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2009(3) Supreme 487
SUPREME COURT OF INDIA
R.V. Raveendran and Lokeshwar Singh Panta, JJ.
Smt. Sarla Verma & Ors. — Appellants
versus
Delhi Transport Corporation & Anr. — Respondents
Civil Appeal No. 3483 of 2008
(Arising out of SLP [C] No.8648 of 2007)
Decided on : 15-04-2009
(1994)2 SCC 176; (1996)4 SCC 362 – Relied upon.
1951 AC 601; 1942 AC 601 – Referred.
(b) Motor Vehicles Act, 1988 – Section 168 – Compensation – Need for consistency – Every district has one or more Motor Accident Claims Tribunal/s – If different Tribunals calculate compensation differently on the same facts, the claimant, the litigant, the common man will be confused, perplexed and bewildered – Multiplier method is the proper method. (Paras 8 and 9)
(c) Motor Vehicles Act, 1988 – Section 168 – Future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand – Where the deceased had a stable job, the court can take note of the prospects of the future and it will be unreasonable to estimate the loss of dependency on the actual income of the deceased at the time of death. (Para 10)
(1994)2 SCC 176; (1996)3 SCC 179; (2003)3 SCC 148 – Relied upon.
(d) Motor Vehicles Act, 1988 – Section 163A – One-third deduction towards personal living expenses got statutory recognition under Second Schedule to the Act – However this norm is not inflexible – In case of large number of dependents, unit method has to be adopted – Norms further vary depending upon whether the decreased was a bachelor or married. (Paras 12 to 15)
(1996)4 SCC 362; (2004)2 SCC 473 – Relied upon.
(e) Motor Vehicles Act, 1988 – Sections 163A and 166 – Principles for determination of liability and quantum of compensation are different for claims made under section 163A and section 166 – Correct approach discussed. (Paras 18 and 21)
(2007)5 SCC 428; (2005)10 SCC 720; (2005)6 SCC 236; (2006)6 SCC 249 – Relied upon.
(f) Motor Vehicles Act, 1988 – Section 168 – In view of the many imponderables in life, actual future pay revisions should not be taken into account for the purpose of calculating the income. (Para 24)
Facts of the case :
1. One Rajinder Prakash died on account of injuries sustained in a motor accident which occurred on 18.4.1988 involving a bus belonging to the Delhi Transport Corporation.
2. At the time of the accident and untimely death, the deceased was aged 38 years, and was working as a Scientist in the Indian Council of Agricultural Research on a monthly salary of Rs.3402/- and other benefits. His widow, three minor children, parents and grandfather (who is no more) filed a claim for Rs.16 lakhs before the Motor Accidents Claims Tribunal, New Delhi.
3. The Tribunal by its judgment and award dated 6.8.1993 allowed the claim in part. The Tribunal arrived at the loss of dependency to the family as Rs.5,94,000/-. It awarded the said amount with interest at the rate of 9% per annum from the date of petition till the date of realization. After deducting Rs.15000/- paid as interim compensation, it apportioned the balance compensation among the claimants, that is, Rs.3,00,000/- to the widow, Rs.75000/- to each of the two daughters, Rs.50000/- to the son, Rs.19000/- to the grandfather and Rs.30000/- to each of the parents.
4. Dissatisfied with the quantum of compensation, the appellants filed an appeal. The Delhi High Court by its judgment dated 15.2.2007 allowed the said appeal in part. Total compensation was determined as Rs.7,19,624/-. Thus the appeal was disposed of by increasing the compensation by Rs.1,25,624/- with interest at the rate of 6% P.A. from the date of claim petition.
Finding of the Court :
Compensation increased by Rs.1,65,246/-.
Result : Appeal partly allowed.
To calculate the quantum of compensation in a motor accident claim, follow these well-established steps:
Determine the Actual Income of the Deceased: Start with the actual income at the time of death, after deducting taxes if applicable. If future prospects are to be considered, estimate the increased income due to career growth or pay revisions, typically adding a percentage (e.g., 50%) for stable jobs below a certain age.
Estimate Future Prospects: Incorporate reasonable future income growth based on the stability of employment and age of the deceased. This involves averaging the current income with projected future income, considering pay revisions or increments, if supported by evidence.
Deduct Personal and Living Expenses: Deduct a standard percentage (commonly one-third for a married person or one-half for a bachelor) of the gross income to account for personal and living expenses. The percentage may vary depending on the number of dependents and the family structure.
Determine the Contribution to Dependents: The remaining amount after deductions represents the annual contribution to the dependents.
Select the Appropriate Multiplier: Choose a multiplier based on the age of the deceased at the time of death. The multiplier reflects the number of years' purchase and is usually derived from a standard table, with higher multipliers for younger deceased individuals.
Calculate Loss of Dependency: Multiply the annual contribution by the selected multiplier to arrive at the core compensation amount for dependency loss.
Add Conventional Heads: Include amounts for loss of estate, funeral expenses, and loss of consortium, if applicable.
Adjust for Past Awards and Finalize: Subtract any interim compensation already received and consider any statutory or case-specific adjustments to arrive at the final compensation amount.
It is important to note that actual future pay revisions should generally not be taken into account unless supported by concrete evidence, and the deductions for personal expenses are typically standardized but can vary based on family size and circumstances (!) (!) (!) (!) .
This systematic approach ensures a fair, consistent, and objective calculation of the compensation amount, aligning with established principles and legal standards (!) (!) (!) (!) (!) (!) .
ORDER
R.V. Raveendran, J.—
The claimants in a motor accident claim have filed this appeal by special leave seeking increase in compensation.
2. One Rajinder Prakash died on account of injuries sustained in a motor accident which occurred on 18.4.1988 involving a bus bearing No.DLP 829 belonging to the Delhi Transport Corporation. At the time of the accident and untimely death, the deceased was aged 38 years, and was working as a Scientist in the Indian Council of Agricultural Research (ICAR) on a monthly salary of Rs.3402/- and other benefits. His widow, three minor children, parents and grandfather (who is no more) filed a claim for Rs.16 lakhs before the Motor Accidents Claims Tribunal, New Delhi. An officer of ICAR, examined as PW-4, gave evidence that the age of retirement in the service of ICAR was 60 years and the salary received by the deceased at the time of his death was Rs.4004/- per month.
3. The Tribunal by its judgment and award dated 6.8.1993 allowed the claim in part. The Tribunal calculated the compensation by taking the monthly salary of the deceased as Rs.3402. It deducted one-third towards the personal and living expenses of the deceased, and arrived at the contribution to the family as Rs.2250 per month (or Rs.27,000/- per annum). In view of the evidence that the age of retirement was 60 years, it held that the period of service lost on account of the untimely death was 22 years. Therefore it applied the multiplier of 22 and arrived at the loss of dependency to the family as Rs.5,94,000/-. It awarded the said amount with interest at the rate of 9% per annum from the date of petition till the date of realization. After deducting Rs.15000/- paid as interim compensation, it apportioned the balance compensation among the claimants, that is, Rs.3,00,000/- to the widow, Rs.75000/- to each of the two daughters, Rs.50000/- to the son, Rs.19000/- to the grandfather and Rs.30000/- to each of the parents.
4. Dissatisfied with the quantum of compensation, the appellants filed an appeal. The Delhi High Court by its judgment dated 15.2.2007 allowed the said appeal in part. The High Court was of the view that though in the claim petition the pay was mentioned as Rs.3,402 plus other benefits, the pay should be taken as Rs.4,004/- per month as per the evidence of PW-4. Having regard to the fact that the deceased had 22 years of service left at the time of death and would have earned annual increments and pay revisions during that period, it held that the salary would have at least doubled (Rs.8008/- per month) by the time he retired. It therefore determined the income of the deceased as Rs.6006/- per month, being the average of Rs.4,004/- (salary which he was getting at the time of death) and Rs.8,008/- (salary which he would have received at the time of retirement). Having regard to the large number of members in the family, the High Court was of the view that only one fourth should be deducted towards personal and living expenses of the deceased, instead of the standard one-third deduction. After such deduction, it arrived at the contribution to the family as Rs.4,504/- per month or Rs.54,048/- per annum. Having regard to the age of the deceased, the High Court chose the multiplier of 13. Thus it arrived at the loss of dependency as Rs.702,624/-. By adding Rs.15,000/- towards loss of consortium and Rs.2,000/- as funeral expenses, the total compensation was determined as Rs.7,19,624/-. Thus it disposed of the appeal by increasing the compensation by Rs.1,25,624/- with interest at the rate of 6% P.A. from the date of claim petition.
5. Not being satisfied with the said increase, the appellants have filed this appeal. They contend that the High Court erred in holding that there was no evidence in regard to future prospects; and that though there is no error in the method adopted for calculations, the High Court ought to
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