REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE JURISDICTION

CIVIL APPEAL NO. 5564 OF 2005

Leela Gupta & Ors.          …Appellants

Versus   State of Uttar Pradesh & Ors. …Respondents     

JUDGEMENT

R.M. Lodha, J.

Ganga Prasad Gupta—the deceased, the husband  

of  the  first  appellant  and  father  of  second,  third  and  fourth  

appellant, was killed in a motor accident on July 8, 1985. He  

was then aged 39 and was officiating Executive Engineer in the  

Irrigation Department, State of Uttar Pradesh. Had he lived, it  

would have been 18 years or so before he reached the age of  

superannuation (i.e. 58 years). After superannuation, he would  

have qualified for pension. His wife and three children filed a  

claim petition under Section 110A of the Motor Vehicles Act,

1939  (for  short,  ‘the  1939  Act’)  before  the  Motor  Accident  

Claims Tribunal, Mirzapur (for short, `the Tribunal’) against the  

respondents  claiming  compensation  in  the  sum  of  Rs.  

7,00,000/-.  His gross salary on the date of accident was Rs.  

2,680/-  per  month.   The  Tribunal  held  that  deceased  would  

have contributed Rs. 2,200/- per month (Rs. 26,400/- per year)  

to the family and by applying a multiplier  of  18, reached the  

finding  that the pecuniary loss to widow and children would be  

Rs. 4,75,200/-  up to the age of his retirement. The Tribunal  

then deducted 1/3rd of the above considering  the amount  being  

paid  in  lump  sum  and  uncertainty  in  life and by further  

deducting  a  sum  of  Rs.  40,000/-  towards  group  insurance  

scheme,  assessed  compensation  to  the  extent  of  Rs.  

2,76,800/-.   An amount  of  Rs.  15,000/-  having been already  

paid to the claimants towards no fault liability, the Tribunal in its  

Award dated February 24, 1987 held that claimants are entitled  

to a sum of Rs. 2,61,800/- and directed the respondents to pay  

the said amount with  pendente lite  and future interest thereon  

@ 9% per annum.

2. On appeal  by the  claimants,  the  High Court  held  

that  the  claimants  were  entitled  to  Rs.  4,70,000/-  as  

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compensation along with 9% simple interest per annum from  

the  date  of  the  claim  petition  until  the  actual  payment  was  

made. The High Court considered the matter thus :

“……Taking  income  of  deceased  at  Rs.  2,700/-  per  month, the same can be assumed safely as Rs. 2700 X  2 = 5,400/- had the deceased lived. Now, 1/3rd is to be  deduced being the amount spent on deceased himself  towards his personal expenses, it gives us a figure of  Rs. 3,600/- per month. Thus, the expected benefit to be  derived by the claimants comes to Rs. 3,600 X 12 =  43,200/- per annum as contribution towards his family.  Taking into account the age of the deceased, we find  that multiplier of 16 is available. The annual income of  Rs.  43,200/-  being  multiplied  by  16,  comes  to  Rs.  6,91,200/-.  However,  considering  imponderability  and  uncertainty  of  life,  this  amount  is  reduced by 1-3rd.  It  gives the figure of Rs. 4,70,000/- (on rounding).”

3. The conventional  approach in  England for  over  a  

century has been  that the damages are to be assessed on the  

basis that the fundamental purpose of an award is to achieve  

as nearly as possible full compensation to the plaintiff  for the  

injuries  sustained.  This   rule   has  been  accepted  in  fatal  

accident  actions  as  well.   The  House  of  Lords  in  Taff  Vale  

Railway  Co.  v.  Jenkins1 laid  down  the  test  that  award  of  

damages  in  fatal  accident  action  is  compensation  for  the  

reasonable expectation of pecuniary benefit by the deceased’s  

1 [1913] AC 1  3

family.    The purpose of award of compensation is to put the  

dependants of  the deceased,  who had been bread-winner of  

the family, in the same position financially as if he had lived his  

natural span of life; it is not  designed to put the claimants  in a  

better  financial  position  in  which  they  would  otherwise  have  

been if the accident had not occurred. At the same time, the  

determination of compensation is not an exact science and the  

exercise   involves  an  assessment  based  on  estimation  and  

conjectures here and there as  many imponderable factors and  

unpredictable  contingencies  have  to  be  taken  into  

consideration.  The statutory rule enacted in Section 110B of  

the 1939 Act (now Section 168 of the Motor Vehicles Act, 1988)  

is award of ‘just compensation’.  

4. In  General Manager, Kerala State Road Transport   

Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.2  

this Court extensively considered the English decisions as well  

as previous decisions of this Court and also the decisions of  

various high courts and laid down that the multiplier method is  

logically  sound  and  legally  well  established  and   must  be  

followed; a departure from which can only be justified in rare  

2 (1994) 2 SCC 176 4

and extraordinary circumstances and very exceptional  cases.  

In para 13 of the Report, this Court  stated as follows :

“13. The multiplier method involves the ascertainment of  the  loss  of  dependency  or  the  multiplicand  having  regard to the circumstances of the case and capitalizing  the multiplicand by an appropriate multiplier. The choice  of  the  multiplier  is  determined  by  the  age  of  the  deceased (or that of the claimants whichever is higher)  and by the calculation as to what capital sum, if invested  at a rate of  interest  appropriate to a stable economy,  would yield the multiplicand by way of annual interest. In  ascertaining this, regard should also be had to the fact  that  ultimately  the  capital  sum  should  also  be  consumed-up over the period for which the dependency  is expected to last.”

  In para 17, it was further stated:

“17. The  multiplier  represents  the  number  of  years’  purchase  on  which  the  loss  of  dependency  is  capitalised. Take for instance a case where annual loss  of dependency is Rs. 10,000. If a sum of Rs 1,00,000 is  invested at  10% annual  interest,  the interest  will  take  care of  the dependency,  perpetually.  The multiplier  in  this case works out to 10. If the rate of interest is 5% per  annum  and  not  10%  then  the  multiplier  needed  to  capitalise  the  loss  of  the  annual  dependency  at  Rs.  10,000  would  be  20.  Then  the  multiplier,  i.e.,  the  number of years’  purchase of 20 will  yield the annual  dependency perpetually. Then allowance to scale down  the multiplier would have to be made taking into account  the  uncertainties  of  the  future,  the  allowances  for  immediate  lump sum payment,  the period over  which  the dependency is to last being shorter and the capital  feed  also  to  be  spent  away  over  the  period  of  dependency is to last etc. Usually in English Courts the  operative  multiplier  rarely  exceeds  16  as  maximum.  This  will  come  down  accordingly  as  the  age  of  the  deceased person (or that of the dependants, whichever  is higher) goes up.”

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While dealing with the aspect of multiplicand, the Court  stated  

that in ascertainment of the multiplicand  many factors have to  

be  put  into  the  scales  to  evaluate  the  contingencies  of  the  

future.   

5.  The case of  Susamma Thomas2   arose out of the  

1939 Act and the appeal was decided by this Court on January  

6, 1993.  The 1939 Act stood repealed by the Motor Vehicles  

Act, 1988 (for short, ‘the 1988 Act’). After decision of this Court  

in  Susamma Thomas2  , the 1988 Act was amended and, inter  

alia,  Section  163A  was  inserted  along  with  the  Second  

Schedule w.e.f.  November 14,  1994.  Vide Section 163A,  the  

special provisions with regard to payment of compensation on  

structured formula basis were introduced in the 1988 Act and  

the Second Schedule provided for compensation for third party  

fatal accident/injury cases claims. Under the Second Schedule,  

the maximum multiplier could be upto 18 and not 16 as was laid  

down in  Susamma Thomas2  .  In  U.P.  State  Road Transport   

Corporation  and  Ors. v.  Trilok  Chandra  and  Ors.3,  a  three-

Judge  Bench  of  this  Court  considered  change  in  statutory  

3 (1996) 4 SCC 362 6

provisions, particularly,  insertion of Section 163A and Second  

Schedule in the 1988 Act and observed thus :

“17. The situation has now undergone a change with the  enactment of the Motor Vehicles Act, 1988, as amended  by  Amendment  Act  54  of  1994.  The  most  important  change  introduced  by  the  amendment  insofar  as  it  relates to determination of compensation is the insertion  of  Sections  163-A  and  163-B  in  Chapter  XI  entitled  “Insurance of Motor Vehicles against Third Party Risks”.  Section 165-A begins with a non obstante clause and  provides for payment of compensation, as indicated in  the Second Schedule, to the legal representatives of the  deceased or injured, as the case may be. Now if we turn  to the Second Schedule, we find a table fixing the mode  of calculation of  compensation for third party accident  injury  claims  arising  out  of  fatal  accidents.  The  first  column gives the age group of the victims of accident,  the  second  column  indicates  the  multiplier  and  the  subsequent horizontal  figures indicate the quantum of  compensation in thousand payable to the heirs of the  deceased victim.  According to this table the multiplier  varies  from 5  to  18  depending  on  the  age  group  to  which the victim belonged. Thus, under this Schedule  the maximum multiplier can be up to 18 and not 16 as  was held in Susamma Thomas case.”

6. The  short  question  presented  in  this  appeal  is  

whether  the High Court  was in error in reducing by 1/3rd the  

compensation  assessed  after  ascertainment  of  multiplicand  

capitalized with the multiplier of 16.  But before we pass to the  

above  question,  we may  notice  two recent  decisions  of  this  

Court,  namely,  (1)  Sarla  Verma  (Smt.)  &  Ors.,  v.  Delhi  

Transport Corporation & Anr.4 and (2) Reshma Kumari & Ors. v.  4  (2009)  6  SCC 121

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Madan Mohan & Anr.5      In the case of Sarla Verma4, a two-

Judge bench of this Court considered  Susamma Thomas2  and  

Trilok Chandra3;  few other decisions, namely, Abati Bezbaruah  

v. Geological Survey of India6; Fakeerappa & Anr. v. Karnataka  

Cement Pipe Factory & Ors.7; T.N. State Transport Corpn. Ltd.  

v.  S.  Rajapriya  &  Ors.8;   New  India  Assurance  Co.  Ltd.  v.  

Charlie & Anr.9;  U.P.State Road Transport  Corpn.  v.  Krishna  

Bala & Ors.10 and Oriental Insurance Co. Ltd. v. Meena Variyal   

& Ors.11 and also two English  decisions – namely;  Davies &  

Anr. v. Powell Duffryn Associated Collieries Ltd.12 and   Nance  

v.  British Columbia Electric  Railway Co. Ltd.13 and laid down  

certain  principles  relating  to  assessment  of  compensation  in  

cases  of  death.   While  dealing  with  the  aspect  of   future  

prospects,  in  paragraph  24  of  the  Report,  it  was  stated  as  

follows:-

“In Susamma Thomas [(1994) 2 SCC 176] this Court  increased the income by nearly 100%, in Sarla Dixit   [(1996) 3 SCC 179] the income was increased only  by 50% and in Abati Bezbaruah [(2003) 2 SCC 148]  

5  (2009) 13 SCC 422 6  (2003)   2 SCC 148 7  (2004)   2 SCC 473 8  (2005)   6 SCC 236 9  (2005) 10 SCC 720 10 (2006)   6 SCC 249  11 (2007)   5 SCC 428 12 (1942) 1 All ER 657 13 (1951) 2 All ER 448

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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 the  deceased  is  more  than  50  years.  Though  the  evidence  may  indicate  a  different  percentage  of  increase, it is necessary to standardise 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.”

As regards deduction for personal  expenses, this Court stated  

thus:

“Though in some cases the deduction to be made  towards personal and living expenses is calculated  on  the  basis  of  units  indicated  in  Trilok  Chandra  [(1996) 4 SCC 362], the general practice is to apply  standardised  deductions.  Having  considered  several subsequent decisions of this Court, we are  of the view that where the deceased was married,  the deduction towards personal and living expenses  of the deceased, should be one-third (1/3rd) where  the number of dependent family members is 2 to 3,  one-fourth (1/4th) where the number of dependent  family  members  is  4  to  6,  and  one-fifth  (1/5th)  where  the  number  of  dependent  family  members  exceeds six.”

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With regard to  multiplier in the cases falling under Section 166  

of 1988 Act, this Court held that  Davies12 method is applicable  

and set out the following Table:

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)

 Upto 15 yrs - - - 15 20

15 to 20 yrs 16 18 18 16 19

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

After  setting  out  the  aforesaid  Table,  this  Court  stated  as  

follows:-

“Tribunals/courts  adopt  and  apply  different  operative multipliers. Some follow the multiplier with  reference to Susamma Thomas [(1994) 2 SCC 176]  [set  out  in  Column (2)  of  the table  above];  some  follow  the  multiplier  with  reference  to  Trilok  ChandraI[(1996) 4 SCC 362], [set out in Column (3)  of the table above]; some follow the multiplier with  reference to  Charlie [(2005) 10 SCC 720]   [set out  

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in Column (4) of the table above]; many follow the  multiplier given in the second column of the table in  the Second Schedule of  the MV Act [extracted in  Column (5) of the table above]; and some follow the  multiplier actually adopted in the Second Schedule  while calculating the quantum of compensation [set  out in Column (6) of the table above]. For example if  the deceased is aged 38 years, the multiplier would  be 12 as per  Susamma Thomas, 14 as per  Trilok  Chandra,  15  as  per  Charlie,  or  16  as  per  the  multiplier  given  in  Column  (2)  of  the  Second  Schedule to the MV Act or 15 as per the multiplier  actually adopted in the Second Schedule to the MV  Act.  Some  tribunals,  as  in  this  case,  apply  the  multiplier  of  22  by  taking  the  balance  years  of  service  with  reference  to  the  retiring  age.  It  is  necessary to avoid this kind of inconsistency. We  are concerned with cases falling under Section 166  and  not  under  Section  163-A  of  the  MV  Act.  In  cases  falling  under  Section  166  of  the  MV  Act,  Davies method is applicable.”

We therefore  hold  that  the  multiplier  to  be  used  should be as mentioned in Column (4) of the table  above  (prepared  by  applying  Susamma  Thomas,  Trilok  Chandra and  Charlie),  which starts  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.”

7. In   Reshma  Kumari5,  a  two-Judge  bench  of  this  

Court  again noticed a long line of  Indian and English cases,  

most of which were noticed in Sarla Verma4 (but Sarla Verma4   

was not noticed) and in view of divergence of opinion to the  

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question  whether  the  multiplier  specified  in  the  Second  

Schedule should be taken to be a guide for calculation of the  

amount  of  compensation  payable  in  a  case  falling  under  

Section 166 of the 1988 Act referred the matter to the larger  

bench.   

8.  The  issue   whether  the  multiplier  specified  in  

Second Schedule for the purposes of Section 163A of 1988 Act  

could  be  taken  to  be  guide  for  computation  of  amount  of  

compensation  in  a  motor  accident  claim  case  falling  under  

Section 166 of the 1988 Act is not yet authoritatively decided  

and is pending consideration before the larger bench.    Insofar  

as present appeal is concerned it arises out of a motor accident  

claim  filed under Section 110-A of the 1939 Act and, therefore,  

the Second Schedule that refers to Section 163A of the 1988  

Act may not be of much  guidance.   To revert to the question  

stated above, it must be stated immediately that  deceased at  

the time of accident had settled and stable job in the Irrigation  

Department,  Government  of  U.P.   He  was  officiating  as  

Executive Engineer and had  fair chance of regular promotion  

to the post of Executive Engineer and Superintending Engineer  

in due course of  time; he had about 18 years  of  service left  12

before superannuation.  He would have got annual increments  

etc.  besides  promotion  during  this  period  of  18  years.   But  

vicissitudes of life cannot be ignored, he might not have lived  

up to that age; he might have been dismissed from service.  In  

a fatal accident case, everything that might have happened to  

the deceased after the date of death remains uncertain.  That  

his  gross  salary  at  the  time  of  accident  was  Rs.  2680/-,  is  

reflected  from his  last  pay certificate.   Having  regard  to  the  

prospects  of  advancement  and future career,  the High Court  

assumed the income of the deceased at Rs. 5400/- per month  

by doubling the last gross salary and making it a round figure.  

The  High  Court  then  deducted  1/3rd amount  towards  his  

personal expenditure and arrived at a figure of Rs. 3600/- per  

month  as  the  expected  contribution  by  the  deceased  to  the  

family  and  applying  a  multiplier  of  16,  assessed  the  

dependency  at  Rs.  6,91,200/-  but,  however,  made  a  further  

deduction by 1/3rd considering imponderability and uncertainty  

of life and thereby awarded a sum of Rs. 4,70,000/- only as  

compensation.  We have seen that in Susamma Thomas2 100%  

increase to the  income which the deceased was having at the  

time  of  accident  was  estimated  as  the  gross  income  of  the  

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deceased.    On the other  hand, in  Sarla Verma4 this  Court  

prescribed the rule of thumb i.e., an addition of 50%  towards  

future prospects where the deceased had a permanent job and  

was below 40 years.  As regards deduction to be made towards  

personal  expenditure,  in  Sarla Verma4  this Court  stated  that  

where  the  deceased was  married  and where  the  number  of  

dependant  family  members  is  4  to  6  then 1/4th of  the  gross  

income should be deducted while in  Susamma Thomas2,  the  

conventional 1/3rd of  the gross income was deducted on that  

count in the absence of any evidence.   Then as per  Table set  

out in Sarla Verma4,  if the age of deceased is 36 to 40 years,  

multiplier of 15 is applicable whereas  in  Susamma Thomas2   

the loss of  dependency was capitalized on a multiplier  of  12  

(the deceased was 39 years of age).  The question is whether  

value of dependency should be recalculated in this appeal.  We  

do not think so.  The High Court ascertained the multiplicand or  

in other words the value of dependency at Rs. 3600/- per month  

keeping  in  view  the  judgment  of  this  Court  in   Susamma  

Thomas2.    In our opinion, it is neither proper nor desirable to  

recalculate  the   multiplicand  at  this  distance  of  time  in  

jurisdiction under Article 136 of the Constitution by applying the  

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guidelines indicated  in  Sarla Verma4.    The High Court  has  

taken  into  account  in  ascertaining  the  multiplicand  the  

guidelines laid down in Susamma Thomas2  which, in our view,  

warrants  no  reconsideration.   However,  we  think  that  

capitalization  of   multiplicand on a multiplier  of  16 is  on the  

higher side and multiplier of 14 in the facts of the case such as  

the present one would meet the ends of justice.  In this way, the  

appellants become entitled to Rs. 6,04,800/-  as compensation  

which,  in our opinion, is fair,  just and equitable.   Before we  

close, however, it has to be held and we hold that  the High  

Court was clearly in error in reducing by 1/3rd the compensation  

assessed after ascertainment of multiplicand capitalized on a  

particular multiplier  since the very method of ascertainment of  

multiplicand  takes  into  consideration  many  factors  of  

imponderables and the contingencies of the future.  Once the  

multiplicand and multiplier are ascertained, the assessment of  

damages  to  compensate  the  dependants  is  arrived  at  by  

multiplying the two and no further deduction needs to be made  

towards uncertainties and other contingencies.    

9. In the result, the appeal is allowed in part and the  

compensation awarded by the High Court  in  the sum of  Rs.  15

4,70,000/- is enhanced to Rs. 6,04,800/-.   The appellants shall  

also  be  entitled  to   9%  simple  interest  per  annum  on  the  

enhanced amount from the date of filing of claim petition until  

the date of its actual payment.  The parties shall bear their own  

costs.  

…………………J.            [AFTAB ALAM]

…………………J.             [R.M. LODHA]

New Delhi August   31, 2010.  

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