Perks must be added to wages while awarding compensation in motor vehicle accident cases: Karnataka HC

Bengaluru: The Karnataka High Court has awarded an enhanced compensation of Rs 2,27,32,608 to the family members of a software employee who died in an accident, observing that while assessing just compensation, amounts paid to the deceased by the employer, whether as perks or under any other nomenclature, should be added to his monthly income.

Motor Accidents Claims Tribunal (MACT), Bengaluru had not taken into consideration the allowance component, on the score that the deceased was on probation.

The accident had occurred on January 29, 2019 at HCL Company Road near Gyan Space Company, Phase-I, Electronic City. Santhosh Kumar Singh, who was working at HCL Technologies Limited, died after his motorcycle was knocked down by a water tanker.

His wife, minor son along with his parents moved the tribunal and claimed that Santhosh was working as a Technical Lead and was earning Rs 1,37,350 per month.

On November 2, 2023, the tribunal awarded Rs 81.9 lakh compensation, holding that the accident occurred due to the rash and negligent driving of the water tanker.

However, the tribunal had considered only Rs 40,000 as per month income, leaving out the allowances. The insurance company and the claimants moved the high court.

A division bench comprising Justices KS Mudagal and KV Aravind noted that the water tanker was moving in the wrong direction and caused the accident and dismissed the appeal filed by the insurer.

Insofar as the computation of compensation, the bench cited the Apex Court Supreme judgement in the Pranay Sethi case and said the top court has already specified that established and sustainable income has to be considered.

“The allowances, namely car allowance, holiday allowance, fuel and vehicle maintenance, compensatory allowance, engagement performance bonus, and food valet, are paid in addition to the basic salary and HRA. Pay slips for the months of November and December 2018, and January 2019, indicate that these allowances were paid consistently every month, without variation,” the bench said.

"These allowances are in lieu of employment and form part of the salary. The allowances are part of the pay package agreed upon between the deceased and the employer. In assessing just compensation, amounts that were to be paid to the deceased by his employer, whether as perks or under any other nomenclature, should be added to his monthly income. Such monthly income forms the basis for computing compensation."

The court further said, “There is no reason for the tribunal to assume that the deceased’s probationary period would not have been successfully completed, and that the same salary paid would not have remained stable or appreciate consider is that if the deceased was drawing a salary of Rs 1,37,350 during the probationary period, the skills and expertise recognized by the employer should not have been disregarded. The documents clearly deposed that the employment of the deceased was permanent. Considering the deceased was aged 35 years, the evidence of documents cannot be doubted.”