IMPORTANT POINT
In a motor accident claim multiplier cannot exceed 18 years purchase factor.

JUDGMENT

A.M. Ahmadi, CJI - Special leave granted.

2. The short question which we are called upon to consider in this appeal relates to the use of the correct multiplier for determination of compensation to be awarded to the legal representatives of a victim of a road accident. The question arises in the backdrop of the following facts.

3. Prem Chandra, aged about 26 years, met with a fatal accident on 1st August, 1977. He was knocked down by an omnibus bearing Registration No. UTW 1802 belonging to the U.P. State Road Transport Corporation. His legal representative preferred a claim for compensation. Taking his earning capacity at Rs. 300/- per month, it was estimated that he spent Rs. 200/- per month on his family members. Fixing the life expectancy at 60 years, the Tribunal deducted 36 years and held that the family was deprived of his earning for 24 years. The compensation was thus worked out at Rs.57,600/- (200x12x24). This amount was raised to Rs. 81,600/- as it was realised that the Tribunal had wrongly taken the age of the deceased at 36 instead of 26 years and had, therefore, committed an error in employing the multiplier of 24 years purchase factor instead of 34 years purchase factor. Thus the compensation came to Rs. 200x12x34 = 81,600. The question then is whether the Tribunal was right in employing the multiplier of 24 or the High Court was right in employing the multiplier of 34?

4. India is one of the countries with the highest number of road accidents. Motor accidents are every day affairs. A large number of claims for compensation for injury caused by road accidents are pending in various Motor Accidents Claims Tribunal. In a fatal accident the dependents of the deceased are entitled to compensation for the loss suffered by them on account of the death. The most commonly practised method of assessing the loss suffered is to calculate the loss for a year and then to capitalise the amount by a suitable multiplier. To that is added the loss suffered on account of loss of expectation of life and the like. The Tribunals and High Courts have adopted divergent methods to determine the suitable multiplier. Even this Court has not been uniform; maybe because the principle on which this method came to be evolved has been forgotten. It has, therefore, become necessary to examine the law and to state the correct principles to be adopted.

5. The topic of compensation for causing death by negligent driving came up for serious discussion before this Court in Gobald Motor Services Limited & Anr. v. R.M.K. Veluswami and others1. The Court referred to the House of Lords decision in Davies v. Powell Duffryn Associated Collieries Ltd.2 and quoted the following passage from the judgment :

"The damages are to be based on the reasonable expectation of pecuniary benefit or benefit reducible to money value. In assessing the damages all circumstances which may be legitimately pleaded in diminution of the damages must be considered.

The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing, on the one hand, the loss to him of the future pecuniary benefit, and, on the other any pecuniary advantage which from whatever source comes to him by reason of the death."

6. The Court also referred to the Judgment by Viscount Simon in Nance v. British Columbia Electric Railways Co. Ltd.3 in which the same principles were enunciated for estimating the damages, the method adopted however differed. Various factors that would enter the calculation as per Viscount Simon were set out in the judgment as under:

".....at first the deceased man s expectation of life has to be estimated having regard to his age, bodily health and the possibility of pre-mature determination of his life by later accidents; secondly, the amount required for the future provision of his wife shall be estimated having regard to the amounts he used to spend on her during his lifetime, and other circumstances; thirdly,the estimated annual