IMPORTANT POINT
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.

Headnote:Motor Vehicles Act, 1988—Section 166—Ascertainment of compensation —Deceased was 33 years old and was claimed to have monthly income of Rs. 8000/- by driving a taxi and had agricultural income also—Court awarded compensation of Rs. 8,16,000/- taking monthly income at Rs. 4000/- in absence of definite material to show actual income and applied multiplier of 17—Appeal—Claimants were widow and minor children—Multiplier method involved ascertainment of loss of dependency or multiplicand and capitalizing multiplicand by appropriate multiplier—Choice of multiplier was determined by age of deceased and by calculation at to what capital sum if invested at a rate of interest appropriate to a stable economy would yield multiplicand by way of annual interest—Considering age of deceased appropriate multiplier would be at 13—Monthly contribution to family after deduction for personal expenses taken at Rs. 3000/- p.m. and compensation calculated at Rs. 4,68,000/—Interest at 6% allowed since date of claim 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 7)
       In both G.M., Kerala SRTC v. Susamma Thomas (1994 (2) SCC 176) and U.P. State Road Transport Corpn. v. Trilok Chandra (1996 (4) SCC 362) the multiplier appears to have been adopted taking note of the prevalent banking rate of interest. In Susamma Thomas’s case (supra) 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 Chandra’s case (supra) appears to be appropriate. 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, as the former is the normal retirement age. (See: New India Assurance Co. Ltd. v. Charlie and Another [2005 (10) SCC 720]. Considering the age of the deceased it would be appropriate to fix the multiplier at 13. The MACT itself found that the income was not established. At some point of time it was stated that the income of the deceased was Rs.6,000/- per month. In the absence of any definite material about the income, monthly contribution to the family, after deduction for personal expenses is fixed at Rs.3,000/- per month i.e. annually Rs.36,000/-. Applying the multiplier of 13, the compensation works out to Rs. 4,68,000/. The same shall carry interest @ 6% p.a. from the date of claim till the date of actual payment. It is stated that a sum of rupees four lakhs has been deposited pursuant to the order dated 4.4.2005. Balance shall be deposited along with interest within two months from today. Out of the total amount, 80% shall be kept in fixed deposit in a nationalised bank initially for a period of five years. But no withdrawal shall be permitted before the expiry of period. However, monthly interest shall be paid to the claimants.(Paras 11 to 13)

JUDGMENT

Dr. Arijit Pasayat, J.—Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench of the Uttaranchal High Court holding that the respondents were entitled to compensation of Rs.8,16,000/- with interest @ 6% p.a. from the date of filing of the claim petition till the date of actual payment. Before the High Court the claimants had questioned the judgment passed by the Motor Accident Claims Tribunal/Addl. District Judge, Haldwani, District Nainital (in short ‘MACT’).

3. Factual scenario in a nutshell is as follows:

On 7.6.1999 at about 9.50 p.m. Vijay Singh Dogra (hereinafter referred to as the ‘deceased’) was coming from Nandpur to Haldwani on his vehicle No. UP 01-3962. He was driving the said vehicle. When the vehicle reached near the Block Office, Haldwani, it dashed with a Truck No.URN 9417 which was parked on the road in violation of the traffic rules. In the accident the deceased sustained grievous injuries and he was taken to the Base Hospital, Haldwani from where he was referred to Bareilly for better treatment. But he died on 9.6.1999. He was about 33 years of age at the time of accident. Claimants i.e. respondents 1 to 4 filed claim petition claiming compensation under Section 173 of the Motor Vehicles Act, 1988 (in short the ‘Act’). It was indicated in the claim petition that the deceased was earning Rs.8,000/- per month by driving a taxi and also had agricultural income. On that basis a sum of Rs.14,88,000/- was claimed as compensation. The opposite party in the claim petition i.e. the present appellant (hereinafter referred to as the ‘Insurer’) disputed the claim. The MACT on consideration of the evidence brought on record dismissed the claim petition on the ground that the accident took place on account of negligence of the deceased. An appeal was filed before the High Court by the claimants. It was stated that the vehicle was loaded with logs of Eucalyptus trees and these logs were protruding outside the truck. There was no indicator on the truck to indicate that the truck was parked so that any person coming from behind could be cautious. It was, therefore, contended that there was negligence on the part of the driver of the vehicle. With reference to Section 81 of the Act, it was indicated that the necessary care and caution was not taken. The High Court found that the vehicle was the subject matter of insurance with the insurer. It was not a case where the vehicle was stationary. On the contrary it was parked on a running condition without any indicator. The High Court, therefore, held that the insurer is liable to pay compensation. So far as the income of the deceased is concerned, taking into account the fact that there was no definite material to throw light on the actual income of the deceased, it was taken at Rs.4,000/- per month and multiplier of 17 was applied and accordingly the compensation was fixed.

4. In support of the appeal, learned counsel for the appellant submitted that the High Court has erroneously fixed compensation by applying multiplier of 17. It was pointed out that the MACT itself noted that no evidence was led to show as to what was the actual income of the deceased. In any event, the multiplier is high. Learned counsel for the respondents on the other hand supported the order of the High Court.

5. 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 father’s 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

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2007 Supreme(SC) 78

Cases Referred (4)