The Supreme Court recently stated in the case of Baijayanti vs National Insurance Co. that an appeal court cannot arbitrarily modify the compensation amount in lack of valid and cogent reasons. In this case, the insured’s widow and her family moved the court demanding Rs. 15 lakh as compensation for the death of their sole earning member in a road accident. The awarded compensation was Rs. 14 lakh plus 8 % interest from the date of the claim.
The insurance company appealed to the high court claiming that the amount was excessive for a person who earned Rs. 9,000 per month as salary. The high court cut down the amount to Rs. 9.5 lakh. The family appealed to the Supreme Court where the compensation was restored to the original amount granted by the tribunal observing it was just and reasonable and the high court was wrong in reducing it in an “extremely cryptic” order.