Supreme Court Rejects 'Split Multiplier' for Accident Compensation, Calls it a Foreign Concept to MV Act

New Delhi: In a significant ruling aimed at bringing uniformity and certainty to motor accident claims, the Supreme Court has declared the practice of applying a 'split multiplier' for calculating compensation as a concept "foreign to the Motor Vehicles Act, 1988 ." A bench of Justice Sanjay Karol set aside a Kerala High Court order that had reduced the compensation awarded to the family of a deceased PWD engineer by applying this contentious method.

The Court restored and enhanced the compensation, emphasizing that retirement is a natural career progression and not an "exceptional circumstance" that justifies deviating from the established method of calculation.

Case Background

The case arose from a tragic road accident on August 3, 2012, which claimed the life of T.I. Krishnan, a 51-year-old Assistant Engineer with the Public Works Department. His wife and children filed a claim petition before the Motor Accidents Claims Tribunal (MACT), Pala.

The MACT awarded a compensation of ₹44,04,912, calculating the loss of dependency based on the deceased's monthly income of ₹45,408, adding 15% for future prospects, and applying a multiplier of 9 (as per the Sarla Verma case for the 51-55 age group).

However, on appeal, the Kerala High Court reduced the compensation for loss of dependency to ₹35,10,144. It employed a 'split multiplier' on the grounds that the deceased would have retired soon, leading to a significant reduction in his income post-retirement. This reduction of over ₹7 lakh prompted the family to appeal to the Supreme Court.

Arguments Before the Supreme Court

The appellants, represented by their counsel, argued that the High Court erred in applying the split multiplier. They contended that the court failed to consider the deceased's high educational qualifications and professional experience, which would have likely secured him employment in the private sector even after superannuation.

The respondent insurance company supported the High Court's reasoning, arguing that the reduction in income post-retirement was a certain event that justified the split multiplier approach.

Judicial Precedents and Supreme Court's Reasoning

Justice Sanjay Karol, authoring the judgment, noted the "divergent views" among various High Courts on the use of the split multiplier, which created inconsistency and deprived Tribunals of clear guidance. The Court observed that this lack of uniformity was a "concerning situation for judicial discipline."

The bench firmly rejected the rationale for using a split multiplier based on the impending retirement of the victim. The Court stated:

> "Superannuation from service hardly qualifies as such an exceptional circumstance, which would justify the use of split multiplier... It is only a natural progression that a person who enters service must also exit at some point in time. The same cannot be taken as a negative circumstance against the deceased person."

Referring to landmark judgments like *** Sarla Verma v. DTC *** and the Constitution Bench decision in *** National Insurance Co. Ltd. v. Pranay Sethi ***, the Court reiterated that the age of the deceased is the sole criterion for selecting the appropriate multiplier.

> "The Constitution Bench in Pranay Sethi (supra) had... observed that the age of the deceased is the criterion to be utilized for multiplier. It does not provide for any other possibilities. This, in our considered view, does not even leave open the possibility of employment of split multiplier, whatsoever."

The Court concluded that the split multiplier method injects uncertainty into a beneficial legislation that aims for "just compensation" and should not be used.

Final Decision and Enhanced Compensation

The Supreme Court set aside the High Court's calculation and recalculated the compensation, adhering to the principles laid down in Pranay Sethi . The final compensation was enhanced to ₹47,76,794 , an increase of over ₹12 lakh from the High Court's award.

The Court directed the insurance company to remit the enhanced amount directly to the bank accounts of the claimants by November 30, 2025. In a directive to ensure nationwide uniformity, the Registrar (Judicial) was instructed to circulate the judgment to all High Courts and Motor Accident Claims Tribunals for compliance, clarifying that the ruling on the split multiplier will apply prospectively.