counsel as amicus curiae, both experts in this field, to assist in this matter.

13. Mr. J.R. Midha, learned senior counsel, has submitted that there is no uniformity in the principles relating to the computation of annual income on the basis of ITRs. Some Courts take the average of the last three years, whereas some Courts take the last return filed to assess the income of the deceased. He further submitted that while the ITR is the prima facie evidence of the deceased’s income, it does not always reflect the true income of the deceased. Factors such as business income pattern, growth pattern and nature of business5 also warrant consideration. Moreover, in cases where the ITR has been filed after the death, it would be appropriate to call for the ITRs for the past three years along with balance sheets of the concerned person/entity. 14. Mr. Salil Paul, learned amicus curiae has submitted that this Court in ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty and Anr.6 relied upon the average income of the ITRs for the previous three years to compute the income of the claimant therein.

15. At the outset, we must reiterate that it is settled law that the objective behind the claim process in the Motor Vehicles Act 1988 is to grant ‘just and fair compensation’. Recently, a two-judge Bench of this Court in V. Pathmavathi and Ors. v. Bharthi Axa General Insurance Co. Ltd. and Anr.7 had succinctly summarised this position and observed: “12. We ought to remind ourselves, at the outset, that when an individual dies as a result of a fatal road accident 5 Nature of business would also include businesses and professions where negative income in the initial years is common and does not reflect the true financial standing of the individual. 6 (2018) 3 SCC 686. 7 2026 SCC OnLine SC 158. [2026] 7 S.C.R. 499 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

and his distressed dependents apply for compensation either from the owner of the vehicle responsible for the death or the insurance company with whom such vehicle is insured, no amount of money can truly compensate for the loss. Compensation is nothing but a rough estimate, being a token attempt to ease the financial burden on the dependents. Take consortium, for example. It is impossible to put a price on the loss of a loved one’s companionship. Spousal, filial or parental compensation are all about acknowledging the emotional void but the payout can never be more than a rough approximation. It is like trying to measure the immeasurable. Considering the income of the deceased, the needs of his dependents and the emotional toll of the loss, the best that can be ensured is that the compensation is fair and reasonable, without being either arbitrary or niggardly. This would be in accord with the foundational principle governing the determination of “just compensation” under Section 168 of the Act.

13. In Reshma Kumari v. Madan Mohan [(2013) 9 SCC 65], a three-Judge Bench of this Court held that the purpose of award of compensation under section 166 read with section 168 of the Act is to place the distressed dependents of the victim of a fatal road accident, if the victim had been the sole bread earner, in almost the same position financially if he lived his natural span of life. It is obviously not intended to put such distressed dependents in a better financial position in which they would otherwise have been if the accident had not occurred. At the same time, the determination of compensation is not an exact science and the exercise involves an assessment based on estimation and conjectures, here and there, as many imponderable factors and unpredictable contingences have to be taken into consideration. Obviously, award of damages in each case would depend on the particular facts and circumstances of the case but the element of fairness in the amount of compensation so determined is the ultimate guiding factor.” (emphasis supplied) 500 [2026] 7 S.C.R. Supreme Court Reports 16. Similarly, another two-judge Bench of this Court in Anant v. Pratap and Anr.8, had expounded that ‘the purpose of compensation under the Motor Vehicles Act is to fully and adequately restore the aggrieved to the position prior to the accident.’

17. In the considered view of this Court, there can be no hard and fast formula for computing the annual income of a deceased person/ claimant. ITRs being a statutory document are an important reference point when it comes to assessing one’s income, for the purposes of compensation under the Motor Vehicle Act. 18. We find force in the submission put forth by Mr. J.R Midha, learned senior counsel. There must be a bifurcation made between salaried individuals and self-employed individuals when it comes to assessment of annual income. In our view, for salaried individuals, only the ITR of the previous year will be sufficient for showcasing the annual income from salary. The reason for considering only the preceding year is that the financial impact of promotions is significant and may be reflected in the ITR for only that year. A situation may also arise whereby the deceased/claimant might not have completed a year in the promoted position before the accident or might not have filed ITR for such period. In such cases the Court concerned shall take reference to the promotion letter and other corroboratory financial statements.

19. When it comes to self-employed / individuals carrying out their own business, in our view, the average of the income specified in the ITRs of up to the previous three years is to be taken as a reference point for assessment of annual income from their business. There may also be a scenario where only one or two ITRs have been filed. Given such scenarios and the fluctuation of income in these professions, surrounding circumstances are also to be taken into consideration. These would include: a) The nature of the business (including geographic location, category etc.); b) Growth pattern of the business and impact of death on the business; 8 (2018) 9 SCC 450. [2026] 7 S.C.R. 501 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors. c) Potential growth of business (for instance certain businesses are capital intensive at the outset and are profitable at scale/ in the future); d) Negative income (certain businesses may require losses in the initial years, which may not reflect the true financial standing); and e) Any other relevant factor relating to the business.

20. The date when the ITRs are filed would also become a relevant consideration, as there may be scenarios where inflated income is showcased after death/injury. In these circumstances, the surrounding factors of the business would become more relevant. However, if sufficiently supported by financial statements, such ITRs may also be taken into consideration. 21. Coming to the facts at hand, the claimant-appellants have brought on record two ITRs for AY 2017-18 and AY 2018-19, whereby the annual income of the deceased is Rs. 11,59,882/- and Rs.15,06,571/-respectively. 22. The High Court took the average of these two years to assess the annual income of the deceased as Rs. 13,33,226/-. There was no reference made to other factors relating to the nature of business. It is borne from the record that the deceased was running his own construction business. Therefore, with a view to awarding just and fair compensation, we fix his annual income as Rs. 14,00,000/-. In view thereof, the compensation payable to the claimant-appellants would be as follows: CALCULATION OF COMPENSATION Compensation Heads Amount Awarded In Accordance with Yearly Income Rs.14,00,000/- Future Prospects (40%) 14,00,000/- + National Insurance (Age being 39) 5,60,000/- Co. Ltd. v. Pranay Sethi = Rs.19,60,000/- (2017) 16 SCC 680 Deduction (1/3) 19,60,000 – 6,53,333 Para 37, 39, 41, 42 and 59.4 = Rs.13,06,667/- Multiplier (15) 13,06,667 x 13 = Rs.83,82,582/- 502 [2026] 7 S.C.R. Supreme Court Reports

Loss of Income of the Rs.1,96,00,005 Deceased Loss of Estate Rs.18,150/- National Insurance Co. Ltd. v. Pranay (10% increase) Sethi Loss of Funeral Rs.18,150/- (2017) 16 SCC 680 Expenses (10% increase) Para 59.8 Loss of Consortium 48,400 X 3 National Insurance Co. Ltd. v. Pranay (10% increase) Sethi = Rs. 1,45,200/- (2017) 16 SCC 680 Para 59.8 United India Insurance Co. Ltd. v. Satinder Kaur, (2021) 11 SCC 780 Para 37.12 Rajwati alias Rajjo and Ors v. United India Insurance Company Ltd. and Ors. 2022 SCC Online SC 1699 Para 34 Total Rs.1,97,81,505 Thus, the difference in compensation would be as under: MACT High Court This Court Rs.2,27,00,064/- Rs.1,87,75,150/- Rs.1,97,81,505/- 23. The Civil Appeal is allowed in the aforesaid terms. The impugned award dated 24.02.2023 passed in M.A.C. Case No. 92 of 2019 by MACT, Behrampur, as modified by the High Court of Orissa at Cuttack vide the impugned order dated 25.04.2024 in MACA No. 452 of 2023, stands modified accordingly. Interest on the enhanced amount is to be paid, as awarded by the Tribunal. [2026] 7 S.C.R. 503 Rashmirekha Tripathy and Anr. v. The Branch Manager (Legal Claims), Sriram General Insurance Company Limited and Ors.

24. The amount be directly remitted into the bank account of the claimant-appellants. The particulars of the bank account are to be immediately supplied by the learned counsel for the appellants to the learned counsel for the respondents. The amount be remitted positively within a period of four weeks thereafter. 25. Pending application(s), if any, shall stand disposed of. Result of the case: Appeal allowed. †Headnotes prepared by: Nidhi Jain