REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1923-1924 OF 2011 (Arising out of SLP (Civil) No.16406-16407 of 2010)

Sri. K.R. Madhusudhan & Ors.  ...Appellant(s)

Versus  

The Administrative Officer & Anr. ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. Delay condoned.

2. Leave granted.

3. On  4.10.1998,  at  about  8.55  a.m.,  V.  

Rajagopalaiah was crossing the road near Ashraya  

Hotel, B.M. Road, Channapatna, when a Maruti Van  

(owned  by  the  first  respondent)  bearing  

registration  No.  KA-05-A-2535  came  at  a  high  

speed and dashed against the deceased, causing  

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severe injuries. He was taken to hospital, but  

he succumbed to his injuries.

4. The  deceased was  of 53  years of  age and  was  

survived by his wife and three sons, the present  

appellants. They filed a claim petition under  

Section  166  of  the  Motor  Vehicles  Act,  1988  

claiming Rs.20,00,000/- as compensation. It was  

contested by the respondents.

5. Motor  Accident  Claims  Tribunal  (hereinafter  

“MACT”) found that the death of V. Rajagopalaiah  

was due to the rash and negligent driving of the  

van driver (the second respondent). The deceased  

was  working  as  Senior  Assistant  in  Karnataka  

Electricity  Board  (hereinafter  “KEB”)  and  his  

last drawn gross monthly salary was Rs.15,642/-  

i.e. Rs.1,87,704/- annually. 1/3rd was deducted  

for personal expenses, after which the amount  

came to Rs.1,25,136/-. As deceased was 53 years  

of  age,  a  multiplier  of  11  was  applied.  The  

Tribunal  also  awarded  funeral  and  transport  

expenses  amounting  to  Rs.10,000/-,  medical  

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expenses  prior  to  death  was  Rs.6,000  and  

compensation  for  loss  and  affection  at  

Rs.25,000/-.  Accordingly,  total  compensation  

awarded was Rs.14,27,496/- along with interest  

of 9% p.a.

6. The appellants and the respondents both appealed  

against the award of the Tribunal to the High  

Court of Karnataka. The appellants appeared for  

enhancement and the respondents for reduction of  

the  amount  awarded.  The  High  Court,  in  its  

impugned  judgment,  reduced  the  compensation  

awarded  by  the  Tribunal  to  the  appellants  to  

Rs.11,82,000/-.  The  relevant  portion  of  High  

Court order reads as follows:

“The  deceased  was  working  as  Senior  Assistant in KEB getting a salary of  Rs.15,642/-.  After  effecting  deductions towards income tax, the net  salary  of  the  deceased  would  be  Rs.14,000/-.  The  mother  and  sons  of  the  deceased  have  filed  claim  petition.  1/5  is  to  be  deducted  towards personal expenses. Rs.11,200/-  would  enure  to  the  benefit  of  the  dependants.  The  deceased  was  aged  about  52  years.  The  deceased  would  have  retired  by  58  years.  After  superannuation, the deceased would get  

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pensionary  income  in  a  sum  of  Rs.6000/-.  1/5  is  to  be  deducted  towards  personal  expenses.  Rs.4800/-  would  enure  to  the  benefit  of  the  dependants.  Split  multiplier  would  apply.  After  superannuation,  multiplier  6  would  apply.  Therefore,  the  total  loss  of  dependency  before  superannuation would be Rs.8,06,400/-  (Rs.11200 (income) X 12 (months) X 6  (multiplier).  The  total  loss  of  dependency from the pensionary income  would  be  Rs.3,45,600/-  (Rs.4800/-  (income)  X  12  (months)  X  6  (multiplier).  The  total  loss  of  dependency would be Rs.11,52,000/- The  petitioners are entitled for a sum of  Rs.25,000/- towards loss of expectancy  and  Rs.10,000/-  towards  funeral  expenses. In all the petitioners are  entitled  for  a  total  sum  of  Rs.11,82,000/-  as  against  Rs.14,27,496/-  awarded  by  the  Tribunal. The petitioners are entitled  for interest at 6% p.a.”

7. Assailing the same, the appellants contend that  

the  future  prospects  of  the  deceased  and  

revision  in  salary  were  not  taken  into  

consideration  by  the  High  Court  and  a  split  

multiplier should not have been adopted.

8. The law regarding addition in income for future  

prospects has been clearly laid down in  Sarla  

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Varma  (Smt.)  &  Others v. Delhi  Transport  Corporation & Another [(2009) 6 SCC 121] and the  relevant portion reads as follows:

“In  Susamma  Thomas this  Court  increased the income by nearly 100%,  in  Sarla  Dixit  the  income  was  increased  only  by  50%  and  in  Abati  Bezbaruah the income was increased by  a  mere  7%.  In  view  of  the  imponderables  and  uncertainties,  we  are in favour of adopting as a rule of  thumb,  an  addition  of  50%  of  actual  salary to the actual salary income of  the deceased towards future prospects,  where the deceased had a permanent job  and  was  below  40  years.  [Where  the  annual income is in the taxable range,  the  words  “actual  salary”  should  be  read as “actual salary less tax”]. The  addition should be only 30% if the age  of the deceased was 40 to 50 years.  There should be no addition, where the  age of deceased is more than 50 years.  Though  the  evidence  may  indicate  a  different  percentage  of  increase,  it  is  necessary  to  standardize  the  addition to avoid different yardsticks  being applied or different methods of  calculation  being  adopted.  Where  the  deceased was self-employed or was on a  fixed  salary  (without  provision  for  annual  increments  etc.),  the  courts  will  usually  take  only  the  actual  income  at  the  time  of  death.  A  departure  therefrom  should  be  made  only  in  rare  and  exceptional  cases  involving special circumstances.”

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9. In the  Sarla Verma (supra) judgment the Court  has held that there should be no addition to  

income for future prospects where the age of the  

deceased  is  more  than  50  years.  The  learned  

Bench  called  it  a  rule  of  thumb  and  it  was  

developed so as to avoid uncertainties in the  

outcomes of litigation. However, the Bench held  

that  a  departure  can  be  made  in  rare  and  

exceptional  cases  involving  special  

circumstances. We are of the opinion that the  

rule of thumb evolved in Sarla Verma (supra) is  to be applied to those cases where there was no  

concrete evidence on record of definite rise in  

income due to future prospects. Obviously, the  

said rule was based on assumption and to avoid  

uncertainties  and  inconsistencies  in  the  

interpretation  of  different  courts,  and  to  

overcome the same.

10. The  present  case  stands  on  different  factual  

basis where there is clear and incontrovertible  

evidence  on  record  that  the  deceased  was  

entitled  and in  fact bound  to get  a rise  in  

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income  in  the  future,  a  fact  which  was  

corroborated by evidence on record. Thus, we are  

of the view that the present case comes within  

the ‘exceptional circumstances’ and not within  

the purview of rule of thumb laid down by the  

Sarla Verma (supra) judgment. Hence, even though  the deceased was above 50 years of age, he shall  

be entitled to increase in income due to future  

prospects.

11. We base our conclusion on our findings from the  

records of the case.  The evidence of PW.1, the  

son  of  the  deceased,  is  that  there  are  four  

claimants, three of them are the sons of the  

deceased  and  the  other  claimant  is  paternal  

grand-mother.  Therein,  he  stated  that  the  

deceased  was  the  only  bread  earner  of  the  

family.  It  was  stated  by  PW.1  that  if  his  

father, the deceased, would have been alive he  

could have got promotion and could have received  

the salary of Rs.20,000/- per month.

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12. PW.3, who was the Senior Assistant in KEB, in  

his evidence also stated that the deceased was  

52 years of age at the time of his death and he  

was having six years of service left. The annual  

increment is Rs.350/-. In the year 2003 (which  

would have been year of retirement), the basic  

pay  of  the  deceased  would  have  been  around  

Rs.16,000/- and in all he would have obtained  

gross  salary  of  Rs.20,000/-  per  month.  PW.3  

deposed  that  as  per  the  Board  Agreement  for  

every  five  years  their  pay  revision  is  

compulsory.  Both  the  witnesses  were  cross-

examined before the Tribunal but the evidence  

leading to pay revision was not assailed.

13. Therefore,  the  consistent  evidence  before  the  

Tribunal  was  that  if  the  deceased  would  have  

been  alive  he  would  have  reached  the  gross  

salary of Rs.20,000/- per month.

14. In  view  of  this  evidence  the  Tribunal  should  

have considered the prospect of future income  

while  computing  compensation  but  the  Tribunal  

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has  not  done  that.  In  the  appeal,  which  was  

filed by the appellants before the High Court,  

the High Court instead of maintaining the amount  

of  compensation,  granted  by  the  Tribunal,  

reduced the same. In doing so, the High Court  

had  not  given  any  reason.  The  High  Court  

introduced the concept of split multiplier and  

departed  from  the  multiplier  used  by  the  

Tribunal  without  disclosing  any  reason  

therefore.  The  High  Court  has  also  not  

considered the clear and corroborative evidence  

about the prospect of future increment of the  

deceased.  When  the  age  of  the  deceased  is  

between 51 and 55 years the multiplier is 11,  

which is specified in the II Column in the II  

Schedule  in  the  Motor  Vehicles  Act,  and  the  

Tribunal  has  not  committed  any  error  by  

accepting the said multiplier. This Court also  

fails to appreciate why the High Court chose to  

apply the multiplier of 6.         

15. We are, thus, of the opinion that the judgment  

of the High Court deserves to be set aside for  

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it  is  perverse  and  clearly  contrary  to  the  

evidence on record, for having not considered  

the future prospects of the deceased and also  

for adopting a split multiplier method.

16. The income of the deceased will be taken to be  

Rs.20,000/- p.m. which amounts to Rs.2,40,000/-  

p.a. After deduction of 1/3rd amount for personal  

expenses, the loss of notional income will be  

Rs.1,60,000/-.  The  multiplier  of  11  will  be  

applied, from which the loss of dependency will  

amount  to  Rs.17,60,000/-.  We  also  award  

Rs.10,000/- for funeral and transport expenses,  

Rs.6,000/- for medical expenses prior to death  

and Rs.25,000/- for loss of love and affection.  

Thus, the total compensation awarded amounts to  

Rs.18,01,000/-  which  we  round  off  to  

Rs.18,00,000/-.

17. The  amount  of  compensation  would  thus  be  

Rs.18,00,000/-  with  the  rate  of  interest  as  

granted by the Tribunal. The amount is to be  

deposited  with  the  Tribunal  within  six  weeks  1

from date after deducting any amount, if already  

deposited.

18. The appeals are, thus, allowed. No costs.

.....................J.   (G.S. SINGHVI)

.....................J.   (ASOK KUMAR GANGULY)

New Delhi   February 18, 2011

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