Supreme Court of India
RESHMA KUMARI AND ORS.versusMADAN MOHAN AND ANR.
- Citation
- 2013 INSC 200
- Decided
- 2 April 2013
- Disposal
- Reference answered
- Bench
- RAJENDRA MAL LODHA
Holding
For compensation claims under s.166, the multiplier, future‑prospect addition and personal‑expense deduction prescribed in the Sarla Verma table shall be applied, and the Second Schedule is only a guide, not a mandatory rule.
Summary
The Supreme Court examined whether the multiplier in the Second Schedule of the Motor Vehicles Act, 1988 should be applied to compensation claims under s.166 (fault liability). It approved the multiplier table and related guidelines formulated in Sarla Verma’s case for selecting the multiplier, adding future‑prospect income, and deducting personal expenses. For death claims where the deceased is 15 years or older, the multiplier from column 4 of the Sarla Verma table must be used; for ages up to 15, a multiplier of 15 and the corrected Second Schedule assessment apply. The Court held that the Second Schedule is not binding for s.166 claims and that the Sarla Verma methodology provides a uniform, fair standard. It also clarified the percentages for future‑prospect additions (50% below 40 years, 30% between 40‑50 years, none above 50) and personal‑expense deductions (one‑third, one‑fourth, one‑fifth based on number of dependants). The reference was answered and the appeals were ordered to be posted for hearing.
Issues considered
- Whether the multiplier specified in the Second Schedule must be strictly applied in compensation determinations under s.166 of the Motor Vehicles Act, 1988.
- Whether the Second Schedule can be used as a guide for s.166 claims or whether a separate standard is required.
- What method should be adopted for selecting the multiplier, adding future‑prospect income, and deducting personal expenses in death claims under s.166.
- Whether the guidelines laid down in Sarla Verma’s judgment should be made binding on all tribunals and courts.
Legislation cited
- Motor Vehicles Act, 1988s. 140, s. 1638, s. 163A, s. 165, s. 166, s. 168
Subjects
Motor Vehicles ActCompensationMultiplierSection 166Section 163AJust compensationLoss of dependencySecond ScheduleSarla Verma guidelinesFuture prospectsPersonal expenses
Judgment
[2013] 2 S.C.R. 706
A RESHMA KUMARI AND ORS.
v.
MADAN MOHAN AND ANR.
(Civil Appeal No. 4646 of 2009)
APRIL 2, 2013.
B
[R.M. LODHA J. CHELAMESWAR AND
MADAN B. LOKUR, JJ.]
Motor Vehicles Act, 1988:
c
s. 166 - Motor accident - Compensation - Computation
of - Multiplier - Additional income for future prospects -
Deduction towards income tax as also personal expenses -
Held: It is high time that the courts move to a standard method
D of selection of multiplier, income for future prospects and
deduction for personal and living expenses - In the
applications for compensation made uls 166 in death cases
where the age of deceased is 15 years and above, Claims
Tribunals shall select the multiplier as indicated in Column
E (4) of the table prepared in Sar/a Verma read with the relevant
para of that judgment - As a result, there is no necessity for
Claims Tribunals to seek guidance or for placing reliance on
the Second Schedule in the 1988 Act - In cases where the
age of the deceased is upto 15 years, irrespective of s. 166
or s. 163A under which the claim for compensation has been
F 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 -
For determination of compensation in death cases, and for
making addition to income for future prospects and deduction
G in case of taxable salary, guidelines laid down in Sar/a
Verma's case shall be followed - Further, with regard to
deduction for personal expenses ordinarily the judgment in
Sar/a Verma's case, subject to the observations made in the
instant judgment, shall be followed.
H 706
RESHMA KUMARI v. MADAN MOHAN 707
s. 168 - 'Just compensation' - Held: The expression, Just' A
means that the amount so determined is fair, reasonable and
equitable by accepted legal standards.
In the instant appeals referred by a two-Judge Bench
for decision of a larger Bench, the question for 8
consideration before the Court was: "whether while
considering an application for compensation made u/s
166, the multiplier specified in the Second Schedule can
be taken to be guide for determination of amount of the
compensation." •
c
Answering the reference, the Court
HELD: 1.1 The Motor Vehicles Act, 1988 gives choice
to the claimants to seek compensation on structured
formula basis as provided in s.163A or make an D
application for compensation arising out of an accident
of the nature specified in sub-s. (1) of s. 165, uls 166. The
claimants have to elect one of the two remedies provided
in ss.163A and 166. The remedy provided in s.163A is not
a remedy in addition to the remedy provided in s.166 but E
it provides for an alternative course to s.166. The peculiar
feature of s.163A is that for a claim made thereunder, the
claimants are not required to plead or establish that the
death or permanent disablement in respect of which the
claim has been made was due to any wrongful act or
F
neglect or default of the owner or owners of the vehicle
concerned. On the other hand, by making an application
for compensation arising out of an accident uls 166 it is
necessary for a claimant to prove negligence on the part
of the driver or owner of the vehicle. The burden is on
the claimant to establish the negligence on the part of the G
driver or owner of the vehicle and on proof thereof, the
claim~nt is entitled to compensation. [para 10-11] [722-E-
G; 723-A-B, E-F]
Minu B. Mehta and Anr. v. Balkrishna Ramchandra H
708 SUPREME COURT REPORTS [2013) 2 S.C.R.
=
A Nayan and Anr. 1977 (2) SCR 886 19.77 (2) SCC 441;
Gujarat State Road Transport Corporation, Ahmedabad v.
Ramanbhai Prabhatbhai and Another 1987(3) SCR
404 = 1987 (3) sec 234 - referred to.
8 Davies & Anr. v. Powell Duffryn Associated Collieries Ltd.
1942 (1) All ER 657 and (2) Nance v. British Columbia
Electric Railway Co. Ltd. 1951 (2) All ER 448 Mallett v. Mc
Monagle 1969 (2) All ER 178 - referred to.
1 ~2 The determination ,of compensation based on
C multiplier method is the best available means and the
most satisfactory method and must be followed invariably
by the tribunals and courts. This statement in Susamma
Thomas is equally applicable to the fatal accident claims
made u/s 166 of the 1988 Act. In Trilok Chandra, the Court
D considered s. 163A and the Second Schedule which was
not under consideration in Susamma Thomas as s.163A
was not on the statute when the judgment in Susamma
Thomas was delivered. It was observed that by
incorporation of ss. 163A and 1638 in the 1988 Act the
E situation had undergone a change. Under the Second
Schedule, the maximum multiplier could be upto 18 and
not 16 as was held in Susamma Thomas. In Trilok
Chandra, the maximum multiplier was fixed at 18 but the
Court did find several defects in the calculation of
F compensation and the amount worked out in the Second
Schedule. Importantly, this Court stated in Trilok Chandra
that tribunals and the courts cannot go by the ready
reckoner; the Schedule can only be. used as a guide.
[para 13 and 32] [724-G-H; 725-A-B; 737-F-G]
G General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas (Mrs.) and
Ors. 1994 (2) SCC 176, U.P. State Road Transport
Corporation and Ors. v. Trilok Chandra and Ors. 1996 (2)
Suppl. SCR 443 = 1996 (4) SCC 362, Kaushnuma Begum
H (Smt.) and Ors. v. New India Assurance Co. Ltd. and Ors.
RESHMA KUMARI v. MADAN MOHAN 709
2001 (1) SCR 8 = 2001 (2) SCC 9; Supe Dei (Smt) and others A
v. National Insurance Company Limited and Another 2009 (4)
SCC 513; Deepal Girishbhai Soni and others v. United India
Insurance Co. Ltd., Baroda (2004) 5 SCC 385; Oriental
Insurance Company Ltd. v. Jashuben and Ors. 2008 (2)
SCR 930 = 2008 (4) SCC 162 - referred to. B
1.3 In Sar/a Verma, this Court undertook the exercise
of comparing the multiplier indicated in Susamma
Thomas, Trilok Chandra and Charlie, for claims u/s 166
of the 1988 Act with the multiplier mentioned in the
Second Schedule for claims u/s 163A (with appropriate C
deceleration after 50 years). The exercise was undertaken
to ensure uniformity and consistency in the selection of
multiplier while awarding compensation in motor accident
claims made u/s 166. [para 26 and 28] [735-A-B; 736-D]
D
Sar/a Verma (Smt.) and Ors. v. Delhi Transport
=
Corporation and Anr. 2009 (5) SCR 1098 2009 (6) sec 121
- affirmed.
New India Assurance Company Ltd. v. Charlie and Anr. E
2005 (2) SCR 1173 = 2005 (10) SCC 720, T.N. State Road
Transport Corporation v. S. Rajapriya and Ors. 2005 (3)
=
SCR 737 2005 (6) SCC 236 and U.P. State Road Transport
Corporation v. Krishna Bala and Ors. 2006 (3) s'uppl.
=
SCR 506 2006 (6) SCC 249 - referred to.
F
1.4 Section 168 of the 1988 Act provides the guideline
that the amount of compensation shall be awarded by the
claims tribunal which appears to it to be just. The
expression, 'just' means tha.t the amount so determined
is fair, reasonable and equitable by accepted legal G
standards and not a forensic lottery. Obviously 'just
compensation' does not mean 'perfect' or 'absolute'
compensation. The just compensation principle requires
examination of the particular situation obtaining uniquely
in an individual case. [para 29] [736-E-F] · H
710 SUPREME COURT REPORTS [2013) 2 S.C.R.
A C.K. Subramania Iyer and Ors. v. T.Kunhikuttan Nair and
Ors. 1970 (2) SCR 688- referred to.
Taff Vale Railway Co. v. Jenkins (1913) AC 1 - referred
to.
B 1.5 In Sar/a Verma, this Court has endeavoured to
simplify the otherwise complex exercise of assessment
of loss of dependency and determination of
compensation in a claim made u/s 166. It has been rightly
stated that claimants in case of death claim for the
C purposes of compensation must establish: (a) age of the
deceased; (b) income of the deceased; and (c) the
number of dependants. To arrive at the loss of
dependency, the Tribunal must consider (i) additions/
deductions to be made for arriving at the income; (ii) the
D 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. In view
of the decision in Sar/a Verma, it is not necessary to
revisit the law on the point. The table has been prepared
E in Sarla Verma for the selection of multiplier having regard
to the three decisions of this Court, namely, Susamma
Thomas, Trilok Chandra and Charlie for the claims made
u/s 166 of the 1988 Act. The Court said that multiplier
shown in Column (4) of the table must be used having
F regard to the age of the deceased. Perhaps the biggest
advantage by employing the table prepared in Sar/a
Verma is that uniformity and consistency in selection of
the multiplier can be achieved. The assessment of extent
of dependency depends on examination of the unique
G situation of the individual case. Valuing the dependency
or the multiplicand is to some extent an arithmetical
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
H
RESHMA KUMARI v. MADAN MOHAN 711
the deceased, such amount is to be multiplied by a A
'multiplier' to arrive at the loss of dependency. [para 33]
[737-G-H; 738-A-F]
1.6 It is high time that the courts move to a standard
method of selection of multiplier, income for future 8
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, this Court must approve the table in Sarla Verma
for the selection of multiplier in claim applications made C
u/s 166 in the cases of death. [para 34] [738-H; 739-A]
1.7 If for the selection of multiplier, Column (4) of the
table in Sar/a Verma is followed, there is no likelihood of
the,claimants who have chosen to apply u/s 166 being
awarded lesser amount on proof of negligence on the D
part of the driver of the motor vehicle than those who
prefer to apply u/s 163A. [para 34] [739-A-B]
1.8 As regards the cases where the age of the victim
happens to be upto 15 years, this Court is of the E
considered opinion that in such cases irrespective of
s.163A or s.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 claimants in F
such cases are not awarded lesser amount when the
application is made u/s 166 of the 1988 Act. In all other
cases of death where the application has been made u/s
166, the multiplier as indicated in Column (4) of the table
in Sar/a Verma should be followed. As a result, there is G
no necessity for the Claims Tribunals to seek guidance ·
or for placing reliance on the Second Schedule in the
1988 Act. The Claims Tribunals shall follow the steps and
guidelines stated in para 19 of Sar/a Verma for
determination of compensation in cases of death. [para H
712 SUPREME COURT REPORTS [2013] 2 S.C.R.
A 34 and 40(i), (ii) and (iii)] [739-C-E; 742-F-H; 743-A]
1.9 The standardization of addition to income for
future prospects shall help in achieving certainty in
arriving at appropriate compensation. While making
addition to income for future prospects, the Tribunals
8 shall follow paragraph 24 of the Judgment in Sar/a
Verma. This Court approves· 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
C years and the addition should be only 30% if the age of
the deceased was 40 to 50 years and no addition 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
D 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
appropriate. A departure from the above principle can
E only be justified in extraordinary circumstances and very
exceptional cases. [para 36 and 40(v)] [740-C-F]
1.10 One must bear in mind 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
F living expenses but what he spends exclusively on
himself does. The percentage of d~duction on account
of personal and living expenses may vary with reference
to the number of dependant members in the family, and
the personal living expenses of the deceased need not
G exactly correspond to the number of dependants. The
standards fixed by this. Court in Sar/a Verma on the
aspect of deduction for personal living expenses in
paragraphs 30, 31 and 32 must ordinarily be followed
unless a case for departure is made out. [para 38-39) [741-
H H; 742-A-C]
RESHMA KUMARI v. MADAN MOHAN 713
Sar/a Verma (Smt.) and Ors. v. Delhi Transport A
Corporation and Anr. 2009 (5) SCR 1098~= 2009 (6)
SCC 121; and Fakeerappa and Anr. v. Karnataka Cement
Pipe Factory and Others 2004 (2 ) SCR 369 = (2004) 2 SCC
473 - referred to.
B
United India Insurance Co. Ltd. & Ors. v. Patricia Jean
Mahajan & Ors. 2002 (3) SCR 1176 = 2002 (6) SCC 281,
Jyoti Kaul & Ors. v. State of M.P. & Anr. 2002 (6) SCC 306,
Abati Bezbaruah v. Dy. Director General, Geological Survey
of India & Anr. 2003 (1) SCR 1229 = 2003 (3) SCC 148, New
India Assurance Co. Ltd. v. Shanti Pathak (Smt.) & Ors. 2007 c
(8) SCR 237 = 2001 (10) sec 1 - cited.
Case Law Reference:
1994 (2) sec 116 referred to Para 1
D
1996 (3) SCR 30 affirmed Para 1
1996 (2) Suppl. SCR443 referred to Para 1
. 2001 (1) SCR 8 referred to Para 1
E
2002 (3) SCR 1176 cited Para 1
2002 (6) sec 306 cited Para 1
2003 (1) SCR 1229 cited Para 1
2007 (8) SCR 237 cited Para 1 F
1977 (2) SCR 886 referred to para 2
1987 ( 3 ) SCR 404 referred to para 4
1942 (1) All ER 657 referred to para 12 G
1951 (2) All ER 44 8 referred to para 12
1969 (2) All ER 178 referred to para 12
2009 (4 > sec 513 referred to para 14
H
714 SUPREME COURT REPORTS [2013] 2 S.C.R.
A (2004) 5 sec 385 referred to para 18
2008 (2) SCR 930 referred to para 22
2009 (5) SCR 1098 referred to para 23
2005 (2) SCR 1173 referred to para 25
B
2005 (3) SCR 737 referred to para 25
2006 (3) Suppl. SCR 506 referred to para 25
(1913) AC 1 referred to para 30
c
1970 (2) SCR 688 referred to para 31
2004 (2) SCR 369 referred to para 37
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
D 4646 of 2009.
WITH
C.A. No. 4647 of 2009.
E Ashok K. Mahajan, Gajendra Maheshwari, Rajat Bose ·for
the Appellants.
Shalu Sharma, Dr. Sushil Balwada, Debasis Misra for the
Respondents.
F The Judgment of the Court was delivered by
R.M. LODHA, J. 1. A two-Judge Bench (S.B. Sinha and
Cyriac Joseph, JJ.) proceeded to hear these appeals on two
common questions, namely, (1) Whether multiplier specified in
the Second Schedule appended to the Motor Vehicles Act,
G 1988 (for short "the 1988 Act") should be scrupulously applied
in all cases? and (2) Whether for determination of the
multiplicand, the 1988 Act provides for any criterion, particularly
as regards determination of future prospect. In the course of
hearing few decisions of this Court, General Manager, Kera/a
H
RESHMA KUMARI v. MADAN MOHAN 715
[R.M. LODHA, J.]
State Road Transport Corporation, Trivandrum v. Susamma A
Thomas (Mrs.) and Ors. 1, Sar/a Dixit (Smt.) and Anr. v.
Ba/want Yadav and Ors. 2 , U.P. State Road Transport
Corporation and Ors. V. Trilok Chandra and Ors. 3 ,
Kaushnuma Begum (Smt.) and Ors. V. New India Assurance
Co. Ltd. and Ors. 4, United India Insurance Co. Ltd. & Ors. v. B
Patricia Jean Mahajan & Ors. 5 , Jyoti Kaul & Ors. v. State of
M.P. & Anr. 6, Abati Bezbaruah v. Dy. Director General,
Geological Survey of India & Anr. 7, New India Assurance Co.
Ltd. v. Shanti Pathak (Smt.) & Ors. 8, were cited. The attention
of the Bench was also invited to Sections 163A and 166 of the c
1988 Act. The Bench was of the opinion that the question,
whether the multiplier specified in the Second Schedule should
be taken to be guide for calculation of amount of compensation
payable in a case falling under Section 166 of the 1988 Act
needed to be decided by a larger Bench. The reasons for
0
referring the above issue to the larger Bench indicated in the
referral order dated 23.07.2009 read as under:
"39. We have noticed hereinbefore that in Patricia Jean
Mahajan 5 and Abati Bezbaruah 7 and the other cases
following them multiplier specified in the Second Schedule E
has been taken to be guiding factor for calculation of the
amount of compensation even in a case under Section
166 of the Act. However, in Shanti Pathak8 this Court
advocated application of lesser multiplier, although no legal
principle has been laid therein. F
40. In Trilok Chandra 3 this Court has pointed out certain
1. 1994 (2) sec 176.
2. 1996 (3) sec 179.
3. 1996 (4) sec 362. G
4. 2001 (2) sec 9.
s. 2002 (6) sec 281.
6. 2002 (6) sec 306.
7. 2003 (3) sec 148.
8. 2001 c1 O) sec 1. H
716 SUPREME COURT REPORTS [2013) 2 S.C.R.
A purported calculation mistakes in the Second Schedule.
It, however, appears to us that there is no mistake therein.
Amount of compensation specified in the Second
Schedule only is required to be paid even if a higher or
lower amount can be said to be the quantum of
B compensation upon applying the multiplier system.
41. Section 163-A of the 1988 Act does not speak of
application of any multiplier. Even the Second Schedule,
so far as the same applies to fatal accident, does not say
so. The multiplier, in terms of the Second Schedule, is
c required to be applied in a case of disability in nonfatal
accident. Consideration for payment of compensation in
the case of death in a "no fault liability" case vis-a-vis the
amount of compensation payable in a case of permanent
total disability and permanent partial disability in terms of
D the Second Schedule is to be applied by different norms.
Whereas in the case of fatal accident the amount specified
in the Second Schedule depending upon the age and
income of the deceased is required to be paid where for
the multiplier is not to be applied at all but in a case
E involving permanent total disability or permanent partial
disability the amount of compensation payable is required
to be arrived at by multiplying the annual loss of income
by the multiplier applicable to the age of the injured as on
the date of determining the compensation and in the case
F of permanent partial disablement such percentage of
compensation which would have been payable in the case
of permanent total disablement as specified under item {a)
of the Second Schedule.
42. The Parliament in its wisdom thought to provide for a
G
higher amount of compensation in case of permanent total
disablement and proportionate amount of compensation
in case of permanent partial disablement depending upon
the percentage of disability.
H 43. Thus, prima facie, it appears that the multiplier
RESHMA KUMARI v. MADAN MOHAN 717
[R.M. LODHA, J.]
mentioned in the Second Schedule, although in a given A
case, may be taken to be a guide but the same is not
decisive. To our mind, although a probable amount of
compensation as specified in the Second Schedule in the
event the age of victim is 17 or 20 years and his annual
income is Rs. 40,000/-, his heirs/legal representatives is B
to receive a sum of Rs.7,60,000/-, however, if an
application for grant of compensation is filed in terms of
Section 166 of the 1988 Act that much amount may not
be paid, ~!though in the former case the amount of
compensation is to be determined on the basis of 'no fault c
liability' and in the later on 'fault liability'. In the
aforementioned situation the Courts, we opine, are
required to lay down certain principles.
44. We are not unmindful of the Statement of Objects and
Reasons to Act 54 of 1994 for introducing Section 163-A D
so as to provide for a new predetermined formula for
payment of compensation to road accident victims on the
basis of age/income; which is more liberal and rational.
That may be so, but it defies logic as to why in a similar
- situation, the injured claimant or his heirs/legal E
representatives, in the 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. The Courts, in our opinion, should also
bear that factor in mind. F
45. Having regard to divergence of opinion and this aspect
of the matter having not been considered in the earlier
decisions, particularly in the absence of any clarification
from the Parliament despite the recommendations made
by this Court in Trilok Chandra3 , the issue, in our opinion, G
shall be decided by a Larger Bench. It is directed
accordingly."
2. We are concerned with the above reference. Before we
refer to the provisions contained in Sections 163A and 166 of H
718 SUPREME COURT REPORTS [2013] 2 S.C.R.
A the 1988 Act, it is of some relevance to notice the background
in which the Parliament considered it necessary to bring in the
provisions of no fault liability on the statute. It so happened_that
in Minu B. Mehta and Anr. v. Balkrishna Ramchandra Nayan
and Anr. 9 , a three-Judge Bench of this Court while considering
B the question whether the fact of injury resulting from the accident
involving the use of a vehicle on the public road is the basis of
a liability and that it is not necessary to prove any negligence
on the part of the driver, held that the liability of the owner of
the car to compensate the victim in a car accident due to the
C negligent driving of his servant is based on the law of tort and
before the master could be made liable it is necessary to prove
that the servant was acting during the course of his employment
and that he was negligent. This Court held that the concept of
owner's liability without any negligence is opposed to the basic
principles of law. The mere fact that a person died or a party
0
received an injury arising out of the use of a vehicle in a public
place cannot justify fastening liability on the owner. This Court
noticed a judgment of Madras High Court in Mis Ruby
Insurance Co. v. Govindaraj, (A.A.O. Nos. 607 of 1973 and
296 of 1974) decided on December 13, 1976 V1,1herein the
E necessity of having social insurance to provide cover for the
claimants irrespective of proof of negligence to a limited extent
was suggested. This Court said "unless these ideas are
accepted by the legislature and embodied in appropriate
enactments Courts are bound to administer and give effect to
F the law as it exists today. We conclude by stating that the view
of the learned Judges of the High Court has no support in law
and hold that proof of negligence is necessary before the owner
or the insurance company could be held to be liable for the
payment of compensation in a motor accident claim case".
G
3. The Parliament having regard to the above view of this
Court and the recommendation of the Law Commission of India,
amended the Motor Vehicles Act, 1939 (for short, "1939 Act")
and inserted Section 92A therein which provided that in any
H 9. 1977 (2) sec 441.
RESHMA KUMARI v. MADAN MOHAN 719
[R.M. LODHA, J.]
claim for compensation under sub-section (1) of Section 92- A
A, the claimant shall not be required to plead and establish that
the death or permanent disablement in respect of which the
claim has been made was due to any wrongful act, neglect or
default of the owner or owners of the vehicles concerned or of
any other person. B
4. In Gujarat State Road Transport Corporation,
Ahmedabad v. Ramanbhai Prabhatbhai and Another10 , a two-
Judge Bench held that the compensation awardable under
Section 92-A was without proof of any negligence on the part C
of the owner of the vehicle or any other person which was
clearly a departure from the usual common law principle that a
claimant should establish negligence on the part of the owner
or driver of the motor vehicle before claiming any
compensation for the death or permanent disablement caused
on account of a motor vehicle accident. Certain observations D
made in Minu B. Mehta9 were held to be obiter in Ramanbhai
Prabhatbhai 10 .
5. The 1988 Act replaced the 1939 Act. Chapter X of the
1988 Act deals with liability without fault in certain cases. Sub- E
- section (3) of Section 140 provides that in any claim for
compensation under sub-section (1) the claimant shall not be
required to plead and establish that the death or permanent
disablement in respect of which the claim has been made was
due to any wrongful act, neglect or default of the owner or F
owners of the vehicle or vehicles concerned or of any other
person. Chapter XI of the 1988 Act deals with insurance of
motor vehicles against third party risks. Chapter XII deals with
the claims tribunals. Section 166 makes a provision for
application for compensation arising out of an accident which G
after few amendments reads as under:
"Section 166 - Application for compensation
10. 1987 (3) sec 234. H
720 SUPREME COURT REPORTS [2013] 2 S.C.R.
A (1) An application for compensation arising out of an
accident of the nature specified in sub-section (1) of
section 165 may be made-
(a) by the person who has sustained the injury; or
B (b) by the owner of the property; or
(c) where death has resulted from the accident, by all or
any of the legal representatives of the deceased; or
(d) ~y any agent duly authorised by the person injured or
c all or any of the legal representatives of the deceased, as
the case may be:
Provided that where all the legal representatives of the
deceased have not joined in any such application for
D compensation, the application shall be made on behalf of
or for the benefit of all the legal representatives of the
deceased and the legal representatives who have not so
joined, shall be impleaded as respondents to the
application.
E
(2) Every application under sub-section (1) shall be made,
at the option of the claimant, either to the Claims Tribunal
having jurisdiction over the area in which the accident
occurred or to the Claims Tribunal within the local limits of
whose jurisdiction the claimant resides or carries on
F
business or within the local limits of whose jurisdiction the
defendant resides, and shall be in such form and contain
such particulars as may be prescribed:
Provided that where no claim for compensation under
G section 140 is made in such application, the application
shall contain a separate statement to that effect
immediately before the signature of the applicant.
(4) The Claims Tribunal shall treat any report of accidents
forwarded to it under sub-section (6) of section 158 as an
H
RESHMA KUMARI v. MADAN MOHAN 721
[R.M. LODHA, J.]
application for compensation under this Act." A
6. By Act 54 of 1994, Section 163A was brought in the
1988 Act w.e.f. 14.11: 1994. Section 163A may be reproduced
which reads as under:..:
"163-A.Special provisions as to payment of 8
compensation on structured formula basis.-(1)
Notwithstanding anything contained in this Act or in any
other law for the time being in force or instrument having
the ·force of law, the owner of the motor vehicle or the
authorised insurer shall be liable to pay in the case of death C
0
or permanent disablement due to accident arising out of
· the use of motor vehicle, compensation, as indicated in the
Second Schedule, to the legal heirs or the victim, as the
case may be.
D
Explanation.-For the purposes of this sub-section,
'permanent disability' shall have the same meaning and
extent as in the Workmen's Compensation Act, 1923 (8
of 1923).
(2) In any claim for compensation under sub-section (1 ), E
the claimant shall not be required to plead or establish that
the death or permanent disablement in respect of which
the claim has been made was due to any wrongful act or
neglect or default of the owner of the vehicle or vehicles
concerned or of any other person. F
(3) The Central Government may, keeping in view the cost
of living by notification in the Official Gazette, from time to
time amend the Second Schedule.·
7. Along with Section 163A Second Schedule was inserted G
in the 1988 Act. Sub- section (3) of Section 163A empowers
the central government to amend the Second Schedule from
time to time keeping in view the cost of living.
8. Consequent upon the insertion of Section 163A in the H
722 SUPREME COURT REPORTS [2013] 2 S.C.R.
A 1988 Act, certain amendments were brought in the 1988 Act.
Sub-section (5) which was inserted in Section 140 reads as
follows:
"Notwithstanding anything contained in sub-section (2)
regarding death or bodily injury to any person, for which
8
the owner of the vehicle is liable to give compensation for
relief, he is also liable to pay compensation under any other
law for the time being in force.
Provided that the amount of such compensation to be
c given under any other law shall be reduced from the
amount of compensation payable under this section or
under section 163A."
9. Section 1638 was also. brought in the 1988 Act along
0 with Section 163A. Section 1638 reads as follows:
"1638. Option to file claim in certain cases. - Where a
person is entitled to claim compensation under section 140
and section 163A, he shall file the claim under either of
the said sections and not under both."
E
10. The 1988 Act gives choice to the claimants to seek
compensation on structured formula basis as provided in
Section 163A or make an application for compensation arising
out of an accident of the nature specified in sub-section (1) of
F Section 165 under Section 166. The claimants have to elect
one of the two remedies provided in Section 163A and Section
166. The remedy provided in Section 163A is not a remedy in
addition to the remedy provided in Section 166 but it provides
for an alternative course to Section 166. By incorporating
G Section 163A in the 1988 Act, the Parliament has provided the
remedy for payment of compensation notwithstanding anything
contained in the 1988 Act or in any other law for the time being
in force or instrument having the force of law, that the owner of
a motor vehicle or authorised insurer shall be liable to pay
H compensation on structured formula basis as indicated in the
RESHMA KUMARI v. MADAN MOHAN 723
[R.M. LODHA, J.]
Second Schedule in the case of death or permanent A
disablement due to accident arising out of the use of motor
vehicle. The peculiar feature of Section 163A is that for a claim
made thereunder, the claimants are not required to plead or
establish that the death or permanent disablement in respeCt
of which the claim has been made was due to any wrongful act B
or neglect or default of the owner or owners of the vehicle
concerned. The scheme of Section 163A is a departure from
the general principle of law of tort that the liability of the owner
of the vehicle to compensate the victim or his heirs in a motor
accident arises only on the proof of negligence on the part of c
the driver. Section 163A has done away with the requirement
of the proof of negligence on the part of the driver of the vehicle
where the victim of an accident or his dependants elect to apply
for compensation under Section 163A. When an application for
compensation is made under Section 163A the compensation 0
is paid as indicated in the Second Schedule. The table in the
Second Schedule has been found by this Court to be defective
to which we shall refer at a little later stage.
11. On the other hand, by making an application for
compensation arising out of an accident under Section 166 it E
is necessary for a claimant to prove negligence on the part of
the driver or owner of the vehicle. The burden is on the claimant
to establish the negligence on the part of the driver or owner
of the vehicle and on proof thereof, the claimant is entitled to
compensation. We are confronted with the question, whether F
while considering an application for compensation made under
Section 166, the multiplier specified in the Second Schedule
can be taken to be guide for determination of amount of the
compensation.
G
12. In Susamma Thomas 1, this Court noticed the two
decisions of House of Lords, (1) Davies & Anr. v. Powell
Duffryn Associated Collieries Ltd. 11 and (2) Nance v. British
11. 1942 (1) All ER 657.
12. 1951 (2) All ER 448. H
724 SUPREME COURT REPORTS [20131 2 s.~.R.
A Columbia· Electric Railway Co. Ltd. 12 wherein two different
methods - lump sum method and multiplier method - were
adopted for determination and for calculation of compensation
in fatal accident actions. This Court has preferred the multiplier
method adopted in Davies case11 • While holding so, this Court
B also referred to another decision of House of Lords in Mallett
v. Mc Monagle 13 • It has been laid down in Susamma Thomas 1
that multiplier method was logically sound and legally well
established. The multiplier represented the number of year's
purchase on which the loss of dependency is capitalized. The
c multiplier method involves the ascertainl'T}ent of the loss of
dependency or the multiplicand having regard 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 as to what capital
0
sum, if invested at a rate of interest appropriate to a stable
economy, would yield the multiplicand by way of annual interest.
In ascertaining this, the Court said that 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
E expected to last. In Susamma Thomas1 this Court noticed that
English Courts have rarely applied operative multiplier
exceeding 16.
13. The award of compensation in a motor accident case
F based on the multiplier method is an established norm in India
.now. A three-Judge Bench in Trilok Chandra 3 reiterated what
was stated in Susamma Thomas 1 as regards determination
of compensation in accident cases on the basis of multiplier
method. In Trilok Chandra 3 , the Court considered Section
G 163A and the Second Schedule which was not under
consideration in Susamma Thomas 1 as Section 163A was not
on the statute when the judgment in Susamma Thomas1 was
delivered. It was observed that by incorporation of Sections
163A and 1638 in the 1988 Act the situation had undergone a
H 13. 1969 (2) All ER 178.
RESHMA KUMARI v. MADAN MOHAN 725
[RM. LODHA, J.]
change. Under the Second Schedule, the maximum multiplier A
could be upto 18 and not 16 as was held in Susamma
Thomas 1• In Trilok Chandra3 , the maximum multiplier was fixed
at 18 but the Court did find several defects in the calculation of
compensation and the amount worked out in the Second
Schedule. Importantly this Court stated in Trilok Chandra3 that B
Tribunals and the Courts cannot go by the ready reckoner; the
Schedule can only be used as a guide. This is what this Court
said in paras 17 and 18 of the Report:
"17. The situation has now undergone a change with the C
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 in Chapter XI entitled "Insurance
of Motor Vehicles against Third Party Risks". Section 165- D
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 E
compensation for third party accident injury 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 F
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. Thus, under this Schedule the
maximum multiplier can be up to. 18 and not 16 as was
held in Susamma Thomas case [(1994) 2 SCC 176]. G
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 multiplier is shown to be 15 years
H
726 SUPREME COURT REPORTS [2013] 2 S.C.R.
A and the multiplicand is shown to be Rs. 3000. The total
should be 3000x15=45,000 but the same is worked out
at Rs. 60,000. Similarly, in the second item the 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.
B To put it briefly, the 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 dependant on the
age of the deceased. For example, if the deceased, a
c 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' purchase factor. This is the improvement
D
over the earlier position that ordinarily 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
multiplier of 24 which the High Court raised to 34, thereby
E showing lack of awareness of the background of the
multiplier system in Davies case".
(Emphasis supplied by us)
14. A three-Judge Bench in Supe Dei (Smt) and Others
F
v. National Insurance Company Limited and Another14 [Civil
Appeal No. 2753 of 2002; decided on April 16, 2002]
considered the question, whether Second Schedule to the 1988
Act can be made applicable in deciding the application for
G compensation made under Section 166 or not? This Court held
that the Second Schedule under Section 163A of the 1988 Act
which gives the amount of compensation to be determined for
the purpose of claim under that Section can be taken as a
guideline while determining the compensation under Section
H 14. (2009) 4 sec 513.
RESHMA KUMARI v. MADAN MOHAN 727
[RM. LODHA, J.]
166 of the 1988 Act. The Second Schedule in terms does not A
apply to a claim made under Section 166 of the 1988 Act.
15. In Patricia Jean Mahajan 5 , this Court had an occasion
to consider Sections 163A and 166 of the 1988 Act. With
regard to Section 163A, the Court stated, "the noticeable 8
features of this provision are that it provides for compensation
in the case of death or permanent disablement due to accident
arising out of use of motor vehicle. The amount of
compensation would be as indicated in the Second Schedule.
The claimant is not required to plead or establish that the death C
or permanent disablement was due to any wrongful act or
negligence or default of the owner of the vehicle or any other
person."
16. Then the Court referred to Sections 165 and 166 of
the 1988 Act and observed that a claim under Section 166 did D
not provide for the amount of compensation according to the
Second Schedule; rather Section 168 makes it clear that it is
for the tribunal to arrive at an amount of compensation which it
may consider to be just in the facts and circumstances of the
case. However, the Court did observe that structured formula E
as provided under Second Schedule would be a safe guide to
calculate the compensation while dealing with a claim made
under Section 166.
17. In Patricia Jean Mahajan 5, in light of the facts which
F
were obtaining in that case, this Court held in paragraphs 19
and 20 of the Report (pgs. 294 and 295) as under:
"19. In the present case we find that the parents of the
deceased were 69/73 years. Two daughters were aged
17 and 19 years. The main question, which strikes us in G
this case is that in the given circumstances the amount of
multiplicand also assumes relevance. The total amount of
dependency as found by the learned Single Judge and
also rightly upheld by the Division Bench comes to
H
728 SUPREME COURT REPORTS [2013] 2 S.C.R.
A 2,26,297 dollars. Applying multiplier of 10, the amount with
interest and the conversion rate of Rs 47, comes to Rs
10.38 crores and with multiplier of 13 at the conversion
rate of Rs 30 the amount comes to Rs 16.12 crores with
interest. These amounts are huge indeed. Looking to the
B Indian economy, fiscal and financial situation, the amount
is certainly a fabulous amount though in the background
of American conditions it may not be so. Therefore, where
there is so much of disparity in the economic conditions
and affluence of the two places viz. the place to which the
c victim belongs and the place where the compensation is
to be paid, a golden balance must be struck somewhere,
to arrive at a reasonable and fair mesne. Looking by the
Indian standards they may not be much too
overcompensated and similarly not very much
undercompensated as well, in the background of the
D
country where most of the dependent beneficiaries reside.
Two of the dependants, namely, parents aged 69n3 years
live in India, but four of them are in the United States. Shri
Soli J. Sorabjee submitted that the amount of multiplicand
shall surely be relevant and in case it is a high amount, a
E lower multiplier can appropriately be applied. We find force~
in this submission. Considering all the facts and factors as
indicated above, to us it appears that application of
multiplier of 7 is definitely on the lower side. Some
deviation in the figure of multiplier would not mean that
F there may be a wide difference between the multiplier
applied and the scheduled multiplier which in this case is
13. The difference between 7 and 13 is too wide. As
observed earlier, looking to the high amount of multiplicand
and the ages of the dependants and the fact that the
G parents are residing in India, in our view application of
multiplier of 10 would be reasonable and would provide a
fair compensation i.e. a purchase factor of 10 years. We
accordingly hold that multiplier of 10 as applied by the
learned Single Judge should be restored instead of
H
RESHMA KUMARI v. MADAN MOHAN 729
[R.M. LODHA, J.]
multiplier of 13 as applied by the Division Bench. We find A
no force in the submission made on behalf of the claimants
that in no circumstances the amount of multiplicar:id would
be a relevant consideration for application of appropriate
multiplier. We havG already given our reasons in the
discussion held above. B
20. The court cannot be totally oblivious to the realities. The
Second Schedule while prescribing the multiplier, had
maximum income of Rs 40,000 p.a. in mind, but it is
considered to be a safe guide for applying the prescribed C
multiplier in cases of higher income also but in cases
where the gap in income is so wide as in the present case
income is 2,26,297 dollars, in such a situation, it cannot
be said that some deviation in the multiplier would be
impermissible. Therefore, a deviation from applying the
multiplier as provided in the Second Schedule may have D
to be made in this case. Apart from factors indicated earlier
the amount of multiplicand also becomes a factor to be
taken into account which in this case comes to 2,26,297
dollars, that is to say an amount of around Rs 68 lakhs per
annum by converting it at the rate of Rs 30. By Indian E
standards it is certainly a high amount. Therefore, for the
purposes of fair compensation, a lesser multiplier can be
applied to a heavy amount of multiplicand. A deviation
would be reasonably permissible in the figure of multiplier
even according to the observations made in the case of F
Susamma Thomas 1 where a specific example was given
about a person dying at the age of 45 leaving no heirs
being a bachelor except his parents."
18. The noticeable observations in Patricia Jean Mahajan 5 G
are that, (i) for the purposes of fair compensation, a lesser
multiplier can be applied to a heavy amount of multiplicand and
(2) a deviation would be reasonably permissible in the figure
of multiplier in appropriate cases.
19. In Deepal Girishbhai Soni and Others v. United India H
730 SUPREME COURT REPORTS [2013] 2 S.C.R.
A Insurance Co. Ltd. 15, Baroda, the question that arose for
consideration before a three-Judge Bench was, whether a
proceeding under Section 163A of the 1988 Act was a final
proceeding and the claimant, who has been granted
compensation under Section 163A, was debarred from
B proceeding with any further claims on the basis of the fault
liability in terms of Section 166. This Court considered the
statutory provisions contained in the 1988 Act, including
Sections 163A and 166. With regard to Section 163A, the
Court stated as follows:
c "42. Section 163-A was, thus, enacted for grant of
immediate relief to a section of the people whose annual
income is not more than Rs 40,000 having regard to the
fact that in terms of Section 163-A of the Act read with the
Second Schedule appended thereto, compensation is to
D be paid on a structured formula not only having regard to
the age of the victim and his income but also the other
factors relevant therefor. An award made thereunder,
therefore, shall be in full and final settlement of the claim
as would appear from the different columns contained in
E the Second Schedule appended to the Act. The same is
not interim in nature .... This together with the other heads
of compensation as contained in columns 2 to 6 thereof
leaves no manner of doubt that Parliament intended to lay
a comprehensive scheme for the purpose of grant of
F adequate compensation to a section of victims who would
require the amount of compensation without fighting any
protracted litigation for proving that the accident occurred
owing to negligence on the part of the driver of the motor
vehicle or any other fault arising out of use of a motor
G vehicle.
xxxxxxxxx
46. Section 163-A which has an overriding effect provides
H 15. (2004) 5 sec 385.
RESHMA KUMARI v. MADAN MOHAN 731
[R.M. LODHA, J.]
for special provisions as to payment of compensation on A
structured-formula basis. Sub-section (1) of Section 163-
A contains non obstante clause in terms whereof the owner
of the motor vehicle or the authorised insurer is liable to
pay in the case of death or permanent disablement due
to accident arising out of the use of motor vehicle, B
compensation, as indicated in the Second Schedule, to the
legal heirs or the victim, as the case may be ......... .
xxxxxxxxx
51. The scheme envisaged under Section 163-A, in our C
opinion, leaves no manner of doubt that by reason thereof
the rights and obligations of the parties are to be
determined finally. The amount of compensation payable
under the aforementioned provisions is not to be altered
or varied in any other proceedings. It does not contain any D
provision providing for set-off against a higher
compensation unlike Section 140. In terms of the said
provision, a distinct and specified class of citizens, namely,
persons whose income per annum is Rs 40,000 or less
is covered thereunder whereas Sections 140 and 166 E
cater to all sections of society.
52. It may be true that Section 163-B provides for an option
to a claimant to either go for a claim under Section 140
or Section 163-A of the Act, as the case may be, but the
same was inserted ex abundanti caute/a so as to remove F
any misconception in the minds of the parties to the lis
having regard to the fact that both relate to the claim on
the basis of no-fault liability. Having regard to the fact that
Section 166 of the Act provides for a complete machinery
for laying a claim on fault liability, the question of giving an G
option to the claimant to pursue their claims both under
Section 163-A and Section 166 does not arise. If the
submission of the learned counsel is accepted the same
would lead to an incongruity.
H
732 SUPREME COURT REPORTS [2013) 2 S.C.R.
A xxx xxx xxx".
20. A two-Judge Bench in Abati Bezbaruah7 with reference
to the structured formula set out in the Second Schedule in
1988 Act observed as follows:-
B lt 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
c the amount of compensation in terms of Section 166
thereof. Deviation from the structured formula, however, as
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
D circumstances of each case.
21. In Shanti Pathak8 a three-Judge Bench of this Court
in a very brief order applied multiplier of 8 for a claim of
compensation in respect of the deceased who was 25 years
E at the time of his death.
22. In Oriental Insurance Company Ltd. v. Jashuben and
Ors. 16 , two-Judge Bench of this Court applied the multiplier of
13 in a case where the age of the deceased was 35 years at
the time of accident.
F
23. In Sar/a Verma (Smt.) and Ors. v. Delhi Transport
Corporation and Anr. 17 , this Court had an occasion to consider
the peculiarities of Section 163A of the 1988 Act vis-a-vis
Section 166. The Court reiterated what was stated in earlier
G decisions that the principles relating to determination of liability
and quantum of compensation were different for claims made
under Section 163A and claims made under Section 166. It was
stated that Section 163A and the Second Schedule in terms
16. 2oos (4) sec 162.
H 11. 2009 (6) sec 121.
RESHMA KUMARI v. MADAN MOHAN 733
[R.M. LODHA, J.]
did not apply to determination of compensation in applications A
under Section 166. While stating that Section 163A contains
a special provision, this Court said:
"34 ....... Section 163-A of the MV Act contains a special
provision as to payment of compensation on structured
8
formula basis, as indicated in the Second Schedule to the
Act. The Second Schedule contains a table prescribing the
compensation to be awarded with reference to the age
and income of the deceased. It specifies the amount of
compensation to be awarded with reference to the annual
income range of Rs 3000 to Rs 40,000. It does not specify C
the quantum of compensation in case the annual income
of the deceased is more than Rs 40,000. But it provides
the multiplier to be applied with reference to the age of the
deceased. The table starts with a multiplier of 15, goes up
to 18, and then steadily comes down to 5. It also provides D
the standard deduction as one-third on account of personal
living expenses of the deceased. Therefore, where the
application is under Section 163-A of the Act, it is possible
to calculate the compensation on the structured formula
basis, even where the compensation is not specified with E
reference to the annual income of the deceased, or is more
than Rs 40,000, by applying the formula: (2/3 x Al x M),
that is two-thirds of the annual income multiplied by the
multiplier applicable to the age of the deceased would be
the compensation. Several principles of tortuous liability F
are excluded when the claim is under Section 163-A of the
MV Act."
24. This Court, however, noticed discrepancies/errors in
the multiplier scale given in the Second Schedule table and also
observed that application of table may result in incongruities. G
Paras 35 and 36 (pp. 137) of the Report are as follows:
"35. There are however discrepancies/errors in the
multiplier scale given in the Second Schedule table. It
prescribes a lesser compensation for cases where a H
734 SUPREME COURT REPORTS [2013) 2 S.C.R.
A higher multiplier of 18 is applicable and a larger
compensation with reference to cases where a lesser
multiplier of 15, 16, or 17 is applicable. From the quantum
of compensation specified in the table, it is possible to
infer that a clerical error has crept in the Schedule and the
B "multiplier'' figures got wrongly typed as 15, 16, 17, 18, 17,
16, 15, 13, 11, 8, 5 and 5 instead of 20, 19, 18, 17, 16,
15, 14, 12, 10, 8, 6 and 5.
36. Another noticeable incongruity is, having prescribed the
notional minimum income of non-earning pel"Sons as Rs
c 15,000 per annum, the table prescribes the compensation
payable even in cases where the annual income ranges
between Rs 3000 and Rs 12,000. This leads to an
anomalous position in regard to applications under Section
163-A of the MV Act, as the compensation will be higher
D in cases where the deceased was idle and not having any
income, than in cases where the deceased was honestly
earning an income ranging between Rs 3000 and Rs
12,000 per annum. Be that as it may."
E 25. While referring to the decisions of this Court in New
India Assurance Company Ltd. v. Charlie and Anr. 18 , T.N.
State Road Transport Corporation v. S. Rajapriya and Ors. 19
and U.P. State Road Transport Corporation v. Krishna Bala
and Ors. 20 , this Court in Sar/a Verma 17 in paragraph 39 (pg.
F 138) of the Report observed as follows:
"39. In New India Assurance Co. Ltd. v. Charlie this Court
noticed that in respect of claims under Section 166 of the
MV Act, the highest multiplier applicable was 18 and that
the said multiplier should be applied to the age group of
G 21 to 25 years (commencement of normal productive
years) and the lowest multiplier would be in respect of
1s. 2005 c10) sec 120.
19. 2005 (6) sec 236.
H 20. 2006 (6) sec 249.
RESHMA KUMARI v. MADAN MOHAN 735
[R.M. LODHA, J.]
persons in the age group of 60 to 70 years (normal retiring A
age). This was reiterated in T.N. State Transport Corpn.
Ltd. v. S. Rajapriya and U.P. SRTC v. Krishna Bala."
26. In Sar/a Verrna 17 , this Court undertook the exercise of
comparing the multiplier indicated in Susamma Thomas 1 ,
Trilok Chandra 3 and Charlie 18 , for claims under Section 166 B
of the 1988 Act with the multiplier mentioned in the Second
Schedule for claims under Section 163A (with appropriate
deceleration after 50 years) as follows:
Age of
Deceased
Multiplier Multiplier Multiplier
Scale as Scale as Scale in
Multiplier
Specified
Multiplier
actually
c
envisaged adopted· Trilok in Second used in
in by Trilok Chandra' Column in Second
Susamma Chandra 3 as the Table Schedu-
Thomas' clarified in Second -le to the
in Schedule M-/Act
Charlie" to the MV (as seen D
Act from the
quantum
of compe·
-nsation)
(1) (2) (3) (4) (5) (6)
E
Upto 15 years - - . 15 20
15 to 20 years 16 18 18 16 19
21 to 25 years 15 17 18 17 18
F
26 to 30 years 14 16 17 18 17
31 to 35 years 13 15 16 17 16
3!1 to 40 years 12 14 15 16 15
41 to 45 years 11 13 14 15 14 G
46 to 50 years 10 12 13 13 12
51 to 55 years' 9 11 11 11 10
56 to 60 years 8 10 09 8 8 H
736 SUPREME COURT REPORTS [2013] 2 S.C.R.
A 61 to 65 years 6 08 .07 5 6
Above 65 years 5 05 05 5 5
27. In paragraph 42 (pg. 140) of the Report, this Court in
Sar/a Verma17 laid down that the multiplier shall be used in a
B given case in the 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
c 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 is
M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15
for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for
46 to 50 years, then reduced by two units for every five
D years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60
years, M-7 for 61 to 65 years and M-5 for 66 to 70 years."
28. The above exercise was undertaken in Sar/a Verma17
to ensure uniformity and consistency in the selection of multiplier
while awarding compensation in motor accident claims made
E under Section 166.
29. Section 168 of the 1988 Act provides the guideline that
the amount of compensation shall be awarded by the claims
tribunal which appears to it to be just. The expression, 'just'
F means that the amount so determined is fair, reasonable and
equitable by accepted legal standards and not a forensic
lottery. Obviously 'just compensation' does not mean 'perfect'
or 'absolute' compensation. The just compensation principle
requires examination of the particular situation obtaining
G uniquely in an individual case.
30. Almost a century back in Taff Vale Railway Co. v.
Jenkins2 1, the House of Lords laid down the test that award of
damages in fatal accident action is compensation for the
reasonable expectation of pecuniary benefit by the deceased's
H 21. (1913)AC1.
RESHMA KUMARI v. MADAN MOHAN 737
[R.M. LODHA, J.]
family. The purpose of award of compensation is to put the A
dependants of the deceased, who had been bread-winner of
the family, in the same position financially as if he had lived his
natural span of life; it is not designed to put the claimants in a
better financial position in which they would otherwise have
been if the accident had not occurred. At the same time, the B
determination of compensation is not an exact science and the
exercise involves an assessment based on estimation and
conjectures here and there as many imponderable factors and
unpredictable contingencies have to be taken into
consideration.
c
31. This Court in C.K. Subramania Iyer and Ors. v.
T.Kunhikuttan Nair and Ors. 22, reiterated the legal philosophy
highlighted in Taff Vale Railway21 for award of compensation
in claim cases and said that there is no exact uniform rule for
measuring the value of the human life and the measure of D
damages cannot be arrived at by precise mathematical
calculations. Obviously, award of damages in each case would
depend on the particular facts and circumstances of the case
but the element of fairness in the amount of compensation so
determined is the ultimate guiding factor. E
32. In Susamma Thomas', this Court - though with
reference to Section 11 OB of the Motor Vehicles Act, 1939 -
stated that the multiplier method was the accepted norm of
ensuring the just compensation which will make for uniformity
and certainty of the awards. We are of the opinion that this F
statement in Susamma Thomas 1 is equally applicable to the
fatal accident claims made under Section 166 of the 1988 Act.
In our view, the determination of compensation based on
multiplier method is the best available means and the most
satisfactory method and must be followed invariably by the G
tribunals and courts.
33. We have already noticed the table prepared in Sarla
Verma 11 for the selection of multiplier. The table has been
22. 1970 (2) SCR 688. H
738 ~·SUPREME COURT REPORTS (2013] 2 S.C.R.
A prepared in Sar/a Verma 17 having regard to the three decisions
of this Court, namely, Susamma Thomas 1 , Trilok Chandra 3
and Charlie 18 for the claims made under Section 166 of the
1988 Act. The Court said that multiplier shown in Column (4)
of the table must be used having regard to the age ·of the
8 deceased. Perhaps the biggest 11advantage by employing the
table prepared in Sar/a Verma is that the uniformity and
consistency in selection of the multiplier can be achieved. The
assessment of extent of dependency depends on examination
of the unique situation of the individual case. Valuing the
C dependency or the multiplicand is to some extent an arithmetical
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.
D In Sar/a Verma 17 , this Court has endeavoured to simplify the .
otherwise complex exercise of assessment of loss of
dependency and determinatioh of compensation in a claim
made under Section 166. It has been rightly stated in Sar/a
Venna 17 that claimants in case of death claim for the purposes
E of compensation must establish (a) age of the deceased; (b)
income of the deceased; and (c) the number of dependants.
To arrive at the loss of dependency, the Tribunal must consider
(i) additions/deductions to be made for arriving at the income;
(ii) the deductions to be made towards the personal living
F 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 on the point as we are in
full agreement with the view in Sar/a Venna 17 •
34. If the multiplier as indicated in Column (4} of the table
G read with paragraph 42 of the Report in Sarfa Verma 11 is
followed, the wide variations inthe selection of multiplier in the
claims of compensation in fatal accident cases can be avoided.
A standard method for selection of multiplier is surely better
than a criss-cross of varying methods. It is high time that we
H move to a standard method of selection of multiplier, income
RESHMA KUMARI v. MADAN MOHAN 739
[R.M. LODHA, J.]
for future prospects and deduction for personal and living A
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 Sarla Verma 17 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, B
Column (4) of the table in Sarla Verma 17 is followed, there is
no likelihood of the 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 163A. As regards the c
cases where the age of the victim happens to be upto 15 years,
we are of the considered opinion that in such cases
irrespective of Section 163A 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
0
to correction as pointed out in Column (6) of the table in Sarla
Verma 17 should be followed. This is to ensure that claimants in
· such cases are not awarded lesser amount when the·
application is made under Section 166 of the 1988 Act. In all
other cases of death where the application has been made EJ
under Section 166, the multiplier as indicated in Column (4) of
the table in Sarla Verma 17 should be followed.
35. With regard to the addition to income for future
prospects, in Sar/a Verma 17 , this Court has noted earlier
decisions in Susamma Thomas 1 , Sar/a Dixit2 and Abati F
Bezbaruah7 and in paragraph 24 of the Report held as under: ·
"24....... In 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 G
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 less tax"). The
addition should be only 30% if the age of the deceased
H
740 SUPREME COURT REPORTS (2013] 2 S.C.R.
A 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 or different
B 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 actual income at the time of death.
A departure therefrom should be made only in rare and
c exceptional cases involving special circumstances. n
36. The standardization of addition to income for future
prospects shall help in achieving certainty in arriving at
appropriate compensation. We approve the method that an
addition of 50% of actual salary be made to the actual salary
D 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 should be made where the age
of the deceased is more than 50 years. Where the annual
E 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
F appropriate. A departure from the above principle can only be
· justified in extraordinary circumstances and very exceptional
cases.
37. As regards deduction for personal and living expenses,
G in Sar/a Verma 17 , this Court considered Susamma Thomas 1 ,
Trilok Chandra 3 and Fakeerappa 23 and finally in paras 30, 31
and 32 of the Report held as under:
"30 ....... Having considered several subsequent decisions
23. Fakeerappa and Anr. v. Karnatka Cement Pipe Factory and others: ((2004)-
H 2 sec 473.
RESHMA KUMAR! v. MADAN MOHAN 741
[R.M. LODHA, J.]
of this Court, we are of the view that where the deceased A
was married, the deduction towards personal and living
expenses of the deceased, should be one-third (1/3rd)
where the number of dependent family members is 2 to
3, one-fourth (1/4th) where the number of dependent family
members is 4 to 6, and one-fifth (1/5th) where the number B
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 C
personal and living expenses, because it is assumed that
a bachelor would tend to spend more on himself. Even
otheiwise, 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,
subject to evidence to the contrary, the father is likely to D
have his own income and will not be considered as a
dependant and the 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 E
married, or be dependent on the father.
32. Thus even if the deceased is survived by parents and
siblings, only the mother would be considered to be a
dependant, and 50% would be treated as the personal and F
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· m a case where he has a widowed mother
and large number of younger non-earning sisters or G
brothers, his personal and living expenses may be
restricted to one-third and contribution to the family will be
taken as two-third."
38. The above does provide guidance for the appropriate
deduction for personal and living expenses. One must bear in H
742 SUPREME COURT REPORTS [2013) 2 S.C.R.
A mind 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
B number of dependant members in the family and the personal
living expenses of the deceased need not exactly correspond
to the number of dependants.
39. In our view, the standards fixed by this Court in Sar/a
C Verma 17 on the aspect of deduction for personal living
expenses in paragraphs 30, 31 and 32 must ordinarily be
followed unless a case for departure in the circumstances noted
in the preceding para is made out.
40. In what we have discussed above, we sum up our
- D conclusions as follows:
(i) In the applications for compensation made under
Section 166 of the 1988 Act in death cases where the ·age of /
the deceased is 15 years and above, .the Claims Tribunals shall
E select the multiplier as indicated in Column (4) of the table
prepared in Sar/a Verma 17 read with para 42 of that judgment.
(ii) In cases where the age of the deceased is upto 15
years, irrespective of the Section 166 or Section 163A under
which the claim for compensation has been made, multiplier
F 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 17 should be followed.
(iii) As a result of the above, while considering the claim
G applications made under Section 166 in death case$ 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.
(iv) The Claims Tribunals shall follow the steps and
H
RESHMA KUMARI v. MADAN MOHAN 743
[RM. LODHA, J.]
·guidelines stated in para 19 of Sar/a Verma 11 for determination A
of compensation in cases of dea~h.
(v) While making addition to income for future prospects,
the Tribunals shall follow paragraph 24 of the Judgment in Sar/a
Verma 17 • B
(vi) Insofar as deduction for personal and living expenses
is concerned, it is directed that the Tribunals shall ordinarily
follow the standards prescribed in paragraphs 30, 31 and 32
of the judgment in Sar/a Verma17 subject to the observations
made by us in para 38 above. C
(vii) The above propositions mutatis mutandis shall apply
to all pending matters where above aspects are under
consideration.
41. The reference is answered accordingly. Civil appeals D
shall now be posted for hearing and disposal before the regular
Bench.
RP. Reference answered.
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