IMPORTANT POINT
In a motor accident claim in death case choice of multiplier is determined by age of deceased (or that of 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.

Headnote:Motor Vehicles Act, 1988 — Section 166 — Motor Accident claim in death case — Multiplier method — Involves ascertainment of loss of dependency or multiplicand and capitalising the multiplicand by an appropriate multiplier — Choice of multiplier is determined by age of deceased or that of claimants which ever is higher and by 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 — Deceased, husband of claimant and father of minor claimants, was 36 years old and was earning monthly salary of Rs. 2300/- — Tribunal adopted multiplier of 22 on ground that deceased had 22 years of service left and awarded compensation of Rs. 5,12,000/- with interest at 12% p.a. — High Court maintained the award — Appeal — Highest multiplier of 18 as held in Trilok Chands case was for the age group of 21 years to 25 years — Appropriate multiplier in this case would be 13 and taking monthly loss of dependency at Rs. 2000/- (after adjusting for personal expenses and likelihood of increase in salary) compensation worked out to Rs. 3,12,000/- — Rs. 25,000/- awarded for deprivation of love and affection and funeral expenses — Interest at 9% awarded from date of filing of petition.
Held : 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.(Para 8)
In Susamma Thomass case it was noted that the normal rate of interest was about 10% and accordingly the multiplier was worked out. As the interest rate is on the decline, the multiplier has to consequentially be raised. Therefore, instead of 16 the multiplier of 18 as was adopted in Trilok Chandras case appears to be appropriate. In fact in Trilok Chands case, 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. (See: New India Assurance Co. Ltd. v. Charlie and Another [2005 (10) SCC 720]. Considering the principles as set out above the multiplier as adopted by the Tribunal and maintained by the High Court is clearly indefensible. Considering the age of the deceased the aforesaid multiplier would be 13. Calculated on that basis by taking monthly loss of dependency at Rs.2.000/- (after adjusting for personal expenses and likelihood of increase in salary) the compensation to be awarded would be Rs.3,12,000/-. To the aforesaid sum would be added Rs.25,000/- awarded by the Tribunal for deprivation of love and affection and funeral expenses and, therefore, entitlement of the claimants is Rs.3,37,000/-. The accident took place on 29.11.1990. Therefore, the rate of interest would be 9% from the date of filing of the claim petition. (Paras 13 and 14)

JUDGMENT

Arijit Pasayat J. — Challenge in this Appeal is to the judgment of a Division Bench of the Allahabad High Court which dismissed the First Appeal filed by the appellant against the Award passed by a Motor Accident Claims Tribunal (XII Additional District Judge, Meerut) (in short the Tribunal.)

2. By the Award made, the Tribunal awarded compensation of Rs.5,12,000/- to the respondents (hereinafter referred to as the Claimants). One Rajveer Singh (hereinafter referred to as the deceased) died in a motor accident on 29.11.1990. The claimants filed a claim petition under the Motor Vehicles Act, 1988 (in short the Act). Age of the deceased was around 36 years and he is earning monthly salary of Rs.2300/- per month. Though claim of agricultural income was made, the Tribunal did not accept the same. It adopted multiplier of 22 on the ground that the deceased had 22 years of service left. It was further noted that thereafter the deceased would have got pension. The widow of the deceased and children were awarded Rs. 20,000/- towards love and affection, and Rs. 5,000/- for funeral rites. After adopting a multiplier of 22 the amount was fixed Rs. 6,07,200/-. After taking note of personal expenses the loss of dependency was fixed at Rs. 1600 per month. In addition interest at the rate of 12% from the date of application was granted.

3. The Corporation questioned correctness of the award before the High Court. It, inter alia, submitted that the multiplier adopted and the rate of interest therein was high. The High Court dismissed the appeal almost summarily holding that the award was not excessive.

4. In support of the appeal, learned counsel for the appellant Corporation submitted that the multiplier of 22 adopted by the Tribunal and maintained by the High Court is high considering the age of deceased. Similarly rate of interest is 12% per annum as awarded by the trial court and maintained by the High Court is characterized as high.

5. Learned counsel for the respondents submitted that the multiplier and the interest have been correctly applied. It is further submitted that the amount awarded is very small and hence this Court should not interfere.

6. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti (1966 (3) SCR 649) in the matter of fixing the appropriate multiplier and computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. "How much has the widow and family lost by the fathers death?" The answer to this lies in the oft quoted passage from the opinion of Lord Wright in Davies v. Powell Duffryn Associated Collieries Ltd. (All ER p.665 A-B) which says:

"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 expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt."

7. There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2) All ER 448) .

8. 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 a

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2006 Supreme(SC) 606

Cases Referred (2)