Gujarat High Court Rules Split Multiplier Not Applicable Despite Continuing Employment After Injury

The Gujarat High Court has delivered a significant ruling in a motor accident compensation case, holding that a tribunal cannot apply a reduced "split multiplier" merely because an injured claimant continued in his job after the accident. Justice J. C. Doshi enhanced the compensation from ₹3.26 lakh to ₹8.15 lakh, emphasizing that permanent disability diminishes earning capacity even if the current job is retained.

The Case and the Tribunal’s Error

Rakeshkumar Navnitlal Shah, then 35 years old and employed at Maghmani Organic Limited earning ₹7,322 per month, suffered severe injuries in a road accident, resulting in 60% physical impairment. He admitted to a 30% functional disability of the whole body. The Motor Accident Claims Tribunal, Vadodara, noted that Shah had returned to his job after recovery and concluded he had suffered no future financial loss. It applied a multiplier of just 5 – instead of the standard age-based multiplier of 16 – and awarded only ₹3.26 lakh. Aggrieved, Shah appealed.

“Split Multiplier is Foreign to the MV Act”

The High Court squarely rejected the tribunal’s approach. Relying on the Supreme Court’s recent decision in Preetha Krishnan & Ors. v. United India Insurance Co. Ltd. (2025), Justice Doshi observed that a split multiplier can only be used in exceptional circumstances, with cogent reasons recorded. Retirement or continued service does not qualify as exceptional.

“Split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used by the Tribunal and/or Courts in calculation of the compensation,” the Court quoted from Preetha Krishnan .

Continuing Employment Does Not Erase Future Loss

The Court noted that while Shah had returned to work, his 30% functional disability inevitably reduced his capacity to earn, both in his current role and elsewhere.

“What is noticeable that, though after recovering from the accidental injury and having suffered 30% functional disability, claimant has joined the service of Maghmani Organic Limited, but one cannot deny the fact that claimant’s function has been reduced by 30% and his capacity to earn is reduced by that much. He may be continued in his existing service, but his chance and ability to serve in some elsewhere employment has been diminished and this hard fact cannot be ignored or rather, employed to apply split multiplier.”

Compensation Recalculated

Applying the correct multiplier of 16 (for a 35-year-old as per National Insurance Co. Ltd. v. Pranay Sethi ), adding 40% towards future prospects (since the claimant had no permanent employment), and awarding higher amounts for pain and suffering, the Court arrived at a total compensation of ₹8,15,400 – an enhancement of ₹4,88,605. The insurance company was directed to deposit the additional amount with 7.5% interest per annum from the date of the petition.

This judgment reinforces that the loss of earning capacity due to permanent disability is a real and compensable injury, irrespective of whether the victim manages to hold onto his existing job. It is a crucial clarification for tribunals and insurance companies across the country.