IMPORTANT POINT
Compensation u/s 166 - Procedure in Sarla Verma approved.

Judgment :-

R.M. Lodha, J.

A two-Judge Bench (S.B. Sinha and Cyriac Joseph, JJ.) proceeded to hear these appeals on two common questions, namely, (1) Whether multiplier specified in the Second Schedule appended to the Motor Vehicles Act, 1988 (for short “the 1988 Act”) should be scrupulously applied in all cases? and (2) Whether for determination of the multiplicand, the 1988 Act provides for any criterion, particularly as regards determination of future prospect. In the course of hearing few decisions of this Court, General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors [1994 (2) SCC 176]., Sarla Dixit (Smt.) and Anr. v. Balwant Yadav and Ors. [1996 (3) SCC 179]., U.P. State Road Transport Corporation and Ors. V. Trilok Chandra and Ors. [1996 (4) SCC 362], Kaushnuma Begum (Smt.) and Ors. V. New India Assurance Co. Ltd. and Ors. [2001 (2) SCC 9], United India Insurance Co. Ltd. & Ors. v. Patricia Jean Mahajan & Ors. [2002 (6) SCC 281], Jyoti Kaul & Ors. v. State of M.P. & Anr. [2002 (6) SCC 306], Abati Bezbaruah v. Dy. Director General, Geological Survey of India & Anr. [2003 (3) SCC 148], New India Assurance Co. Ltd. v. Shanti Pathak (Smt.) & Ors. [2007 (10) SCC 1], were cited. The attention of the Bench was also invited to Sections 163A and 166 of the 1988 Act. The Bench was of the opinion that the question, whether the multiplier specified in the Second Schedule should be taken to be guide for calculation of amount of compensation payable in a case falling under Section 166 of the 1988 Act needed to be decided by a larger Bench. The reasons for referring the above issue to the larger Bench indicated in the referral order dated 23.07.2009 read as under:

“39. We have noticed hereinbefore that in Patricia Jean Mahajan5 and Abati Bezbaruah7and the other cases following them multiplier specified in the Second Schedule has been taken to be guiding factor for calculation of the amount of compensation even in a case under Section 166 of the Act. However, in Shanti Pathak8 this Court advocated application of lesser multiplier, although no legal principle has been laid therein.

40. In Trilok Chandra3 this Court has pointed out certain purported calculation mistakes in the Second Schedule. It, however, appears to us that there is no mistake therein. Amount of compensation specified in the Second Schedule only is required to be paid even if a higher or lower amount can be said to be the quantum of compensation upon applying the multiplier system.

41. Section 163-A of the 1988 Act does not speak of application of any multiplier. Even the Second Schedule, so far as the same applies to fatal accident, does not say so. The multiplier, in terms of the Second Schedule, is required to be applied in a case of disability in nonfatal accident. Consideration for payment of compensation in the case of death in a “no fault liability” case vis-à-vis the amount of compensation payable in a case of permanent total disability and permanent partial disability in terms of the Second Schedule is to be applied by different norms. Whereas in the case of fatal accident the amount specified in the Second Schedule depending upon the age and income of the deceased is required to be paid where for the multiplier is not to be applied at all but in a case involving permanent total disability or permanent partial disability the amount of compensation payable is required to be arrived at by multiplying the annual loss of income by the multiplier applicable to the age of the injured as on the date of determining the compensation and in the case of permanent partial disablement such percentage of compensation which would have been payable in the case of permanent total disablement as specified under item (a) of the Second Schedule.

42. The Parliament in its wisdom thought to provide for a higher amount of compensation in case of permanent total disablement and proportionate amount of compensation in case of permanent partial di