Supreme Court of India
MG. DIR., BANGALORE METROPOLITAN TPT. CORP.versusSAROJAMMA & ANR.
- Citation
- 2008 INSC 510
- Decided
- 22 April 2008
- Disposal
- Case Partly allowed
- Bench
- S B SINHA
Holding
Compensation must be determined per Schedule II with a one‑third deduction of income, the multiplier of 15 is permissible, and the interest rate must remain at 7%.
Summary
The case involved a claim under Section 163‑A of the Motor Vehicles Act for the death of an 18‑year‑old tutor in a bus accident. The Motor Accident Claims Tribunal awarded compensation of Rs 3,84,000 using a multiplier of 16 and deducted one‑third of the deceased’s estimated monthly income of Rs 3,000 for personal expenses. The Karnataka High Court reduced the multiplier to 15 but increased the interest rate on the award from 7% to 10%. The appellant challenged the multiplier, the deduction percentage, and the higher interest rate. The Supreme Court held that compensation must be calculated according to Schedule II, that the appropriate deduction is one‑third of income, and that the multiplier of 15 is acceptable; it ordered the interest rate to be restored to 7%. Consequently, the appeal was partly allowed, upholding the High Court’s multiplier but correcting the interest rate.
Issues considered
- Whether the multiplier of 15 is appropriate for calculating loss of dependency in lieu of 16.
- Whether the deduction for personal expenses should be one‑third or one‑half of the deceased’s income.
- Whether the interest rate on the compensation award can be increased from 7% to 10% without justification.
- Whether the claimant must establish negligence to invoke Section 163‑A.
- Whether compensation should include loss of estate, love and affection, and other heads under Schedule II.
Legislation cited
- Motor Vehicles Act, 1988s. 163-A, s. 166
Subjects
Motor Vehicles ActSection 163-ACompensationDependency multiplierSchedule IIInterest rateLoss of estateLoss of love and affectionJust compensation
Judgment
[2008] 6 S.C.R. 812
A MG. DIR., BANGALORE METROPOLITAN TPT. CORP. ;..,
v.
SAROJAMMA & ANR.
(Civil Appeal No. 2897 of 2008)
APRIL 22, 2008
B
(S.B.SINHA AND V.S. SIRPURKAR, JJ.) -r- 'I
Motor Vehicles Act, 1988; Ss. 163-A & 166 and
Schedule-II.·
c Death in accident - Compensation - Determination of -
Held: Quantum of compensation to be determined in terms of
s. 163-A and as per structured formula in Schedule-If of the
Act - Ordinarily, one-third of income of the deceased is
deducted from his total income for calculating compensation
D to claimant - In the instant case, allegedly, deceased was
serving as tutor and also admitted in the Army Teachers
Training Institute, thus, having potential of becoming a teacher
- Hence, his income as estimated at Rs.3,0001- p.m. cannot
be said to be on higher side - No reason found to interfere
E with findings of the High Court in applying multiplier of 15 for
calculating compensation - But, the High Court had
considered irrelevant factors in increasing the rate of interest
from 7% to 10% - Hence, rate of interest altered to 7% -
Directions issued.
F Principle of just compensation - Applicability of.
A bus, belonging to the appellant, met with an
accident. Son of respondent No.1, the claimant, was
traveling in the bus sustained injuries and later
succumbed to the injuries. Respondent No.1 filed a claim
G
petition. The Tribunal calculated the compensation for
loss by applying the multiplier of 16. On appeal, the High
Court allowed the multiplier of 15 instead of 16 for ... A
calculating the compensation but increased the rate of
H 812
MG. DIR., BANGALORE METROPOLITAN TPT. CORP. 813
v. SAROJAMMA & ANR.
interest from 7% to 10% on the amount of compensation. A
Hence the present appeal.
Appellant contended that there was no evidence to
show that the income of the deceased was Rs. 3,000/-
p.m.; that the age of the claimant being 45 as on the date
of accident, the High Court committed a serious error in 8
---+ applying the multiplier of 15 as the deceased was a
bachelor; that the claimant being his mother, the Tribunal
as also the High Court should have deducted 50% of the
amount from his income while determining
compensation; and that the High Court committed a C
serious error in enhancing the rate of interest from 7% to
10% wherefor no justification has been shown.
Respondent submitted that keeping in view the fact
that the mother of the deceased has lost her only son, the D
Tribunal should have awarded compensation towards
loss of estate and loss of love and affection; that
deduction of one-third towards personal expenses is
applied in all cases; and that keeping in view the fact that
the accident had taken place in the year 1998, grant of
10% interest on amount of compensation was wholly E
justified.
Partly allowing the appeal, the Court
HELD: 1.1 For invoking the provision u/s.163-A of the
Motor Vehicles Act, it is not necessary for a claimant to F
establish any act of negligence on the part of the driver. It
is not necessary even to plead that the death had occurred
owing to any wrongful act or neglect or default of owner
of the vehicle. Quantum of compensation is to be
determined in terms of the Schedule II appended thereto: G
(Paras - 5 & 6) (817-B, C, DJ
1.2 The structured formula as provided in the
Schedule itself stipulates reduction of income of the
deceased by one-third in consideration of the expenses H
814 SUPREME COURT REPORTS [2008] 6 S.C.R.
>- <
A which he would have incurred towards maintaining
himself, had he been alive. Ordinarily one-third should be
deducted from the income of th' deceased and not half
thereof. (Para - 7, 8) [817-E, F, G]
1.3 For determining the amount of compensation, the
B most relevant factor is the income of the deceased. The
+- -<.
deceased was a tutor, who was admitted in the Army
Teachers Training institute. He had t~e requisite potential
of becoming a teacher. His income, thus, having been
estimated at Rs. 3,000/- p.m. cannot be said to be on a
c very high side. (Para - 8) [817-G; 818-A]
2.1 What should be the legal principle on which the
principle of just compensation should be worked out had
been the subject matter of various decisions of this Court.
This court in cases after cases noticed that the principles
D
on which the multiplier method was developed has been
given a go-by. In many cases, a hybrid method based on
the subjectivity of the Tribunal has been noticed.
Guidelines provided for by the statutes as also the
Superior Court have not been applied. The courts have
E also noticed several defects in the Schedule -II of the Act.
It was opined that ordinarily the multiplier should not
exceed 16. (Para - 11) [819-E, F, G)
General Manager, Kera/a State Road Transport
F Corporation, Trivandrum vs. Susamma Thomas (Mrs.) and
Others (1994) 2 SCC 176 and U. P State Road Transport
Corporation and Others vs. Trilok Chandra and Others [(1996)
4 sec 362 - referred to.
2.2 In the instant case, no finding has been arrived at
G by the Tribunal that the age of the claimant was 45 or
below. Why the multiplier of 16 had been applied by the
Tribunal was not stated. The High Court has also not laid
~.A
down the legal premise upon which it had applied the
multiplier of 15. It, however, appears that the counsel for
H the appellant himself stated that the correct multiplier
MG. DIR., BANGALORE METROPOLITAN TPT. CORP. 815
v. SAROJAMMA & ANR. [S.S. SINHA, J.]
A
would be 15 and not 16 which has been accepted by the A
High Court. This Court, therefore, does not intend to
interfere with the finding of the High Court. (Para - 13)
[820-F, G]
Fakeerappa and Another vs. Karnataka Cement Pipe
B
->-+ Factory and Others (2004) 2 SCC 473 - referred to.
2.3 The High Court, however, took into consideration
an irrelevant factor, viz., that the claimant must have been
suffering from a mental agony in determining the rate of
interest as also the age of the deceased. There exists no
justification for increase in the rate of interest. The interest
c
of justice would be subserved if the rate of interest
payable on the awarded amount is brought down to 7%,
as was directed by the Tribunal. (Para -14) [820-H, 821-A, B]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2897 D
of 2008.
From the final Judgment and Order dated 28.03.2006 of
the High Court of Karnataka at Bangalore in MFA No. 5584/03
(MV) C/W.CR.OB 236/2004(MV)
E
R.S. Hegde, Chandra Prakash, J.K. Nayyar and P.P. Singh
for the Appellant.
Kiran Suri for the Respondents.
The Judgment of the Court was delivered by
F
S.B. SINHA, J. 1. Leave granted.
2. One Ravi Kumar (deceased) son of Respondent no. 1
was travelling in a bus belonging to the appellant on 25.11.1998.
It met with an accident. The deceased sustained injuries. He
subsequently succumbed thereto. He was unmarried. He was G
aged about 18 years. He left behind the respondent No. 1 as
.A ..,
his only heir and legal representative .
A claim petition was filed in terms of Section 163-A
of the Motor Vehicles Act. 1988 (for short "the Act") The H
816 SUPREME COURT REPORTS [2008) 6 S.C.R.
>.
A Tribunal calculated the loss of dependency at Rs.3,84,000/-
wherefor the multiplier of 16 was applied. The Tribunal estimated
the income of the deceased at Rs.3,000/- p.m. One-third was
deducted from the said amount towards his personal expenses.
An appeal was preferred thereagainst by the appellant.
B By reason of the impugned judgment, the High Court while + ~:
allowing the multiplier of 15 instead of 16 increased the rate of
interest from 7% to 10%. Respondent No. 1 was held to be
entitled to a total sum of Rs. 3,64,500/- (Rs. 3,60,000 + 2,000 +
2,500).
c 3. Mr. R.S. Hegde, learned counsel appearing on behalf
of the appellant would submit:
(i) There was no evidence to show that the deceased
was earning a sum of Rs. 3,000/- p.m.
D
(ii) The age of the respondent No. 1 being 45 as on the
date of accident, the High Court committed a serious
error in applying the multiplier of 15; as the deceased
was a bachelor
E (iii) The claimant being his mother, the Tribunal as also
the High Court should have deducted 50% of the
amount from his income.
(iv) The High Court committed a serious error in
enhancing the rate of interest from 7% to 10%
F wherefor no justification has been shown.
4. Ms. Kiran Suri, learned counsel appearing on behalf of
the respondents, on the other hand, would urge:
(i) It is not a fit case where this Court should exercise
G its discretionary jurisdiction under Article 136 of the
Constitution of India.
(ii) Keeping in view the fact that the mother has lost her rA
only son, the Tribunal should have awarded
compensation towards loss of estate and loss of
H
MG. DIR., BANGALORE METROPOLITAN TPT. CORP. 817
v. SAROJAMMA & ANR. [S.B. SINHA, J.]
~
love and affection. A
(iii) As deduction of one-third towards personal
expenses is applied in all cases, the impugned
judgment should not be int~rfered with.
(iv) Keeping in view the fact that the accident had taken B
/ + place in the year 1998, grant of 10% interest was
wholly justified.
5. Section 163-A of the Act was inserted by Act No. 54 of
1994 with effect from 14.11.1994. For invoking the said
provision, it is not necessary for a claimant to establish any act c
of negligence on the part of the driver. It is not necessary even
to plead that the d_eath had occurred owing to any wrongful act
or neglect or default of owner of the vehicle.
6. Quantum of compensation is to be determined in terms
D
of the Schedule II appended thereto. In terms thereof, apart from
.... the amount of compensation as provided for therein only funeral
expenses, loss of consortium (if beneficiary is the spouse), loss
of estate, medical expenses, would be payable.
7. As the Schedule II provides for a structured formula, E
ordinarily, the same has to be adhered to. The structured formula
itself stipulates reduction of income of the deceased by one-
third in consideration of the expenses which he would have
incurred towards maintaining himself, had he been alive.
8. Whereas in determining an application for grant of F
~ compensation under Section 166 of the Act, the Tribunal may
be entitled to find out actual loss of damages suffered by the
claimants, the formula having not envisaged such a contingency,
we are of the opinion that ordinarily one-third should be
deducted from the income of the deceased and not the half G
thereof.
). --; For determining the amount of compensation, the most
relevant factor, therefore, is the income of the deceased. He
was a tutor. He was admitted in the Army Teachers Training
H
818 SUPREME COURT REPORTS [2008] 6 S.C.R.
)<
A institute. He had the requisite potential of becoming a teacher.
His income, thus, having been estimated at Rs. 3,000/- p.m.
cannot be said to be on a very high side.
9. This Court in General Manager, Kera/a State Road
Transport Corporation, Trivandrum v. Susamma Thomas
B (Mrs.) and Others [(1994) 2 SCC 176] held as under: ~
"9. The assessment of damages to compensate the
dependants is beset with difficulties because from the
nature of things, it has to take into account many
c imponderables, e.g., the life expectancy of the deceased
and the dependants, the amount that the deceased would
have earned during the remainder of his life, the amount
that he would have contributed to the dependants during
that period, the chances that the deceased may not have
lived or the dependants may not live up to the estimated
D
remaining period of their life expectancy, the chances that
-).-
the deceased might have got better employment or income
or might have lost his employment or income altogether."
10. This aspect of the matter has also been considered in
E U. P State Road Transport Corporation and Others v. Trilok
Chandra and Others [(1996) 4 SCC 362] by a Three-Judge
Bench of this Court in the following terms:
"9. The compensation to be awarded has two elements.
One is the pecuniary loss to the estate of the deceased
F resulting from the accident, the other is the pecuniary loss
,l
sustained by the members of his family for his death. The
Court referred to these two elements in the Gobald Motor
Seivice's case. These two elements were to be awarded
under Section 1 and Section 2 of the Fatal Accidents Act,
G 1855 under which the claim in that case arose. The Court
in that case cautioned that while making the calculations
no part of the claim under the first or the second element /
should be included twice. The Court gave a very lucid """" ,
illustration, which can be quoted with profit:
H
MG. DIR., BANGALORE METROPOLITAN TPT CORP. 819
v. SAROJAMMA & ANR [S.B. SINHA, J.]
An illustration may clarify the position.Xis the income of A
the estate of the deceased, Y is the yearly expenditure
incurred by him on his dependents (we will ignore the
other expenditure incurred by him). X-Y i.e. Z, is the amount
he saves every year. The capitalised value of the income
spent on the dependents, subject to relevant deductions, B
/ + is the pecuniary loss sustained by the members of his
family through his death. The capitalised value of his
income, subject to relevant deductions, would be the loss
caused to the estate by his death. If the claimants under
both the heads are the same, and if they get compensation c
for the entire loss caused to the estate, they cannot claim
again under the head of personal loss the capitalised
income that might have been spent on them if the
deceased were alive. Conversely, if they got compensation
under Section 1, representing the amount that the
D
deceased would have spent on them, if alive, to that
extent there should be deduction in their claim under
Section 2 of the Act in respect of compensation for the
loss caused to the estate. To put it differently if under
Section 1 they got capitalised value of Y, under Section 2
they could get only the capitalised value of Z, for the E
capitalised value Y + Z =X would be the capitalised value
of his entire income."
11. What should be the legal principle on which the principle
of just compensation should be worked out had been the subject F
matter of various decisions of this Court. This court in cases
after cases noticed that the principles on which the multiplier
method was developed has been given a go-by. In many cases,
a hybrid method based on the subjectivity of the Tribunal has
been noticed. Guidelines provided for by the statutes as also
G
the Superior Court have not been applied. The courts have also
noticed several defects in the schedule. It was opined that
A..~ ordinarily the multiplier should not exceed 16.
12. Our attention has also been drawn to a decision of this
Court in Fakeerappa and Another v Karnataka Cement Pipe H
820 SUPREME COURT REPORTS [2008) 6 S.C.R.
A Factory and Others [(2004) 2 SCC 473] wherein it was held:
'7. What would be the percentage of deduction for personal
expenditure cannot be governed by any rigid rule or formula
of universal application. It would depend upon
circumstances of each case. The deceased undisputedly
B was· a bachelor. Stand of the insurer is that after marriage, -i '
the contribution to the parents would have been lesser
and, therefore, taking an overall view the Tribunal and the
High Court were justified in fixing the deduction.
c 8. It has to be noted that the ages of the parents as
disclosed in the Claim Petition were totally unbelievable.
If the deceased was aged about 27 years as found at the
time of post mortem and about which there is no dispute,
the father and mother could not have been aged 38 years
and 35 years respectively as claimed by them in the Claim
D
Petition. Be that as it may, taking into account special
features of the case of feel it would be appropriate to
restrict the deduction for personal expenses to one-third
of the monthly income. Though the multiplier adopted
appears to be slightly on the higher side, the plea taken
E by the insurer cannot be accepted as there was no
challenge by the insurer to the fixation of the multiplier
before the High Court and even in the appeal filed by
the appellants before the High Court the plea was not
taken."
F
13. No finding has been arrived at by the Tribunal that the
age of the claimant was 45 or below. Why the multiplier of 16
had been applied by the Tribunal was not stated. The High Court
has also not laid down the legal premise upon which it had
applied the multiplier of 15. It, however, appears that the learned
G
counsel for the appellant himself stated that the correct multiplier
would be 15 and not 16 which has been accepted by the High
Court. We do not, therefore, intend to interfere with the said ~ ....
finding in the instant case.
H 14. The High Court, however, took into consideration an
MG. DIR., BANGALORE METROPOLITAN TPT. CORP. 821
v. SAROJAMMA & ANR. [S.B. SINHA, J.]
irrelevant factor, viz., that the claimant must have been suffering A
from a mental agony in determining the rate of interest as also
the age of the deceased. We do not see any justification for
increase in the rate of interest. We, therefore, are of the opinion
that the interest of justice would be subserved if the rate of
interest payable on the awarded amount is brought down to 7%, B
as was directed by the Tribunal.
15. The appeal is allowed only to the aforementioned
extent. No costs.
S.K.S. Appeal partly allowed c
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Motor Vehicles Act"Sign in to search