SC sends key question on compensation for NRI accident victims to larger bench
19/11/2025
NEW DELHI, Nov 18: The Supreme Court has referred to a larger Bench a significant question of law concerning how compensation should be calculated in motor accident cases where the deceased was working abroad and earning in foreign currency. The referral came in a judgment delivered in Tharunoju Eshwaramma & Ors. vs. K. Ram Reddy & Anr. after the Court noted conflicting views in previous rulings.
The appeal arose from the death of 27-year-old Hari Shankar Brahma, a System Analyst employed in New Jersey, USA, earning an annual salary of USD 47,050 (approximately ?21.17 lakh). The Motor Accident Claims Tribunal had awarded ?63 lakh, while the Telangana High Court recalculated his income by taking only one-third of his US salary, treating him as a contractual worker, and awarded ?83.63 lakh. The claimants challenged this reduction before the Supreme Court.
The Bench of Justice Rajesh Bindal and Justice Manmohan observed that previous judgments of the Supreme Court reflect two divergent approaches:
Approach 1: Full Foreign Income Considered
Several judgments-Shyam Prasad Nagalla (2025), Kulwinder Kaur (2025), Ashish Ravindra Kulkarni (2024), Satinder Kaur (2021), Ramla (2019), Balram Prasad (2014), Jiju Kuruvila (2013)-held that the deceased's actual foreign income should be converted into Indian rupees and used as the basis, with only standard deductions applied.
Approach 2: Moderated Income / Double Deduction
Other rulings-Chanderi Devi (2015) and Deo Patodi (2009)-applied substantial downward adjustments to foreign income based on cost-of-living differences and then further applied standard personal-expense deductions, resulting in significantly lower compensation.
Need for Clarity
The Court noted the growing number of Indian professionals working abroad and the lack of uniformity in calculating compensation for such victims. It highlighted factors requiring authoritative guidance, including:
o Whether foreign income should be moderated for cost-of-living differences
o How to avoid "double deduction"
o Whether remittances to Indian families should influence income assessment
o Whether the deceased's marital status and residence of dependents (India or abroad) should matter
Since one line of cases includes a three-judge Bench decision, the Court held that only a larger Bench can resolve the conflict.
The Supreme Court has directed that the case papers be placed before the Chief Justice of India for constitution of a larger Bench to settle these issues once and for all.
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