Supreme Court of India
NATIONAL INSURANCE COMPANY LTD.versusSMT. SAROJ AND ORS.
- Citation
- 2009 INSC 800
- Decided
- 12 May 2009
- Disposal
- Dismissed
- Bench
- S B SINHA
Holding
The multiplier in the Second Schedule is a guide, not a mandatory rule, and the Tribunal’s award of Rs 22.12 lakh using a multiplier of 16 is upheld as just compensation.
Summary
The appellant, National Insurance Co., challenged a Motor Accident Claims Tribunal award of Rs 22.12 lakh compensation for the death of a 41‑year‑old technician, arguing that the Tribunal improperly applied the multiplier from the Second Schedule of the Motor Vehicles Act and exceeded the claimant's stated demand of Rs 20 lakh. The Supreme Court examined whether the multiplier is mandatory in death cases and whether compensation can be limited to the claimed amount. It held that the multiplier in the Second Schedule is a guideline, not a rigid rule, and that compensation must be just and consider the deceased's earnings, allowances, and future prospects. The Court found no error in the Tribunal’s application of a multiplier of 16 and affirmed the award. Consequently, the appeal was dismissed with costs.
Issues considered
- The applicability and mandatory nature of the multiplier prescribed in the Second Schedule of the Motor Vehicles Act, 1988, in cases of death.
- Whether the compensation award can be limited to the amount claimed by the petitioner.
- Whether courts may deviate from the structured formula of the Second Schedule in determining compensation.
Legislation cited
- Motor Vehicles Act, 1988s. 163-A, s. 166, s. 168
Subjects
Motor Vehicles ActCompensationMultiplierSecond ScheduleDeathDependencyInsuranceMotor Accident
Judgment
[2009] 9 S.C.R. 81
NATIONAL INSURANCE COMPANY LTD. A
v.
SMT. SAROJ AND ORS.
(Civil Appeal No. 3483 of 2009)
MAY 12, 2009
8
[S.8., SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]
Motor Vehicles Act, 1988 - ss. 166 and 168 - Second
Schedule - Vehicular accident resulting in death of a person
- Compensation - Determination of - Appropriate multiplier C
- Held:Compensation must be just - While determining
compensation, amount of monetary loss which had been and
would be suffered by heirs and legal representatives of
deceased should be considered - For such purpose, the take-
home salary of deceased, other allowance and perks which D .
would have benefited the deceased's entire family and the
prospective loss of future earnings should be borne in mind
- On facts, where deceased was a 41 year old technician
employed in a Multinational company earning around
Rs. 17000 per month, Courts below were justified in adopting E
a multiplier of 16 and in awarding compensation of Rs.22. 12
lakhs though only Rs.20 lakhs was claimed as compensat~on
- The submission that the Court should hav_e awarded only
the sum claimed is not correct. ,
Rani Gupta v. United India Insurance Company & Ors. F
(2009) 5 SCALE 439; United India lnsruance Co. Ltd. v.
Bindu & Ors. JT2009(4) SC 315; Unitedlndia Insurance Co.
Ltd. etc. v. PatriciaJean Mahajan & Ors. (2002) 6 SCC 281;
The Managing Director, TNSTC Ltd. v. K.I. Bindu &
Ors. (2005) 8 SCC 473 and Tami/N adu State Transport G
I Corporation Ltd. v. S. Rajapriya and two Ors. (2005) 6 SCC
236; National Insurance Co. Ltd. v. Indira Srivastava& Ors.
(2008) 2 SCC 763 and Abati Bezbaruah v. Dy. Director
General Geological Survey of India & Anr. (2003) 3 SCC 148,
81 . H
82 SUPREME COURT REPORTS [2009] 9 $.C.R.
/
A referred to. ~
Mallett v. Mc Mangle 1969 (2) All ER 178, referred to.
Case Law Reference:
B (2009) 5 SCALE 439 referred to Para 9
JT 2009(4) SC 315 referred to Para 12
,;.,
1969 (2) All ER 178 referred to Para 12
(2002) 6 sec 281 referred to Para 13
c
(2005) 8 sec 473 referred to Para 13
(2005) 6 sec 236 referred to Para 13 ~
..--
(2008) 2 sec 763 referred to Para 14
D )..-
(2003) 3 sec 148 referred to Para 15
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3483 of 2009.
~
E From the Judgment & Order dated 29.5.2007 of the High
Court of Punjab & Haryana at Chandigarh in F.A.O. No. 2041
of 2006.
._ ____
- Dr. Meera Agarwal and Ramesh Chandra Mishra for the *-
Appellant.
F
Dr. Sushil Balwada for the Respondents.
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
G
2. Appellant is before us aggrieved by and dissatisfied
with a judgment and order dated 29.05.2007 passed by a r
learned Single Judge of the High Court of Punjab and Haryana
at Chandigarh in FAQ No.2041 of 2006 whereby and
H whereunder a First Appeal preferred by the appellant herein .;'
NATIONAL INSURANCE COMPANY LTD. v. SAROJ 83
AND ORS. [S.B. SINHA, J.]
against a judgment and award dated 03.2.2006 passed by the A
Motor Accident Claims Tribunal, Rohtak directing the appellant
herein to pay compensation with interest to the respondent, was
dismissed.
3. One Joginder Singh, husband of respondent No.1 and
8
father of respondent Nos. 2 to 4, while riding a two wheeler met
with an accident on 29.11.2003 as it collided with a truck. The
said truck was insured with the appellant by its owner who is
respondent No.5 herein.
4. A claim petition was filed before the Motor Vehicles C
Accident Claims Tribunal claiming a sum of Rs.20,00,000/-. The
deceased was an ·employee of Maruti Udyog Limited and had
been drawing a sum of Rs.16,110/- per month. The Tribuna.I
determined his income at Rs.17,244/- per month by its award
dated 3.2.2006. His age was determined as 41 years 10 D
months and 9 days. A multiplier of 16 was applied to arrive. at
the amount of compensation at a sum of Rs.22, 12,200/-.
5. A First Appeal preferred by the appellant has been
dismissed by the High Court by reason of the impugned E
judgment dated 29.05.2007.
6. Dr. Meera Agarwal, learned counsel appearing on
behalf of the appellant, would urge :
(1) The Tribunal and consequently the High Court should F
have restricted the award of compensation only to the sum
claimed by the claimant in the claim petition.
(2) Provisions of Schedule II attached to Section 163-A
being applicable strictly in cases where the income of the G
deceased does not exceed Rs.40,000/- per annum, the
multiplier specified therein should not have been applied.
(3) The claimants having not disclosed as to what amount
they had received from the insurance company and who
·was the insurer of the scooter driven by the deceased, the H
84 SUPREME COURT REPORTS [2009] 9 S.C.R..
A impugned judgment should not be sustained. ~·
7. Mr. AV. Rao, learned counsel appearing on behalf of
the respondents, on the other hand, supported the impugned
judgment.
B 8. The deceased was occupying the post of Technical in
a Weld Shop Work in Maruti Udyog Limited. His net salary was
Rs.16,110/- per month. Both the courts below, however, in fa.
terms of the evidences brought on record found ~alary payable
to the deceased at Rs.17,244.95 per month. This finding of the
c Tribunal had not been questioned before the High Court.
Indisputably, again the age of the deceased at the time of
death was found to be 41 years 10 months and 9 days.
9. It has not been denied or disputed that the multiplier
D
method can be applied for the purpose of determination of the
amount of compensation in a motor accident in terms of the
provisions of the Motor Vehicles Act, 1988.
We have, however, do not mean to suggest that the
E multiplier specified in the S~cond Schedule should be applied
automatically.
In Rani Gupta v. United India Insurance Company & Ors.
[2009 (5) SCALE 439] this Court observed that in an
appropriate case, the matter may require consideration by
F
larger Bench keeping in view paragraphs 5 an.d 6 of the Note
appended to the Second Schedule of the Act in terms· whereof
the multiplier was to be adopted only in a case of permanent
total or partial disability.
G 10. The Second Schedule provides for a new pre-
determined formula for payment of compensation to road
accident victims on the basis of age/income in a more liberal
or rational way.
H If that be so, a question arises as to why the injured
NATIONAL INSURANCE COMPANY LTD. v. SAROJ 85
AND ORS. [S.B. SINHA, J.]
~
claimant and/or heirs and legal representatives of the victim in A
a case of death on proof of negligence on the part of the driver
of a motor vehicle would get a lesser amount than the one
specified in the Second Schedule although both are similarly
situated. Such a dichotomy, in our opinion, could be resolved
by finding the applicability of multiplier in the cases where the B
victims have suffered injuries resulting in permanent total
_i_
disablement or permanent partial disablement.
Probably, it is in that view of the matter, there is some sort
of a cleavage of opinion in the matter of application of multiplier.
Whereas in one set of decisions multiplier specified in the c
Second Schedule has been applied, in another set of decisions,
a lesser multiplier was applied. In either set of the decisions
sometimes, no principle of law has been laid down. It is,
~
however, accepted at the Bar that the multiplier specified in the
Second Schedule should be taken to be the guidelines. D
11. We may notice a few precedents in this behalf.
In Rani Gupta (supra), it is stated :
"18. By and large, therefore, the Court had proceeded on E
( the basis that the multiplier mentioned in the Second
Schedule should be taken to be the guide but it may not
~
be.
19. The multiplier specified in the Second Schedule may
F
not be decisive for calculating compensation in cases of
death. In fact, the word multiplier has been used only for
the purpose of calculating damages in the case of
permanent disability and not in the case of death as would
appear from note 5 and 6 appended thereto.
G
20. The Second Schedule provides for payment of the
amount of compensation to the persons whose income is
._, from Rs.3,000/- to Rs.40,000/- per annum, depending upon
the age of the deceased; as for example if the age of the
deceased is 15 years, the amount of compensation H
86 SUPREME COURT REPORTS [2009] 9 S.C.R.
A payable would be 60,000/-, but where the annual income
is Rs.3,000/-, a sum of Rs.50,000/- has been specified
therefor even if the age of the deceased is between 35 to
65 years.
21. The Parliament had, therefore, thought that Rs.50,000/
B - should be the minimum amount of compensation payable
to legal representatives of those persons whose annual ,.&.
income is Rs.3,000/- per month. For the said purpose, the
multiplier specified in the Second Schedule has no role to
play. Even in absence of the multiplier in the Second
c- Schedule, the amount of compensation payable would be
the same irrespective of the multiplier specified therein."
12. Recently, in United India lnsruance Co.. Ltd. v. Bindu
& Ors. [JT 2009(4) SC 315], this Court applied the multiplier
D of 13 where the age of the deceased was 32 years. The Court
referring to Mallett v. Mc Mangle [1969 (2) All ER 178) and
Qther decisions preceding the same, opined :
"11. In both General Manager, Kera/a State Road
Transport Corporation, Trivandrum v. Susamma Thomas
E (Mrs.) and Ors. [1994 (2) SCC 176] and U.P. State Road
Transport Corporation and Ors. v. Trilok Chandra and
Ors. [JT 1996 (5) sc 356; 1996 (4) sec 362], the J...
multiplier appears to have been adopted by this Court
taking note of the prevalent banking rate of interest.
F
12. In fact in Trilok Chand's case (supra), after reference
to Second Schedule to the Act, it was noticed that the
same suffers from many defects. It was pointed out that
the same is to serve as a guide, but cannot be said to be
G invariable ready reckoner. However, the appropriate
highest multiplier was held to be 18. The highest multiplier ~
has to be for the age group of 21 years to 25 years when
an ordinary Indian Citizen starts independently earning and ..,.
the lowest would be in respect of a person in the age group
of 60 to 70, which is the normal retirement age.
H
NATIONAL INSURANCE COMPANY LTD. v. SAROJ 87
AND ORS. [S.S. SINHA, J.]
13. Keeping in view the parameters indicated above it A
would be appropriate to fix the multiplier at 13 and the rate
of interest at 6% p.a. The MACT shall work out the
entitlements on the aforesaid basis."
13. Reliance has been placed by Dr. Agarwal on a decision 8
of this Court in United India Insurance Co. Ltd. Etc. v. Patricia
;., Jean Mahajan & Ors. [(2002) 6 SCC 281], wherein multiplier
of 10 has been used where the deceased used to get salary
in US$.
Yet again in The Managing Director, TNSTC Ltd. v. K.I. C
Bindu & Ors. [(2005) 8 SCC 473], this Court held :
"14. The multiplier method involves the ascertainment of
the loss of dependency or the multiplicand having regard
to the circumstances of the case and capitalizing the D
multiplicand by an appropriate multiplier. The choice.of the
multiplier is determined by the age of the deceased (or that
of the claimants whichever is higher) and by the calculation
as to what capital sum, if invested at a rate of interest
appropriate to a stable economy, would yield the E
multiplicand by way of annual interest. In ascertaining this,
regard should also be had to the fact that ultimately the
capital sum should also be consumed-up over the period
for which the dependency is expected to last."
Reliance has also been placed on Tamil Nadu State F
Transport Corporation Ltd. v. S. Rajapriya and two Ors.
[(2005) 6 sec 236], wherein it was held :
"12. The multiplier method involves the ascertainment of
the loss of dependency or the multiplicand having regard G
to the circumstances of the case and capitalizing the
multiplicand by an appropriate multiplier. The choice of the
multiplier is determined by the age of the deceased (or that
of the claimants whichever is higher) and by the calculation
~s to what capital sum, if invested at a rate of interest H
,..
'
88 SUPREME COURT REPORTS [2009] 9 S.C.R.
A appropriate to a stable eqmomy, would yield the
multiplicand by way of annual interest. In ascertaining this,
regard should also be had to the fact that ultimately the
capital sum should also be consumed-up over the period
· for which the dependency is expected to last."
8
14. The amount of compensation which is required to be
determined by the Tribunal must be just. In certain situations as
for example in the case of the death of only son to a mother,
no monetary compensation would be sufficient. Whereas the
C court, while determining the amount of compensation, should
consider the amount of monetary loss which had been and
WOL1ld be suffered by the heirs and legal representatives of the
deceased, the same should not be a windfall. It is for the
aforementioned purpose, not only the take home salary is to
be taken into consideration but also other allowance and perks
D which would have benefited the entire family. [See National
lnsm:ance Co. Ltd. v. Indira Srivastava & Ors. [(2008) 2 SCC
763] . .
15. The prospective loss of future earnings should also be
E borne in mind. The quantum of compensation must be
determined on certain legal principles. The deceased might
. have a bright future prospect. He would have been,· in normal
situation, considered for promotion immediately. Although rigid +-
tests are difficult to be laid down, any kind of hypothesis, as
F far as possible should be avoided.
In Abati Bezbaruah v. Dy. Director General Geological
Survey of India & Anr. [(2003) 3 SCC 148], this Court observed
G "11. It is now a well settled principle of law that the payment
of compensation on the basis of structured formula as
provided for under the Second Schedule should not
ordinarily be deviated from. Section 168 of the Motor
Vehicles Act lays down the guidelines for determination of
H the amount of compensation in terms of. Section 166
NATIONAL INSURANCE COMPANY LTD. v. SAROJ 89
AND ORS. [S.B. SINHA, J.]
thereof. Deviation of the structured formuJa, however, as A
has been held by this Court, may be resorted to in
exceptional cases. Furthermore, the amount of
compensation should be just and fair in the facts and
circumstances of each case."
B
In this case, the deceased was a technician employed i_n
a Multinational company. The Tribunal as also the High Court
while determining the amount of compensation did not bestow
its consideration to future prospects. It is trite that the Court
should look into the circumstances of each and every case for
arriving at a just compensation. His future prospect has not been C
taken into consideration. In case of this nature, therefore, we
do not think that application of multiplier of 16 was on a higher
side.
16. Submission of Mr. Agarwal that the Court should have D
awarded only the sum claimed bv the claimant, in our opinion,
is not correct.
17. Contention raised on behalf of the appellant that the
claimant had not disclosed as to what amount they had E
received from the insurance company with whom the scooter
driven by the deceased was insured cannot be considered l;>y
us for the first time as no such contention has been raised
before the courts below. The legal representatives of the
deceased examined themselves as witnesses. They should
have cross-examined on the said question. The insurance F
company could have found out from other insurance company
also as to whether, in fact, a claim had been advanced and
whether insurance company paid any amount to them.
18. For the reasons aforementioned; there is no merit in G
the appeal. It is dismissed accordingly with costs. Counsel's
fee assessed at Rs.10,000/-.
8.8.8. Appeal dismissed.
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