# ARUN KUMAR AGRAWAL AND ANOTHER v. NATIONAL INSURANCE COMPANY AND OTHERS

- **Citation:** [2010] 9 S.C.R. 303
- **Court:** Supreme Court of India
- **Decided:** 2010-07-22
- **Case number:** Civil Appeal No. 5843 of 2010
- **Bench:** G.S. Singhvi, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/arun-kumar-agrawal-and-another-v-national-insurance-company-and-others-26876
- **Pages:** 46

## Headnote

A
B
Motor Vehicles Act, 1988 - ss. 166 and 163A; Second
Schedule Clause (6) - Fatal motor accident - Of non-earning
mother/house-wife - Claim petition u/s. 166 - Compensation
C
to her dependants - Criteria for determination - Held: The
claimants are entitled to compensation - The services of nonearning mother/house-wife cannot be compared with .that of
a house-keeper/servant/employee, but monetary values
should be put to the services rendered by them - Though s.
D
163A does not apply, in terms, to claim u/s. 166, yet in the
absence of a definite criteria for determination of
compensation payable to the dependants of non-earning
house-wife/mother, it would be reasonable to rely upon the
criteria specified in clause (6) of the Second Schedule and
E
then to apply appropriate multiplier -
Suggestion to
Parliament to amend the provisions of the Act and the related
·laws for giving compensation to the dependents of woman!
home-maker - Legislation.
Words and Phrases - 'Services' - Meaning of.
A woman, aged about 39 years, died in a motor
accident. The Appellant No. 1 (husband) and appellant No.
F
2 (son) filed a petition u/s. 166 of Motor Vehicles Act, 1988,
seeking compensation of Rs. 19,20,000/- . The Motor G
Accidents Claims Tribunal held that the claimants were
entitled to compensation. While determining the quantum
of compensation, it held that in view of clause (6) of
303
H
304
SUPREME COURT REPORTS
[2010] 9 S.C.R.
A Second Schedule of the Motor Vehicles Act, the income
of the deceased could be assessed at Rs. 5,000/- p.m. (Rs.
68,000 p.a.) and after making deduction of Rs. 20,000
towards personal expenses and applying multiplier of 15,
the total loss of dependency was assessed as Rs. 6
B lakhs. However, the tribunal reduced the amount of
c~mpensation to Rs. 2,50,000/-. The appeal, preferred by
the claimants was dismissed by the High Court.
In the instant appeal, the question for determination
was as to what should be the criteria for determination
C of the compensation payable to the dependants of a
woman who dies in a road accident and who does not
have regular source of income.
D
Allowing the appeal, the Court
HELD: Per G.S. SINGHVI, J. 1. It is not possible to
quantify any amount in lieu of the services rendered by
the wife/mother to the family i.e. husband and children.
However, for the purpose of award of compensation to
E the dependents, some pecuniary estimate has to be made
of the services of housewife/mother. In that context, the
term 'services' is required to be given a broad meaning
and must b~ construed by taking into account the loss
of personal care and attention given by the deceased to
her children as a mother and to her husband as a wife.
F They are entitled to adequate compensation in lieu of the
loss of gratuitous services rendered by the deceased.
The amount payable to the dependants cannot be
diminished on the ground that some close relation like a
grandmother may volunteer to render some of the
G services to the family which the deceased was giving
earlier. [Para 24] [333-H; 334-A-C]
2. It is highly unfair, unjust and inappropriate to
compute the compensation payable to the dependents of
H a deceased wife/mother, who does not have regular
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 305
COMPANY
income, by comparing her services with that of a houseA
keeper or a servant or an employee, who works for a
fixed period. The gratuitous services rendered by wife/
mother to the husband and children cannot be equated
with the services of an employee and no evidence or data
can possibly be produced for estimating the value of
8
such services. It is virtually impossible to measure in
terms of money the loss of personal care and attention
suffered by the husband and children on the demise of
the house-wife. [Para 32] [338-E-G]
3. Section 163A of Motor Vehicles Act, 1988 contains
C
a special provision for payment of compensation on the
basis of a structured formula as indicated in the Second
Schedule of the Act, which con

## Text

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[2010] 9 S.C.R. 303
ARUN KUMAR AGRAWAL AND ANOTHER
V.
NATIONAL INSURANCE COMPANY AND OTHERS
(Civil Appeal No. 5843 of 2010)
JULY 22, 2010
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.)
A
B
Motor Vehicles Act, 1988 - ss. 166 and 163A; Second
Schedule Clause (6) - Fatal motor accident - Of non-earning
mother/house-wife - Claim petition u/s. 166 - Compensation
C
to her dependants - Criteria for determination - Held: The
claimants are entitled to compensation - The services of nonearning mother/house-wife cannot be compared with .that of
a house-keeper/servant/employee, but monetary values
should be put to the services rendered by them - Though s.
D
163A does not apply, in terms, to claim u/s. 166, yet in the
absence of a definite criteria for determination of
compensation payable to the dependants of non-earning
house-wife/mother, it would be reasonable to rely upon the
criteria specified in clause (6) of the Second Schedule and
E
then to apply appropriate multiplier -
Suggestion to
Parliament to amend the provisions of the Act and the related
·laws for giving compensation to the dependents of woman!
home-maker - Legislation.
Words and Phrases - 'Services' - Meaning of.
A woman, aged about 39 years, died in a motor
accident. The Appellant No. 1 (husband) and appellant No.
F
2 (son) filed a petition u/s. 166 of Motor Vehicles Act, 1988,
seeking compensation of Rs. 19,20,000/- . The Motor G
Accidents Claims Tribunal held that the claimants were
entitled to compensation. While determining the quantum
of compensation, it held that in view of clause (6) of
303
H
304
SUPREME COURT REPORTS
[2010] 9 S.C.R.
A Second Schedule of the Motor Vehicles Act, the income
of the deceased could be assessed at Rs. 5,000/- p.m. (Rs.
68,000 p.a.) and after making deduction of Rs. 20,000
towards personal expenses and applying multiplier of 15,
the total loss of dependency was assessed as Rs. 6
B lakhs. However, the tribunal reduced the amount of
c~mpensation to Rs. 2,50,000/-. The appeal, preferred by
the claimants was dismissed by the High Court.
In the instant appeal, the question for determination
was as to what should be the criteria for determination
C of the compensation payable to the dependants of a
woman who dies in a road accident and who does not
have regular source of income.
D
Allowing the appeal, the Court
HELD: Per G.S. SINGHVI, J. 1. It is not possible to
quantify any amount in lieu of the services rendered by
the wife/mother to the family i.e. husband and children.
However, for the purpose of award of compensation to
E the dependents, some pecuniary estimate has to be made
of the services of housewife/mother. In that context, the
term 'services' is required to be given a broad meaning
and must b~ construed by taking into account the loss
of personal care and attention given by the deceased to
her children as a mother and to her husband as a wife.
F They are entitled to adequate compensation in lieu of the
loss of gratuitous services rendered by the deceased.
The amount payable to the dependants cannot be
diminished on the ground that some close relation like a
grandmother may volunteer to render some of the
G services to the family which the deceased was giving
earlier. [Para 24] [333-H; 334-A-C]
2. It is highly unfair, unjust and inappropriate to
compute the compensation payable to the dependents of
H a deceased wife/mother, who does not have regular
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 305
COMPANY
income, by comparing her services with that of a houseA
keeper or a servant or an employee, who works for a
fixed period. The gratuitous services rendered by wife/
mother to the husband and children cannot be equated
with the services of an employee and no evidence or data
can possibly be produced for estimating the value of
8
such services. It is virtually impossible to measure in
terms of money the loss of personal care and attention
suffered by the husband and children on the demise of
the house-wife. [Para 32] [338-E-G]
3. Section 163A of Motor Vehicles Act, 1988 contains
C
a special provision for payment of compensation on the
basis of a structured formula as indicated in the Second
Schedule of the Act, which contains a table prescribing
the compensation to be awarded with reference to the
age and income of the deceased. The note appended to
D
column (1) of the Second Schedule makes it clear that
from the total amount of compensation, 1/3rd is to be
deducted in consideration of the expenses which the
victim would have incurred towards maintaining himself,
had he been alive. Clause (6) of the Second Schedule lays
E
down that in the cases of fatal and disability in non-fatal
accidents, income of the non-earning person should be
taken as Rs.15,000/- per annum and that of spouse shall
be taken as 1/3rd of the income of the earning/surviving
spouse. [Para 14] [326-G-H; 327-A-B]
F
4. Though, Section 163A does not, in terms, apply to
the cases in which claim for compensation is filed u/s. 166
of the Act, in the absence of any other definite criteria for
determination of compensation payable to the
dependents of a non-earning housewife/mother, it would
G
be reasonable to rely upon the criteria specified in clause
(6) of the Second Schedule and then apply appropriate
multiplier. [Para 32] [338-H; 339-A-B]
H
306
SUPREME COURT REPORTS
[2010] 9 S C.R.
A
General Manager Kera/a State Road Transport
B
Corporation v. Susamma Thomas (Mrs.) and Ors. 1994 (2)
SCC 176; UP. S.R. TC. v. Tri/ok Chandra 1996 (4) SCC 362;
Sar/a Verma (S'mt.) and Ors. v. Delhi Transport Corporation
and Anr. 2009 (6) sec 121 - relied on.
Deepal Girishbhai Soni v. United India Insurance Co.
Ltd. (2004) 5 SCC 385; Oriental Insurance Co. Ltd. v. Meena
Variya/ (2007) 5 SCC 428; Minu B. Mehta v. Balkrishna
Ramchandra Nayan (1977) 2 SCC 441; Gujarat SRTC v.
Ramanbhai Prabhatbhai (1987) 3 SCC 234; Sar/a Verma
C (Smt.) and Ors. v. Delhi Transport Corporation and Anr (2009)
6 SCC 121; Raj Rani and Ors. v. Oriental Insurance
Company Limited and Ors. (2009) 13 SCC 654; Ningamma
and Anr. v. United Insurance Company Limited (2009) 13
sec 710 - referred to.
D
5. In the instant case, appellant No.1 in his deposition
had categorically stated that the deceased was earning
Rs.50,0001- per annum by paintings and handicrafts, the
respondents did not lead any evidence to controvert the
E same. Notwithstanding this, the tribunal and the High
Court altogether ignored the income of the deceased. The
tribunal did advert to the Second Schedule of the Act and
observed that the income of the deceased could be
assessed at Rs.5,0001- per month (Rs.60,000/- per annum)
F
because the income of her spouse was Rs.15,4161- per
month and then held that after making deduction, the
total loss of dependency cou'd be Rs.S lacs. However,
without any tangible reason, the tribunal decided to
reduce the amount of compensation by observing that
G the deceased was actually non-earning member and the
amount of compensation would be too much. The High
Court went a step further and dismissed the appeal by
erroneously presuming that neither of the claimants was
dependent upon the deceased and the ser1ices rendered
by her could be estimated as Rs.12501- per month. The
H
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 307
COMPANY
reasons assigned by the tribunal for reducing the amo~nt, . A
of compensation are wholly untenable and the approach
adopted by the High Court in dealing with the issue .. 9f
payment of compensation to the appellan~ was ex fcicie .
erroneous and unjustified. [Paras 33 and 34] [339-E-tl;
340-A-B]
B
6. The appellants are entitled to compensation of
Rs.6 lacs. Respondent No.1 is directed to P,ay; the said
amount of compensation along with interest at the .. rate.
of 6% per annum from the date of filing application. u/s.
166 of the Act till the date of payment. [Para 35] [3407CC
DJ
Lata Wadha and Ors. v. State of Bihar and Ors. 20Q1 (8)
SCC 197; M.S. Grewal and Anr. v. Deep Chand Sood and
Ors. (2001) 8 SCC 151; Municipal Corporation of Greater D
Bombay v. Lax man Iyer and Anr. (2003) 8 SCC 731; A.
Rajam v. M. Manikya Reddy 1989 ACJ 542 ; Oriental
Insurance Co. Ltd., v. Shamsher Singh Manu-JK-0180-2002;
National Insurance Company Ltd. v. Mahadevan, Minor
Buvanadevi, Minor Venkatesh and Parameswaran (2009)
E
ACJ 1373; Chandra Singh and Ors. v. Gurmeet Singh and
Ors.(2003) VII AD (Delhi) 222; Krishna Gupta and Ors. v.
Madan Lal and Ors. 96 (2002) DLT 829; Caplan Singh v.
Oriental Insurance Co. Ltd. and Ors.112 (2004) DLT 417;
Amar Singh Thukral v. Sandeep Chhatwal 112 (2004) DLT, F.
478 - referred to.
Berry v. Humm and Co. (1915) 1 K.B. 627; Regan v. ·
Williamson (1976) 1 W.L.R. 305; Mehmet v. Perry (1977) 2 ·
i\11 ER 52 - referred to.
Kemp and Kemp on Quantum of Damages, (Special
Edition - 1986) - referred to.
Per Asok Kumar Ganguly, J. (Supplementing)
G
1. Despite the clear constitutional mandate to eschew
H
308
SUPREME COURT REPORTS
[2010] 9 S.C.R.
A discrimination on the grounds of sex, in Article 15(1) of
the Constitution, in its implementation, there is a distinct
gender bias against women in various social welfare
legislations and also in judicial pronouncements.
[Para 2] [340-E-F]
B
2. Clause 6 of the Second Schedule to the Motor
Vehicles Act, 1988 provides for notional income of those
who had no income prior to accident. Clause 6 has been
divided into two classes of persons, (a) non-earning
persons, and (b) spouse. Insofar as the spouse is
C concerned, the income of the injured in fatal and non-fatal
accident has been categorized as 1/3rd of the income of
the earning and surviving spouse. It is, therefore,
assumed if the spouse who does not earn, which is
normally the woman in the house and the home-maker,
D such a person cannot have an income more than 1/3rd
of the income of the person who is earning. This
categorization has been made without properly
appreciating the value of the services rendered by the
home-maker. To value the income of the home-maker as
E one-third of the income of the earning spouse is not
based on any apparently rational basis. [Para 3] [340-GH; 341-A-C]
3. In the Census of 2001, it appears that those who
F are doing household duties like cooking, cleaning of
utensils, looking after children, fetching water, collecting
firewood have been categorized as non-workers and
equated with beggars, prostitutes and prisoners who,
according to census, are not engaged in economically
G productive work. As a result of such categorization about
36 crores (367 million) women in India have been
classified in the Census of India, 2001 as non-workers
and placed in the category of beggars, prostitutes and
prisoners. This entire exercise of Census operation is
done under an Act of Parliament. The approach of
H
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 309
COMPANY
equating women, who are home-makers, with beggars,
A
prostitutes and prisoners as economicaliy nonproductive workers by statutory authorities betrays -a
totally insensitive and callous approach towards the·
dignity of labour so far as women are concerned and is
also clearly indicative of a strong gender bias against B
women. It is thus clear that in independent India also, the -
process of categorizing is dominated by concepts which
were prevalent in colonial India and no attempt was made,·
to restructure those categories with a gender sensitivity.
which is the hallmark in the Constitution of India. [Paras c
4, 7 and 8] [341-D-E; 342-B-D]
4. Women are generally engaged in home-making,
bringing up children and also in production of goods and
services which are not sold in the market but are -
consumed at the household level. Thus, the work of D
women mostly goes unrecognized and they are never
valued. Therefore, in the categorization by the Census,
what is ignored is the well known fact that women make·
significant contribution at various levels including
agricultural production by sowing, harvesting;. E
transplanting and also tending catties and by cooking/
and delivering the food to those persons who are on the
field during the agriculture season. [Paras 10 and 11]
[342-E-H; 343-A]
F
5. The gender bias has also been reflected in the
judgment of the High Court whereby the High Court has
accepted the tribunal's reasoning of assessing the
income of the victim at Rs.1,250/- per month. Even if one
goes by the formula under clause (6) of the Second · G
Schedule, income of the victim comes to Rs.5,000/- per
month. [Para 13] [343-!3]
National Insurance Co. Ltd. vs. Minor Deepika rep. by her
guardian _and next friend, Ranganathan and Ors. (2009) 6
MLJ 1005 - referred to.
H
310
SUPREME COURT REPORTS
[2010] 9 S.C.R.
A
6. It has to be recognized that the services produced
in the home by the women for other members of the
household are an important and valuable form of
production. It is possible to put monetary value to these
services. Alternative to imputing money values is to
B measure the time taken to produce these services and
compare these with the time that is taken to produce
goods and services which are commercially viable. One
has to admit that in the long run, the services rendered
by women in the household sustain a supply of labour
c to the economy and keep human societies going by
weaving the social fabric and keeping it in good repair. If
these services are taken for granted and no value is
attached to this, this may escalate the unforeseen costs
in terms of deterioration of both human capabilities and
0 social fabric. [Paras 23 and 25] [346-G-H; 347-E-F]
. 7. The time spent by women in doing household
work as home-makers is the time which they can devote
to paid work or to their education. This lack of
sensitiveness and recognition of their work mainly
E contributes to women's high rate of poverty and their
consequential oppression in society, as well as various
physical, social and psychological problems. The courts
and tribunals should do well to factor these
considerations in assessing compensation for
F housewives who are victims of road accident and
quantifying the amount in the name of fixing 'just
compensation'. [Para 26] [347-G-H; 348-A]
8. Parliament is required to have a rethinking for
G properly assessing the value of home-makers and
householders work and suitably amending the
provisions of Motor Vehicles Act and other related laws
for giving compensation when the victim is a woman and
a home-maker. Amendments in matrimonial laws may
H
ARUN KUM,A.R AGRAWAL v NATIONAL INSURANCE 311
COMPANY
also be made in order to give effect to the mandate of A
Article 15(1) in the Constitution. [Para 28] [348-D]
Case Law Reference:
In the Judgment of G.S. Singhvi, J:
(2004) 5 sec 385
Referred to.
Para 15
B
(2007) 5 sec 428
Referred to.
Para 16
(1977) 2 sec 441
Referred to.
Para 16
(1987) 3 sec 234
Referred to.
Para 16
c
2009 (6) sec 121
Referred to.
Para 17
(2009) 13 sec 654
Referred to.
Para 18
(2009) 13 sec 110
Referred to.
Para 18
D.
(1915) 1 K.B. 627
Referred to.
Para 20
(1976) 1 W.L.R. 305
Referred to.
Para 21
(1977) 2 All ER 52
Referred to.
Para 22
E
2001 (8) sec 197
Referred to.
Para 25
(2001) 8 sec 151
Referred to.
Para 26
(2003) 8 sec 731
Referred to.
Para 26
1989 ACJ 542
Referred to.
Para 27
F
Manu-JK-0180-2002
Referred to.
Para 28
(2009) ACJ 1373
Referred to.
Para 29
(2003) VII AD (Delhi) 222 Referred to.
Para 30
G
96 (2002) DL T 829
Referred to.
Para 30
112 (2004) DLT 417
Referred to.
Para 30
112 (2004) DLT 478
Referred to.
Para 30
H
A
B
c
312
SUPREME COURT REPORTS
1994 (2) sec 176
1996 (4) sec 362
2009 (6) sec 121
Relied on.
Relied on.
Relied on.
(2010] 9 S C.R.
Para 32
Para 32
Para 32
In the Judgment of Asok Kumar Ganguly, J:
(2009) 6 MLJ 1005
Referred to.
Para 13
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5843 of 2010.
From the Judgment & Order dated 30.4.2004 of the High
Court of Judicature at Allahabad in First Appeal from Order
number 2408 of 2003.
Sanjay Singh, Sharve Singh, Ugra Shankar Prasad for the
D Appellant
E
Hetu Arora, Pramod Dayal, Nikunj Dayal Arun Kumar
Beriwal, Vishnu Mehra (for B.K. Satija) for the Respondent.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
2. What should be the criteria for determination of the
compensation payable to the dependents of a woman who dies
in a road accident and who does not have regular source of
F income is the question which arises for determination in this
appeal filed against the judgment of the Division Bench of
Allahabad High Court which declined to enhance the
compensation awarded to the appellants by Motor Accident
Claims Tribunal, Shahjahanpur (for short, 'the Tribunal').
G
3. Smt. Renu Agrawal (wife of appellant No.1 - Arun
Kumar Agrawal and mother of appellant No.2 - Suwarna
Agrawal) died in a road accident when the car driven by
appellant No.1 was hit by truck bearing No.UGK-489 in village
H Pachkora, District Hardoi, U.P. The appellants filed a petition
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 313
COMPANY [G.S. SINGHVI, J.}
under Section 166 of the Motor Vehicles Act, 1988 (for short, · A
'the Act') for award of compensation of Rs.19,20,000/- by
asserting that the accident was caused due to rash and
negligent driving of the truck which was owned by respondent
No.2, Mohd. Farooq and was ,insured with respondent No.1.
They pleaded that the deceased was 39 years of age at the
8
time of accident and due to her death, life of appellant No.1
had become miserable inasmuch as being a government
servant he was unable to look after his minor child. They further
pleaded that the deceased used to look after domestic affairs
of the family and both the appellants have been deprived of the
C
care, love and affection of the deceased and the comfort of her
company.
4. The owner of the truck (respondent No.2), its driver
(respondent No.4) and the insurance company (respondent
No.1) contested the claim. All of them denied that the accident
D
was caused due to rash and negligent driving of the truck by
respondent No.4. According to them, appellant No.1 was
responsible for the accident. They disputed the dependency of
the appellants and the quantum specified in the claim petition.
Respondent No.1 further pleaded that it was not liable to pay
E
compensation because driving licence of respondentNo.4 was
not valid; that the owner had not complied with Section 64 VB
of the Insurance Act and that the uwner and the insurer of Tata
Sumo UP-65/4559, which was also involved in the accident
were not rr.ade parties.
F
5. After considering the pleadings and evidence of the
parties, the Tribunal held that the accident was caused due to
rash and negligent driving of the truck by respondent No.4 and
being legal heirs of the deceased, the appellants are entitled
to compensation. While dealing with the issue relating to the
G
quantum of compensation, the Tribunal extensively referred to
the statement of appellant No.1, who stated that the deceased
was earning Rs.50,000/- by engaging herself in paintings and
H
314
SUPREME COURT REPORTS
(2010] 9 S.C.R.
A
handicrafts. The Tribunal held that the deceased was deeply
involved in the family affairs and after her death, the entire family
was broken and as a result of that, working capacity of appellant
No.1 was decreased. The Tribunal noted that at the time of
accident monthly income of appellant No.1 was Rs.15,416/- and
8
held that in view of clause 6 of Second Schedule of the Act,
the income of the deceased could be assessed at Rs.5,000/-
per month (Rs.60,000/- per annum) and after making deduction
of Rs.20,000/- towards personal expenses of the deceased and
applying the multiplier of 15, the total loss of dependency comes
C to Rs.6 lacs. However, instead of awarding that amount as
compensation, the Tribunal reduced the same to Rs.2,50,000/
- by making the following observations:
"The claimants are entitled to this amount of compensation
but keeping in mind that the deceased was actually not an
D
earning member and this is only based on notional income.
The amount of compensation is too much and as such a
lesser multiplier could be adopted in the present case. In
the circumstances of this case, the claimants are entitled
to Rs.2,50,000/- as compensation from the insurance
E
company. This issue is accordingly decided with the above
observation."
F
G
H
6. The High Court dismissed the appeal preferred by the
appellants by making the following observations:
"At the time of accident claimant No.1 Arun Kumar Agrawal
was getting monthly salary of Rs.15,416/- and at time of
filing the appeal Rs.24,042/- per month. Claimant Arun
Kumar Agarwal and his son aged about seven years are
the only legal representatives of the deceased. Neither of
the claimants were dependents upon the deceased. The
services rendered by Renu Agrawal, the deceased as
house wife may be estimated at Rs.1250.00 per month
and thus the annual contribution by rendering services
comes to Rs.15,000/- and applying the multiplier of 15 it
comes to Rs.2,25,000/- and adding the amount of
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 315
COMPANY [G.S. SINGHVI, J.]
Rs.3000.00 as funeral expenses, Rs.7,000.00 due to loss
A
of love and affection to the son and Rs.15,000.00 due to
loss of comfort consortium, the compensation comes to
Rs.2,50,000.00.' Thus, considering all the facts and
circumstances, the compensation awarded is just and fair."
7. Shri Sanjay Singh, learned counsel for the appellant ·B
relied upon the judgment of this Court in Lata Wadha and
others v. State of Bihar and others (2001) 8 sec 197 and
argued that the Tribunal and the High Court committed serious
error by not awarding just and fair compensation to the
appellants ignoring that the family was not only deprived of the
C
money which the deceased used to earn from paintings and
handicrafts but also of her services as housewife/mother apa·rt
from the care, love, affection and comfort of her company.
Learned counsel submitted that the award of the Tribunal is
liable to be modified because it did not assign any reason for ·D
reducing the amount of compensation payable to the appellants
in terms of the loss of dependency i.e. Rs.6 lacs. ~earned
counsel then argued that both the Tribunal and the High Court
erred in refusing to recognize the immense importance of the
invaluable services rendered by a housewife/mother to the · E
family throughout her life. Learned counsel finally submitted that
even if a housewife/mother doe-; not earn a single penny in
material terms, the criteria laid down by the legislature in clause
6 of the Second Schedule appended to the Act should be
applied for awarding compensation in petitions filed under ··· F
Section 166 of the Act.
8. Learned counsel appearing for the respondents
supported the award of the Tri~unal and the judgment of the
High Court and argued that criteria laid down in Section 163A
G
of the Act cannot be invoked for awarding higher compensation ·
to the appellants because they had filed petition under s.ection
166 of the Act. Learned counsel then submitted that no tangible
. evidence was produced before the Tribunal to show that the
deceased used to earn Rs.50,000/- per annum from paintings ,'H
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A
and handicrafts and argued that the said amount was rightly not
taken into consideration for the purpose of determination of the
compensation payable to the appellants.
9. We have considered the respective submissions. At the
8
outset, we may notice some of the precedents in which guiding
principles have been laid down for determination of the
compensation payable to the victim(s) of the accident or their
legal representatives.
10. In General Manager Kera/a State Road Transport
C Corporation v. Susamma Thomas (Mrs.) and others (1994)
2 SCC 176, this Court considered the legitimacy of multiplier
method evolved and applied by the British Courts and approved
the same. The relevant paragraphs of that judgment are
extracted below:
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"9. The assessment of damages to compensate the
dependants is beset with difficulties because from the
nature of things, it has to take into account many
imponderables, e.g., the life expectancy of the deceased
and the dependants, the amount that the deceased would
have earned during the remainder of his life, the amount
that he would have contributed to the dependants during
that period, the chances that the deceased may not have
lived or the dependants may not live up to the estimated
remaining period of their life expectancy, the chances that
the deceased might have got better employment or income
or might have lost his employment or income altogether.
10. The manner of arriving at the damages is to ascertain
the net income of t~e deceased available for the support
of himself and his dependants, and to deduct therefrom
such part of his income as the deceased was accustomed
to spend upon himself, as regards both self-maintenance
and pleasure, and to ascertain what part of his net income
the deceased was accustomed to spend for the benefit
of the dependants. Then that should be capitalised by
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multiplying it by a figure representing the proper number A
of year's purchase.
13. The multiplier method involves the ascertainment of the
loss of dependency or the multiplicand having regard to the
circumstances of the case and capitalizing the multiplicand 8
by an appropriate multiplier. The choice of the multiplier is
determined by the age of the deceased (or that of the
claimants whichever is higher) and by the calculation as
to what capital sum, if invested at a rate of interest
appropriate to a stable economy, would yield the
multiplicand by way of annual interest. In ascertaining this, C
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.
16. It is necessary to reiterate that the multiplier method D
is logically sound and legally we/I-established. There are
some cases which have proceeded to determine the
compensation on the basis of aggregating the entire
future earnings for over the period the life expectancy was
lost, deducted a percentage therefrom towards E
uncertainties of future life and award the resulting sum as
compensation. This is clearly unscientific. For instance,
if the deceased was, say 25 years of age at the time of
death and the life expectancy is 70 years, this method
would multiply the loss of dependency for 45 years -
F
virtually adopting a multiplier of 45 -
and even if one-third
or one-fourth is deducted therefrom towards the
uncertainties of future life and for immediate lump sum
payment, the effective multiplier would be between 30 and
34. This is wholly impermissible. We are, aware that some G
decisions of the High Courts and of this Court as well have
arrived at compensation on some such basis. These
decisions cannot be said to have laid down a settled
principle. They are merely instances of particular awards
in individual cases. The proper method of computation is H
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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
judgments of the High Courts have justified a departure
from the multiplier method on the ground that Section 11 OB of the Motor Vehicles Act, 1939 insofar as it envisages
the compensation to be 'just', the statutory determination
of a 'just' compensation would unshackle the exercise from
any rigid formula. It must be borne in 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."
(emphasis supplied)
11. In UP. S. R. T. C. v. Tri/ok Chandra ( 1996) 4 SCC 362,
E
a three-Judge Bench referred to the principles evolved by British
Courts for award of damages and reiterated the multiplier
method spelt out in General Manager Kera/a State Road
Transport Corporation v. Susamma Thomas (supra). The
Court then took note of the stark inconsistencies in the approach
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adopted by the motor accident claims tribunals and courts in
awarding compensation, referred to the amendment made in
the Act in 1994, pointed out the defects in the Second Schedule
and observed:
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"15. We thought it necessary to reiterate the method of
working out 'just' compensation because, of late, we have
noticed from the awards made by tribunals and courts that
the principle on which the multiplier method was developed
has been lost sight of and once again a hybrid method
based on the subjectivity of the Tribunal/Court has surfaced,
introducing uncertainty and lack of reasonable uniformity in
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COMPANY [GS. SJNGHVI, J.]
the matter of determination of compensation. It must be A
realised that the Tribunal/Court has to determine a fair
. amount of compensation awardable to the victim of an
accident which must be proportionate to the injury caused.
The two English decisions to which we have referred
earlier provide the guidelines for assessing the loss B
occasioned to the victims. Under the formula advocated
by Lord Wright in Davies, the loss has to be ascertained
by first determining the monthly income of the deceased,
then deducting therefrom the amount spent on the
deceased, and thus assessing the loss to the dependants c
of the deceased. The annual dependency assessed in
this manner is then to be multiplied by the use of an
appropriate multiplier. Let us illustrate: X, male, aged
about 35 years, dies in an accident He leaves behind his
widow and 3 minor children. His monthly income was 0
Rs.3500. First, deduct the amount spent on X every month.
The rough and ready method hitherto adopted where no
definite evidence was forthcoming, was to break up the
family into units, taking two units for an adult and one unit
for a minor. Thus X and his wife make 2+2=4 units and
each minor one unit i.e. 3 units in all, totalling 7 units. Thus
the share per unit works out to Rs.3500,7= Rs.500 per
month. It can thus be assumed that Rs.1000 was spent on
X. Since he was a working member some provision for his
transport and out-of-pocket expenses has to be estimated.
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In the present case we estimate the out-of-pocket expense
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at Rs.250. Thus the amount spent on the deceased X
works out to Rs.1250 per month leaving a balance of
Rs.3500-1250=Rs.2250 per month. This amount can be
taken as the monthly loss to X's dependants. The annual
dependency comes to Rs.2250x12=Rs.27,000. This G
annual dependency has to be multiplied by the use of an
appropriate multiplier to assess the compensation under
the head of loss to the dependants. Take .the appropriate
multiplier to be 15. The compensation comes to
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Rs.27,000x15=Rs.4,05,000. To this may be added a
conventional amount by way of loss of expectation of life.
Earlier this conventional amount was pegged down to
Rs.3000 but now having regard to the fall in the value of
the rupee, it can be raised to a figure of not more than
Rs.10,000. Thus the total comes to Rs.4,05,000+10,000=
Rs.4, 15,000.
17. The situation has now undergone a change with the
enactment of the Motor Vehicles Act, 1988, as amended
by Amendment Act 54 of 1994. The most important
change introduced by the amendment insofar as it relates
to determination of compensation is the insertion of
Sections 163-A and 163-B in Chapter XI entitled
"Insurance of Motor Vehicles against Third Party Risks".
Section 165-A begins with a non obstante clause and
provides for payment of compensation, as indicated in the
Second Schedule, to the legal representatives of the
deceased or injured, as the case may be. Now if we turn
to the Second Schedule, we find a table fixing the mode
of calculation of compensation for third party accident
injury claims arising out of fatal accidents. The first column
gives the age group of the victims of accident, the second
column indicates the multiplier and the subsequent
horizontal figures indicate the quantum of compensation
in thousand payable to the heirs of the deceased victim.
According to this table the multiplier varies from 5 to 18
depending on the age group to which the victim belonged.
Thus, under this Schedule the maximum multiplier can be
up to 18 and not 16 as was held in Susamma Thomas
case.
18. We must at once point out that the calculation of
compensation and the amount worked out in the Schedule
suffer from several defects. For example, in Item 1 for a
victim aged 15 years, the multiplier is shown to be 15 years
and the multiplicand is shown to be Rs.3000. The total
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 321
COMPANY [G.S. SINGHVI, J.]
should be 3000x15=45,000 but the same is worked out A
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.
To put it briefly, the table abounds in such mistakes. Neither
the tribunals nor the courts can go by the ready reckoner.
B
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
bachelor, dies at the age of 45 and his dependants are
his parents, age of the parents would also be relevant in c
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
over the earlier position that ordinarily it should not exceed
0
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
showing lack of awareness of the background of the
E
multiplier system in Davies case."
(emphasis supplied)
12. In Sar/a Verma (Smt.) and others v. Delhi Transport
Corporation and another (2009) 6 SCC 121, a two-Judge
F
Bench made threadbare analysis of various issues arising
before the tribunals and the courts in cases involving claim for
award of compensation under the Act, reiterated the principles
laid down in General Manager Kera/a State Road Transport
Corporation v Susamma Thomas (supra), referred to the G
subsequent judgment in U.P. S.R. T.C. v. Trilok Chandra
(supra) and then observed:
"16. Compensation awarded does not become "just
compensation" merely because the Tribunal considers
it to be just. For example, if on the same or similar facts
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(say the deceased aged 40 years having annual income
of Rs. 45, 000 leaving his surviving wife and child), one
Tribunal awards Rs. 10, 00, 000 another awards
Rs. 5, 00, 000, and yet another awards Rs. 1, 00, 000, all
believing that the amount is just, it cannot be said that
what is awarded in the first case and the last case is just
compensation. "Just compensation" is adequate
compensation which is fair and equitable, on the facts and
circumstances of the case, to make good the loss
suffered as a result of the wrong, as far as money can
do so, by applying the well-settled principles relating to
award of compensation. It is not intended to be a
bonanza, largesse or source of profit.
17. Assessment of compensation though involving certain
hypothetical considerations, should nevertheless be
objective. Justice and justness emanate from equality in
treatment, consistency and thoroughness in adjudication,
and fairness and uniformity in the decision-making process
and the decisions. While it may not be possible to have
mathematical precision or identical awards in assessing
compensation, same or similar facts should lead to awards
in the same range. When the factors/inputs are the same,
and the formula/legal principles are the same, consistency
and uniformity, and not divergence and freakiness, should
be the result of adjudicaticn to arrive at just compensation.
In Susamma Thomas, this Court stated: (SCC p.185,
para 16)
"16 .... 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."
18. Basically only three facts need to be established by
ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 323
COMPANY [G.S. SINGHVI, J.]
the claimants for assessing compensation in the case of death:
A
(a) age of the deceased;
(b) income of the deceased; and
(c) the number of dependants.
The issues to be determined by the Tribunal t9 arrive at
the loss of dependency are:
(i) additions/deductions to be made for arriving at the
income;
(ii) the deduction to be made towards the personal living
expenses of the deceased; and
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(iii) the multiplier to be applied with reference to the age
0
of the deceased.
If these determinants are standardised, there will be
uniformity and consistency in the decisions. There will be
lesser need for detailed evidence. It will also be easier for
the insurance companies to settle accident claims without
E
delay."
(emphasis supplied)
_In paragraphs 20 to 24, the Court considered the issue of
F
addition to income for future prospects and observed:
"24. In Susamma Thomas this Court increased the
income by nearly 100%, in Sarla Dixit the income was
increased only by 50% and in Abati Bezbaruah the income
was increased by a mere 7%. In view of the imponderables G
and uncertainties, we are in favour of adopting as a rule
of thumb, an addition of 50% of actual salary to the actual
salary income of the deceased towards future prospects,
where the deceased had a permanent job and was· below
40 years. (Where the annual income is in the taxable
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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 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 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
bf death. A departure therefrom should be made only in
rare and exceptional cases involving special
circumstances."
The Court then considered the nature and extent of
deduction for personal and living expenses and laid down the
following principles:
"30. Though in some cases the deduction to be made
towards personal and living expenses is calculated on the
basis of units indicated in Trilok Chandra, the general
practice is to apply standardised deductions. Having
considered several subsequent decisions of this Court, we
are of the view that where the deceased was married, the
deduction towards personal and living expenses of the
deceased, should be one-third (1/3rd) where the number
of dependent family mel"1bers 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 of dependent
family members exceeds six.
31.