In the cases where the insured was self-employed, the award of future prospects cannot be denied.

The Hon’ble Supreme Court in the matter Reliance General Insurance Company Ltd. Vs. Shalu Sharma and Ors (SLP (C) No. 23086 of 2016) decided on February 02, 2018, dismissed the petition where the insurer challenged the factored component of 30 percent towards the loss of future prospects initially awarded by Motor Accident Claims Tribunal (MACT) in assessing the compensation.



The insured died in 2013 in an accident and was insured against third party risks by the appellant. The dependents filed a claim for compensation before the MACT. The Tribunal held that the accident was caused due to the negligence of the driver of the offending vehicle. Compensation of Rs. 30,26,810 was awarded together with interest at 9 percent per annum. The Tribunal factored in a component of 30 percent towards the loss of future prospects in assessing the compensation.

The insurer appealed before Delhi High Court against the award of future prospects to the extent of 30 percent. Deceased was 42 years old on the date of the accident. According to the appellant, the increase in his gross total income as shown in the income tax returns for 2010-11, 2011-12 and 2012-13 would not justify the award of future prospects, or at least to that extent. The High Court negatived the submission of the insurer and held that having due regard to the progressive increase in the income of the deceased, the award of future prospects by the Tribunal could not be faulted.



The Hon’ble Court held that an insured either self-employed or on a fixed salary cannot be refused of future prospects by insurer. The grant must be in accordance with the principle laid down by Constitutional bench in National Insurance Company Limited v Pranay Sethi ((2017) 13 SCALE 12) where Court held, ‘In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 1 (2017) 13 SCALE 12 3 25% where the deceased was between the age of 40 to 50 years… should be regarded as the necessary method of computation. The established income means the income minus the tax component’.

The Court modified the award with 25% of future prospects instead of 30% computed by the Tribunal, and addition of Rs 70,000 also made in terms of the decision in Pranay Sethi (supra) on account of the conventional heads of loss of estate (Rs15,000), loss of consortium (Rs 40,000) and funeral expenses Rs. 15000. Hence, the total compensation is quantified at Rs 27,66,522 on which the claimants would be entitled to interest @ 9% p.a. from the date of the filing of the claim petition.