IMPORTANT POINTS
A coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench.
A decision per incuriam an earlier decision is not a binding precedent.
While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.
In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
For determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paragraphs 30 to 32 of Sarla Verma.
The selection of multiplier shall be as indicated in the Table in Sarla Verma read with paragraph 42 of that judgment.
The age of the deceased should be the basis for applying the multiplier.
Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years.

Headnote:(a) Interpretation – Judgment – Judgment of a larger Bench is binding on Benches of smaller strength – Judgment of an earlier coordinate Bench is also binding on subsequent coordinate Bench – Disagreement with earlier judgment of a co-ordinate Bench – Impermissible – Even a judgement per incuriam and having different view from earlier judgment will not be a binding precedent. (Para 15, 30)
       (2003) 5 SCC 448; (2014) 13 SCC 759; (1985) 4 SCC 369; (1989) 3 SCC 396; AIR 1968 SC 372; (2015) 8 SCC 583; (2010) 11 SCC 1; AIR 1962 SC 83; (2002) 1 SCC 1; (2002) 4 SCC 234; (2014) 7 SCC 701; (2015) 6 SCC 347; (2014) 16 SCC 623 – Relied upon
       (b) Motor Vehicles Act, 1988 – Section 166 – Determination of compensation – Deduction towards personal and living expenses – Percentages laid down in Sarla Verma for bachelor and married persons should be followed – However personal living expenses of the deceased need not exactly correspond to the number of dependants as stated in Reshma Kumari. (Para 39, 41, 42)
       (2009) 6 SCC 121; (2013) 9 SCC 65 – Approved
       © Motor Vehicles Act, 1988 – Section 166 – Determination of compensation – Multiplier – The table of multipliers as prepared in Sarla Verma should be applied – But on the basis of income established – “Income” means actual income less than the tax paid – Future prospects are to be added thereto on percentage basis. (Para 44, 46)
       (2009) 6 SCC 121; (2013) 9 SCC 65 – Approved
       (1996) 4 SCC 362; (2005) 10 SCC 720; (1994) 2 SCC 176 – Referred
       (d) Motor Vehicles Act, 1988 – Section 166 – Determination of compensation – Grants under conventional and traditional heads – Loss of estate, loss of consortium and funeral expenses – Needs to be quantified – Amounts should be revisited time to time – rates lid down as Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- for loss of estate, loss of consortium and funeral expenses respectively – Enhancement at the rate of 10% in a span of three years further laid down. (Para 54)
       (2012) 6 SCC 421; (2009) 6 SCC 121; (2013) 9 SCC 54; (2015) 6 SCC 347; (1996) 4 SCC 362; (2013) 15 SCC 45 – Referred
       (e) Motor Vehicles Act, 1988 – Sections 168 – Future prospects – Just compensation – Accidental death compensation – Not a windfall – Cannot also be a pittance – Age and income to be established by evidence – Addition of future prospects on present proven income – Determination of income while computing compensation must include future prospects – Held, no rationale for having different norms for salaried persons and persons with fixed income etc. – Norms should be same for all, i.e., salaried persons as well as persons with fixed income without increments etc. – Rate of addition for future prospects laid down – In case of persons having a permanent job, 50% below 40 years of age; 30% in age group of 40-50 years and 15% in age group 50-60 years – In case of self-employed person or person on a fixed salary, addition of 40% below 40 years of age, 25% between age group 40-50 years and 10% in the age group 50-60 years. (Para 57, 59, 60)
       (2012) 6 SCC 421; (2013) 9 SCC 54; (2009) 6 SCC 121; (2013) 9 SCC 65; (2009) 13 SCC 422; (2009) 4 SCC 513; (2002) 6 SCC 281; (2004) 5 SCC 385; 1913 AC 1 : (1911-13) All ER Rep 160 (HL); 1951 SC 601 : (1951) 2 All ER 448 (PC); 1942 AC 601 : (1942) 1 All ER 657 (HL); (2003) 3 SLR ® 601 – Referred
       Facts of the case:
       This matter relates to determination of motor accident claims.
       Perceiving cleavage of opinion between Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 and Rajesh v. Rajbir Singh, (2013) 9 SCC 54 both three-Judge Bench decisions, a two-Judge Bench in National Insurance Company Limited v. Pushpa, (2015) 9 SCC 166 referred the matter to a larger Bench for an authoritative pronouncement, and that is how the matters have been placed before the present Bench.
       Finding of the Court:
       There should be addition towards future prospects in case of self-employed persons or persons with fixed salary etc. also. Rates however should be different for these two sets of people.
       Figures under conventional and traditional heads should be reasonable and should be enhanced every three years.
       Result: Reference answered.

Judgement Key Points

The judgment provides standardized guidelines for deductions towards personal and living expenses of the deceased when determining the multiplicand (net income for loss of dependency) in motor accident death claims under Section 166 of the Motor Vehicles Act.

Key Rules on Deductions:

For married deceased:
Deduct 1/3 (33%) if 2-3 dependent family members.
Deduct 1/4 (25%) if 4-6 dependent family members.
Deduct 1/5 (20%) if more than 6 dependent family members. (!) (!) (!)
For bachelor deceased (typically parents as claimants):
Normally deduct 50%, assuming higher personal spending and limited dependency (usually only mother as dependant, excluding father, siblings unless evidence shows otherwise).
Exception: If large dependent family (e.g., widowed mother + many non-earning siblings), restrict to 1/3. (!) (!) (!) (!)
General principles:
Tribunals/courts must ordinarily follow these standardized percentages from paras 30-32 of the referred framework (as approved here). (!) (!) (!) (!)
Deduction reflects the portion of net earnings spent exclusively on the deceased (not family maintenance); it may vary based on case-specific evidence like number of dependants, but need not strictly match dependant count. (!) (!)
"Income" for this purpose is actual/established income less tax, with future prospects added before deduction. (!) (!) (!)

These rules promote uniformity and consistency, applied after proving age, income, and dependants, alongside multiplier and future prospects. (!) (!) (!) (!) (!) (!) (!)

JUDGMENT :

Dipak Misra, CJI.

Perceiving cleavage of opinion between Reshma Kumari and others v. Madan Mohan and another, (2013) 9 SCC 65 and Rajesh and others v. Rajbir Singh and others, (2013) 9 SCC 54 both three-Judge Bench decisions, a two-Judge Bench of this Court in National Insurance Company Limited v. Pushpa and others, (2015) 9 SCC 166 thought it appropriate to refer the matter to a larger Bench for an authoritative pronouncement, and that is how the matters have been placed before us.

2. In the course of deliberation we will be required to travel backwards covering a span of two decades and three years and may be slightly more and thereafter focus on the axis of the controversy, that is, the decision in Sarla Verma and others v. Delhi Transport Corporation and another, (2009) 6 SCC 121 wherein the two- Judge Bench made a sanguine endeavour to simplify the determination of claims by specifying certain parameters.

3. Before we penetrate into the past, it is necessary to note what has been stated in Reshma Kumari (supra) and Rajesh’s case. In Reshma Kumari the three-Judge Bench was answering the reference made in Reshma Kumari and others v. Madan Mohan and another, (2009) 13 SCC 422. The reference judgment noted divergence of opinion with regard to the computation under Sections 163-A and 166 of the Motor Vehicles Act, 1988 (for brevity, “the Act”) and the methodology for computation of future prospects. Dealing with determination of future prospects, the Court referred to the decisions in Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 Abati Bezbaruah v. Dy. Director General, Geological Survey of India, (2003) 3 SCC 148 and the principle stated by Lord Diplock in Mallett v. McMonagle, 1970 AC 166: (1969) 2 WLR 767 and further referring to the statement of law in Wells v. Wells, (1999) 1 AC 345 observed:-

“46. In the Indian context several other factors should be taken into consideration including education of the dependants and the nature of job. In the wake of changed societal conditions and global scenario, future prospects may have to be taken into consideration not only having regard to the status of the employee, his educational qualification; his past performance but also other relevant factors, namely, the higher salaries and perks which are being offered by the private companies these days. In fact while determining the multiplicand this Court in Oriental Insurance Co. Ltd. v. Jashuben, (2008) 4 SCC 162 held that even dearness allowance and perks with regard thereto from which the family would have derived monthly benefit, must be taken into consideration.
'47. One of the incidental issues which has also to be taken into consideration is inflation. Is the practice of taking inflation into consideration wholly incorrect? Unfortunately, unlike other developed countries in India there has been no scientific study. It is expected that with the rising inflation the rate of interest would go up. In India it does not happen. It, therefore, may be a relevant factor which may be taken into consideration for determining the actual ground reality. No hard-and-fast rule, however, can be laid down therefor.
'48. A large number of English decisions have been placed before us by Mr. Nanda to contend that inflation may not be taken into consideration at all. While the reasonings adopted by the English courts and its decisions may not be of much dispute, we cannot blindly follow the same ignoring ground realities.
'49. We have noticed the precedents operating in the field as also the rival contentions raised before us by the learned counsel for the parties with a view to show that law is required to be laid down in clearer terms.”

4. In the said case, the Court considered the common questions that arose for consideration. They are:-

“(1) Whether the multiplier specified in the Second Schedule appended to the Act should be scrupulously applied in all the cases?

(2) Whether for determination of the multiplicand, the Act provides for any crite

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2017 Supreme(SC) 1050

Key Rules on Deductions:

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