REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.     3483           OF 2009 (Arising out of SLP (C) No.18250 of 2007)

National Insurance Company Ltd. … Appellant

Versus

Smt. Saroj & Ors. … Respondents

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Appellant is before us aggrieved by and dissatisfied with a judgment  

and order dated 29.05.2007 passed by a learned Single Judge of the High  

Court  of  Punjab  and  Haryana  at  Chandigarh  in  FAO No.2041  of  2006  

whereby and whereunder a First Appeal preferred by the appellant herein  

against  a  judgment  and  award  dated  03.2.2006  passed  by  the  Motor  

Accident  Claims  Tribunal,  Rohtak  directing  the  appellant  herein  to  pay  

compensation with interest to the respondent, was dismissed.

3. One  Joginder  Singh,  husband  of  respondent  No.1  and  father  of  

respondent Nos. 2 to 4, while riding a two wheeler met with an accident on  

29.11.2003 as it collided with a truck.  The said truck was insured with the  

appellant by its owner who is respondent No.5 herein.

4. A claim petition was filed before the Motor Vehicles Accident Claims  

Tribunal claiming a sum of Rs.20,00,000/-.  The deceased was an employee  

of Maruti Udyog Limited and had been drawing a sum of Rs.16,110/- per  

month.  The Tribunal determined his income at Rs.17,244/- per month by its  

award dated 3.2.2006.  His age was determined as 41 years 10 months and 9  

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days.   A  multiplier  of  16  was  applied  to  arrive  at  the  amount  of  

compensation at a sum of Rs.22,12,200/-.   

5. A First Appeal preferred by the appellant has been dismissed by the  

High Court by reason of the impugned judgment dated 29.05.2007.

6. Dr.  Meera  Agarwal,  learned  counsel  appearing  on  behalf  of  the  

appellant, would urge :

1) The Tribunal and consequently the High Court should have restricted  

the award of compensation only to the sum claimed by the claimant in  

the claim petition.

2) Provisions of Schedule II attached to Section 163-A being applicable  

strictly in cases where the income of the deceased does not exceed  

Rs.40,000/-  per  annum, the  multiplier  specified  therein  should  not  

have been applied.

3) The  claimants  having  not  disclosed  as  to  what  amount  they  had  

received from the insurance company and who was the insurer of the  

scooter driven by the deceased, the impugned judgment should not be  

sustained.

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7. Mr.  A.V.  Rao,  learned  counsel  appearing  on  behalf  of  the  

respondents, on the other hand, supported the impugned judgment.

8. The deceased was occupying the post of Technical in a Weld Shop  

Work in Maruti Udyog Limited.  His net salary was Rs.16,110/- per month.  

Both  the  courts  below,  however,  in  terms  of  the  evidences  brought  on  

record  found  salary  payable  to  the  deceased  at  Rs.17,244.95  per  month.  

This finding of the Tribunal had not been questioned before the High Court.

Indisputably, again the age of the deceased at the time of death was  

found to be 41 years 10 months and 9 days.   

9. It has not been denied or disputed that the multiplier method can be  

applied for the purpose of determination of the amount of compensation in a  

motor accident in terms of the provisions of the Motor Vehicles Act, 1988.

We  have,  however,  do  not  mean  to  suggest  that  the  multiplier  

specified in the Second Schedule should be applied automatically.   

In Rani Gupta v. United India Insurance Company & Ors. [2009 (5)  

SCALE 439] this Court observed that in an appropriate case, the matter may  

require consideration by larger Bench keeping in view paragraphs 5 and 6  

of the Note appended to the Second Schedule of the Act in terms whereof  

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the multiplier was to be adopted only in a case of permanent total or partial  

disability.

10. The Second Schedule provides for a new pre-determined formula for  

payment  of  compensation  to  road  accident  victims  on  the  basis  of  

age/income in a more liberal or rational way.

If that be so, a question arises as to why the injured claimant and/or  

heirs and legal representatives of the victim in a case of death on proof of  

negligence on the part of the driver of a motor vehicle would get a lesser  

amount than the one specified in the Second Schedule although both are  

similarly situated.  Such a dichotomy, in our opinion, could be resolved by  

finding the applicability of multiplier in the cases where the victims have  

suffered  injuries  resulting  in  permanent  total  disablement  or  permanent  

partial disablement.

Probably,  it  is  in  that  view of  the  matter,  there  is  some sort  of  a  

cleavage of opinion in the matter of application of multiplier.  Whereas in  

one set of decisions multiplier specified in the Second Schedule has been  

applied,  in  another  set  of  decisions,  a  lesser  multiplier  was  applied.   In  

either  set  of  the  decisions  sometimes,  no  principle  of  law has  been  laid  

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down.  It is, however, accepted at the Bar that the multiplier specified in the  

Second Schedule should be taken to be the guidelines.   

11. We may notice a few precedents in this behalf.

In Rani Gupta (supra), it is stated :

“18. By  and  large,  therefore,  the  Court  had  proceeded  on  the  basis  that  the  multiplier  mentioned in the Second Schedule should be taken  to be the guide but it may not be.

19. The  multiplier  specified  in  the  Second  Schedule  may  not  be  decisive  for  calculating  compensation in cases of death.  In fact, the word  multiplier  has been used only for the purpose of  calculating  damages  in  the  case  of  permanent  disability  and not  in  the  case  of  death  as  would  appear from note 5 and 6 appended thereto.   

20. The Second Schedule provides for payment  of  the  amount  of  compensation  to  the  persons  whose  income is  from Rs.3,000/-  to  Rs.40,000/-  per  annum,  depending  upon  the  age  of  the  deceased; as for example if the age of the deceased  is 15 years, the amount of compensation payable  would be 60,000/-, but where the annual income is  Rs.3,000/-,  a  sum  of  Rs.50,000/-  has  been  specified therefor even if the age of the deceased  is between 35 to 65 years.   

21. The Parliament had, therefore, thought that  Rs.50,000/-  should  be  the  minimum  amount  of  compensation  payable  to  legal  representatives  of  those persons whose annual income is Rs.3,000/-  per  month.   For  the  said  purpose,  the  multiplier  specified  in  the  Second  Schedule  has  no  role  to  

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play.   Even  in  absence  of  the  multiplier  in  the  Second  Schedule,  the  amount  of  compensation  payable  would  be  the  same  irrespective  of  the  multiplier specified therein.”

12. Recently,  in  United  India  Insruance Co.  Ltd. v.  Bindu & Ors. [JT  

2009(4) SC 315], this Court applied the multiplier of 13 where the age of  

the deceased was 32 years.  The Court referring to  Mallett v.  Mc Mongle  

[1969 (2) All ER 178] and other decisions preceding the same, opined :

“11. In both General Manager, Kerala State Road  Transport  Corporation,  Trivandrum  v.  Susamma  Thomas (Mrs.) and Ors. [1994 (2) SCC 176] and  U.P. State Road Transport Corporation and Ors. v.  Trilok  Chandra  and  Ors.  [JT  1996  (5)  SC  356;  1996 (4) SCC 362], the multiplier appears to have  been  adopted  by  this  Court  taking  note  of  the  prevalent banking rate of interest.

12.  In  fact  in  Trilok  Chand's  case  (supra),  after  reference  to  Second Schedule  to  the  Act,  it  was  noticed that the same suffers from many defects. It  was  pointed  out  that  the  same  is  to  serve  as  a  guide,  but  cannot  be  said  to  be invariable  ready  reckoner.  However,  the  appropriate  highest  multiplier  was  held  to  be  18.  The  highest  multiplier has to be for the age group of 21 years  to 25 years when an ordinary Indian Citizen starts  independently earning and the lowest would be in  respect of a person in the age group of 60 to 70,  which is the normal retirement age.

13.  Keeping  in  view  the  parameters  indicated  above it would be appropriate to fix the multiplier  at 13 and the rate of interest at 6% p.a. The MACT  

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shall  work  out  the  entitlements  on  the  aforesaid  basis.”

13. Reliance has been placed by Dr. Agarwal on a decision of this Court  

in  United India Insurance Co. Ltd. Etc. v.  Patricia Jean Mahajan & Ors.    

[(2002)  6  SCC 281],  wherein  multiplier  of  10  has  been  used  where  the  

deceased used to get salary in US $.   

Yet again in  The Managing Director, TNSTC Ltd. v.  K.I. Bindu &  

Ors.  [(2005) 8 SCC 473], this Court held :

“14.  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.”

Reliance  has  also  been  placed  on  Tamil  Nadu  State  Transport  

Corporation Ltd. v. S. Rajapriya and two Ors.  [(2005) 6 SCC 236], wherein  

it was held :

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“12.  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.”

14. The amount of compensation which is required to be determined by  

the Tribunal must be just.  In certain situations as for example in the case of  

the death  of  only son to  a  mother,  no  monetary compensation  would be  

sufficient.   Whereas  the  court,  while  determining  the  amount  of  

compensation, should consider the amount of monetary loss which had been  

and would be suffered by the heirs and legal representatives of the deceased,  

the same should not be a windfall.  It is for the aforementioned purpose, not  

only the take home salary is to be taken into consideration but also other  

allowance and perks which would have benefited the entire family.  [See  

National Insurance Co. Ltd. v. Indira Srivastava & Ors. [(2008) 2 SCC 763].

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15. The prospective loss of future earnings should also be borne in mind.  

The  quantum  of  compensation  must  be  determined  on  certain  legal  

principles.  The deceased might have a bright future prospect.  He would  

have  been,  in  normal  situation,  considered  for  promotion  immediately.  

Although rigid tests are difficult to be laid down, any kind of hypothesis, as  

far as possible should be avoided.   

In  Abati  Bezbaruah v.  Dy. Director  General  Geological  Survey of  

India & Anr. [(2003) 3 SCC 148], this Court observed :

“11. It is now a well settled principle of law that  the  payment  of  compensation  on  the  basis  of  structured  formula  as  provided  for  under  the  Second Schedule should not ordinarily be deviated  from. Section 168 of the Motor Vehicles Act lays  down  the  guidelines  for  determination  of  the  amount of compensation in terms of Section 166  thereof.  Deviation  of  the  structured  formula,  however, as has been held by this Court, may be  resorted to in exceptional cases. Furthermore, the  amount of compensation should be just and fair in  the facts and circumstances of each case.”

In  this  case,  the  deceased  was  a  technician  employed  in  a  

Multinational  company.   The  Tribunal  as  also  the  High  Court  while  

determining the amount of compensation did not bestow its consideration to  

future prospects.  It is trite that the Court should look into the circumstances  

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of  each  and  every  case  for  arriving  at  a  just  compensation.   His  future  

prospect  has  not  been  taken  into  consideration.   In  case  of  this  nature,  

therefore,  we do not  think  that  application  of  multiplier  of  16  was on  a  

higher side.

16. Submission of Mr. Agarwal that the Court should have awarded only  

the sum claimed by the claimant, in our opinion, is not correct.   

17. Contention raised on behalf of the appellant that the claimant had not  

disclosed as to what amount they had received from the insurance company  

with  whom  the  scooter  driven  by  the  deceased  was  insured  cannot  be  

considered by us for the first time as no such contention has been raised  

before  the  courts  below.   The  legal  representatives  of  the  deceased  

examined themselves as witnesses.  They should have cross-examined on  

the said question.  The insurance company could have found out from other  

insurance company also as to whether, in fact, a claim had been advanced  

and whether insurance company paid any amount to them.

18. For the reasons aforementioned, there is no merit in the appeal.  It is  

dismissed accordingly with costs.  Counsel’s fee assessed at Rs.10,000/-.

……………………………….J.

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[S.B. Sinha]

..…………………………..…J.  [Dr. Mukundakam Sharma]

New Delhi; May 12, 2009

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