REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3660 OF 2006

Shakti Devi                                      ……  Appellant

Vs.

New India Insurance Co. Ltd. & Anr.          ……  Respondents  

JUDGMENT

R.M. LODHA, J.  

A mother who lost her 22-year old son in a motor accident  

is  in  appeal,  by  special  leave,  aggrieved  by  the  inadequate  

compensation  awarded  to  her.  The  appellant  and  her  husband  

Sachidanand Sinha lived at Badom Bazaar  in  Hazaribagh  and their  

son Pravin Kumar Sinha resided with them. Pravin Kumar Sinha had  

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done B. Com (Honours) and was earning about Rs.1000/- per month  

from a general store being run from the house. On February 26, 1991  

Pravin Kumar Sinha and his father travelled in a bus (UP 72-9015) to  

Ranchi. When the bus reached near Karmahi forest,  a truck (PAX  

4785)   coming from the  opposite  direction  collided with   it.   Both  

vehicles at that time were being driven rashly and negligently.   As a  

result of the accident, two persons died on the spot and appellant’s  

son Pravin Kumar Sinha suffered grievous injuries. He was taken to  

Nawjiwan  hospital,  Tumbagara,   Manika  where  he  died  after  few  

days.

2. The  appellant  and  her  husband  filed  a  claim  petition  

under Section 166 of  the Motor Vehicles Act,  1988 (for short,  ‘the  

1988  Act’)  before  the  Motor  Vehicle  Accident  Claims  Tribunal,  

Palamau,  Daltonganj  (for  short,  ‘the  Tribunal’)   claiming  

compensation for the death of their son in the sum of  Rs. 2 lacs from  

the  owners  and  insurers   of  the  two   vehicles.  The  appellant’s  

husband died during the pendency of claim petition and, accordingly,  

his name was struck off.  

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3. The owners of the two vehicles who were impleaded as  

opposite party Nos. 1 and 2 neither appeared nor filed any written  

statement. The insurance companies filed separate written statement  

and contested the claim petition.   The opposite  party  no.  3  –  the  

insurer  of  the  bus  –  blamed  the  truck  for  the  accident  while  the  

opposite party no. 4 – insurer of the truck –  stated that it was due to  

the rash and negligent driving of  the bus driver   that  the accident  

occurred.

4. The  Tribunal  held  that   the  claimant’s  son  died  in  the  

accident caused by the bus (UP 72-9015)  and the truck  (PAX 4785)  

due to the negligent driving by the drivers of the vehicles. As regards  

the quantum of compensation, the Tribunal pegged  the earning of  

the deceased at  Rs. 1000/- per month and after deducting personal  

expenses to the extent of 1/3rd, fixed the annual dependency at Rs.  

7920/-.  The Tribunal applied the multiplier of 8 and held that  the  

compensation  so  computed  would  come  to  Rs.  63,360/-.   The  

Tribunal  then   made  it  a  round  figure  of   Rs.  60,000/-  and  after  

adjusting Rs. 25,000/- which was paid to the claimant towards no-

fault liability held that the claimant was entitled to  a further sum of  

Rs. 35,000/- and awarded her simple interest @ 10% p.a. from the  

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date of the award dated June 6, 2000 till its realization. The Tribunal  

apportioned the award equally between the insurance companies.  

5. The  appellant  challenged  the  award  passed  by  the  

Tribunal before the High Court of Jharkhand, Ranchi. However, her  

appeal was dismissed by the High Court on December 5, 2003.  

6.  The only  issue for  consideration in  this appeal  is  with  

regard  to  the  quantum of  compensation.  Mr.  Braj  Kishore  Mishra,  

learned counsel  for the appellant  argued that  the compensation of  

Rs. 60,000/- for the death of a 22-year old boy in a motor accident is  

too low and meager and the High Court seriously erred in maintaining  

the award although the Tribunal erred in arriving at the dependency  

as well as in applying the multiplier.

7. It must be stated at the outset that the multiplier method  

has been consistently applied by this Court in the claim cases arising  

out of the Motor Vehicles Act, 1939 as well as the 1988 Act.  This  

Court  emphasized  in  the  case  of  General  Manager,  Kerala  State  

Road Transport Corporation, Trivandrum v Susamma Thomas (Mrs.)  

and Ors.1  that the multiplier method is logically sound and legally well  1 (1994) 2 SCC 176

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established and must be followed; a departure from which can only  

be  justified   in  rare  and  extraordinary  circumstances  and  very  

exceptional  cases.  We  reiterate  that  the  multiplier  method  should  

remain  the  only  method,  as  it  has  been,  for  assessing  the  

compensation under the 1988 Act.  The multiplier method involves  

capitalization of the loss of annual dependency (i.e. multiplicand) by  

an appropriate multiplier.   Thus, in an action under Section 166 of  

the 1988 Act,  the Tribunal is required to first assess the annual value  

of the lost dependency. The first step in calculating the annual value  

of the loss of dependency is at the date of the deceased’s death. The  

value of the dependency at the date of the deceased’s death could  

then be revised in the light of the likely changes in the deceased’s  

income that would have occurred taking into account future increase  

in  the  income.   In  Davies  &  Anr.  v  Powell  Duffryn  Associated  

Collieries Ltd.2, Lord Wright stated, “ the starting point is the amount  

of  wages  which  the  deceased  was  earning,  the  ascertainment  of  

which  to  some  extent  may  depend  on  the  regularity  of  his  

employment.  Then there is an estimate of how much was required or  

expanded for his own personal and living expenses.  The balance will  

give a datum or basic figure which will generally be turned into a lump  2 (1942) 1 All ER 657

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sum  by  taking  a  certain  number  of  years’  purchase”.    It  is  not  

necessary  for  us  to  further  delve  into  the  matter  in  this  regard.  

Suffice,  however  to  say  that  above  statement  of  Lord  Wright  in  

Davies  case2 has  been  applied  by  this  Court  in  large  number  of  

cases.   

8. Recently in the case of  Sarla Verma (Smt.) and Ors. v.  

Delhi Transport  Corporation and Anr3, this Court observed in para 20  

of the report as follows :

“20. Generally the actual income of the deceased less  income tax should be the starting point for calculating  the  compensation.  The  question  is  whether  actual  income at  the  time  of  death  should  be  taken  as  the  income  or  whether  any  addition  should  be  made  by  taking note of future prospects.”

9. The Court in Sarla Verma3 then considered the decisions  

of  this  Court  in  Susamma Thomas1,  Sarla  Dixit  (Smt)  &  Anr.   v.  

Balwant Yadav & Ors.4,   Abati Bezbaruah v. Dy. Director General,   

Geological Survey of India & Anr.5  and in paragraph 24 of the report  

held thus :

“24. In  Susamma  Thomas this  Court  increased  the  income by nearly 100%, in  Sarla Dixit the income was  

3 (2009) 6 SCC 121  4 (1996) 3 SCC 179 5 (2003) 3  SCC 148

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increased  only  by  50%  and  in  Abati  Bezbaruah 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.”

10. Then  with  regard  to  deduction  for  personal  and  living  

expenses, in  Sarla Verma3 this Court  again  considered  Susamma  

Thomas1,  U.P.  State  Road Transport  Corporation  & Ors. v.  Trilok  

Chandra & Ors.6 and Fakeerappa and Another v. Karnataka Cement  

Pipe Factory and Others7 and held as under :

“31. Where  the  deceased  was  a  bachelor  and  the  claimants  are  the  parents,  the  deduction  follows  a  different principle. In regard to bachelors, normally, 50%  is deducted as personal and living expenses, because it  is assumed that a bachelor would tend to spend more  on himself. Even otherwise, there is also the possibility  

6 (1996) 4 SCC 362 7 (2004) 2 SCC 473

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of his getting married in a short time, in which event the  contribution to the parent(s) and siblings is likely to be  cut  drastically.  Further,  subject  to  evidence  to  the  contrary, the father is likely to have his own income and  will not be considered as a dependant and the mother  alone  will  be  considered  as  a  dependant.  In  the  absence  of  evidence  to  the  contrary,  brothers  and  sisters will not be considered as dependants, because  they will either be independent and earning, or married,  or be dependent on the father.   32. Thus even if the deceased is survived by parents  and siblings, only the mother would be considered to be  a dependant, and 50% would be treated as the personal  and living expenses of  the bachelor  and 50% as the  contribution to the family. However, where the family of  the bachelor is large and dependent on the income of  the deceased, as in a case where he has a widowed  mother  and  large  number  of  younger  non-earning  sisters  or  brothers,  his  personal  and  living  expenses  may be restricted to  one-third  and contribution to the  family will be taken as two-third.”

11. As regards selection of  multiplier,  in  Sarla Verma3,  this  

Court  on  consideration  of  the  earlier      decisions  in   

Susamma Thomas1,  Trilok Chandra6  and  New India Assurance Co.  

Limited v. Charlie and Anr.8 prepared 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)  

8 (2005) 10 SCC 720

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(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

In the light  of  the above table,  this Court  held that in claim cases  

under Section 166 of the 1988 Act,  the multiplier  as mentioned in  

column 4 should be applied.  

12. So far as the present case is concerned, at the time of  

accident,  the deceased was 22-year old and not married. He was  

running a general store from his house and earning about Rs. 1000/-  

per month from the business. In Sarla Verma3, this Court stated that  

where the deceased was self-employed, the court shall usually take  

only the actual income at the time of death; a departure from there  

should be made only in rare and exceptional cases involving special  

circumstances.  Does  the  present  case  involve  special  

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circumstances? In our view, it does.  The evidence has come that the  

deceased was to get employment in the forest department after the  

retirement  of  his  father.  Obviously  the  evidence  is  based  on  the  

government  policy.  The  deceased,  thus,  had  a  reasonable  

expectation of  the government  employment  in  near  future.   In  the  

circumstances,  the actual  income at  the time of  deceased’s death  

needs  to  be  revised  and   taking  into  consideration  the  special  

circumstances of the case, in our view, the monthly income of the  

deceased  deserves  to  be  fixed  at  Rs.  2000/-.   As  regards  the  

personal  expenses,  since the deceased was  not  married,  we are  

satisfied that the principle stated in Sarla Verma3  that 50% should be  

treated as the personal and living expenses of the bachelor may be  

applied.  Seen thus,  the annual loss of dependency would come to  

Rs. 12,000/-.  Insofar as multiplier is concerned, the Tribunal applied  

the multiplier of 8.   Learned counsel for the appellant argued that the  

multiplier of 18 should have been applied keeping in view the age of  

the deceased.  The argument is devoid of any substance.  In  a case  

where the age of the claimant is higher than the age of the deceased,  

the age of claimant  and not the age of the deceased has to be taken  

into account for the capitalization of the lost dependency.  It  is so  

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because  the  choice  of  multiplier  is  determined  by  the  age  of  the  

deceased or that of the claimant, whichever is higher.  The exact age  

of the claimant has not come on record.   As per the evidence of AW1  

(Pankaj Kumar Sinha), on the date of his deposition,   the claimant’s  

age  was  about  63  years.  The  date  of  deposition  of  AW-1  is  not  

available. The accident occurred in 1991 and the date of decision of  

the Tribunal is June 6, 2000.  Ordinarily, the Tribunal would not have  

taken much time after the evidence was complete.  We may assume  

that  the  statement  of  AW-1 was  recorded  somewhere  in  1998  or  

1999.   If  that  be  so,  the  age  of  the  claimant  on  the  date  of  the  

accident would be about 54-55 years.  As per the table prepared in  

Sarla Verma3   , the multiplier of 11 would, therefore, be applicable.  

By multiplying the annual loss of dependency (Rs.12000/-)  with the  

multiplier of 11, the  claimant becomes entitled to the compensation  

in the sum of Rs. 1,32,000/-. The compensation determined by the  

Tribunal  at  Rs.  60,000/-  and  confirmed  by  the  High  Court  in  the  

appeal is manifestly erroneous and is enhanced to Rs. 1,32,000/-.

13. The appeal is allowed to the above extent. The enhanced  

compensation  shall  be  paid  by  the  insurance  companies  to  the  

appellant with the simple interest of 10% per annum from the date of  

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Judgment  of  the  Tribunal  (June  6,  2000)  till  the  actual  payment  

apportioned equally in the manner directed by the Tribunal within two  

months from today.  The parties shall bear their own costs.

……………….. J.     (Aftab Alam)

….……………. J.                                                                     (R.M. Lodha) NEW DELHI, NOVEMBER 9, 2010.

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