How compensation law works
When someone dies in a road accident, the Motor Vehicles Act, 1988, entitles their family to compensation. The framework is largely mathematical: a court takes the deceased’s income, deducts a portion for personal expenses, adds a percentage for future prospects, and multiplies the result by a figure keyed to the deceased’s age. The number at the start of that chain determines almost everything that follows.
For a salaried person, there are payslips and tax returns. For a homemaker, there is nothing of this kind. The law’s solution has been “notional income”, which is a figure courts impute to the deceased in recognition that domestic labour has value even when unpaid.
How courts valued homemakers before 2026 order
The question before the Supreme Court is not entirely now. Courts have grappled for decades with how to place a monetary value on the work done by homemakers.
In Lata Wadhwa v. State of Bihar (2001), which arose from a fire at a Tata Steel event in Jamshedpur, the Supreme Court recognised that the services performed by homemakers could not be ignored while awarding compensation. It approved a notional income of Rs 3,000 per month for homemakers within 34-59 years of age.
Around the same time, the Motor Vehicles Act treated a non-earning person as having an annual income of Rs 15,000. These figures became a starting point for compensation calculation across the country.
The question of whether a homemaker’s work could be reduced to such figures never really left the courts. In Arun Kumar Agarwal and Anr v. National Insurance Co. Ltd (2010), the Supreme Court observed that the contribution of a wife and a mother extends far beyond cooking or cleaning. A homemaker manages the household, cares for children, guides them through their formative years, and often enables other members of the family to pursue education and employment. The court described these services as “invaluable” and warned against equating them with those of a paid domestic worker.
The value of domestic labour had been recognised in principle, but there was no clear method of accounting for a homemaker’s daily economic contribution to a household. Photo: Unsplash
The framework for calculating compensation was further standardised in National Insurance Co. Ltd v. Pranay Sethi (2017), where a Constitution Bench laid down rules for adding future prospects and fixed amounts under heads such as loss of consortium, funeral expenses, and loss of estate. The decision ensured greater consistency in compensation awards across the country.
Yet, even after these orders, courts were still relying on notional income figures. The value of domestic labour had been recognised in principle, but there was no clear method of accounting for the economic contribution that a homemaker makes to a household everyday. It is this gap that the Supreme Court sought to address in its 2026 order.
Why homemakers don’t fit the framework
The problem is not simply that the numbers are low, even though they are. It is that notional income cannot fully capture what a homemaker actually contributes.
The Supreme Court drew on the National Statistical Office’s Time Use Survey of 2019, which found that women between the ages of 15 and 59 spend over 7 hours daily on unpaid domestic tasks against under 3 hours for men and that women’s unpaid caregiving contributes an estimate of 15-17% of India’s gross domestic product (GDP), a contribution that does not appear in GDP precisely because unpaid work is not counted as productive activity.
The court identified three dimensions of loss when a homemaker dies:
- the management of the household itself;
- the loss of “first teacher” for the children, as in the daily transmission of skills, language, and values that no paid arrangement replicates; and
- the loss to the earning spouse of the domestic infrastructure that enabled his focus on work.
These, the court said, make the homemaker’s contribution “neither entirely economic nor entirely non-economic”.
The law also has a second instrument for acknowledging this kind of loss — “loss of consortium”, which is fixed at Rs 40,000 per dependent under Pranay Sethi. The judgment standardised compensation law by fixing conventional heads such as consortium, loss of estate, and funeral expenses.
But the current Supreme Court judgment held that the consortium addressed the loss of “affection, comfort, solace, companionship, society, assistance, protection”, which speaks to emotional absence rather than the concrete economic value of domestic management.
The gap between what notional income captures and what the consortium captures is where the homemaker’s actual contribution had been falling through.
What the court held
The Supreme Court created a new head of compensation, called “loss of domestic care”, with a baseline value of Rs 30,000. It described the homemakers as both a caregiver and an economic actor.
The head applies where all three conditions are present, that is:
- the homemaker contributed to the household’s functioning,
- children in the family lost her maternal care and guidance, and
- the spouse or parents lost support.
Where all three are met, Rs 30,000 per month stands as the base monthly income, the figure to which prospects are added and to which the multiplier is applied, replacing the notional income as the starting point. A multiplier is an age-based figure used by courts to estimate the number of years for which the deceased would have likely continued contributing to the family. Where the homemaker also had paid employment, Rs 30,000 is added to her actual income.
The figure is revised upward by 10% every three years on the same schedule established for the consortium under Pranay Sethi.
On the separation from the consortium, the court said that “consortium deals almost exclusively with the emotional aspects of loss”, giving “no attention to the contribution of the homemaker within the house from an economic lens”. Loss of domestic care addresses the other half.
In this case, the deceased homemaker was 35 years old. Using the new framework laid down in the judgment, the Supreme Court calculated compensation at Rs 60.48 lakh for the family’s loss of dependency. After adding amounts under other recognised heads such as consortium, loss of estate, and funeral expenses, the total compensation came to Rs 62.77 lakh.
Pendency of cases
The order also addressed the 25-year delay of the case itself. The appeal had remained pending in the Punjab and Haryana High Court for nearly two decades, partly because court records were damaged in a fire and had to be reconstructed.
The court said that the delay prompted it to examine whether such pendency was exceptional or part of a larger pattern. Surveying over 120 motor accident appeals, the court found average pendency at the High Court level running to approximately 8 years.
“Although it is never possible to fully compensate for the loss of a person who has been an integral part of a person’s family, the idea of ‘just and fair’ compensation required that an amount of money be paid to the claimants that would place them in a position as if the unfortunate incident had not taken place,” the court said. “For whatever reasons, when this takes twenty years, the suffering is only compounded further.”
It directed the Chief Justices of all the High Courts to list the oldest pending motor accident matters first, expand dedicated benches where needed, and directed tribunals to adopt summary procedure wherever possible.
A bench comprising Justices Sanjay Karol and N Kotiswar Singh held that homemakers are not merely caregivers but “economic entities” whose contribution to the household had been consistently undervalued by courts. Photo: Unsplash 
The value of domestic labour had been recognised in principle, but there was no clear method of accounting for a homemaker’s daily economic contribution to a household. Photo: Unsplash
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