P.S. Somanathan & Ors vs District Insurance Officers & Anr

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.

5 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.

7 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 Multiplier Multiplier Multiplier Multiplier Multiplier

the Scale as Scale as Scale in specified actually used

Deceased envisaged adopted by Trilok in Second in Second

in Susamma Trilok Chandra as Column in Schedule to

Thomas Chandra clarified the Table the MV Act (as

in Charlie in Second seen from the

Schedule quantum of

to the MV compensation)

Act

(1) (2) (3) (4) (5) (6)

Up to - - - 15 20 15

yrs

15 to 16 18 18 16 19 20 1

yrs

21 to 15 17 18 17 18 25

yrs

26 to 14 16 17 18 17 30

yrs

31 to 13 15 16 17 16 35

yrs

36 to 12 14 15 16 15 40

yrs

41 to 11 13 14 15 14 45

yrs

46 to 10 12 13 13 12 50

yrs

51 to 9 11 11 11 10 55

yrs

56 to 8 10 09 8 8 60

yrs

61 to 6 08 07 5 6 65

yrs

Above 5 05 05 5 5 65

Yrs

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

1

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.

1 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.

1 .....................J.

(G.S. SINGHVI)

.....................J.

(ASOK KUMAR GANGULY)

New Delhi

February 17, 2011

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