# [2002] 3 S.C.R. 1176

- **Citation:** [2002] 3 S.C.R. 1176
- **Court:** Supreme Court of India
- **Decided:** 2002-07-08
- **Case number:** Civil Appeal Nos. 3655-58 of 2002
- **Bench:** D.P. Mohapatra, Brijesh Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2002-3-s-c-r-1176-18547
- **Pages:** 30

## Headnote

Motor Vehicles Act, 1988:
Second Schedule and Section /63A-Motor accident-DeathC Compensation-Multiplier-Deviation from-Permissibility of-Held,
ordinarily provisions contained in Second Schedule may be taken as a guideBut in. case where gap of income is wide, deviation from the multiplier is
permissible-For the purposes of fair compensation a lesser multiplier can be
applied to a heavy amount of f!IUltiplicand.
D
Compensation-Deduction on accoun~ of receipts under the Insurance
Policy and other receipts under social security system-Whether perrnissibleH~ld, such deduction for balancing losses and gains by reason of death, to
arrive at amount of compensation is a general rule-But the amount received
on account of social security must have nexus or relation with the accidental
E injury or death.
Interest-A.ward of at the rate of I 2'Y<r-Held, in view of declining interest
rate, interest reduced to 9%.
Death of foreign citizen-Claim of compensation after applying a certain
F conversion rate-In appeal plea to calculate amount of award at higher
conversion rate-Held, higher conversion rate not permissible-The claimants
cannot ask for more than what was claimed in the claim petition.
Practice and Procedure-Issue not raised in Courts below-Interference
by Supreme Court-Non-raising of the issue inferred from the observation of
G the Court below-Held, generally such observation cannot be denied-But in
case of vague observation, it is open to Supreme Court to ascertain the correct
position on the basis of totality of the observations in the judgment.
Words and Phrases :
H
1176
UNITED INDIA INSURANCE CO. LTD. 1•. PATRICA JEAN MAHAJAN
} J 77
"Receipts from l·vhatever source "-~Meaning of· in the context of Motor A
Vehicles Act, 1988.
An American citizen while he was on visit to India met with an
accident and succumbed to his injuries. His parents, his wife and his three
children were his dependants.
The dependants filed petitfon claiming compensation on account of
his death. In the petition, details of income etc. had been given in Dollars
but prayer for passing the decree was for a sum indicated in rupees, which
was arrived at by applying Rs. 30 as conversion rate of Dollar.
B
Motor Accident Claims Tribunal found that death of the deceased C
was on account of rash and negligent driving and ascertained the amount
of compensation by applying multiplier of7, and by deducting the amount
received by the claimants on account of social security system, Applying
the exchange rate of rupees 30, it awarded compensation of Rs. 1.19 crores
with interest at the rate of 12%.
On appeal Single Judge of High Court enhanced the amount of
compensation to Rs. 10.38 crores by using multiplier of JO and disallowed
the deductions on account of social security system. Rate of exchange was
applied at Rs, 47 i.e. the current rate as then prevailing. The rate of interest
was maintained as 12°/o.
D
E
In appeal, before Division Bench of High Court, the Court further
enhanced the compensation by applying multiplier of 13 according to
Second Schedule referable to Section 163-A of the Motor Vehicles Act,
1988 holding that the Schedule was safe guide to arrive at the amount of
just compensation. It disallowed the deduction on account of social security F
system. Interest rate was maintained as 12% while the exchange rate was
applied at Rs. 30. Thus total amount of compensation came to about Rs.
16.12 crores.
In appeal to this Court it was contended by insurance company that
while assessing the amount of compensation the benefits, which have G
accrued to the claimants by reason of death, must also be taken into
account. The claimants contended that the question relating to rate of
interest was not under challenge before High Court hence the same could
· not be raised in this Court; that the factual position as recorded by Division
Bench of High Court that the rate of interest was not in dispute before H
1178
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A the Court, should not

## Text

_Characters 0–39,999 of 76,765. This is a partial read: ask again with offset=39999 for what follows._

A
UNITED INDIA INSURANCE CO. LTD. ETC. ETC.
v .
. PATRICA JEAN MAHAJAN AND ORS. ETC. ETC.
JULY 8, 2002
B
[D.P. MOHAPATRA AND BRIJESH KUMAR, JJ.]
Motor Vehicles Act, 1988:
Second Schedule and Section /63A-Motor accident-DeathC Compensation-Multiplier-Deviation from-Permissibility of-Held,
ordinarily provisions contained in Second Schedule may be taken as a guideBut in. case where gap of income is wide, deviation from the multiplier is
permissible-For the purposes of fair compensation a lesser multiplier can be
applied to a heavy amount of f!IUltiplicand.
D
Compensation-Deduction on accoun~ of receipts under the Insurance
Policy and other receipts under social security system-Whether perrnissibleH~ld, such deduction for balancing losses and gains by reason of death, to
arrive at amount of compensation is a general rule-But the amount received
on account of social security must have nexus or relation with the accidental
E injury or death.
Interest-A.ward of at the rate of I 2'Y<r-Held, in view of declining interest
rate, interest reduced to 9%.
Death of foreign citizen-Claim of compensation after applying a certain
F conversion rate-In appeal plea to calculate amount of award at higher
conversion rate-Held, higher conversion rate not permissible-The claimants
cannot ask for more than what was claimed in the claim petition.
Practice and Procedure-Issue not raised in Courts below-Interference
by Supreme Court-Non-raising of the issue inferred from the observation of
G the Court below-Held, generally such observation cannot be denied-But in
case of vague observation, it is open to Supreme Court to ascertain the correct
position on the basis of totality of the observations in the judgment.
Words and Phrases :
H
1176
UNITED INDIA INSURANCE CO. LTD. 1•. PATRICA JEAN MAHAJAN
} J 77
"Receipts from l·vhatever source "-~Meaning of· in the context of Motor A
Vehicles Act, 1988.
An American citizen while he was on visit to India met with an
accident and succumbed to his injuries. His parents, his wife and his three
children were his dependants.
The dependants filed petitfon claiming compensation on account of
his death. In the petition, details of income etc. had been given in Dollars
but prayer for passing the decree was for a sum indicated in rupees, which
was arrived at by applying Rs. 30 as conversion rate of Dollar.
B
Motor Accident Claims Tribunal found that death of the deceased C
was on account of rash and negligent driving and ascertained the amount
of compensation by applying multiplier of7, and by deducting the amount
received by the claimants on account of social security system, Applying
the exchange rate of rupees 30, it awarded compensation of Rs. 1.19 crores
with interest at the rate of 12%.
On appeal Single Judge of High Court enhanced the amount of
compensation to Rs. 10.38 crores by using multiplier of JO and disallowed
the deductions on account of social security system. Rate of exchange was
applied at Rs, 47 i.e. the current rate as then prevailing. The rate of interest
was maintained as 12°/o.
D
E
In appeal, before Division Bench of High Court, the Court further
enhanced the compensation by applying multiplier of 13 according to
Second Schedule referable to Section 163-A of the Motor Vehicles Act,
1988 holding that the Schedule was safe guide to arrive at the amount of
just compensation. It disallowed the deduction on account of social security F
system. Interest rate was maintained as 12% while the exchange rate was
applied at Rs. 30. Thus total amount of compensation came to about Rs.
16.12 crores.
In appeal to this Court it was contended by insurance company that
while assessing the amount of compensation the benefits, which have G
accrued to the claimants by reason of death, must also be taken into
account. The claimants contended that the question relating to rate of
interest was not under challenge before High Court hence the same could
· not be raised in this Court; that the factual position as recorded by Division
Bench of High Court that the rate of interest was not in dispute before H
1178
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A the Court, should not be allowed to be disputed; and that it is only the
current exchange rate of dollar which should be allowed since the value
of the Rupee has fallen in exchange of Dollar after the application of claim
B
was made and award was given.
Disposing of the appeals, the Court
HELD: 1.1. Considering all the facts and factors, application of
multiplier of 7 is definitely on the lower side. Some deviation in the figure
of mulitplier would not inean that there may be a wide difference between
the multiplier applied and the scheduled multiplier, which in this case is
C 13. The difference between 7 and 13 is too wide. Looking in the high
amount of mulitplicand and the ages of the dependants and the fact that
the parents are living in India, application of mulitplier of 10 would be
reasonable and would provide a fair compensation i.e. a purchase factor
of 10 y~ars. Accordingly multiplier of 10 should be restored instead of
multiplier of 13. 11192-D-FI
D
1.2. Ordinarily while awarding compensation, the provisions
contained in the Second Schedule may be taken as a guide including the
mulitplier, but there may arise some cases, as one in hand, which may fall
in the category having special feature or facts calling for deviation from
E the multiplier usually applicable. The Court cannot be totally oblivion to
the realities. T~e 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 prescribed 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 $, in such a situation, it cannot be said that some
F deviation in the multiplier, would be impermissible. Therefore, a deviation
from applying the multiplier as provided in the second Schedule may have
to be made in this case. Apart from other factors the amount of
multiplicand also become a factor to be taken into account which in this
case comes to 226297 $ that is to say an amount of around Rs. 68 lacs per
G annum by converting it at the rate of Rs. 30. By Indian 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 figure of multiplier. Applying
a multiplier other than the scheduled multiplier does not mean that any
method other than mulitplier method has been applied.
H
11193-E; 1192-H; 1193-A, B; 1191-GI
,I
J. ....
UNITED INDIA INSURANCE CO. LTD. ''· PATRICA JEAN MAHAJAN
1179
1.3. In the instant case the amounts granted as compensation by A
Single Judge and Division Bench of High Court, are huge. Looking to the
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, there is_ so much of disparity in the economic
conditions and affluence of the two places viz. the place to which the victim B
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 standarcis they may not be much too
overcompensated and similarly not very much under compensated as well,
in the background of the country where most of the dependent
beneficiaries reside. 11192-B-DI
C
General Manager, Kera/a State Road Transport Corporation,
Trivandrwn v. Susamma Thomas (Mrs) and Ors., 1199412SCC176; U.P.
State Road Transport Corporation and Ors. v. Trilok Chand and Ors., 119961
4 SCC 362; Lala Wadhwa and Ors. v. State of Bihar and Ors., 12001 I 8 SCC
197 and Jyoti Kaul and Ors. v. State of Madhya Pradesh, JT 120001 7 SCC D
367, referred to.
Devis v. Tailor (1997) AC 207; Devis v. Paul Dujfryn Associated
Limited, (1942) 1 All Er. 657 (HL) and Mal/eel/ v. Mc Monagle. (1970) AC
166, referred to.
E
2.1. High Court has rightly disallowed any deduction on account of
receipts under the Insurance Policy and other receipts under social security
system which the claimant would have also otherwise_ entitled to receive
irrespective of accidental death. Principle of balancing between losses and
gains, by reason of death, to arrive at amount of compensation is a general p
rule, but what is more important is that such receipts by the claimants
must have some co-relation with the accidental death by reason of which
alone the claimants have received the amounts. Amount on account of
social security as may have been received must have nexus or relation with
the accidental injury or death, so as to be deductible from the amount of
compensation. There must be some co-relation between the amount G
received and the accidental death or it may be in the same sphere, absence
the amount received shall not be deducted from the amount of
compensation. The amount received on account of insurance policy of the
__,
deceased cannot be deduced from the amount of compensation though no
doubt the receipt of the insurance amount is accelerated due to pre-mature H
1180
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A death of the insured. No co-relation of allowance paid to the children, and
the wife under the social security system, with the accidental death has
been shown much less established. Apart from the fact that contribution
comes from different sources for constituting the fund out of which,
payment on account of social security system is made one of the constituent
B of fund is tax which is deducted from income for the puruose.
11199-1'1; 1200-A-EI
2.2. If the proposition "receipts from whatever source" is interpreted .
so widely that it may cover all the receipts, which may come into the hands
of the claimants, in view of the mere death of the victim, it would only
C defeat the purpose of the Act providing for just compensation on account
of accidental death. Such gains may be on account of saving or other
investment etc. made by the deceased would not go to the benefit of wrong
doer and the claimant should not be left worse of, if he had never taken
an Insurance Policy or had not made investments for future returns.
D
(1200-E-FI
Helen C. Rebello (Mrs.) v. Maharashtra State Road Transport
Corporation, 1199'91 1 SCC 90, relied on.
Gobald Motor Service limited v. R.MK. Veluswami and Ors., 119621
1 SCR 929: Mis. Shekhupura Transport Co. Ltd. v. Northern India Transport
E Company, 11971) 1 SCC 785; General Manager, Kera/a State Road Transport
Corporation Trivandrum v. Susamma Thomas (Mrs.) and Ors., 11994) 2
sec 176, referred to.
F
Davis v. Powell Duffiyn.Associated Collieries Ltd., (1942) AC 601 and
Hodgson v. Trapp and Anr., (1988) 3 All ER. 870 and 230 S.O. 2(d)(l)
(1968) Flaapp Lexis 5073 Marc A 0 'NEAL', referred to.
American law Report 84 AlR 2d; Report of Royal Commission on civil
liability and compensation for personal injury under the Chairmanship of lord
Pearson, Volume-I; Mac Grager on damages 16 Edition; Encyclopedia
G America page 186 (!), referred to.
3.1. In view of declining rate of interest, it is reduced to 9%1 in place
of 12% as awarded by the High Court. 11203-DI
Kaushnuma Begum (Smt.)and Ors v. New India Assurance Company
H Ltd., 120011 2 sec 9, relied on.
)
UNITED JNDIA INSURANCE CO. LTD. 1•. PATRICA JEAN MAHAJAN
1181
R.D. Haltangadi v. Pest Control (India) Pvt. ltd. and Ors .. 119951 I A
sec 551, distinguished.
Rabert v. Insurance Company Ltd.. (19991 8 SCC 226, referred to.
Jefford and Anr. v. Gee, (2001) ACC 540; (1970) All ER 1202, referred to.
3.2. Though it is correct that concession made by a party and an B
observation made to that effect in the judgment, cannot be allowed to be
denied. Only the Court which recorded the statement itself was competent
to rectify the error if the Court recording the statement was approached
to consider the matter without delay. But in certain cases where a stray
remark or observation made by the Court which is not very clear and is C
vague, and a different picture emerges from other part of judgment it may
be open for this Court to ascertain the correct position on the basis of
totality of the observations made in the judgment itself. It is nowhere
indicated that the Insurance Company had made any statement conceding
the rate of interest nor it is indicated how the concession was made. Then
the observation that the "rate of interest was not in dispute before the D
Court" may only lead to an inference that the rate of interest was not ·
disputed before the Court in the arguments advanced on behalf of the
party concerned .. But factually.it is found that, the Insurance Company
had cited the decisions to indicate that the lower rate of interest was
awarded in certain decisions, which had been relied upon by him. This is E
enough to indicate that the lower rate of interest was awarded in certain
decisions, which had been relied upon by him. This is enough to indicate
that the rate of interest was actually disputed. More than one case, a
reference of which has been made in the judgment of the Division Bench
itself, has been relied upon by the Insurance Company for reducing the
rate of interest. 11201-D·HI
F
State of Maharashtra v. Ramdas Shrinivas Nayak and Anr., 119821 2
SCC 463 and Apar (P) Ltd. and Anr. v. Union of India and Ors., 11992( Supp.
I SCC, referred to.
4. Calculation of the amount of award at the conversion rate of Rs. G
47 cannot be permitted. Ther~ is no occasion to convert the amount of
decree in Rupees into Dollars applying Rs. 30 as rate of conversion and
then re-convert it in Rupees at the rate of Rs. 47. The claimants cannot
ask for more than what was prayed for in the claim petition. In the present
case prayer for passing a decree was for a sum indicated in Rupees which
figure was arrived at by the claimants applying Rs. 30 as the conversion H
\
•
I
·1
'·
1182
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A rate. Therefore, in the present case there is no such dispute as to what
rate .of conversion was.to be applied. 11204-B-EI
. .-
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3655-58 of
2002.
B
From the Judgment and Order dated 17.10.2001 of the Delhi High
Court in L.P.A. Nos. 225/200 I, 179/200 I and 236/200 I.
Soli J. Sorabji, Attorney General, T.R. Rajagopalan, Ranjit Kr P.P. Rao
and P.P. Malhotra, M.K. Dua, S.M. Suri, Manish Singhvi, Varun Goswami,
Ashok K. Mahajan, Kishore Rawat, P.N. Puri, Ashwani Kumar and Arvind
C Kumar Gupta for the appearing parties.
the Judgtnent of the Court was delivered by
BRIJESH KUMAR, J. Leave granted.
The above noted four appeals arise out of the proceedings before the
D Motor Accident Claims Tribunal Tis Hazari, Delhi in Suit No. 325 of 1995.
E
Since in all the appeals the judgment and order passed by the Division Bench
of Delhi High Court has been challenged and the matters relate to the same
accident, all these appeals have been heard together and they are being disposed
of by this order.
The brief facts are that Dr. Suresh K. Mahajan aged 47-48 years a
medical graduate went to America and established himself in the medical
profession and became an American National. He established his own hospital
in Miu'.igan, U.S.A. He was on visit to India and on February 3, 1995 while
proceeding to Jaipur from Delhi in a Maruti Car No. DL-4CB- I 926 belonging
F to one of the two brothers travelling with him, a truck No. HR-29D- l 125 hit
the rear part of the Maruti Car. Dr. Mahajan was sitting on the back seat was
injured and succumbed to his injuries. The Dependants of Dr. Suresh K.
Mahajan filed a petition under Section 166 of the Motor Vehicles Act for
compensation on account of death of Dr. Mahajan. According to the claimants
Dr. Mahajan had specialized in the field of Nephrology and had set up his
G good practice and a hospital in Michigan U.S.A. According to the claimants,
income of the d~ceased was progressively increasing every year out of his
practice and the hospital and in the year 1994 his income was to the tune of
9 lacs US dollars. At the time of his death Dr. Suresh K. Mahajan left behind
his wife Patrica Jean Mahajan, two daughters, a son and his parents residing
H in Delhi. According to the claimants, he was providing good education to his
-
UNITED INDIA INSURANCE CO. LTD. 1•_ PATRICA JEAN MAHAJAN [BRIJESH KUMAR, J.J } } 83
children and had also been sending a sum of Rs. 8,000 to his parents in A
Delhi. A compensation for a sum of Rs. 54 crores was claimed.
The Motor Accidents Claims Tribunal, after appreciation of the evidence
and the material on the record and on detailed discussion therefore, recorded
the finding that Dr. Mahajan received injuries and died because of the rash
and negligent driving of the Troller No. HR 29-D-1125. So far the amount B
of compensation is concerned, the Tribunal came to the conclusion that the
Carry home income of the deceased was 3,09204 US Dollars. Out of which,
2/3rd amount was set apart on account of self expenses of the deceased and
I/3rd amount was held to be the amount of dependency which came to
1,03068 US Dollars. A multiplier of 7 was applied to arrive at the figure of C
compensation, the amount came to 7,21,476 US Dollars, out of which
deduction on account of benefits of social security system/UC was deducted
which included an amount of 2,50,000 US Dollars received by the claimants
on .account of personal life insurance of Dr. Mahajan. The other amounts
paid to Mrs. Mahajan and two of her children on account of social security
coming to a sum of 51,300 US Dollars were also deducted. The Tribunal D
deducted a total amount of. 3,22,900 dollars. Applying the exchange rate of
Rs. 30 a sum of Rs. 1.19 crores was awarded with interest at the rate of 12%
from the date of filing of the petition up to the date of payment, the total
amount thus come to about Rs. 1.62 crores.
The claimants approached the High Court in appeal. The learned Single E
Judge found that carry home income of the deceased was 3,39,445 US Dollars
and out of the said amount, I/3rd of it instead of 2/3rd was liable to be
deducted on account of self expenditure of the deceased, the amount of
dependency thus, was fixed at 226297 US dollars. The learned Single Judge
applied the multiplier of 10 and disallowed any deductions on account of F
social security syste1n. The same rate of interest \Vas maintained as awarded
but the rate of exchange at Rs. 47/- was applied being the current rate as then
prevailing. The total amount of compensation thus arrived at, came to
Rs. 10.38 crores. The FAO No. 273 of 1998 preferred by the claimants was
thus allowed in the manner indicated above. And the appeal preferred by the
United India Insurance company Ltd. FAO No. 366 of 1998 was dismiS>ed G
with an observation that there was no scope to disturb the finding of the
Tribunal on the question of negligence ofoffending !roller/driver. The parties
preferred three Letters Patent Appeals before the Division Bench, which have
been decided by the judgment and order dated 17.10.200 I. The LPA No. 179
of 200 I, preferred by Patrica Mahajan, and LPA No. 225 of 200 I and 236 H
'
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•
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SUPREME COURT REPORTS
[2002] 3 S.C.R.
A of 2001 had been filed by the United Insurance Company Ltd. challenging
the amount of compensation as awarded by the learned Single Judge and also
\.
the order upholding the finding of rash and negligent driving on the part of
driver of the troller. By means of impugned judgment, the Division Bench
maintained the order passed by the learned Single Judge but for application
._
B
of multiplier and the exchange rate. In so far it related to exchange rate of
Dollar, the Division Bench observed that it was a closed chapter since the
amount awarded by the Tribunal at the exchange rate of Rs. 30 was withdrawn
by the claimants and the exchange rate of Rs. 4 7 as awarded by the Single
Judge was disallowed. The Division Bench applied the mutiplier of 13
according to second schedule to the Act referable to Section 163A of the Act. .
c It was found that there was no reason not to follow the schedule which has
been held by the Supreme Court to be safe guide to arrive at the amount of
just compensation. In the result, the total amount i.e. principal with interest
.,
came to about Rs. 16.12 crores.
The above noted appeals have been filed against the judgment of the
~
D Division Bench, the United Insurance Company Ltd. raising a grievance
against application of multiplier of 13 and disirllowance of deduction on
account of social security system. They also feel aggrieved by award of
interest at the rate of 12% per annum. In one of the appeals preferred by the
United India Insurance Company the finding of rash and negligent driving on
E the part of driver of the troller has also been sought to be challenged. In the
appeal preferred by the claimants, conversion rate of Dollar in terms of
Rupet:s has been asked @ Rs. 4 7 as was awarded by the learned Single
Judge.
We may first take up the question of application of appropriate multiplier
F
in the facts and circumstances of this case. The multiplier of 13, has been
applied by the Division Bench of the High Court strictly following the Second
Schedule to the Act referable to Section 163A of the Act. The Petition was
filed by the claimant for award of compensation under Section 166 of the
Motor.Vehicles Act. Before adverting to the case law on the point cited by
G the learned counsel for both the sides, it may be beneficial to peruse the two
provisions indicated above. Section 163A as inserted by Act 54 of 1994
w.e.f. 14.11.1994 reads as under:-
~
.:A
"163A. Special Provisions as to payment of compensation on
structured formula basis.-(1) Notwithstanding anything contained
rH
in this Act or in any other law for the time being in force or instrument
UNITED !NOIA INSURANCE CO. LTD. 1·. PATRICA JEAN MAHAJAN {BRJJESH KUMAR, J.]
J J 85
having the force of law. the owner of the motor vehicle of the A
authorised insurer shall be liable to pay in the case of death or
pennanent disable1nent due to accident arising out of the use of motor
vehicle, compensation, an indicated in the Second Schedule, to the
legal heirs or the victim, as the case may be.
Explanation.-For the purposes of this sub-section, "permanent B
disability" shall have the sa1ne 111eaning and extent as in the
Workmen's Compensation Act, 1923 (8 of the 1923).
(2) In any claim for compensation under sub-section (I), the claimant
shall not be required to plead or establish that the death or pennanent
disablement in respect of which the claim has been made was due to C
any wrongful act or neglect or default of the owner of the vehicle/ or
vehicles concerned or of any other _person.
(3) The Central Governn1ent may, keeping in view the cost of living
by notification in the Official Gazette, from time to time amend the
Second Schedule."
D
The noticeable 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 or E
permanent disablement was due to any wrongful act or negligence or
default of the owner of the vehicle or any other person. Award of
compensation according to Schedule under this provision is also known
as structured formula.
Section 166 reads as under:-
"Application for compensation-( I) An application for
compensation arising out of an accident of the nature specified in
sub-section (I) of section 165 may be made-
( a)
by the person who has sustained the injury; or
(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
F
G
(d) by any agent duly authorised by the person injured or all or any H
1186
A
B
c
SUPREME COURT REPORTS
[2002] 3 S.C.R.
of the legal representatives of the deceased, as the case may be;
Provided tha, where all the legal representatives of the deceased
have not joined in any such application for 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.
(2) Every application under sub-section (I) 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 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 section 140
D
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 .application for
E
compensation under this Act.
F
G
It would also be necessary to peruse sub-Section I of Section .165
which reads as under:-
165. Claims Tri~unals.-{ I) A State Government may, by notification
in the Official Gazette, constitute one or more Motor Accidents Claims
Tribunals (hereafter in this Chapter referred to as Claims Tribunal)
for such area as may be specified in the notification for the purpose
of adjudicating upon claims for compensation in respect of accidents
involving the death of or bodily injury to, persons arising out of the
use of motor vehicles, or damages to any property of a third party so
arising, or both.
Exp/anation.-For the removal of doubts, it is hereby declared that
the expression "claims for compensation in respect of accidents
involving the death of or bodily injury to persons arising out of the
H
use of motor vehicles" includes claims for compensation under Section
'
I
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UNITED INDIA INSURANCE CO. LTD. 1·. PATRICA JEAN MAHAJAN [llRIJESH KUMAR. J.] 1187
140 and section 163A."
From the provisions quoted above, it is clear that a claim under Section
166 covers cases of all kinds of bodily injuries or damage to the property of
third p_arty or both. Under the explanation to sub-Section I of Section 165 it
A
has been inC:icated that the provision includes the claims for compensation
under Section 140 and Section 163A but it is nowhere provided that the B
a1nount of compensation is to be assessed or calculated according to the
second Schedule. On the other hand, Section 168 provides the key leading to
determination of amount of compensation under Section 166 of the Act. The
relevant part of Section 168 reads as under:-
.. 168. Award of the Claims Tribunal.-On receipt of an application C
for compensation made under section 166, the Claims Tribunal shall,
after giving notice of the application to the insurer and after giving
the parties (including the insurer) an opportunity if being heard, hold
an inquiry into the claims or as the case may be, each of the claims
and, subject to the provisions of section 162 may make an award an D
award determining the amount of compensation which appears to it
to be just and specifying the person or persons to whom compensation
shall be paid and in making the award the Claims Tribunal shall
specify the amount which shall be paid by the insurer of owner or
driver of the vehicle involved in the accident or by all or any of them,
as the case may be;
E
Provided that where such application makes a claims of
compensation under section 140 in respect of the death or permanent
disablement of any person, such claim and any other claim (whether
made in such application or otherwise) for compensation in respect
of such death or permanent disablement shall be disposed of in F
accordance with the provisions of Chapter X.
(2) The Claims Tribunal shall arrange shall arrange to deliver
copies of the award to the parties concerned expeditiously and in any
case within a period of fifteen days from the date of the award.
(3) When an award is made under this section. The person who
is required to pay any a1nount in terms of such award shall, within
thirty days of the date of announcing the award by the Claims Tribunal,
deposit the entire amount awarded in such manner as the Claims
Tribunal may direct."
G
H
A
B
c
D
E
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SUPREME COURT REPORTS
[2002] 3 S.C.R.
It thus makes it clear that it is fo; the Tribunal to arrive at an
amount of compensation which it may consider to be just in the facts
and circumstances of the case. This Court however has been of the
view that structured formula as provided under the Second Schedule
would be a safe guide to calculate the amount of just compensation.
Deviation though permissible may only be resorted to for some special
reasons to do so. So far structured formula is concerned, it provides
for a maximum multiplier of 18. The application of the multiplier
depends upon the age of the deceased, age of his dependants, number
of his dependents, the amount of dependency etc. Again we find that
the structured formula relates to victim whose income is up to a sum
of Rs. 40,000 per annum. It may be darified that in the present case,
it is not in dispute that the multiplier method, which is accepted and
prevalent method, would be applicable and has been applied. The
question of setting apart I/3rd oft.he income on account of expenditure
on the self by the deceased is also not in dispute, i.e. to say that the
amount of multiplicand shall be the 2/3rd of annual income of the
deceased. The annual income of the deceased, as found by the learned
Singie Judge and the Division Bench namely $3,39445 is also not in
dispute, nor the amount of dependency2,26297 US Dollars. The only
dispute is about application of 13 as multiplier as applied by a Division
Bench of the High Court following the Second Schedule to the Act.
We may refer to the decision reported in [1994] 2 SCC 176 _General
Manager, Kera/a State Road Transport Corporation, Trivandrum v. Susamma
Thomas (Mrs.) and Ors.
In this case while considering the law on the subject, it was observed
p
in para 13 of the report as follows:-
G
"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 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."
It was reiterated in para 16 that the multiplier method is logically sound
and legally well established as compared to other methods indicated in the
H other decisions in which different methods of computation was applied. It
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UNITED INDIA INSURANCE CO. LTD. 1'. l'ATRlCA JEAN MAHAJAN [BRIJESH KUMAR, J.] ] J 89
was observed that those cases cannot be said to have laid any principle of A
co111putation of compensation .. The Cou11 then further observes as follows:~
"The proper method of computation is the multiplier method. Any
departure except in exceptional and extraordinary, cases, would
introduce inconsistency of principle, lack of uniformity and an element
of unpredictability for the assessment of compensation. Some B
judgments of the High Courts have justified a departure from the
multiplier method on the ground that Section 110-B of the Motor
Vehicles Act, 1939 in so far as it envisages the compensation to be
just, the statutory determination of a just compensation would
unshackle the exercise fro1n any rigid formula. It 1nust be borne in C
mind that the multiplier method is the accepted method of ensuring
a just compensation which, will make for uniformity and certainty of
the awards. We disapprove these decisions of the High Courts, which
have taken a contrary view. We indicate that the multiplier method
is the appropriate method, a departure from which can only be justified
in rare and extraordinary circumstances and very exceptional cases." D
In another decision reported in [ 1996] 4 SCC page 362 UP State Road
Transport Corporation and Ors. v. T1·i/ok Chand and Ors., the view taken in
the case of Susamma Thomas (supra) has been reiterated. It has been held
that in the case of Susamma Thomas maximum multiplier which could be
applied was found to be 16 which according to this case can now be up to E
18, in view of the Second Schedule. This part of the judgment has also been
particularly relied upon by the learned COlUlsel for the claimants. The Court
has also agreed with the observations made in the case of Susamma Thomas
that there should be no departure from the multiplier method, particularly on
the ground of awarding just compensation, as it was provided under Section F
1108 of the Motor Vehicles Act 1939 corresponding to the present Section
168 of the Motor Vehicles Act 1988. It is further observed that multiplier
method is accepted method for determining just compensation, which also
brings about uniformity and certainty of award. In paragraph 18 it has however,
been observed about Second Schedule that neither the Tribunals nor the
Court can go by the ready recknor, it can only be used as guide. The Court G
has emphasized that in no case a multiplier should exceed 18 years purchase
factor. It is however, observed as follows:-
"It can only be used as a guide. Besides the selection of muJtipJier,
cannot in all cases be solely dependent on the age of the deceased.
For example, ifthe deceased, a bachelor, dies at the age of 45 and his H
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[2002] 3 S.C.R.
A
dependents arc his parents, age of the parents would also be relevant
in the choice of mutiplier." (emphasis supplied)
What thus emerge from the above decisions is that the Court must
adhere to the system of multiplier in arriving at the proper amount of
compensaiion, and also with a view to maintain uniformity and certainty. Use
B of higher multiplier has been depricated and it is emphasized that it can not
exceed 18. The multiplier, as would be evident from the observations quoted
earlier, may differ in the peculiar facts and circumstances of a particular case
as according to the example cited where bachelor dies at the age of 45, the
age of his dependent parents may be relevant for selecting a proper multiplier.
C Meaning thereby that a multiplier less than what is provided in the schedule
could be applied in special facts and circumstances of a case. In the later
cases also this Court has taken the same view that multiplier system is more
appropriate and proper method for calculating the amount of compensation.
[200 I] 8 SCC 197 Lat a Wadhwa and Ors. v. State of Bihar and Ors. may
be referred to. Decision in the case of Sushamma Thomas (supra) and other
D English decision considered in the judgments referred earlier namely, Devis
v. Tailor ( 1997) AC 207, Devis v. Paul Dujfryn Associated limited. 1942 (I)
All Er. 657 (HL). Malleett v. Mc Monagle (1970) AC 166 have been referred
to.
E
In Jyoti Kaul and Ors. v. State of Madhya Pradesh, JT (2000) 7 SC
page 367 this Court again referring, to the decision in the case of Susamma
Thomas (supra) reiterated that multiplier system should be applied for the
purposes of calculation of amount of compensation. It has also been observed.
that the question as to what mutiplier should be applied would depend upon
various facts and circumstances of the case, hence the multiplier may change
F to some degree.
In the case in hand it is amply clear that it is not the case of any party
that proper method of computing the amount of compensation, namely the
multiplier method has not been applied. We have already seen that in the
G decisions referred to, in the earlier part of this judgment it is clearly stated
that except in very rare cases, multiplier system should not be deviated from.
The other methods, which were in vogue prior to introduction of multiplier
system have been held to be no more good system. The choice of multiplier
may differ to some degree as observed in the case of Jyoti Kaul (supra)
depending upon various facts and circumstances of the case. Though, normally
H the multiplier as indicated in 2nd schedule should be applied as it is as found
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UNITED INDIA INSURANCE CO. LTD. 1·. PATRICA JEAN MAHAJAN [BRIJESH KUMAR, J.] ] ] 9}
to be a safe guide for the purpose of calculation of amount of compensation. A
The Tribunal had applied the mutiplier of 7, which obviously was very low.
While applying the mutiplier of7, the Tribunal has observed that it had taken
into consideration the age of the deceased and the yield, which, would have
come by way of interest on the amount of compensation. The Tribunal though
had also discussed that the two daughters of the deceased were age of 19 and B
17 years and the age of son was 13 years, parents of the deceased were 69/
73 years: The Tribunal was of the view that period of dependency may not
be long for the children. Then in consideration of the fact that amount awarded
by apr'ying multiplier of 7 would yield an interest of about 87,000 US
Dollars if invested at the rate of 12% per annum. The learned Single Judge
of the High Court considering the age of the deceased and his dependants and C
the provisions of the Second Schedule and the decision of this Court in the
case of Trilok Chand (supra) took the view that the application of mutiplier
of I 0 would be appropriate in the present case. The Division Bench in appeal
has laid much stress on the fact that according to the decision in Susamma
Thomas and Trilok Chand (supra) there should not be any deviation in the
method of working out the amount of compensation applying multiplier
method. There is nothing wrong in the statement of above propositions as
indicated by the Division Bench. Different method can be resorted to only in
D
rare and exceptional cases but the learned Single Judge had applied only
mutiplier method and none-else, however looking to the facts and
ci~cumstances of the case, applied the multiplier of I 0 instead of 13 as provided E
for the victi1ns of the age group of deceased as in this case between 45 to 50
years. It is true as also noticed by the High Court that the 2nd Schedule
should be taken as a guide, but it does not mean that no deviation in the
figure of mutiplier itself, would be permissible in any case whatsoever.
Normally, Second Schedule may provide a guide for applicati_on of multiplier
but for valid and proper reasons, different mutiplier can be applied, indeed F
not exceeding 18 in any case on the upper side. As indicated in the case of
Susamma Thomas (supra) itself the Court gave an example of a situation
where the age of the victim may be 45 years, but who may be a bachelor with
his parents alone as dependents, obviously, meaning thereby that lesser
mutiplier could be applied in such a case. By applying a mutiplier other than G
the scheduled multiplier does not mean that any method other than multiplier
1nethod has been applied. For some special reasons some deviation from the
scheduled multiplier can be made.
In the present case we find that the parents of the deceased were 69/
73 years. Two daughters were aged 17 and 19 years. Main question, which H
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SUPREME COURT REPORTS
[2002] 3 S.C.R.
A strikes to us in this case is that in the given circumstances the amount of
multiplicant 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 226297 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 came to Rs. 16.12 crores
B with interest.