REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1891 OF 2011 (Arising out of SLP (Civil) No.13771 of 2010)

P.S. Somanathan and Ors.     ...Appellant(s)

Versus  

District Insurance Officer and Anr.   ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. Delay condoned.

2. Leave granted.

3. One Suresh Chandra Babu, was walking along the  

side  of  Alappuzha-Kollam  National  Highway  near  

Punnapra  junction  on  25.07.1994,  when  a  lorry  

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(bearing registration No. KL 4/6802) which was  

being driven rashly suddenly hit him. As a result  

of which he sustained serious injuries and died  

on the spot. The lorry which was insured with the  

first  respondent  was  owned  by  the  second  

respondent.

4. The  appellants  (claimants)  who  are  the  family  

members of the deceased filed a claim petition  

before the Motor Accident Claims Tribunal (MACT),  

claiming Rs.1,75,000/- as compensation. The same  

was  contested  by  the  first  and  second  

respondents.

5. Before  the  MACT,  the  following  issues  were  

framed:

“i. Whether the accident was due to the rash and  

negligent  driving  of  the  second  respondent  

herein?

ii. Whether the petitioners were entitled to get  

any  compensation  and  if  so,  what  was  the  

quantum and who all were liable?”

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6. Based on the evidence on record, MACT concluded  

that the accident had occurred in view of the  

rash  and  negligent  driving  of  the  second  

respondent and it awarded a total compensation of  

Rs.1,71,600/- together with interest at the rate  

of 12% p.a. and cost of Rs.1,500/-. It calculated  

the same as follows:

“…Suresh Chandra Babu aged 33 years died  due to injuries sustained in the accident.  PW1 swears that at the time of accident  Suresh  Chandra  Babu  was  working  as  an  operator  in  Motherland  Industries,  Punnapra and was getting Rs.4,500/- p.m.  In Ext. A1 FIR, it is stated that Suresh  Chandra  Babu  was  working  as  a  mechanic  operator in Motherland Industries Company.  PW1  swears  that  Suresh  Chandra  Babu  was  unmarried  and  he  was  looking  after  the  affairs  of  the  family.  Considering  the  nature of the work done by deceased Suresh  Chandra  Babu,  his  monthly  income  can  be  assessed as Rs.1,200/- for the purpose of  calculating  just  compensation.  After  deducting his personal expenses he would  be  contributing  Rs.800/-  p.m.  to  his  mother-  the  first  petitioner.  In  this  manner, the annual dependency of the first  petitioner  of  the  deceased  comes  to  Rs.9,600/-.  In  this  case  16  can  be  determined  as  suitable  multiplier.  Therefore, the amount of compensation on  account  of  loss  of  dependency  comes  to  Rs.1,53,000/-. Rs.15,000/- can be awarded  towards  compensation  for  pain  and  

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suffering.  Rs.1,900/-  can  be  awarded  towards  transportation  charges  and  Rs.2,000/- can be awarded towards funeral  expenses. Thus, in total, the petitioner  is  entitled  to  get  Rs.1,71,600/-  as  compensation.”

7. The  first  respondent  appealed  against  the  

judgment of the MACT before the High Court of  

Kerala at Ernakulam.

8. The  High  Court,  vide  its  impugned  judgment,  

reduced  the  compensation  to  Rs.85,000/-  along  

with  interest  at  the  rate  of  12%  p.a.,  the  

relevant portion of High Court judgment reads as  

follows:

“Heard both sides. The learned Government  Pleader submits that father was aged about  70 years even at the time of the accident  and therefore the Tribunal had committed  an error in fixing the multiplier at 16  whereas it has to only apply a multiplier  of  5.  In  the  award,  the  age  of  first  claimant is not shown but the daughter of  the first claimant namely Leela has filed  an affidavit before this Court for getting  impleaded as I.A. 1407/06 where her age is  shown as 61 years. So it is clear that she  would  be  49  years  at  the  time  of  the  accident and therefore even if the minimum  age that can be fixed for the mother will  be 67 years and not less. The mother is  

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the real legal representative and others  cannot  claim  the  status  of  legal  representative  and  therefore  the  appropriate multiplier to be used in this  case  is  only  5.  It  is  true  that  the  Tribunal  has  taken  his  income  at  Rs.1,200/-  per  month  whereas  claimants  claimed that the deceased was getting an  amount of Rs.1,500/- as his income. We fix  it at Rs.1,500/- deduct 1/3rd for personal  expenses  and  applying  a  multiplier  of  5  the loss of dependency compensation would  come  to  Rs.60,000/-.  The  Tribunal  has  awarded  Rs.15,000/-  towards  pain  and  suffering,  Rs.1,000/-  towards  transportation charges and Rs.2,000/- for  funeral expenses. They are only just and  reasonable and we do not find any ground  to  interfere  with  the  same.  But  the  Tribunal  has  not  awarded  any  amount  towards  love  and  affection.  Hence,  we  grant an amount of Rs.5,000/- under that  head and also award a sum of Rs.2,500/-  towards  loss  of  estate.  Therefore,  the  total compensation that the claimants are  entitled to will be Rs.85,000/-.”

9. Aggrieved with the judgment of the High Court,  

the appellants (claimants) filed a Special Leave  

Petition before this Court.

10. On  the  question  of  fixing  the  quantum  of  

compensation in motor accident claim cases, this  

Court has laid down several guidelines.

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11. In the case of  Concord of India Insurance Co.  Ltd. v. Nirmala Devi [(1979) 118 ITR 507(SC)],  Justice  Krishna  Iyer,  speaking  for  a  Bench  of  

this Court, observed that the determination of  

compensation must be liberal, not niggardly since  

the law values life and limb in a free country in  

generous scales.

12. In the case of General Manager, Kerala State Road  Transport Corporation, Trivandrum v. Mrs. Susamma  Thomas and Ors.  [AIR 1994 SC 1631], this Court  held that:

“The assessment of damages to compensate  the dependants is beset with difficulties  because from the nature of things, it has  to take into account many imponderables,  e.g., the life expectancy of the deceased  and  the  dependants,  the  amount  that  the  deceased  would  have  earned  during  the  remainder of his life, the amount that he  would have contributed to the dependants  during that period, the chances that the  deceased  may  not  have  lived  or  the  dependants  may  not  live  up  to  the  estimated remaining period of their life  expectancy, the chances that the deceased  might have got better employment or income  or  might  have  lost  his  employment  or  income together. The manner of arriving at the damages is  to  ascertain  the  net  income  of  the  deceased  available  for  the  support  of  himself and his dependants, and to deduct  

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therefrom such part of his income as the  deceased  was  accustomed  to  spend  upon  himself, as regards both self- maintenance  and pleasure, and to ascertain what part  of  his  net  income  the  deceased  was  accustomed to spend for the benefit of the  dependants.  Then  that  should  be  capitalized by multiplying it by a figure  representing the proper number of year's  purchase. Much  of  the  calculation  necessarily  remains in the realm of hypothesis "and in  that region arithmetic is a good servant  but a bad master" since there are so often  many imponderables. In every case "it is  the overall picture that matters" and the  court must try to assess as best as it can  the loss suffered.”

13. The Bench also observed that the proper method of  

computation is the multiplier-method, which was  

an  accepted  method  of  arriving  at  ‘just’  

compensation. Any departure, save in exceptional  

and  extraordinary  cases,  would  introduce  

inconsistency  of  principle,  lack  of  uniformity  

and  an  element  of  unpredictability  for  the  

assessment  of  compensation.  Further,  the  Bench  

held that the multiplier was determined by two  

factors, namely, the rate of interest appropriate  

to a stable economy and the age of the deceased  

or of the claimant whichever was higher.

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14. The principles laid down in Susamma (supra) were  upheld in the case of  U.P. State Road Transport  Corporation and Ors. v. Trilok Chandra and Ors.  [(1996) 4 SCC 362].

15. In  the  case  of  Tamil  Nadu  State  Transport  Corporation Ltd. v. S. Rajapriya     & Ors  . [AIR 2005  SC 2985], this Court observed that the choice of  

the multiplier was to be determined by the age of  

the deceased (or that of the claimants whichever  

is higher) and by the calculation as to what the  

capital sum, if invested at a rate of interest  

appropriate to a stable economy, would yield by  

way  of  annual  interest.  In  ascertaining  this,  

regard  was  also  to  be  had  to  the  fact  that  

ultimately  the  capital  sum  would  also  be  

consumed-up  over  the  period  for  which  the  

dependency was expected to last.

16. In  United India Insurance Co. Ltd.  v. Bindu &  Ors. [(2009)  3  SCC  705],  this  Court  again  reiterated that the choice of the multiplier was  

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to be determined by the age of the deceased (or  

that of the claimants whichever is higher) and by  

the  calculation  of  a  capital  sum  which,  if  

invested at a rate of interest appropriate to a  

stable  economy,  would  yield  by  way  of  annual  

interest.

17. In  Supe Dei (Smt) & Ors.  v. National Insurance  Co. Ltd. & Anr.  [(2009) 4 SCC 513], the Court  observed that while considering the question of  

just compensation payable in a case all relevant  

factors including appropriate multiplier had to  

be considered, and that the Second Schedule under  

Section 163-A to the Motor Vehicles Act, 1988,  

which  gave  amount  of  compensation  to  be  

determined  for  purpose  of  claim  under  the  

section,  could  be  taken  as  a  guideline  while  

determining the compensation under Section 166 of  

the Act.

18. In  Sarla Verma (Smt.) & Ors.  v. Delhi Transport  Corporation & Anr. [(2009) 6 SCC 121], this Court  

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formulated the principles very lucidly and which  

are quoted below:

“Basically  only  three  facts  need  to  be  established by the claimants for assessing  compensation in the case of death:  (a) age of the deceased;  (b) income of the deceased; and the  (c) the number of dependents.  The  issues  to  be  determined  by  the  Tribunal  to  arrive  at  the  loss  of  dependency are: (i)  additions/deductions  to  be  made  for  arriving at the income;  (ii) the deduction to be made towards the  personal living expenses of the deceased;  and  (iii)  the  multiplier  to  be  applied  with  reference of the age of the deceased.  If  these  determinants  are  standardized,  there will be uniformity and consistency  in the decisions. There will lesser need  for  detailed  evidence.  It  will  also  be  easier  for  the  insurance  companies  to  settle accident claims without delay.  To  have  uniformity  and  consistency,  the  Tribunals should determine compensation in  cases  of  death,  by  the  following  well- settled steps:

Step 1 (Ascertaining the multiplicand) The  income  of  the  deceased  per  annum  should  be  determined.  Out  of  the  said  income  a  deduction  should  be  made  in  regard  to  the  amount  which  the  deceased  would  have  spent  on  himself  by  way  of  personal and living expenses. The balance,  which is considered to be the contribution  to the dependant family, constitutes the  multiplicand.

Step 2 (Ascertaining the multiplier)

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Having regard to the age of the deceased  and  period  of  active  career,  the  appropriate multiplier should be selected.  This does not mean ascertaining the number  of years he would have lived or worked but  for the accident. Having regard to several  imponderables  in  life  and  economic  factors,  a  table  of  multipliers  with  reference to the age has been identified  by  this  Court.  The  multiplier  should  be  chosen from the said table with reference  to the age of the deceased.

Step 3 (Actual calculation) The  annual  contribution  to  the  family  (multiplicand)  when  multiplied  by  such  multiplier gives the `loss of dependency'  to the family.”

19. Further,  this  Court  considered  the  principles  

laid  down  in  Susamma (supra),  Trilok  Chandra  (supra)  and  New  India  Assurance  Co.  Ltd.  v.  Charlie & Anr. [(2005) 10 SCC 720] and gave the  following table for multiplier:

Age of  the  Deceased

Multiplier  Scale as  envisaged  in Susamma  Thomas

Multiplier  Scale as  adopted by  Trilok  Chandra

Multiplier  Scale in  Trilok  Chandra as  clarified  in Charlie

Multiplier  specified  in Second  Column in  the Table  in Second  Schedule  to the MV  Act

Multiplier  actually used  in Second  Schedule to  the MV Act (as  seen from the  quantum of  compensation)

(1) (2) (3) (4) (5) (6) Up to  15  yrs

- - - 15 20

15 to  20  

16 18 18 16 19

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yrs 21 to  25  yrs

15 17 18 17 18

26 to  30  yrs

14 16 17 18 17

31 to  35  yrs

13 15 16 17 16

36 to  40  yrs

12 14 15 16 15

41 to  45  yrs

11 13 14 15 14

46 to  50  yrs

10 12 13 13 12

51 to  55  yrs

9 11 11 11 10

56 to  60  yrs

8 10 09 8 8

61 to  65  yrs

6 08 07 5 6

Above  65  Yrs

5 05 05 5 5

20. In the present case, the claimants had filed for  

compensation  under  Section  166  of  the  Motor  

Vehicles Act, 1988. The original claim petition  

had been filed by the mother and brother of the  

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deceased and the deceased was 33 years of age  

when he died in the accident.

21. For the purpose of calculating the multiplier,  

the  High  Court  held  that  mother  was  the  real  

legal representative and others could not claim  

to be the legal representatives of the deceased,  

and  accordingly  applied  a  multiplier  of  5,  

whereas the Tribunal had calculated compensation  

by considering a multiplier of 16.

22. This Court is of the opinion that the law as has  

been laid correctly in the case of  Sarla Varma  (supra), in a very well considered judgment, is  

to be followed.

23. The  High  Court  unfortunately  took  a  very  

technical  view  in  the  matter  of  applying  the  

multiplier.  The High Court cannot keep out of  

its consideration the claim of the daughter of  

the  first  claimant,  since  the  daughter  was  

impleaded, and was 49 years of age.  Admittedly,  

the deceased was looking after the entire family.  

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In determining the age of the mother, the High  

Court should have accepted the age of the mother  

at  65,  as  given  in  the  claim  petition,  since  

there is no controversy on that.  By accepting  

the age of mother at 67, the High Court further  

reduced the multiplier from 6 to 5, even if we  

accept  the  reasoning  of  the  High  Court  to  be  

correct.  The reasoning of the High Court is not  

correct  in  view  of  the  ratio  in  Sarla  Verma  (supra).   Following  the  same  the  High  Court  

should have proceeded to compute the compensation  

on the age of the deceased.

24. Thus, the finding of the High Court is contrary  

to the ratio in Sarla Verma (supra), which is the  leading decision on this question and which we  

follow.   

25. This Court, therefore, cannot sustain the High  

Court judgment and is constrained to set aside  

the same.  The award of MACT is restored.

26. The appeal is allowed.  No costs.  

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

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

New Delhi   February 17, 2011   

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