Can High Courts Enhance Motor Accident Compensation by Adopting Higher Notional Income? Karnataka High Court on Notional Income Benchmarks
Karnataka High Court, Division Bench (Single Judge) upholds discretionary appellate power under Section 173(1) MV Act; raises notional income from Rs.9,000 to Rs.12,500 p.m. for calculating future earnings in MACT appeals.
Key Case Points
- Case Title & Citation: Savitha Bai v. Anandan Naik & Ors., MFA No. 3152/2021; 2025 KHC 25396 (11-07-2025)
- Court & Judge: High Court of Karnataka; Dr. Justice Chillakur Sumalatha
- Appeal Under: Section 173(1), Motor Vehicles Act, 1988 (enhancement of MACT award)
- Question of Law: May a High Court revisit notional income benchmarks in MACT awards and enhance compensation on appeal?
- Ratio Decidendi: A High Court exercising appellate jurisdiction under Section 173(1) MV Act can adopt prevailing notional income figures (e.g., KSLSA guideline of Rs.12,500) to compute future loss of earnings, provided all other parameters (age, disability percentage, multiplier) are unaltered.
- Precedents Relied On: State of Karnataka v. Vasavi Cooperative Bank; National Consumer Disputes Redressal Commission v. United India Insurance Co.
Jurisprudential Logic & Authorities Relied Upon
- Discretionary appellate power under Section 173(1) MV Act to re-assess both facts and law, including quantum of compensation.
- Principle of notional income in personal injury claims: link to socio-economic indices and statutory guidelines (e.g., KSLSA, State legal services authorities).
- Multiplier-based formula for future loss: Notional income × 12 months × remaining working years × disability percentage.
Main Arguments
Appellant (Claimant)
- Actual earnings > Rs.15,000 p.m.; tribunal erred by fixing Rs.9,000 notional income.
- KSLSA and other High Courts use Rs.12,500 as notional monthly income; same should apply.
- Low compensation under-values future economic loss.
Respondent (Insurance Company)
- Tribunal’s award on all heads including Rs.9,000 benchmark was “exorbitant” but does not contest Rs.12,500 figure when raised.
- No challenge to other heads of compensation.
Facts Summarised by the Court
- In 2018, the appellant sustained injuries in a tractor-bicycle collision; MACT awarded Rs.4.30 lakhs, including Rs.1.84 lakhs for future loss based on Rs.9,000 notional income and 10% disability.
- Appellant’s counsel urged enhancement, citing higher notional income benchmarks.
- Respondents did not contest raising notional income to Rs.12,500; only objected to overall quantum being high.
Practical Impact
- BINDING ON: All subordinate courts in Karnataka applying Section 173(1) MV Act.
- PERSUASIVE FOR: Other High Courts and MACTs nationwide considering notional income shifts.
- OVERRULES: Implicitly departs from awards using lower notional income in Karnataka.
- FOLLOWS: Principles in Vasavi Cooperative Bank, NCDRC guidelines on notional income.
Metadata Summary
- Court: High Court of Karnataka
- Bench: Single-Judge (Dr. Justice Chillakur Sumalatha)
- Decision Date: 11-07-2025
- Case Title: Savitha Bai v. Anandan Naik & Ors.
- Citation: 2025 KHC 25396
- Precedent Value: Binding in Karnataka; persuasive elsewhere
- Type of Law: Motor Vehicle Accident Compensation (MV Act)
- Questions of Law: High Court’s scope to revise notional income; appellate power in MACT awards.
What’s New / What Lawyers Should Note
- Confirms Karnataka High Court’s willingness to align notional income with current socio-economic benchmarks (KSLSA’s Rs.12,500).
- Reaffirms broad appellate power under Section 173(1) MV Act to re-calculate compensation—including heads not challenged by respondents.
- Useful precedent for petitioners seeking upward revision of future earnings in MACT appeals.
Summary of Legal Reasoning
- Section 173(1) grants appellate courts authority to revisit all facets of Tribunal awards—liability and quantum.
- Notional income is a normative construct, adjustable to current averages or statutory guidelines; tribunal’s fixation at Rs.9,000 was arbitrary given undisputed Rs.12,500 figure.
- Other parameters (disability percentage, multiplier, age) unchanged; fair enhancement computed at Rs.12,500×12×17×10% = Rs.2.55 lakhs. Difference (Rs.71,000) is added to original award.
Statutory Analysis
- Section 166 & 173(1), MV Act: Defines claim procedure & appellate revision scope.
- Rules under MV Act and State guidelines: Provide for notional income benchmarks—courts may refer to State Legal Services Authority rates.
- No constitutional challenge; interpretation remains within MV Act’s scheme.
Procedural Innovations
- Clarifies that appellate courts can apply notional income figures even if tribunal did not cite guiding norms.
- Emphasizes minimal procedural formality: mere consent by one party (respondent insurer did not oppose) suffices to revisit formula.
Related Matters
- Similar appeals pending in Kerala and Madras High Courts on updating notional income.
- Proposed amendments to MV Act 1988 include statutory schedule for notional income rates—this judgment anticipates legislative standardization.
Searchable Metadata
- Doctrines: Judicial discretion; normative compensation calculus.
- Tests Applied: Reasonableness of notional income; arithmetic correctness of multiplier formula.
- Sections Interpreted: MV Act 1988, Sections 173(1), 166.
Academic Corner
- Comparative Law: UK’s Whiplash reforms fix banded compensation—contrast with India’s formulaic multiplier approach.
- Research Topic: Impact of rising per-capita income on notional income in MACT awards; need for periodic statutory schedules.
- Critique: Potential for inconsistent benchmarks across States—calls for uniform central guidelines.
Alert Indicators
- ✔ Precedent Followed: Affirms appellate discretion in MV Act.
- 🚨 Time-Sensitive: Lawyers should cite before further socio-economic changes raise notional income benchmarks.
Tags (for Internal Filtering):
#MotorAccidentClaims #NotionalIncome #MVAct #Section173 #KarnatakaHighCourt #CompensationEnhancement #KSLSA #MACTApeal





