Maya Singh vs The Oriental Insurance Co. Ltd

2025 INSC 161 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. ……………. OF 2025 (Arising out of S.L.P.(C) No.30398 of 2019)

MAYA SINGH AND OTHERS … Appellant(s)

VERSUS

THE ORIENTAL INSURANCE CO. LTD. AND OTHERS … Respondent(s)

JUDGMENT

RAJESH BINDAL, J.

1. Leave granted.

2. This appeal has been filed against the impugned order

dated 31.07.2019 1 passed by the High Court2 in a motor accident case.3

The Tribunal4 awarded compensation of ₹28,66,994/- under various Signature Not Verified Digitally signed by ARJUN BISHT Date: 2025.02.07

Reason: 1 MA No. 568 of 2015.

17:42:45 IST

2 High Court of Madhya Pradesh at Gwalior.

3 Claim Case No. 65 of 2014.

4 First Additional Motor Accidental Claims Tribunal, Dist. Gwalior (M.P.).

Page 1 of 12 heads along with interest @ 7.5% per annum from the date of filing of

the claim petition till realisation. However, the High Court reduced the

compensation to ₹19,66,833/- observing that the deceased was to

remain in service only for another 02 years and thereafter would have

retired. Split method for calculation of dependency was applied.

3. The facts on record are that on 07.03.2014 at about

03.00 p.m., Laxman Das Mahour (deceased) was travelling with his son

Jugal Kishore, on a bus. After getting off the bus, he was walking on the

road when the offending bus bearing Registration No. MP-06/B-1725

dashed against him. Tragically, Laxman Das succumbed to his injuries

at the scene of the accident. The appellants are the family of the

deceased, who filed the claim petition seeking compensation.

4. Before the Tribunal, the owner and the driver of the

offending bus did not appear despite service, hence, were proceeded

against ex-parte. Respondent/Insurance Company challenged the

claim of the appellants by, inter alia, denying the negligence of the bus

driver and disputing the income earned by the deceased.

5. After considering the materials produced by the parties in

evidence, the Tribunal assessed the compensation at ₹28,66,994/-. The

details thereof are as under:

Page 2 of 12

Heads Compensation (₹) Loss of dependency 27,41,994 (₹4,57,000 x 9 x 2/3) Loss of consortium to wife 1,00,000 Funeral expense 25,000 Total 28,66,994 with interest @ 7.5% p.a.

6. Aggrieved against the award of the Tribunal, the Insurance

Company preferred appeal before the High Court. The High Court

partially allowed the same and reduced the compensation under the

head of loss of dependency by bifurcating the period for which the

deceased would have remained in service and post-retirement. The

amount of consortium payable to the widow was reduced from

₹1,00,000/- to ₹40,000/-. The total amount of compensation assessed

by the High Court was ₹19,66,833/-. The details thereof are as under:

Heads Compensation (₹) Salary (March 2014 to Dec. 2015) – 8,69,000 ₹39,500 x 22 months Salary (January 2016 to July 2016) – 2,97,500 ₹42,500 x 7 months Pension – ₹21,250 x 79 months 16,78,750 Dependency – 1/3rd reduction (-) 9,48,416 Loss of estate 15,000 Loss of funeral expense 15,000 Loss of consortium 40,000 Total 19,66,833 with interest @ 7.5% p.a.

Page 3 of 12

7. Aggrieved against the aforesaid order, the claimants are

before this Court.

8. Learned counsel for the appellants submitted that the High

Court has committed grave error in reducing the amount of

compensation admissible to them under the head of loss of

dependency. The High Court has applied a novel method of splitting

the income of pre and post-retirement, as a result of which the amount

of compensation which the appellants are entitled to was considerably

reduced. The appellants are entitled to compensation on account of

loss of income as opined by the Tribunal and in addition are entitled to

15% increase on account of future prospects considering the age of the

deceased. The Tribunal had rightly assessed the loss of income to the

family but had failed to grant compensation on account of loss of estate

in terms of Constitution bench judgment of this Court in National

Insurance Company Limited v. Pranay Sethi and Others. 5

9. On the other hand, the learned counsel of the respondent

submitted that the compensation as assessed by the High Court is just

and fair. The deceased was close to 58 years of age and would have

retired in the next 02-03 years. Thereafter, he would have received

5 (2017) 16 SCC 680 : 2017 INSC 1068.

Page 4 of 12 pension and not salary. It would have been about 50% of the last drawn

salary. The compensation has to be calculated with reference of loss

to the family post retirement. Loss to the family after retirement could

not be of the income of the deceased but of the amount of pension.

However, Respondent did not dispute the fact that in terms of Pranay

Sethi (supra), the appellants would be entitled to an increase on

account of future prospects and also specified compensation under

other heads.

10. Heard learned counsel for the parties and perused the

paperbook.

11. As is evident from the record, the accident in question took

place on 07.03.2014. The deceased was knocked down by the

offending bus bearing Registration No. MP-06/B-1725. He died on the

spot. He was 57-58 years of age and was employed as a phone

mechanic with Bharat Sanchar Nagar Limited (for short “BSNL”). He

was survived by his widow and four children. Two of his sons were

held not to be legally entitled to claim compensation as they were not

financially dependent on the deceased. The present appellants,

namely the widow, a dependent son and a daughter of the deceased,

are the rightful claimants for compensation. The income as proved on

record was ₹39,500/- per month (₹4,74,000/- per annum), which after

Page 5 of 12 deduction of income tax was ₹4,57,000/- per annum. To the aforesaid

facts, there is no dispute. The Tribunal assessed the compensation on

account of loss of income taking the annual income of the deceased at

₹4,57,000/- by applying a multiplier of 9 and applying a cut of one-third

towards personal expenses.

11.1 The High Court applied a split method. It was opined that

after the death of the deceased in the accident he would have drawn

salary of ₹39,500/- for a period of 22 months. Thereafter, an increment

was due to him, by adding the same for another 07 months before

retirement, he would have drawn salary of ₹42,500/- per month.

Thereafter, the deceased would have been entitled to pension of

₹21,250/-. The compensation was assessed in terms thereof. As far as

loss of compensation on account of consortium is concerned, the

Tribunal had awarded ₹1,00,000/-, which was reduced to ₹40,000/-.

Additionally, amount of ₹15,000/- was granted on account of loss of

estate. The compensation granted on account of funeral expenses was

reduced from ₹25,000/- to ₹15,000/-. As against ₹28,66,994/- awarded

by the Tribunal, the High Court assessed the compensation at

₹19,66,833/-.

11.2 An examination of the High Court's decision reveals that

substantial reduction in compensation is on account of application of a

Page 6 of 12 'split multiplier' to the income of deceased. In our considered view, the

High Court has erred in not considering the principles laid down in the

cases of Sarla Verma v. DTC 6 and Sumathi v. M/s. National Insurance

Company Ltd. 7

11.3 This Court in Sumathi (supra) addressed a similar situation.

The deceased was 54 years of age and was due to retire from

government service in four years when the fatal accident occurred.

The High Court assessed the compensation by taking the total salary of

the deceased for the leftover period of four years and fifty per cent of

the salary for the post-retirement period. The High Court awarded a

total compensation of ₹25,25,000/- instead of ₹40,76,496/- awarded by

the Tribunal. This Court set aside the decision of High Court and held

that split multiplier cannot be applied unless specific reasons are

recorded. It was opined as under:

“9. The High Court has applied split multiplier by referring to the judgment of this Court in the case of Puttamma & Ors. v. K. L. Narayana Reddy & Anr.,8 without recording any specific reason, contrary to the said judgment. The High Court has applied split multiplier only on the ground that the deceased was 54 years of age at the

6 (2009) 6 SCC 121 : 2009 INSC 506.

7 CIVIL APPEAL NO. 7729 OF 2021 decided on 15.12.2021 : 2022 ACJ 1315. 8 (2013) 15 SCC 45 : 2013 INSC 814

Page 7 of 12 time of the accident and leftover service was only four years. In the case of Puttamma & Ors. v. K. L. Narayana Reddy & Anr., in similar circumstances, where the split multiplier was applied for the purpose of assessing compensation by the High Court, this Court has allowed the appeal by setting aside the judgment of the High Court. Para 66 of the judgment of the case of Puttamma & Ors. v. K. L. Narayana Reddy & Anr. is relevant for the purpose of disposal of this appeal. The relevant para 66 reads as under:

“66. In the appeal which was filed by the claimants before the High Court, the High Court instead of deciding the just compensation allowed a meagre enhancement of compensation. In doing so, the High Court introduced the concept of split multiplier and departed from the multiplier system generally used in the light of the decision in Sarla Verma case without disclosing any reason. The High Court has also not considered the question of prospect of future increase in salary of the deceased though it noticed that the deceased would have continued in pensionable services for more than 10 years. When the age of the deceased was 48 years at the time of death it wrongly applied multiplier of 10 and not 13 as per decision in Sarla Verma. Thus, we fail to appreciate as to why the High Court chose to apply split multiplier and applied multiplier of 10. We, thus, find that the judgment of the High Court is perverse and contrary to the evidence on record and

Page 8 of 12 is fit to be set aside for not having considered the future prospects of the deceased and also for adopting split multiplier method against the law laid down by this Court. In view of our aforesaid finding, we hold that the judgment of the High Court deserves to be set aside. We, accordingly, set aside the impugned judgment and hold that the claimants are entitled for total compensation of Rs.23,43,688. They shall also get interest on the enhanced compensation at the rate of 12% per annum from the date of filing of the complaint petition. Respondent 2 Insurance Company is directed to pay the enhanced/additional compensation and interest to the claimants within a period of three months by getting prepared a demand draft in their name.”

From a reading of the above judgment, it is clear that in normal course, the compensation is to be calculated by applying the multiplier, as per the judgment of this Court in the Case of Sarla Verma. Split multiplier cannot be applied unless specific reasons are recorded. The finding of the High Court that the deceased was having leftover service of only four years, cannot be construed as a special reason, for applying the split multiplier for the purpose of assessing the compensation. In normal course, compensation is to be assessed by applying multiplier as indicated by this Court in the judgment in the case of Sarla Verma. As no other special reason is recorded for applying the split multiplier,

Page 9 of 12 judgment of the High Court is fit to be set aside by restoring the award of the Tribunal.” (emphasis supplied)

11.4 In Sarla Verma’s case (supra), this Court has held that while

calculating the compensation, the multiplier to be used should start

with an operative multiplier of 18 (for the age groups of 15 to 20 and 21

to 25 years), reduced by one unit for every five years, that is M-17 for

26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for

41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units

for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60

years, M-7 for 61 to 65 years and M-5 for 66 to 70 years.

11.5 From the above, it is clear that normally Courts and

Tribunals have to apply the multiplier as per the judgement of this

Court in Sarla Verma (supra). Any deviation from the same warrants

special reasons to be recorded. In the case in hand, neither any special

reason has been recorded by the High Court while applying the split

method nor we find there is one in the facts of the case. In the case in

hand, the deceased was a technically qualified person and people are

generally healthy at that age and continue working even after

retirement.

Page 10 of 12 12. Considering the aforesaid factual aspects and position of

law, in our view, the compensation on account of loss of income while

applying the multiplier of 9 by the Tribunal without applying the split

method is the correct calculation on that account. Moreover, the

Tribunal as well as the High Court had failed to award future prospects

while calculating the compensation. Considering the age of the

deceased, the appellant would be entitled to future prospects @ 15%.

On account of loss of estate and funeral expenses, the amount of

₹15,000/- each awarded by the High Court is as per law. As far as loss

of consortium is concerned, there are three claimants, namely, the

widow, one son and one daughter. They would be entitled to

compensation on account of loss of consortium @ ₹40,000/- each. The

Tribunal had erred in awarding only a sum of ₹1,00,000/- in total.

13. In view of our aforesaid discussions, the compensation to

which the appellants would be entitled to is as per the calculations here

under:

Heads Compensation (₹) Loss of dependency 31,53,300 (₹4,57,000 x 9 x 2/3 x 115/100) Loss of consortium (₹40,000 x 3) 1,20,000 Funeral expense 15,000 Loss of estate 15,000 Total 33,03,300

Page 11 of 12

14. For the reasons mentioned above, the present appeal is

allowed, the impugned order passed by the High Court is set aside.

The award of the Tribunal is modified to the extent mentioned above.

The appellants are held to be entitled to total compensation of

₹33,03,000/- (rounded off). They shall be entitled to payment of

interest at the same rate as was awarded by the Tribunal.

15. Pending application (if any) shall stand disposed of.

……………….……………..J. (J.K. MAHESHWARI)

……………….……………..J. (RAJESH BINDAL) New Delhi February 07, 2025.

Page 12 of 12