The Supreme Court is set to convene a larger bench to address a critical question: how should the income of individuals working abroad be calculated when determining compensation for road accident victims in India? This move comes in response to differing judicial opinions on whether to fully consider a deceased person’s foreign salary or to adjust it based on Indian living standards.
Justices Rajesh Bindal and Manmohan highlighted the growing importance of this issue, noting the increasing number of Indians, especially in IT and specialized fields, working abroad and sending remittances home. The court recognized that differing approaches to deductions for foreign income could lead to inconsistent compensation awards.
“With changes in the level of earnings in the last decades, a lot of IT graduates/professionals and other Indians are going abroad for better career opportunities. There are divergent views on applying deductions where the income is earned in a foreign country. The issue deserves to be resolved by a larger bench,” the court stated, requesting the Chief Justice of India to form the bench.
The case originated from an appeal filed by the family of Hari Shankar Brahma, a 27-year-old system analyst from New Jersey, USA, who tragically died in a road accident in India in 2009. At the time of his death, he was earning $47,050 annually (approximately ₹21 lakh). His family sought compensation for their loss.
The Motor Accident Claims Tribunal had initially calculated compensation based on his US income, applying standard deductions, and awarded ₹63 lakh. However, the Gauhati High Court reduced the income for assessment, considering him a contractual foreign worker and applying only one-third of his overseas salary as the base. Further deductions for future prospects and personal expenses led to a final compensation of ₹83.63 lakh. The family contested this, arguing that the high court’s calculation unfairly diminished the income twice.
The Supreme Court acknowledged that there are two lines of precedent: one that advocates for considering the full foreign salary with normal deductions, and another that suggests adjusting foreign income to account for cost-of-living differences. The court emphasized the need for clarity on several practical points, including whether foreign income should be reduced before deductions, what formula should be used for adjustments, how remittances to families in India should be handled, and the impact of the family’s residence (abroad or in India).
The bench concluded that a uniform principle is essential to ensure fairness for both the victims’ dependents and the insurance companies, given the rising number of Indians working abroad and the risk of arbitrary compensation awards due to inconsistent judicial approaches.
“Let the papers be placed before the Hon’ble Chief Justice of India for constituting a larger Bench for consideration of the issues referred to above,” the bench ordered.