Judgment:-

Dr. Arijit Pasayat, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a Division Bench of the Kerala High Court dismissing the appeal filed by the appellant questioning correctness of the award passed by the Motor Accident Claims Tribunal, Paravur (in short the `MACT).

3. Background facts in a nutshell are as follows:

One Anil lost his life in a vehicular accident on 17.6.1999. The respondents filed a Claim Petition in terms of Section 166 of the Motor Vehicles Act, 1988 (in short the `Act). It was stated in the claim petition that when the deceased was driving a motor cycle, a tractor owned by respondent no.5 which was being driven in rash and negligent manner by respondent No.4 dashed against him and he suffered serious injuries. The vehicle was the subject matter of insurance with the present appellant (hereinafter referred to as the `insurer). A claim of Rs.12,00,000/- was made. The stand taken by the insurer was that the accident took place only due to the negligence of the deceased and there was no negligence on the part of the driver. It was also submitted that there was no evidence regarding the income of the deceased and, therefore, the claim was highly exaggerated. It was indicated in the claim petition that the age of the deceased was 32 years and that he was getting Rs.7,427/- as monthly salary. The MACT found that the monthly income as claimed has been established. Adopting a multiplier of 17 the entitlement of the claim was fixed at Rs.10,61,000/-with 9% interest from the date of filing of the claim petition. An appeal was filed before the High Court which dismissed the appeal on the ground that the award made was in order.

3. It was submitted by learned counsel for the appellant that not only the claim of income was without any basis but also the multiplier has no rational basis. It is also submitted that the rate of interest awarded is high.

4. There is no appearance on behalf of the respondents in spite of service of notice.

5. There were two methods adopted to determine and for calculation of compensation in fatal accident actions. The first multiplier method mentioned in Davies v. Powell Duffregn Associated Collieries Ltd. (1942 AC 601) and the second in Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2) All ER 448).

6. 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.

7. The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speech in Mallett v. Mc Mongle (1969 (2) All ER 178) where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed:

"The starting point in any estimate of the amount of the `dependency` is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But....there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effe