Holding

The Court held that compensation must be computed using the standardized multiplier and future‑prospects percentages prescribed in Sarla Verma (as approved in Reshma Kumari), that the Rajesh decision is per incuriam and not binding, and that coordinate benches must adhere to earlier co‑equal precedents.

Summary

The Supreme Court examined the computation of compensation under Sections 163‑A, 166 and 168 of the Motor Vehicles Act, 1988 in death claims, focusing on the appropriate multiplier, the addition of future prospects to the deceased's income, and the quantification of conventional heads such as loss of estate, loss of consortium and funeral expenses. It affirmed the standardized scheme laid down in Sarla Verma (approved in Reshma Kumari) for selecting the multiplier based on age and for adding future prospects, prescribing specific percentage additions for permanent‑job, self‑employed and fixed‑salary deceased. The Court held that the Rajesh decision, which deviated from this scheme, is not a binding precedent and is per incuriam, and that coordinate benches of equal strength must follow earlier co‑equal decisions. It also clarified the method for deducting personal and living expenses and fixed reasonable amounts for conventional heads, to be increased by 10% every three years. Consequently, the reference was answered and the matter was directed to the appropriate bench for further orders.

Issues considered

The correct multiplier to be applied under Section 166 for death claims.
How to determine the addition for future prospects to the deceased's income, especially for self‑employed or fixed‑salary persons.
The appropriate quantification of conventional heads (loss of estate, loss of consortium, funeral expenses) and their periodic inflation adjustment.
Whether the decision in Rajesh v. Rajbir Singh is a binding precedent over the earlier Sarla Verma and Reshma Kumari rulings.
The applicability of the per‑incuriam doctrine and the duty of coordinate benches to follow earlier co‑equal judgments.

Legislation cited

Constitution of Indias. Article 141
Motor Vehicles Act, 1988s. 163-A, s. 166, s. 168

Subjects

Motor Vehicles ActCompensation calculationMultiplierFuture prospectsJust compensationPrecedentPer incuriamStandardizationPersonal living expensesConventional headsLoss of consortiumLoss of estateFuneral expenses

Judgment

[2017] 13 S.C.R. 100

A NATIONAL INSURANCE COMPANY LIMITED
v.
PRANAY SETHI AND ORS.
(Special Leave Petition (Civil) No. 25590of2014)
B OCTOBER 31, 2017

(DIPAK MISRA, CJI, A. K. SIKRI, A. M. KHANWILKAR,
DR. D. Y. CJJANDRACHUD AND ASHOK BHUSHAN, JJ.]
Motor Vehicles Act. 1988
c ss. 163-A. 166 and 168 - Computation of compensation -
Determination of multiplicand -Determination of income o_fdeceased
- Determination of reasonable figures on conventional heads - Held:
s. I 68 deals with concept ofjust compensation and the same is to
be decided on the foundation of fairness. reasonableness and
D equitabilizv on acceptable legal standard - The determination has
to he on the foundation of evidence as regards the age and income
of deceased and !herea.fier apposite multiplier to be applied -
Formula relating to multiplier would he as indicated in *Sarla Verma
case and approved in **Reshma Kumari case - For grant <![just
compensation principle of standardization is approved so that a
E
specific and c~rtain multiplicand is determined for applying the
multiplier on the basis of age - The principle would include in its
ambit addition of fi1t11re prospects on the proven income at presenr
- The principle ofstandardization will also apply to the selfemplo.ved
or a person having.fixed salary. and determination of income would
F include fi1ture prospects - While determining income of deceased
having permanµnt Joh. an addition of 50% of actual salary to the
income towards .fi1t11re prospects where the deceased was below age
of 40 years. addi1ion of 30°{, if the age of deceased was between
40 and 50 years and addition of 15% would be made if the deceased
was between the age of 50 to 60 years - If the deceased is selF
G
employed or on .fixed salary. addition of income towards .fi1ture
prospects would be 40% of income where deceased was he/ow 40
years of age; .P5°~ where deceased was between 40 and 50 years
of age and 10% where the deceased was between 50 and 60 years
of age. would he regarded as necessary method of computation -
H Conventional and Traditional headv namely loss of estate, loss of
100
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY IOI
SETHI AND ORS.

consortium and funeral expenses cannot be determined on A
percentage basis - Reasonable figures on conventional heads
should be Rs.150001-, Rs.400001- and Rs.150001- respectively to
be enhanced at the rate of 10% in every three years.
Judicial Discipline:
A co-ordinate Bench of the same strength cannot take a B
contrary view than what has been held by another co-ordinate Bench
- Earlier decision of co-equal Bench binds the Bench of same
strength - Precedent - Constitution of India - Art. 141.
Judgment:
c
Judgment per incuriam - A decision or judgment can be per
incuriam any provision in a statute, rule or regulation, which was
not brought to the notice of the court - A judgment can also be per
incuriam if it is not possible to reconcile its ratio with that of a
previously pronounced judgment of a co-equal or a larger Bench.
D
Answering the referred issues, the Court
HELD : 1.1 In view of the analysis made in *Sar/a Jlerma
case which has been reconsidered in **Reshma Kumari case, so
far as the guidance provided for appropriate deduction for personal
and living expenses is concerned, the tribunals and courts should
E
be guided by conclusion 43.6 of **Reshma Kumari case. The
method provided therein is approved. [Para 43] [131-D-EJ
1.2 So far as the multiplier is concerned, the claims tribunal
and the Courts shall be guided by Step 2 that finds place in
paragraph 19 of *Sar/a Jlerma case read with paragraph 42 of the
F
said judgment. In Reshma Kumari case, the aforesaid has been
approved. [Paras 44 and 45] [131-E-F; 132-A]
1.3 Insofar as the aforesaid multiplicand/multiplier is
concerned, it has to be accepted on the basis of income established
by the legal representatives of the deceased. Future prospects
are to be added to the sum on the percentage basis and "income" G
means actual income less than the tax paid. If the same is
followed, it shall subserve the cause of justice and the
unnecessary contest before the tribunals and the courts would
be avoided. [Paras 46 and 47] [132-F-G]
H
102 SUPREME COURT REPORTS [2017] 13 S.C.R.

A 1.4 Section 168 of the Act deals with the concept of "just
compensation" and the same has to be determined on the
foundation of fairness, reasonableness and equitability on
acceptable legal standard because such determination can never
be in arithmetical exactitude. It can never be perfect. The aim is
to achieve an acceptable degree of proximity to arithmetical
B
precision on tlje basis of materials brought on record in an
individual case. The conception of "just compensation" has to
be viewed through the prism of fairness, reasonableness and non-
violation of the principle of equitability. Though the discretion
vested in the tribunal is quite wide, yet it is obligatory on the part
c of the tribunal to be guided by the expression, that is, "just
compensation". The determination has to be on the foundation
of evidence brought on record as regards the age and income of
the deceased and thereafter the apposite multiplier to be applied.
The formula relating to multiplier has been clearly stated in *Sar/a
Vt!rma case and it has been approved in **Reshma Kumari case.
D
The age and income, have to be established by adducing evidence.
The tribunal and the Courts have to bear in mind that the basic
principle lies in pragmatic computation which is in proximity to
reality. It is a well accepted norm that money cannot substitute a
life lost but an effort has to be made for grant of just compensation
E having uniformi~ of approach. There has to be a balance between
the two extremes, that is, a windfall and the pittance, a bonanza
and the modicum. In such an adjudication, the duty of the tribunal
and the Courts is difficult and hence, an endeavour has been made
by this Court for standardization which in its ambit includes
addition of future prospects on the proven income at present. As
F
far as future prospects are concerned, there has been
standardization keeping in view the principle of certainty, stability
and consistency. The principle of "standardization" is approved
so that a specific and certain multiplicand is determined for
applying the multiplier on the basis of age. [Para 57] (136-B-H]
G 1.5 In re~pect of fixation of future prospects in cases of
deceased who is self-employed or on a fixed salary, *Sarlu Verma
case has carved out an exception permitting the claimants to bring
materials on record to get the benefit of addition of future
prospects. It has not, per se, allowed any future prospects in
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 103
SETHI AND ORS.

respect of the said category. When the Court accepts the principle A
of standardization, there is really no rationale not to apply the
said principle to the self-employed or a person who is on a fixed
salary. To follow the doctrine of actual income at the time of death
and not to add any amount with regard to future prospects to the
income for the purpose of determination of multiplicand would B
be unjust. The determination of income while computing
compensation has to include future prospects so that the method
will come within the ambit and sweep of just compensation as
postulated under Section 168 of the Act. [Paras 58 and 59) (137-
A-D)
1.6 In case of a deceased who had held a permanent job c
with inbuilt grant of annual increment, there is an acceptable
certainty. But to state that the legal representatives of a deceased
who was on a fixed salary would not be entitled to the benefit of
future prospects for the purpose of computation of compensation
would be inapposite. It is because the criterion of distinction D
between the two in that event would be certainty on the one hand
and staticness on the other. One may perceive that the
comparative measure is certainty on the one hand and uncertainty
on the other but such a perception is fallacious. It is because the
price rise does affect a self-employed person; and that apart there
is always an incessant effort to enhance one's income for E
sustenance. The purchasing capacity of a salaried person on
permanent job when increases because of grant of increments
and pay revision or for some other change in service conditions,
there is always a competing attitude in the private sector to
enhance the salary to get better efficiency from the employees. F
Similarly, a person who is self-employed is bound to garner his
resources and raise his charges/fees so that he can live with same
facilities. To have the perception that he is likely to remain static
and his income to remain stagnant is contrary to the fundamental
concept of human attitude which always intends to live with
dynamism and move and ch>inge with the time. Though it may G
seem appropriate that there cannot be certainty in addition of
future prospects to the existing income unlike in the case of a
person having a permanent job, yet the said perception does not
really deserve acceptance. There can be some degree of
difference as regards the percentage that is meant for or applied H
104 SUPREME COURT REPORTS (2017] 13 S.C.R.

A to in respect of the legal representatives who claim on behalf of
the deceased who had a permanent job than a person who is self-
employed or on a fixed salary. But not to apply the principle of
standardization on the foundation of perceived lack of certainty
would tantamoulnt to remaining oblivious to the marrows of ground
reality. And, therefore, degree-test is imperative. Unless the
B
degree-test is applied and Ieft to the parties to adduce evidence
to establish, it would be unfair and inequitable. The degree-test
has to have th1e inbuilt concept of percentage. Taking into
consideration the cumulative factors, namely, passage of time,
the changing society, escalation of price, the change in price index,
c the human attitµde to follow a particular pattern of life, etc., an
addition of 40% of the established income of the deceased towards
future prospects where the deceased was below 40 years and an
addition of 25% where the deceased was between the age of 40
to 50 years would be reasonable. [Para 59] (137-D-H; 138-A-D]
D I. 7 While determining the income, an addition of 50% of
actual salary to the income of the deceased towards future pros-
pects, 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
E addition should be 15%. Actual salary should be read as actual
salary less tax. [Para 61] [139-C]
1.8 Where the age of the deceased is more than 50 years,
as per *Sar/a Verma case, it is appropriate not to add any amount
and the same bas been approved in **Reshma Kumari case.
F Judicial notice can be taken of the fact that salary does not remain
the same. When a person is in a permanent job, there is always
an enhancement due to one reason or the other. To lay down as
a thumb rule that there will be no addition after 50 years will be
an unacceptable concept. There should be an addition of 15% if
G the deceased is between the age of 50 to 60 years and there
should be no addition thereafter. Similarly, in case of self-
employed or petson on fixed salary, the addition shoulu be 10%
between the age of 50 to 60 years. The aforesaid yardstick has
been fixed so that there can be consistency in the approach by
the tribunals and the courts. [Para 60] [138-E-F]
H
NATIONAL INSURANCE COMPANY LIMJTED v. PRANAY 105
SETHI AND ORS.

1.9 The conventional sum has been provided in the Second A
Schedule of the Act. Para 3 of the Second Schedule also provides
for General Damages in case of death. The said Schedule has
been found to be defective as stated by the Court in #Trilok
Chandra case. The Second Schedule has not been followed starting
from the decision in #Trilok Chandra case and there has been no
B
amendment to the same. The conventional damage amount needs
to be appositely deteri,nincd. In different cases different amounts
have been granted. The Court does not agree with the view
expressed in ##Rajesh case. It has granted Rs. 25,000/- towards
funeral expenses, Rs. 1,00,000/- loss of consortium and
Rs. 1,00,000/- towards loss of care and guidance for minor c
children. The head relating to loss of care and minor children
does not exist. Though ##Rajesh case refers to ###Santosh Devi
case, it does not seem to follow the same. The conventional and
traditional heads, cannot be determined on percentage basis
because that would not be an acceptable criterion. Unlike D
determination of income, the said heads have to be quantified.
Any quantification must have a reasonable foundation. There can
be no dispute over the fact that price index, fall in bank interest,
escalation of rates in many a field have to be noticed. The court
cannot remain oblivious to the same. There has been a thumb
rule in this aspect. Otherwise, there will be extreme difficulty in E
determination of the same and unless the thumb rule is applied,
there will be immense variation lacking any kind of consistency
as a consequence of which, the orders passed by the tribunals
and courts are likely to be unguided. Therefore, the High Court
thinks it seemly to fix reasonable sums. Reasonable figures on
F
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 principle ofrevisiting the said heads
is an acceptable principle. But the revisit should not be fact-
centric or quantum-centric. The amount which the Court has
quantified should be enhanced on percentage basis in every three G
years and the enhancement should be at the rate of 10% in a
span of three years. This will bring in consistency in respect of
those heads. [Paras 50, 51, 52 and 54] [134-B, D; 135-B-F]
106 SUPREME COURT REPORTS [2017] 13 S.C.R.

A **Reshmr:i Kumari and Ors. v. !vfadan Mohan and Anr.
(2013) 9 SCC 65 : [2013) 2 SCR 706; *Sar/a Verma
and Ors. v. Delhi Transport Corporation and Anr
(2009) 6 SCC 121 : [2009) 5 SCR 1098 - affirmed.
##Rajes~ and Ors. v. Rajbir Singh and Ors. (2013) 9
B SCC 54 : [2013) 5 SCR 961; ###Santosh Devi v.
National Insurance Company Limited and Ors. (2012)
6 SCC 421 : [2012] 3 SCR 1178 - not a binding
precedent.
National Insurance Company Limited v. Pushpa and Ors.
c (2015) 9 SCC 166 ; Reshma Kumari and Ors. v.•Hadan
Mohan and Anr. (2009) 13 SCC 422 : [2009) 11 SCR
305 ; Sar/a Dix it v. Ba/want Yadav (1996) 3 SCC
179: )19!16] 3 SCR 30 ; Abati Bezbaruah v. Dy. Director
General. Geological Survey of India (2003) 3 SCC
148 : [2003] 1 SCR 1229 ; #U.P State Road Transport
D Corporation and Ors. v. Trilok Chandra and Ors.
(1996) 4 SCC 362 : [1996] 2 Suppl. SCR 443 ; Supe
Dei v. National Insurance Company Limited (2009) 4
SCC 513 : )2002] 3 SCR 1176 ; United India Insurance
Co. Ltd v. Patricia Jean Mahajan (2002) 6 SCC 281 :
E [2005] 2 SCR 1173 ; Deepal Girishbhai Soni v. United
India lnsltrance Co. Ltd. (2004) 5 SCC 385 ; New India
Assurance Co. Ltd v. Charlie and Anr. (2005) 10 SCC
720 : [2005] 2 SCR 1173 ; Munna Lal Jain and Anr. v.
Vipin Kumar Sharma and Ors. (2015) 6 SCC 347 :
[2015] 'I SCR 207 ; Puttamma and Ors. v. KL.
F Narayana Reddy and Anr. (2013) 15 SCC 45 : [2013]
16 SCR 831 - referred to.
Mal/ell v. McMonagle 1970 AC 166 : (1969) 2 WLR
767 ; We/Is v. Wells (1999) 1 AC 345 ; Taff Vale Railway
Co. v. Jenkins 1913 AC 1 : (1911-13) All ER Rep 160
G (HL) ; Nance v. British Columbia Electric Railway Co.
Ltd. 1951 SC 601 : (1951) 2 All ER 448 (PC) ;
Davies tt. Powell Dz~ffryn Associated Collieries Ltd.
1942 AC 601 : (1942) 1 All ER 657 (HL) ; Nirumalan
V Kanapathi Pillay v. Teo Eng Chuan (2003) 3 SLR
H (R) 601- referred to.
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 107
SETHI AND ORS.

2.1 Discipline demanded by a precedent or the A
disqualification or diminution of a decision on the application of
the per i11curiam rule is of great importance, since without it,
certainty of law, consistency of rulings and comity of courts would
become a costly casualty. A decision or judgment can be per
i11curiam any provision in a statute, rule or regulation, which was B
not brought to the notice of the court. A decision or judgment
can also be per incuriam if it is not possible to reconcile its ratio
with that of a previously pronounced judgment of a co-equal or
larger Bench. There can be no scintilla of doubt that an earlier
decision of co-equal Bench binds the Bench of same strength.
Though the judgment in ##Rajesh's case was delivered on a later C
date, it had not apprised itself of the law stated in **Resh ma
Kumari case but had been guided by ###Sa11tosh Devi case. It is
not a binding precedent on the co-equal Bench. [Para 30)
[124-G; 125-A-C)
2.2 The two-Judge Bench in ###Sa11tosh Devi case should D
have been well advised to refer the matter to a larger Bench as it
was taking a different view than what has been stated in *Sar/a
Verma case a judgment by a co-ordinate Bench. It is because a
co-ordinate Bench of the same strength cannot take a contrary
· view than what has been held by another co-ordinate Bench. As
##Rajesh case has not taken note of the decision in **Reshma E
Kumari case which was delivered at earlier point of time, the
decision in Rajesh case is not a binding precedent. [Para 61)
[138-H; 139-A-B]
Pradip Chandra Pariia and others " Pramod Chandra
Patnaik and others (2002) 1 SCC 1 : [2001) 5 Suppl. F
SCR 460 ; Chandra Prakash and Ors. " State of UP
and Anr. (2002) 4 SCC 234 : [2002) 2 SCR 913 -
followed.
State of Bihar v. Kalika Kuer alias Kalika Singh and
Ors. (2003) 5 SCC 448 : [2003) 3 SCR 919; G.L. Batra
v. State of Hmyana and Ors. (2014) 13 SCC 759 : G
[2013] 10 SCR 431 ; Union of India v. Godfrey Philips
India Ltd. (1985) 4 SCC 369: [1985) 3 Suppl. SCR
123 ; Sundarjas Kanya/al Bhatija v. Collectm; ThanP
Maharashtra (1989) 3 SCC 396 : r1oo 0
•

405 ; Trihhovandas P1m·h~•
108 SUPRlEME COURT REPORTS [2017] 13 S.C.R.

A Motilal Patel AIR I968 SC 372 ; Madras Bar
Association v. Union of India and Anr. (2015) 8 SCC
583 : [2015] 6 SCR 638 ; Union of India v. Madras
Bar Association (2010) II SCC 1 : [20101 6 SCR
857 ; Jaisri Sahu v. Rajdewan Dubey AIR 1962 SC
83 : (1962) SCR 553; Sandhya Educational Society
B
and Anr. v. Union of India and Ors. (2014) 7 SCC
701 ; Rattiram and Orsi v. State of Madhya Pradesh
(2012) 4 SCC 516 : [20121 3 SCR 496 ; Indian Oil
Corporation Ltd. v. Municipal Corporation (I995) 4
SCC 96: [199513 SCR 246; Sundeep Kumar Bafna
c v. State of Maharashtra and Anr. (2014) I6 SCC 623 :
[2014] 4 SCR 486 - relied on.
Case Law Reference
[2013] 2 SCR 706 affirmed Para 1
D [20131 5 SCR 961 not a binding precedent Para 1
(2015) 9 sec 166 referred to Para 1
[20091 5 SCR 1098 affirmed Para2
[2009] 11 SCR 305 referred to Para3
E [19961 3 SCR 30 referred to Para3
[20031 1 SCR 1229 referred to Para3
[19961 2 Suppl. SCR 443 referred to Para 7
[20021 3 SCR 1176 referred to Paras
F [2005] 2 SCR 1173 referred to Para9
c2004) 5 sec 385 referred to Para9
[20051 2 SCR 1173 referred to Para 10
[20I2j 3 SCR 1178 not a binding precedent Para 14
G [2003) 3 SCR 919 relied on Para 17
[2013] 10 SCR 431 relied on Para 18
!19851 3 Supl'I. SCR 123 relied on Para 18
[198913 SCR 405 relied on Para IS
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 109
SETHI AND ORS.

AIR 1968 SC 372 relied on Para 18 A
[2015) 6 SCR 638 relied on Para 18
[2010) 6 SCR 857 relied on Para 18
[1962] SCR 553 relied on Para 19
[2001) 5 Suppl. SCR 460 followed Para 21 B

[2002) 2 SCR 913 followed Para 22
(2014) 1 sec 101 relied on Para 24
[2012] 3 SCR 496 relied on Para 24
(1995) 3 SCR 246 relied on Para24 c
[2015) 7 SCR 207 referred to Para 27
[2014) 4 SCR 486 relied on Para 30
[2013) 16 SCR 831 referred to Para 50
D
CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) No. 25590 of2014.
From the impugned Judgment and Order dated 30.05.2013 of the
High Court of Punjab and Haryana at Chandigarh in F.A.O No.5011 of
2011
E
WITH
Civil Appeal No.696 l of2015, Civil Appeal Nos.8770, 8045-8046
of2016 and CivilAppealNos.12046, 8611 of2017
Special Leave Pettion (Civil) No.16735 of 2014, Special Leave
Petition (Civil) Nos.163, 3387, 7076, 32484, 16056, 22134, 24163, 26263,
25818,26227,29520-29521,35679,34237,36072,35371,34395,36027, F
37617 of2016 and Special Leave Petition (Civil) Nos.8306, 7241, 17436
of2017.
Rakesh Kumar Khanna, Joy Basu, Basava Prabhu Patil, Jayant
Bhushan,A.N. Krishna Swamy, Basva Prabhu Patil, Sr. Advs., Dr. Rashmi
Khanna, Ms. Seema Rao, Mohit Nagar, Ms.Meera Agarwal, Ramesh G
Chandra Mishra, Rajeev Maheshwaranand Roy, Abhinav, P. Srinivasan,
Sameer Nandwani, Ashish Virmani, Pallav Mongia, Akshay Abrol,
C.S. Ashri, Aru K. Sinha, Sumit Sinha, Sinha Shrey Nikhilesh, Harsh
Bhati, Ms.Arona Mehta, Ms. Manjeet Chawla, Nakul Dewan,
Pradhuman Gohil, Vikash Singh, Ms.Taruna Singh Gohil, Himanshu H
110 SUPREME COURT REPORTS [2017] 13 S.C.R.

A Chaubey, Ms.Ishita Singh, Ms.Neelu Mohan, Anuj Bhandari, Ms.Disha
Bhandari, S.K. SiajJa, R.S. Singh, R.L. Saini, Ms.Seema Kashyap, Bipin
Behari Sinha, Raj!'sh Kumar Gupta, C. N. Sreekumar, T.G. Narayanan
Nair, K.N. Madh4soodhanan, Aroon Menon, Virash B. Saharya, M.J.
Paul, Rishi Malhotra, Sudhir Naagar, Mohit Singh, Abhishek Kr. Gola,
Prashant Khatana, S.N. Parasar, Ms.Binisa Mohanty, Mritunjay Kumar
B
Sinha, R.Ayyam Ferumal, Ms.Enakshi Mukhopadhyay, Pramod Dayal,
Ms.Sangeeta Kumar, Sharan Thakur, Siddrath Thakur, Vijay Kumar
Pradeshi, Ajay Si!ilgh, Sushi! Balwada, Ms.Prerna Mehta, Puneet Jain,
Ms. Christi Jain, Abhinav Gupta, Ms.Priya Jain, Ms. Yashika Sharma,
Harsh Jain, Ms.Pratibha Jain, Munish Kumar Garg, Nitin Kumar Gupta,
c Ms.Manju Sharma Jaitley, Ms.Garima Prashad, Ashok Kumar Sharma,
Deepak Jyoti Ghildiyal, Ms.Bandana Singh, Vikalp Mudgal, P.K. Seth,
Ms.Manjeet Chawla, R. Nedumaran, Ms.Aswathi MK., V. Vasudevan,
P.R. Kovilan, Mrs,Geetha Kovilan, Mukesh Kumar Sharma, Ms.Shweta
Shukla, Sanchar Apand, Apoorv Singhal, Anant K. Vats ya, Raj iv Singhal,
Devendra Singh, Amit Kumar Singh, Mrs. K. Enatoli Serna, Amith J.,
D
S.P. Jain, Himanshu Gambhir, Ms. Amandeep Kaur, Ranbir Singh Yadav,
Ms.Anzu K. Varkey, Ms. Meenakashi Midha, Kapil, Midha, Chandra
Shekhar Ashri, J.P:N. Shahi, Dr. (Mrs.) Vipin Gupta, Dr. Monika Gussain,
Ranjan Dwivedi, Bharat Bhushan, Nikhil Jain, Ashok Kumar Singh,Ansar
Ahmad Chaudhary, Ravinder Kumar Yadav, Birendra Kumar Srivastava,
E Kaushal Yadav, Debasis Misra, Viresh B. Saharya, Ms.Geetha Kovilan,
Navdeep Singh, Ravi Mehrotra, R.K. Sinha, Dharmendra Kumar Sinha,
Ashwani Kumar Dubey, Amo! Sinha, Rahul Kochar, Advs for the
appearing parties.
The Judgrnent of the Court was delivered by
F DIPAK MISRA, CJI. I. Perceiving cleavage ofopinion between
Reshma Kumari and others v. Madan Mohan and another 1 and
Rajesh and others v. Rajbir Singh and others', both three-Judge Bench
decisions, a two-Judge Bench of this Court in National Insurance
Company Limited v. Pushpa and others' thought it appropriate to
G refer the matter to a larger Bench for an authoritative pronouncement,
and that is how the matters have been placed before us.

1
(2013) 9 sec 65
2
(2013) 9 sec 54
'(2015) 9 sec 166
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 111
SETHI AND ORS. [DIPAK MISRA, CJI]

2. In the course of deliberation we will be required to travel A
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 Sar/a Verma and others v. Delhi Transport Corporation
and another' wherein the two-Judge Bench made a sanguine endeavour
to simplify the determination of claims by specifying certain parameters.
B
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'.
The reference judgment noted divergence of opinion with regard to the
computation under Sections 163-A and 166 of the Motor Vehicles Act, c
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 Sar/a Dixit v. Ba/want Yadav', Abati
Bezbaruah v. Dy. Director General, Geological Survey of India'
and the principle stated by Lord Diplock in Mallett v. McMonagle' and D
further referring to the statement of law in Wells v. Wells' 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 E
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 10 held that even dearness allowance and F
perks with regard thereto from which the family would have
derived monthly benefit, must be taken into consideration.

4(2009) 6 sec 121
'(2009) 13 sec 422 G
• (1996) 3 sec 179
'c2003) 3 sec 148
' 1970 AC 166: (1969) 2 WLR 767
'(1999) 1 AC 345
"(2008) 4 sec 162

H
112 SUPREME COURT REPORTS (2017) 13 S.C.R.

A 4 7. One of the incidental issues which has also to be taken into
consideration is inflation. ls 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
B
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
c 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
D 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
E appended to the Act should be scrupulously applied in all the cases?
(2) Whether for determination of the multiplicand, the Act provides
for any criterion, particularly as regards determination of future
prospects?"
5. Analyzing further the rationale in determining the laws under
F Sections 163-A and 166, the Court had stated thus:-
"58. We are not unmindful of the Statement of Objects and
Reasons tp Act 54 of 1994 for introducing Section 163-A so as to
provide for a new predetermined formula for payment of
compensation to road accident victims on the basis of age/income,
G which is more liberal and rational. That may be so, but it defies
logic as !ID why in a similar situation, the injured claimant or his
heirs/leg~! representatives, in the case of death, on proof of
negligence on the part of the driver ofa motor vehicle would get
a lesser amount than the one specified in the Second Schedule.
The courts, in our opinion, should also bear that factor in mind."
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 113
SETHI AND ORS. [DIPAK MISRA, CJI]

6. Noticing the divergence of opinion and absence of any A
clarification from Parliament despite the recommendations by this Court,
it was thought appropriate that the controversy should be decided by the
larger Bench and accordingly it directed to place the matter before
Hon 'ble the Chief Justice oflndia for appropriate orders for constituting
a larger Bench.
B
7. The three-Judge Bench answering the reference referred to
the Scheme under Sections 163-A and 166 of the Act and took note of
the view expressed by this Court in U.P. State Road Transport
Corporation and others v. Trilok Chandra and others 11 , wherein the
Court had stated:-
c
"17. The situation has now undergone a change with the enactment
of the Motor Vehicles Act, 1988, as amended by Amendment Act
54 of 1994. The most important change introduced by the
amendment insofar as it relates to determination of compensation
is the insertion of Sections 163-A and 163-B ln Chapter XI entitled
'Insurance of motor vehicles against third-party risks'. Section D
163-A begins with a non obstante clause and provides for payment
of compensation, as indicated in the Second Schedule, to the legal
representatives of the deceased or injured, as the case may be.
Now if we turn to the Second Schedule, we find a Table fixing the
mode of calculation of compensation for third-party accident injury E
claims arising out of fatal accidents. The first column gives the
age group of the victims of accident, the second column indicates
the multiplier and the subsequent horizontal figures indicate the
quantum of compensation in thousand payable to the heirs of the
deceased victim. According to this Table the multiplier varies from
5 to 18 depending on the age group to which the victim belonged. F
Thus, under this Schedule the maximum multiplier can be up to 18
and not 16 as was held in Susamma Thomas 12 case.
18. We must at once point out that the calculation of compensation
and the amount worked out in the Schedule suffer from several
defects. For example, in Item 1 for a victim aged 15 years, the G
multiplier is shown to be 15 years and the multiplicand is shown to
be Rs 3000. The total should be 3000 x 15 = 45,000 but the same
is worked out at Rs 60,000. Similarly, in the second item the
" (1996) 4 sec 362
12
(1994) 2 sec I 76 H
114 SUPREME COURT REPORTS [2017] 13 S.C.R.

A multiplier is 16 and the annual income is Rs 9000; the total should
have been Rs 1,44,000 but is shown to be Rs 1, 71,000. To put it
briefly, th¢ Table abounds in such mistakes. Neither the tribunals
nor the courts can go by the ready reckoner. It can only be used
as a guide. Besides. the selection of multiplier cannot in all cases
be solely glependent on the age of the deceased. For example, if
B
the decea~ed, a bachelor, dies at the age of 45 and his dependants
are his parents. age of the parents would also be relevant in the
choice of the multiplier. But these mistakes are limited to actual
calculations only and not in respect of other items. What we
propose to emphasise is that the multiplier cannot exceed 18 years'
c purchase factor. This is the improvement over the earlier position
that ordin?rily it should not exceed 16. We thought it necessary to
state the correct legal position as courts and tribunals are using
higher multiplier as in the present case where the Tribunal used
the multill'lier of 24 which the High Court raised to 34. thereby
showing lack of awareness of the background of the multiplier
D
system in Davies case."
[Underlining is ours]
8. The Court also referred to Supe Dei I'. National Insurance
Company Limi~ed' 3 wherein it bas been opined that the position is well
E settled that the Second Schedule under Section 163-A to the Act which
gives the amount of compensation to be determined for the purpose of
claim under the section can be taken as a guideline while determining
the compensation under Section 166 of the Act.
9. After so observing, the Court also noted the authorities in United
F India Insurance Co. Ltd v. Patricia Jean Mahajan", Deepal
Girishbhai Soni I', United India Insurance Co. Ltd.", and Jashuben
(supra). It is p~rceivable from the pronouncement by the three-Judge
Bench that it has referred to Sar/a Verma and observed that the said
decision reiterated what had been stated in earlier decisions that the
principles rel&ting to determination of liability and quantum of
G compensation were different for claims made under Section 163-A and
claims made ullder Section 166. It was further observed that Section
163-A and the Second Schedule in terms did not apply to determination

"(2009) 4 sec 513
"(2002) 6 sec 2s1
H "(2004J 5 sec 385
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 115
SETHI AND ORS. [DIPAK MISRA, CJI]

of compensation in applications under Section 166. In Sar/a Vi!rma A
(supra), as has been noticed further in Reshma E.umari (supra), the
Court found discrepancies/errors in 1he multiplier scale given in the
Second Schedule Table and also observed th~t application of Table may
result in incongruities.
10. The three-Judge Bench further apprised itself that in Sar/a B
Vi!rma (supra) the Court had undertaken the exercise of comparing the
multiplier indicated in Susamma Thomas (supra), Trilok Chandra
(supra), and New India Assurance Co. Ltd v. Charlie and another 16
for claims under Section 166 of the Act with the multiplier mentioned in
the Second Schedule for claims under Section 163-A and compared the
fonnula and held that the multiplier shall be used in a given case in the c
following manner:-
"42. We therefore hold that the multiplier to be used should be as
mentioned in Column (4) of the Table above (prepared by applying
Susamma Thomas, Trilok Chandra and Charlie), which starts with
an operative multiplier of I 8 (for the age groups of 15 to 20 and D
21 to 25 years); reduced by one unit for every five years, that is,
M-17 for 26 to 30 years, M-16 for 31to35 years, M-15 for36 to
40 years, M-14 for 41to45 years, and M-13 for46 to 50 years,
then reduced by two units for every five years, that is, M-11 for
51to55 years, M-9 for 56 to 60 years, M-7 for61to65 years and E
M-5 for 66 to 70 years."
11. After elaborately analyzing what has been stated in Sar/a
Verma (supra), the three-Judge Bench referred to the language employed
in Section 168 of the Act which uses the expression "just". Elucidating
the said term, the Court held that it conveys that the amount so dctennined F
is fair, reasonable and equitable by accepted legal standard and not on
forensic lottery. The Court observed') ust compensation" does not mean
"perfect" or "absolute compensation" and the concept of just
compensation principle requires examination of the particular situation
obtaining uniquely in an individual case. In that context, it referred to
Taff Vale Railway Co. v. Jenkins" and held:- G
"36. In Sar/a ~rma, this Court has endeavoured to simplify the
otherwise complex exercise ofassessment ofloss of dependency

" (2005) 10 sec no
" 1913 AC 1 : (1911-13) All ER Rep 160 (HL) H
116 SUPREME COURT REPORTS [2017] 13 S.C.R.

A and determination of compensation in a claim made under Section
166. It has been rightly stated in Sar/a Verma that the claimants
in case of death claim for the purposes of compensation must
establish (a) age of the deceased; (b} income of the deceased:
and (c) \he number of dependants. To arrive at the loss of
dependency, the Tribunal must consider (i} additions/deductions
B
to be made for arriving at the income; (ii) the deductions to be
made towards the personal living expenses of the deceased; and
(iii) the multiplier to be applied with reference to the age of the
deceased. We do not think it is necessary for us to revisit the law
!_m the point as we are in full agreement with the view in Sar/a
C Verma."
[Emphasis is added]
12. And further:-
"!! is high time that we move to a standard method of selection of
D multiplier, income for future prospects and deduction for personal
and living expenses. The courts in some of the overseas
jurisdictions have made this advance. It is for these reasons, we
think we must approve the Table in Sar/a Verma for the selection
of multiplier in claim applications made under Section 166 in the
cases of death. We do accordingly. If for the selection of multiplier,
E Column (4) of the Table in Sar/a Verma is followed, there is no
likelihoqid ofthe claimants who have chosen to apply under Section
166 being awarded lesser amount on proof of negligence on the
part of the driver of the motor vehicle than those who prefer to
apply under Section 163-A. As regards the cases where the age
F of the vjctimhappcns to be up to 15 years, we arc of the considered
opinion that in such cases irrespective of Section 163-A or Section
166 under which the claim for compensation has been made,
multiplier of 15 and the assessment as indicated in the Second
Schedule subject to correction as pointed out in Column (6) of the
Table in Sar/a Verma should be followed. This is to ensure that
G the claimants in such cases are not awarded lesser amount when
the application is made under Section 166 of the 198 8 Act. In all
other cases of death where the application has been made under
Sectioljl 166. the multiplier as indicated in Column (4} of the Table
in Sar/a Verma should be followed."
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 117
SETHI AND ORS. [DIPAK MISRA, CJI]

This is how the first question the Court had posed stood answered. A
13. With regard to the addition of income for future prospects,
this Court in Reshma Kumari (supra) adverted to Para 24 of the Sar/a
Verma s case and held:-
"39. The standardisation of addition to income for future prospects
shall help in achieving certainty in arriving at appropriate B
compensation. We approve the method that an addition of 50% of
actual salary be made to the actual salary income of the deceased
towards future prospects where the deceased had a permanent
job and was below 40 years and the addition should be only 30%
if the age of the deceased was 40 to 50 years and no addition c
should be made where the age of the deceased is more than 50
years. Where the annual income is in the taxable range, the actual
salary shall mean actual salary less tax. In the cases where the
deceased was self-employed or was on a fixed salary without
provision for annual increments, the actual income at the time of
death without any addition to income for future prospects will be D
appropriate. A departure from the above principle can only be
justified in extraordinary circumstances and very exceptional
cases."
The aforesaid analysis vividly exposits that standardization of
addition to income for future prospects is helpful in achieving certainty E
in arriving at appropriate compensation. Thus, the larger Bench has
concurred with the view expressed by Sar/a Verma (supra) as per the
determination of future income.
14. It is interesting to note here that while the reference was
pending, the judgment in Santosh Devi v. National Insurance Company F
Limited and others" was delivered by a two-Judge Bench which
commented on the principle stated in Sar/a Verma. It said:-
"14. We find it extremely difficult to fathom any rationale for the
observation made in para 24 of the judgment in Sar/a Verma case
that where the deceased was self-employed or was on a fixed G
salary without provision for annual increment, etc. the courts will
usually take only the actual income at the time of death and a
departure from this rule should be made only in rare and
exceptional cases involving special circumstances. In our view, it
'"(2012)6SCC421 H
118 SUPREME COURT REPORTS [2017] 13 S.C.R.

A will be 11a!ve to say that the wages or total emoluments/income of
a person who is self-employed or who is employed on a fixed
salary without provision for annual increment, etc. would remain
the same throughout his life.
15. The rise in the cost of living affects everyone across the board.
B It does not make any distinction between rich and poor. As a
matter ©f fact, the effect of rise in prices which directly impacts
the cost of Jiving is minimal on the rich and maximum on those
who are self-employed or who get fixed income/emoluments. They
are the worst affected people. Therefore, they put in extra efforts
to generate additional income necessary for sustaining their
c families.
16. The salaries of those employed under the Central and State
Governments and their agencies/instrumentalities have been revised
from time to time to provide a cushion against the rising prices
and provisions have been made for providing security to the families
D of the \leceased employees. The salaries of those employed in
private sectors have also increased manifold. Till about two
decades ago, nobody could have imagined that salary of Class IV
employee of the Government would be in five figures and total
emoluments of those in higher echelons of service will cross the
E figure <!>f rupees one lakh.
17. Although the wages/income of those employed in unorganised
sectors has not registered a corresponding increase and has not
kept pace with the increase in the salaries of the government
ernplo}!ees and those employed in private sectors, but it cannot be
F denied that there has been incremental enhancement in the income
of those who are self-employed and even those engaged on daily
basis, monthly basis or even seasonal basis. We can take judicial
notice of the fact that with a view to meet the challenges posed
by high cost of living, the persons falling in the latter category
periodically increase the cost of their labour. In this context, it
G may be useful to give an example ofa tailor who earns his livelihood
by stitching clothes. If the cost of living increases anrl the prices
of essentials go up, it is but natural for him to increase the cost of
his labour. So will be the cases of ordinary skilled and unskilled
labour like barber, blacksmith, cobbler, mason, etc.
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 119
SETHI AND ORS. [DIPAK MISRA, CJI]

18. Therefore, we do not think that while making the observations A
in the last three lines of para 24 of Sar/a Verma judgment, the
Court had intended to lay down an absolute rule that there will be
no addition in the income of a person who is self-employed or
who is paid fixed wages. Rather, it would be reasonable to say
that a person who is self-employed or is engaged on fixed wages B
will also get 30% increase in his total income over a period of
time and if he/she becomes victim of an accident then the same
formula deserves to be applied for calculating the amount of
compensation."
15. The aforesaid analysis in Santosh Devi (supra) may prima
facie show that the two-Judge Bench has distinguished the observation C
made in Sar/a Verma s case but on a studied scrutiny, it becomes clear
that it has really expressed a different view than what has been laid
down in Sar/a H!rma (supra). If we permit ourselves to say so, the
different view has been expressed in a distinctive tone, for the two-
Judge Bench had stated that it was extremely difficult to fathom any D
rationale for the observations made in para 24 of the judgment in Sar/a
Verma:, case in respect of self-employed or a person on fixed salary
without provision for annual increment, etc. This is a clear disagreement
with the earlier view, and we have no hesitation in saying that it is
absolutely impermissible keep.ing in view the concept of binding
E
precedents.
16. Presently, we may refer to certain decisions which deal with
the concept of binding precedent.
17. In State of Bihar v, Kalika Kuer alias Kalika Singh and
others", it has been held:- F
" I 0.... an earlier decision may seem to be incorrect to a Bench
of a coordinate jurisdiction considering the question later, on the
ground that a possible aspect of the matter was not considered or
not raised before the court or more aspects should have been
gone into by the court deciding the matter earlier but it would not G
be a reason to say that the decision was rendered per incuriam
and liable to be ignored. The earlier judgment may seem to be not
correct yet it will have the binding effect on the later Bench of
coordinate jurisdiction.... "
'" (2003) s sec 448
H
120 SUPREME COURT REPORTS [2017] 13 S.C.R.

A The Court has further ruled:-
"] 0.... Basy course of saying that earlier decision was rendered
per incuriam is not permissible and the matter will have to be
resolved only in two ways - either to follow the earlier decision
or refer the matter to a larger Bench to examine the issue, in case
B it is felt that earlier decision is not correct on merits."
18. In (i.L. Batra v. State of Haryana and others10 , the Court
has accepted the said principle on the basis of judgments of this Court
rendered in Union ofIndia v. Godfrey Philips India Ltd. 21, Sundarjas
Kanya/al Bhatija v. Collector, Thane, Maharashtra" and
c Tribhovanda~ Purshottamdas Thakkar v. Ratilal Motilal Pate/23 . It
may be noted here that the Constitution Bench in Madras Bar
Association v. Union of India and another" has clearly stated that
the prior Constitution Bench judgment in Union of India v. Madras
Bar Associati1m 25 is a binding precedent. Be it clarified, the issues that
were put to rest in the earlier Constitution Bench judgment were treated
D as precedents by latter Constitution Bench.
19. In tnis regard, we may refer to a passage from .Taisri Sahu v.
Rajdewan Dubey":-
" 11. Law will be bereftofall its utility if it should be thrown into a
E state ot' uncertainty by reason of conflicting decisions, and it is
therefore desirable that in case of difference of opinion, the
question should be authoritatively settled. It sometimes happens
that an earlier decision given by a Bench is not brought to the
notice of a Bench hearing the same question, and a contrary
decision is given without reference to the earlier decision. The
F question has also been discussed as to the correct procedure to
be followed when two such conflicting decisions are placed before
a later Bench. The practice in the Patna High Court appears to
be that in those cases, the earlier decision is followed and not the
later. Ih England the practice is, as noticed in the judgment in
G "(2014113 sec 759
" <1985) 4 sec 369
" (1989) 3 sec 396
''AIR 1968 SC 372
'" r2015) 8 sec 583
''(2010111 sec 1
'''AIR 1962 SC 83
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 121
SETHI AND ORS. [DIPAK MISRA, CJI]

Seshamma v. Venkata Narasimharao that the decision of a court A
of appeal is considered as a general rule to be binding on it. There
are exceptions to it, and one of them is thus stated in Halsbury's
Laws of England, 3rd Edn., Vol. 22, para 1687,pp. 799-800:
"The court is not bound to follow a decision ofits own if given
per incuriam. A decision is given per incuriam when the court B
has acted in ignorance ofa previous decision of its own or ofa
Court of a co-ordinate jurisdiction which covered the case
before it, or when it has acted in ignorance ofa decision of the
House of Lords. In the former case it must decide which
decision to follow, and in the latter it is bound by the decision of
the House of Lords." C
In Virayya v. Venkata Subbayya it has been held by the Andhra
High Court that under the circumstances aforesaid the Bench is
free to adopt that view which is in accordance with justice and
legal principles after taking into consideration the views expressed
in the two conflicting Benches, vide also the decision of the Nagpur D
High Court in Bilimoria v. Central Bank of India. The better
course would be for the Bench hearing the case to refer the matter
to a Full Bench in view of the conflicting authorities without taking
upon itself to decide whether it should follow the one Bench
decision or the other. We have no doubt that when such situations E
arise, the Bench hearing cases would refer the matter for the
decision of a Full Court."
20. Though the aforesaid was articulated in the context of the
High Court, yet this Court has been following the same as is revealed
from the aforestated pronouncements including that of the Constitution F
Bench and, therefore, we entirely agree with the said view because it is
the precise warrant of respecting a precedent which is the fundamental
norm ofjudicial discipline.
21. In the c~ntext, we may fruitfully note what has been stated in
Pradip Chandra Parija and others v. Pramod Chandra Patnaik G
and others27 . In the said case, the Constitution Bench was dealing with
a situation where the two-Judge Bench disagreeing with the three-Judge
Bench decision directed the matter to be placed before a larger Bench

" (20021 1 sec 1
H
122 SUPREME COURT REPORTS [2017] 13 S.C.R.

A of five Judges of this Court. In that scenario, the Constitution Bench
stated:-
"6 .... In our view, judicial discipline and propriety demands that a
Bench of !Wo learned Judges should follow a decision of a Bench
of three learned Judges. But if a Bench of two learned Judges
concludes !hat an earlier judgment of three learned Judges is so
B
very incorrect that in no circumstances can it be followed, the
proper coutse for it to adopt is to refer the matter before it to a
Bench of three learned Judges setting out, as has been done here,
the reasons why it could not agree with the earlier judgment. ... "
22 . In Ch(lndra Prakash and others v. State of U.P. and
c another", another Constitution Bench dealing with the concept of
precedents stated thus:-
"22 .... The doctrine of binding precedent is of utmost importance
in the administration of our judicial system. It promotes certainty
and consistency in judicial decisions. Judicial consistency promotes
D confidence in the system, therefore, there is this need for
consistency in the enunciation of legal principles in the decisions
of this Court. It is in the above context, this Court in the case of
Raghubir Singh" held that a pronouncement oflaw by a Division
Bench of this Court is binding on a Division Bench of the same or
smaller nu):Ilber of Judges .... "
E
23. Be it noted, Chandra Prakash concurred with the view
expressed in Raghubir Singh and Pradip Chandra Parija.
24. In Sandhya Educational Society and another v. Union of
India and others30, it has been observed that judicial decorum and
discipline is paramount and, therefore, a coordinate Bench has to respect
F the judgments and orders passed by another coordinate Bench. In
Rattiram and others v. State of Madhya Pradesh", the Court dwelt
upon the issue what would be the consequent effect of the latter decision
which had been rendered without noticing the earlier decisions. The
Court noted the observations inRaghubir Singh (supra) and reproduced
G a passage from Indian Oil Corporation Ltd. v. Municipal
Corporation" which is to the following effect:-
20
(2002) 4 sec 234
" ( 1989) 2 sec 754
"(2014) 1sec101
"(2012) 4 sec 516
H "(1995) 4 sec 96
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 123
SETHI AND ORS. [DIPAK MISRA, CJI]

"8 .... The Division Bench of the High Court in Municipal Corpn., A
Indore v. Ratnaprabha Dhanda was clearly in error in taking
the view that the decision of this Court in Ratnaprabha was not
binding on it. In doing so, the Division Bench of the High Court
did something which even a later co-equal Bench of this Court
did not and could not do .... "
B
25. It also stated what has been expressed in Raghubir Singh
(supra) by R.S. Pathak, C.J. It is as follows:-
"28. We are of opinion that a pronouncement oflaw by a Division
Bench of this Court is binding on a Division Bench of the same or
a smaller number of Judges, and in order that such decision be C
binding, it is not necessary that it should be a decision rendered by
the Full Court or a Constitution Bench of the Court.... "
26. In Rajesh (supra) the three-Judge Bench had delivered the
judgment on 12.04.2013. The purpose of stating the date is that it has
been delivered after the pronouncement made in Reshma Kumari scase. D
On a perusal of the decision in Rajesh (supra), we find that an attempt
has been made to explain what the two-Judge Bench had stated in Santosh
Devi (supra). The relevant passages read as follows:-
"8. Since, the Court in Santosh Devi case actually intended to
follow the principle in the case of salaried persons as laid down in E
. Sar/a Verma case and to make it applicable also to the self-
employed and persons on fixed wages, it is clarified that the
increase in the case of those groups is not 30% always; it will also
have a reference to the age. In other words, in the case of self-
employed or persons with fixed wages, in case, the deceased
victim was below 40 years, there must be an addition of 50% to F
the actual ·income of the deceased while computing future .
prospects. Needless to say that the actual income should be income
after paying the tax, if any. Addition should be 30% in case the
deceased was in the age group of 40 to 50 years.
9. In Sar/a Verma case, it has been stated that in the case of G
those above 50 years, there shall be no addition. Having regard to
the fact that in the case of those self-employed or on fixed wages,
where there is normally no age of superannuation, we are of the
view that it will only be just and equitable to provide an addition of
15% in the case where the victim is between the age group of 50
H
124 SUPREME COURT REPORTS [2017] 13 S.C.R..

A to 60 yeats so as to make the compensation just, equitable, fair
and reasonable. There shall normally be no addition thereafter."
27. At this juncture, it is necessitous to advert to another three-
Judge Bench decision in Munna Lal Jain and another v. Vipin Kumar
Sharma and Others"- In the said case, the three-Judge Bench
B commenting on the judgments stated thus:-
"2. In the absence of any statutory and a straitjacket formula,
there arc bound to be grey areas despite several attempts made
by this Cburt to lay down the guidelines. Compensation would
basically depend on the evidence available in a case and the
c formulas shown by the courts are only guidelines for the
computation of the compensation. That precisely is the reason
the courts lodge a caveat stating "ordinarily", "normally",
"exceptional circumstances", etc., while suggesting the formula."
28. After so stating, the Court followed the principle stated in
D Rajesh. We think it appropriate to reproduce what has been stated by
the thrcc-Judgo Bcnch:-
"10. As far as future prospects are concerned, in Rajesh v. Rajbir
Singh, a three-Judge Bench of this Court held that in case of
self-employed persons also, if the deceased victim is below 40
E years, th~re must be addition of 50% to the actual income of the
deceased while computing future prospects."
29. We are compelled to state here that in Munna Lal Jain (supra),
the three-Judge Bench should have been guided by the principle stated
in Reshrna Ku/nari which has concurred with the view expressed in
Sar/a Devi or in case of disagreement, it should have been well advised
F
to refer the case to a larger Bench. We say so, as we have already
expressed the opinion that the dicta laid down in Reshrna Kurnari being
earlier in point of time would be a binding precedent and not the decision
in Rajesh.
30. In this context, we may also refer to Sundeep Kumar Bafna
G
v. State of Maharashtra and another" which correctly lays down the
principle that discipline demanded by a precedent or the disqualification
or diminution of a decision on the application of the per incuriarn rule is

"c201s) 6 sec 347
"c2014) 16 sec 623
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 125
SETHI AND ORS. [DIPAK MISRA, CJ!]

of great importance, since without it, certainty of law, consistency of A
rulings and comity of courts would become a costly casualty. A decision
or judgment can be per incuriam any provision in a statute, rule or
regulation, which was not brought to the notice of the court. A decision
or judgment can also be per incuriam if it is not possible to reconcile its ,. ·
ratio witl1 that of a previously pronounced judgment of a co-equal or B
larger Bench. There can be no scintilla of doubt that an earlier decision
of co-equal Bench binds the Bench of same strength. Though the
judgment in Rajesh's case was delivered on a later date,it had not
apprised itself of the law stated in Reshma Kumari (supra) but had
been guided by Santosh Devi (supra). We have no hesitation that it is
not a binding precedent on the co-equal Bench. C
31. At this stage, a detailed analysis of Sar/a Verma (supra) is
necessary. In the said case, the Court recapitulated the relevant principles
relating to assessment of compensation in case of death and also took
note of the fact that there had been considerable variation and
inconsistency in the decision for Courts and Tribunals on account of D
adopting the method stated in Nance v. British Columbia Electric
Railway Co. Ltd. 35 and the method in Davies v. Powell Duffryn
Associated Collieries Ltd. 36 • It also analysed the difference between
the considerations ofthe two different methods by this Court inSusamma
Thomas (supra) wherein preference was given to JJavies method to
the Nance method. Various paragraphs fromSusamma Thomas (supra) E
and Trilok Chandra (supra) have been reproduced and thereafter it
has been observed that lack of uniformity and consistency in awarding
the compensation has been a matter of grave concern. It has stated that
when different tribunals calculate compensation differently on the same
facts, the claimant, the litigant and the common man are bound to be F
confused, perplexed and bewildered. It adverted to the observations made
in Trilok Chandra (supra) which are to the following effect:-
"15. We thought it necessary to reiterate the method of working
out 'just' compensation because, of late, we have noticed from
the awards made by tribunals and courts that the principle on G
which the multiplier method was developed has been lost sight of
and once again a hybrid method based on the subjectivity of the
Tribunal/court has surfaced, introducing uncertainty and lack of

"1951 SC601 :(1951)2AllER448(PC)
36
1942 AC 601 : (1942) I All ER 657 (HL) H
126 SUPREME COURT REPORTS (2017] 13 S.C.R.

A reasonablt uniformity in the matter of determination of
compensation. It must be realised that the Tribunal/court has to
determine a fair amount of compensation awardable to the victim
of an accident which must be proportionate to the injury caused.
"
B 32. While adverting to the addition of income for future prospects,
it stated thus:-
"24. In Su~amma Thomas this Court increased the income by
nearly 100%, in Sar/a Dixit the income was increased only by
50% and in Abati Bezbaruah the income was increased by a
c mere 7%. •n view of the imponderables and uncertainties, we are
in favour of adopting as a rule of thumb, an addition of 50% of
actual salary to the actual salary income of the deceased towards
future prospects, where the deceased had a permanent job and
was below 40 years. (Where the annual income is in the taxable
range, the words "actual salary" should be read as "actual salary
D less tax"). The addition should be only 30% if the age of the
deceased was 40 to 50 years. There should be no addition, where
the age of the deceased is more than 50 years. Though the evidence
may indicate a different percentage of increase, it is necessary to
standardise the addition to avoid different yardsticks being applied
E or different methods of calculation being adopted. Where the
deceased was self-employed or was on a fixed salary (without
provision for annual increments, etc.), the courts will usually take
only the adtual income at the time of death. A departure therefrom
should be made only in rare and exceptional cases involving special
circumstances."
F
33. Though we have devoted some space in analyzing the
precedential value of the judgments, that is not the thrust of the
controversy. We are required to keenly dwell upon the heart of the
issue that emerges for consideration. The seminal controversy before
us relates to the issue where the deceased was self-employed or was a
G person on fixed salary without provision for annual increment, etc., what
should be the addition as regards the future prospects. In Sar/a Verma,
the Court has made it as a rule that 50% of actual salary could be added
if the deceased had a permanent job and if the age of the deceased is
between 40 - 50' years and no addition to be made if the deceased was
more than 50 y~ars. It is further ruled that where deceased was self-
H
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SETHI AND ORS. [DIPAK MISRA, CJI]

employed or had a fixed salary (without provision for annual increment, A
etc.) the Courts will usually take only the actual income at the time of
death and the departure is permissible only in rare and exceptional cases
involving special circumstances.
34. First, we shall deal with the reasoning of straitjacket demarcation
between the permanent employed persons within the taxable range and B
the other category where deceased was self-employed or employed on
fixed salary sans annual increments, etc.
35. The submission, as has been advanced on behalfof the insurers,
is that the distinction between the stable jobs at one end of the spectrum
and self-employed at the other end of the spectrum with the benefit of c
future prospects being extended to the legal representatives of the
deceased having a permanent job is not difficult to visualize, for a
comparison between the two categories is a necessary ground reality. It
is contended that guaranteed/definite income every month has to be
treated with a different parameter than the person who is self-employed
inasmuch as the income does not remain constant and is likely to oscillate D
from time to time. Emphasis has been laid on the date of expected
superannuation and certainty in permanent job in contradistinction to the
uncertainty on the part of a self-employed person. Additionally, it is
contended that the permanent jobs are generally stable and for an
assessment the entity or the establishment where the deceased worked E
is identifiable since they do not suffer from the inconsistencies and
vagaries of self-employed persons. It is canvassed that it may not be
possible to introduce an element of standardization as submitted by the
claimants because there are many a category in which a person can be
self-employed and it is extremely difficult to assimilate entire range of
self-employed categories or professionals in one compartment. It is also F
asserted that in certain professions addition of future prospects to the
income as a part of multiplicand would be totally an unacceptable concept.
Examples are cited in respect of categories of professionals who are
surgeons, sports persons, masons and carpenters, etc. It is also highlighted
that-the range of self-employed persons can include unskilled labourer G
to a skilled person and hence, they cannot be put in a holistic whole.
That apart, it is propounded that experience of certain professionals brings
in disparity in income and, therefore, the view expressed in Sar/a Verma
(supra) that has been concurred with Reshma Kumari (supra) should
not be disturbed.
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128 SUPREME COURT REPORTS [2017] 13 S.C.R.

A 36. Quite apart from the above, it is contended that the principle
of standardization that has been evolved in Sarla Verma (supra) has
been criticized on the ground that it grants compensation without any
nexus to the actu11l loss. It is also urged that even if it is conceded that
the said view is cprrect, extension of the said principle to some of the
self-employed persons will be absolutely unjustified and untenable.
B
Learned counsel for the insurers further contended that the view
expressed in Raje,sh (supra) being not a precedent has to be overruled
and the methodology stood inSarla Verma (supra) should be accepted.
3 7. On behalf of the claimants, emphasis is laid on the concept of
"just compensation" and what should be included within the ambit of
c 'just compensation". Learned counsel have emphasized on Davies
method and urged that the grant of pecuniary advantage is bound to be
included in the fumre pecuniary benefit. It has also been put forth that in
right to receive ju~t compensation under the statute, when the method of
standardization has been conceived and applied, there cannot be any
D discrimination between the person salaried or self-employed. It is
highlight1:d that if,evidence is not required to be adduced in one category
of cases, there is no necessity to compel the other category to adduce
evidence to establish the foundation for addition of future prospects.
38. Stress is laid on reasonable expectation of pecuniary benefits
E relying on the decisions in Tafe Vale Railway Co. (supra) and the
judgment of Singapore High Court in Nirumalan V Kanapathi Pillay
v. Teo Eng Chuan 37 • Lastly, it is urged that the standardization formula
for awarding future income should be applied to self-employed persons
and that would be a justifiable measure for computation of loss of
dependency.
F
39. Before we proceed to analyse the principle for addition of
future prospects, we think it seemly to clear the maze which is vividly
reflectible from $aria Verma, Reshma Kumari, Rajesh and Munna
Lal Jain. Three aspects need to be clarified. The first one pertains to
deduction towards personal and living expenses. In paragraphs 30, 31
G and 32, Sarla Verma lays down:-
"30. Though in some cases the deduction to be made towards
personal and living expenses is calculated on the basis of units
indicated in Trilok Chandra1, the general practice is to apply

"(2003) 3 SLR (R) ~O I
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standardised deductions. Having considered several subsequent A
decisions of this Court, we are of the view that where the deceased
was married, the deduction towards personal and living expenses
of the deceased, should be one-third (I/3rd) where the number of
dependent family members is 2 to 3, one-fourth (I/4th) where the
number of dependent family members is 4 to 6, and one-fifth (1/
B
5th) where the number of dependent family members exceeds
SIX.

31. Where the deceased was a bachelor and the claimants are
the parents, the deduction follows a different principle. In regard
to bachelors, normally, 50% is deducted as personal and living
expenses, because it is assumed that a bachelor would tend to c
spend more on himself. Even otherwise, there is also the possibility
of his getting married in a short time, in which event the contribution
to the parent(s) and siblings is likely to be cut drastically. Further,
subj eel to evidence to the contrary, the father is likely to have his
own income and will not be considered as a dependant and the D
mother alone will be considered as a dependant. In the absence
of evidence to the contrary, brothers and sisters will not be
considered as dependants, because they will either be independent
and earning, or married, or be dependent on the father.
32. Thus even if the deceased is survived by parents and siblings, E
only the mother would be considered to be a dependant, and 50%
would be treated as the personal and living expenses of the bachelor
and 50% as the contribution to the family. However, where the
family of the bachelor is large and dependent on the income of
the deceased, as in a case where he has a widowed mother and
large number of younger non-earning sisters or brothers, his F
personal and living expenses may be restricted to one-third and
contribution to the family will be taken as two-third."
40. In Reshma Kumari, the three-Judge Bench agreed with the
multiplier determined in Sar/a Verma and eventually held that the
advantage of the Table prepared in Sar/a M!rma is that uniformity and G
consistency in selection of multiplier can be achieved. It has observed:-
"35 .... The assessment of extent of dependency depends on
examination of the unique situation of the individual case. Valuing
the dependency or the multiplicand is to some extent an arithmetical
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130 SUPREME COURT REPORTS [2017] 13 S.C.R.

A exercise, The multiplicand is normally based on the net annual
value of the dependency on the date of the deceased's death.
Once the net annual loss (multiplicand) is assessed, taking into
account the age of the deceased, such amount is to be multiplied
by a "multiplier" to arrive at the loss of dependency."
B 41. In ~eshma Kumari, the three-Judge Bench, reproduced
paragraphs 30, 31 and 32 of Sar/a Verma and approved the same by
stating thus:-
"41. The above does provide guidance for the appropriate
deduction for personal and living expenses. One must bear in mind
c that the proportion of a man's net earnings that he saves or spends
exclusively for the maintenance of others does not form part of
his living expenses but what he spends exclusively on himself
does. The percentage of deduction on account of personal and
living expenses may vary with reference to the number of
dependept members in the family and the personal living expenses
D of the deceased need not exactly correspond to the number of
dependants.
42. Ir. our view, the standards fixed by this Court in Sar/a Verma
on the aspect of deduction for personal living expenses in paras
30, 31 aqd 32 must ordinarily be followed unless a case for departure
E in the circumstances noted in the preceding paragraph is made
out."
42. The conclusions that have been summed up in Reshma
Kumari are as follows:-
"'43.1. In the applications for compensation made under Section
F
166 of the 1988 Act in death cases where the age of the deceased
is 15 years and above, the Claims Tribunals shall select the
multiplier as indicated in Column (4) of the Table prepared in Sar/a
Verma read with para42 of that judgment.
43.2. ln·cases where the age of the deceased is up to 15 years,
G
irrespective of Section 166 or Section 163-A under which the
claim for compensation has been made, multiplier of 15 and the
assessment as indicated in the Second Schedule subject to
correction as pointed out in Column (6) of the Table in Sar/a
Verma sjiould be followed.
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43.3. As a result of the above, while considering the claim A
applications made under Section 166 in death cases where the
age of the deceased is above 15 years, there is no necessity for
the Claims Tribunals to seek guidance or for placing reliance on
the Second Schedule in the 1988 Act.

43.4. The Claims Tribunals shall follow the steps and guidelines B
stated in para 19 of Sar/a Verma for determination pf compensation
in cases of death.

43.5. While making addition to income for future prospects, the
Tribunals shall follow para 24 of the judgment in Sar/a Verma.
c
43.6. Insofar as deduction for personal and living expenses is
concerned, it is directed that the Tribunals shall ordinarily follow
the standards prescribed in paras 30, 31 and 32 of the judgment in
Sar/a Verma subject to the observations made by us in para 41
above."
D
43. On a perusal of the analysis made in Sar/a Verma which has
been reconsidered in Reshma Kumari, we think it appropriate to state
that as far as the guidance provided for appropriate deduction for personal
and living expenses is concerned, the tribunals and courts should be
guided by conclusion 43.6 ofReshma Kumari. We concur with the same
as we have no hesitation in approving the method provided therein. E

44. As far as the multiplier is concerned, the claims tribunal and
the Courts shall be guided by Step 2 that finds place in paragraph 19 of
Sar/a Verma read with paragraph 42 of the said judgment. For the sake
of completeness, paragraph 42 is extracted below :-
F
"42. We therefore hold that the multiplier to be used should be as
mentioned in Column (4) of the table above (prepared by applying
Susamma Thomas, Trilok Chandra and Charlie), which starts
with an operative multiplier of 18 (for the age groups of 15 to 20
and 21 to 25 years), reduced by one unit for every five years, that G
is M-17 for26 to 30 years, M-16 for 31to35 years, M-15 for 36
to 40 years, M-14 for41to45 years, andM-13 for46 to 50 years,
then reduced by two units for every five years, that is, M-11 for
51to55 years,M-9 for 56to60 years, M-7 for61 to65 years and
M-5 for 66 to 70 years."
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132 SUPREME COURT REPORTS (2017] 13 S.C.R.

A 45. In Resh ma Kumari, the aforesaid has been approved by stating,
thus:-
"It is high time that we move to a standard method of selection of
multiplien income for future prospects and deduction for personal
and living expenses. The courts in some of the overseas
B jurisdictions have made this advance. It is for these reasons, we
think we must approve the Table in Sar/a Verma for the selection
of multiplier in claim applications made under Section 166 in the
cases of d¢ath. We do accordingly. If for the selection of multiplier,
Colunm (II) of the Table in Sar/a Verma is followed, there is no
likelihood of the claimants who have chosen to apply under Section
c 166 being awarded lesser amount on proof of negligence on the
part of the driver of the motor vehicle than those who prefer to
apply under Section 163-A. As regards the cases where the age
of the viclimhappens to be up to 15 years, we are of the considered
opinion that in such cases irrespective of Section 163-A or Section
D 166 under which the claim for compensation has been made,
multiplier of 15 and the assessment as indicated in the Second
Schedule subject to correction as pointed out in Colunm (6) of the
Table in Sar/a Verma should be followed. This is to ensure that
the claimlmts in such cases are not awarded lesser amount when
the appliQation is made under Section 166 of the 1988 Act. In all
E other cases of death where the application has been made under
Section 166, the multiplier as indicated in Colunm (4) of the Table
in Sar/a Verma should be followed."
46. At this stage, we must immediately say that insofar as the
aforesaid multi11>licand/multiplier is concerned, it has to be accepted on
F the basis of income established by the legal representatives of the
deceased. Future prospects are to be added to the sum on the percentage
basis and "income" means actual income less than the tax paid. The
multiplier has already been fixed in Sar/a Verma which has been approved
in Reshma Kumari with which we concur.
G 47. In our considered opinion, if the same is followed, it shall
subserve the cause of justice and the unnecessary contest before the
tribunals and the courts would be avoided.
48. Another aspect which has created confusion pertains to grant
of loss of estat~, loss of consortium and funeral expenses. In Santosh
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SETHI AND ORS. [DIPAK MISRA, CJ!]

Devi (supra), the two-Judge Bench followed the traditional method and A
granted Rs. 5,000/- for transportation of the body, Rs. 10,000/- as funeral
expenses and Rs. 10,000/- as regards the loss of consortium. In Sar/a
Verma, the Court granted Rs. 5,000/- under the head of loss of estate,
Rs. 5,000/- towards funeral expenses and Rs. 10,000/- towards loss of
Consortium. In Rajesh, the Court granted Rs. 1,00,000/- towards loss B
of consortium and Rs. 25,000/- towards funeral expenses. It also granted
Rs. 1,00,000/- towards loss of care and guidance for minor children.
The Court enhanced the same on the principle that a formula framed to
achieve uniformity and consistency on a socio-economic issue has to be
contrasted from a legal principle and ought to be periodically revisited as
has been held in Santosh Devi (supra). On the principle of revisit, it C
fixed different amount on conventional heads. What weighed with the
Court is factum of inflation and the price index. It has also been moved
by the concept of loss of consortium. We are inclined to think so, for
what it states in that regard. We quote:-

"17. . .. In legal parlance, "consortium" is the right of the D
spouse to the company, care, help, comfort, guidance, society,
solace, affection and sexual relations with his or her mate. That
non-pecuniary head of damages has not been properly understood
by our courts. The loss of companionship, love, care and protection,
etc., the spouse is entitled to get, has to be compensated E
appropriately. The concept of non-pecuniary damage for loss of
consortium is one of the major heads of award of compensation
in other parts of the world more particularly in the United States
of America, Australia, etc. English courts have also recognised
the right of a spouse to get compensation even during the period
of temporary disablement. By loss of consortium, the courts have F
made an attempt to compensate the loss of spouse's affection,
comfort, solace, companionship, society, assistance, protection,
care and sexual relations during the future years. Unlike the
compensation awarded in other countries and other jurisdictions,
since the legal heirs are otherwise adequately compensated for
G
the pecuniary loss, it would not be proper to award a major amount
under this head. Hence, we are of the view that it would only be
just and reasonable that the courts award at least rupees one lakh
for loss of consortium."

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134 SUPREME COURT REPORTS (2017] 13 S.C.R.

A 49. Be it noted, Munna Lal Jain (supra) did not deal with the
same as the notice was confined to the issue of application of correct
multiplier and deduction of the amount.
50. This aspect needs to be clarified and appositely stated. The
conventional sum has been provided in the Second Schedule of the Act.
B The said Schedule has been found to be defective as stated by the Court
in Trilok Chandra (supra). Recently in Puttamma and others v. K.L.
Narayana Reddy and another38 it has been reiterated by stating:-
..... we hold that the Second Schedule as was enacted in 1994
has now become redundant, irrational and unworkable due to
c changed scenarioi1cluding the present cost ofliving and current
rate of inflation and increased life expectancy."
51. As far as multiplier or multiplicand is concerned, the same
has been put to rest by the judgments of this Court. Para 3 of the
Second Schedul~ also provides for General Damages in case of death.
D It is as follows:-
"3. General Damages (in case of death):
The following General Damages shall be payable in addition to
compensation outlined above:-
(i) Funeral expenses - Rs. 2,000/-
E
(ii) Loss of Consortium, if beneficiary is the spouse- Rs.5,000/-
(iii) Loss C)f Estate - Rs. 2,500/-
(iv) Medical Expenses - actual expenses incurred before death
supported by bills/vouchers but not exceeding -Rs. 15,000/-"
F
52. On a p~rusal of various decisions of this Court, it is manifest
that the Second Schedule has not been followed starting from the decision
in Trilok Chandra (supra) and there has been no amendment to the
same. The conventional damage amount needs to be appositely
determined. As we notice, in different cases different amounts have
G been granted. A sum of Rs. 1,00,000/- was granted towards consortium
in Rajesh. The justification for grant of consortium, as we find from
Rajesh, is founded on the observation as we have reproduced
hereinbefore.

"(2013) 15 sec 45
H
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53. On the aforesaid basis, the Court has revisited the practice of A
awarding compensation under conventional heads.
54. As far as the conventional heads are concerned, we find it
difficult to agree with the view expressed in Rajesh. It has granted
Rs. 25,000/-towards funeral expenses, Rs. 1,00,000/- loss of consortium
and Rs. 1,00,000/- towards loss of care and guidance for minor children. B
The head relating to loss of care and minor children does not exist.
Though Rajesh refers to Santosh Devi, it does not seem to follow the
same. The conventional and traditional heads, needless to say, cannot be
determined on percentage basis because that would not be an acceptable
criterion. Unlike determination of income, the said heads have to be
quantified. Any quantification must have a reasonable foundation. There
c
can be no dispute over the fact that price index, fall in bank interest,
escalation ofrates in many a field have to be noticed. The court cannot
remain oblivious to the same. There has been a thumb rule in this aspect.
Otherwise, there will be extreme difficulty in determination of the same
and unless the thumb rule is applied, there will be immense variation D
lacking any kind of consistency as a consequence of which, the orders
passed by the tribunals and courts are likely to be unguided. Therefore,
we think it seemly to fix reasonable sums. It seems to us that 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 principle ofrevisiting the said heads is an E
acceptable principle. But the revisit should not be fact-centric or quantum-
centric. We think that it would be condign that the amount that we have
quantified should be enhanced on percentage basis in every three years
and the enhancement should be at the rate of I 0% in a span of three
years. We arc disposed to hold so because that will bring in consistency F
in respect of those heads.
55. Presently, we come to the issue ofaddition offuture prospects
to determine the multiplicand.
56. In Santosh Devi the Court has not accepted as a principle
that a self-emp)oyed person remains on a fixed salary throughout his G
life. It has taken note of the rise in the cost of living which affects
everyone without making any distinction between the rich and the poor.
Emphasis has been laid on the extra efforts made by this category of
persons to generate additional income. That apart, judicial notice has
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136 SUPREME COURT REPORTS (2017) 13 S.C.R.

A been taken of the fact that the salaries of those who are employed in
private sectors also with the passage of time increase manifold. In
Rajesh 's case, the Court had added 15% in the case where the victim is
between the a~ group of 15 to 60 years so as to make the compensation
just, equitable, fair and reasonable. This addition has been made in respect
of self-employed or engaged on fixed wages.
B
57. Section 168 of the Act deals with the concept of "just
compensation" and the same has to be determined on the foundation of
fairness, reasop.ableness and equitability on acceptable legal standard
because such determination can never be in arithmetical exactitude. It
can never be perfect. The aim is to achieve an acceptable degree of
c proximity to a{ithmetical precision on the basis of materials brought on
record in an individual case. The conception of"just compensation" has
to be viewed through the prism of fairness, reasonableness and non-
violation of the principle of equitability. In a case of death, the legal
heirs of the claimants cannot expect a windfall. Simultaneously, the
D compensation granted cannot be an apology for compensation. It cannot
be a pittance. Though the discretion vested in the tribunal is quite wide,
yet it is obligatory on the part of the tribunal to be guided by the expression,
that is, "just compensation". The determination has to be on the foundation
of evidence brought on record as regards the age and income of the
deceased and thereafter the apposite multiplier to be applied. The formula
E
relating to multiplier has been clearly stated in Sar/a Verma (supra) and
it has been apiiroved in Reshma Kumari (supra). The age and income,
as stated earlier, have to be established by adducing evidence. The
tribunal and the Courts have to bear in mind that the basic principle lies
in pragmatic ~omputation which is in proximity to reality. It is a well
F accepted norm that money cannot substitute a life lost but an effort has
to be made for grant ofjust compensation having uniformity ofapproach.
There has to be a balance between the two extremes, that is, a windfall
and the pittance, a bonanza and the modicum. In such an adjudication,
the duty of the tribunal and the Courts is difficult and hence, an endeavour
G has been mad~ by this Court for standardization which in its ambit includes
addition of future prospects on the proven income at present. As far as
future prospects are concerned, there has been standardizatio.1 keeping
in view the principle of certainty, stability and consistency. We approve
the principle of"standardization" so that a specific and certain multiplicand
is determined for applying the multiplier on the basis of age.
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58. The seminal issue is the fixation of future prospects in cases A
of deceased who is self-employed or on a fixed salary. Sarla Verma
(supra) has carved out an exception permitting the claimants to bring
materials on record to get the benefit of addition of future prospects. It
has not, per se, allowed any future prospects in respect of the said
category.
B
59. Having bestowed our anxious consideration, we are disposed
to think when we accept the principle of standardization, there is really
no rationale not to apply the said principle to the self-employed. or a
person who is on a fixed salary. To follow the doctrine of actual income
at the time of death and not to add any amount with regard to future c
prospects to the income for the purpose of determination of multiplicand
would be unjust. The determination of income while computing
compensation has to include future prospects so that the method will
come within the ambit and sweep of just compensation as postulated
under Section 168 of the Act. In case of a deceased who had held a
permanent job with inbuilt grant of annual increment, there ·is an D
acceptable certainty. But to state that the legal representatives of a
deceased who was on a fixed salary would not be entitled to the benefit
of future prospects for the purpose of computation of compensation
would be inapposite. It is because the criterion of distinction between
the two in that event would be certainty on the one hand and staticness
E
on the other. One may perceive that the comparative measure is certainty
on the one hand and uncertainty on the other but such a perception is
fallacious. It is because the price rise does affect a self-employed person;
and that apart there is always an incessant effort to enhance one's income
for sustenance. The purchasing capacity of a salaried person on
permanent job when increases because of grant of increments and pay F
revision or for some other change in service conditions, there is always
a competing attitude in the private sector to enhance the salary to get
better efficiency from the employees. Similarly, a person who is self-
employed is bound to gamer his resources and raise his charges/fees so
that he can live with same facilities. To have the perception that he is G
likely to remain static and his income •o remain stagnant is contrary to
the fundamental concept of human attitude which always intends to live
with dynamism and move and change with the time. Though it may
seem appropriate that there cannot be certainty in addition of future
prospects to the existing income unlike in the case of a person having a
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138 SUPRI\ME COURT REPORTS [2017] 13 S.C.R.

A permanent job, yet the said perception does not really deserve acceptance.
We are inclined to think that there can be some degree of difference as
regards the percentage that is meant for or applied to in respect of the
legal representatives who claim on behalf of the deceased who had a
permanent job tban a person who is self-employed or on a fixed salary.
But not to appl)! the principle of standardization on the foundation of
B
perceived lack of certainty would tantamount to remaining oblivious to
the marrows of ground reality. And, therefore, degree-test is imperative.
Unless the degree-test is applied and left to the parties to adduce evidence
to establish, it would be unfair and inequitable. The degree-test has to
have the inbuill concept of percentage. Taking into consideration the
c cumulative fac!ors, namely, passage of time, the changing society,
escalation of price, the change in price index, the human attitude to follow
a particular pattern of life, etc., an addition of 40% of the established
income of the deceased towards future prospects and where the
deceased was below 40 years an addition of 25% where the deceased
was between the age of 40 to 50 years would be reasonable.
D
60. The GOntroversy does not end here. The question still remains
whether there should be no addition where the age of the deceased is
more than 50 years. Sar/a Verma thinks it appropriate not to add any
amount and the same has been approved in Reshma Kumari. Judicial
E notice can be taken of the fact that salary does not remain the same.
When a person is in a permanent job, there is always an enhancement
due to one re.ason or the other. To lay down as a thumb rule that there
will be no addition after 50 years will be an unacceptable concept. We
are disposed to think, there should be an addition of 15o/o if the deceased
is between the age of 50 to 60 years and there should be no addition
F thereafter. Similarly, in case of self-employed or person on fixed salary,
the addition should be 10% between the age of 50 to 60 years. The
aforesaid yardstick has been fixed so that there can be consistency in
the approach by the tribunals and the courts.

61. In view of the aforesaid analysis, we proceed to record our
G
conclusions:-

(i) The two-Judge Bench in Santosh Devi should have been well
advised to refer the matter to a larger Bench as it was taking
a different view than what has been stated in Sar/a Verma, a
H
NATIONAL INSURANCE COMPANY LIMITED v. PRANAY 139
SETHI AND ORS. [DIPAK MISRA, CH]

judgment by a coordinate Bench. It is because a coordinate A
Bench of the same strength cannot take a contrary view than
what has been held by another coordinate Bench.

(ii) As Rajesh has not taken note of the decision in Reshma
Kumari, which was delivered at earlier point of time, the
decision in Rajesh is not a binding precedent. B

(iii) 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%, C
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.

(iv) In case the deceased was self-employed or on a fixed salary, D
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 I 0% where the deceased was
between the age of 50 to 60 years should be regarded as the E
necessary method of computation. The established income
means the income minus the tax component.

(v) 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 Sar/a Verma which we F
have reproduced hereinbefore.

(vi) The selection of multiplier shall be as indicated in the Table in
Sar/a Verma read with paragraph 42 of that judgment.

(vii) The age of the deceased should be the basis for applying the G
multiplier. ·

(viii) 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
H
140 SUPREME COURT REPORTS [2017] 13 S.C.R.

A aforesaid amounts should be enhanced at the rate of I 0% in
every three years.

62. The reference is answered accordingly. Matters be placed
before the: appropriate Bench.

B
Kalpana K. Tripathy Referred issues answered.