# RESHMA KUMARI AND ORS v. MADAN MOHAN AND ANR

- **Citation:** [2013] 2 S.C.R. 706
- **Court:** Supreme Court of India
- **Decided:** 2013-04-02
- **Case number:** Civil Appeal No. 4646 of 2009
- **Bench:** R.M. Lodha J. Chelameswar, Madan B. Lokur
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/reshma-kumari-and-ors-v-madan-mohan-and-anr-28746
- **Pages:** 38

## Headnote

Motor Vehicles Act, 1988:
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
neglect or default of the owner or owners of the vehicle
concerned. On the other hand, by making an application
F
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-EG; 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 eq

## Text

_Characters 0–39,918 of 69,999. This is a partial read: ask again with offset=39918 for what follows._

A
B
c
[2013] 2 S.C.R. 706
RESHMA KUMARI AND ORS.
v.
MADAN MOHAN AND ANR.
(Civil Appeal No. 4646 of 2009)
APRIL 2, 2013.
[R.M. LODHA J. CHELAMESWAR AND
MADAN B. LOKUR, JJ.]
Motor Vehicles Act, 1988:
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
neglect or default of the owner or owners of the vehicle
concerned. On the other hand, by making an application
F
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-EG; 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]
Sar/a Verma (Smt.) and Ors. v. Delhi Transport
Corporation and Anr. 2009 (5) SCR 1098 = 2009 (6) sec 121
- affirmed.
D
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.
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
F
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
F
as pointed out in Column (6) of the table in Sar/a Verma
should be followed. This is to ensure that claimants in
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
8 addition to income for future prospects, the Tribunals
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) [741H 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.
United India Insurance Co. Ltd. & Ors. v. Patricia Jean
B
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 c
India Assurance Co. Ltd. v. Shanti Pathak (Smt.) & Ors. 2007
(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
2002 (3) SCR 1176
cited
Para 1
E
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
B
2005 (2) SCR 1173
referred to
para 25
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
Mahajan5 and Abati Bezbaruah7 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 Chandra3 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
A
B
c
D
E
F
G
H
716
SUPREME COURT REPORTS
[2013) 2 S.C.R.
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
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
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
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
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
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
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.
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
0
principles of law. The mere fact that a person died or a party
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
G
payment of compensation in a motor accident claim case".
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 92A
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 twoJudge 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
Prabhatbhai10.
5. The 1988 Act replaced the 1939 Act. Chapter X of the
1988 Act deals with liability without fault in certain cases. SubE
- 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.
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A
(1) An application for compensation arising out of an
accident of the nature specified in sub-section (1) of
section 165 may be madeB
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(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
(d) ~y any agent duly authorised by the person injured or
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
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 (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
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 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
RESHMA KUMARI v. MADAN MOHAN
[R.M. LODHA, J.]
application for compensation under this Act."
721
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:..:
A
"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.
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 ),
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.
(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.·
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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
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A
1988 Act, certain amendments were brought in the 1988 Act.
8
c
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
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
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:
E
"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."
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.
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[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 Monagle13• It has been laid down in Susamma Thomas1
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
0 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, 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 Chandra3 reiterated what
was stated in Susamma Thomas1 as regards determination
of compensation in accident cases on the basis of multiplier
method. In Trilok Chandra3, the Court considered Section
G 163A and the Second Schedule which was not under
consideration in Susamma Thomas1 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
Thomas1• 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 165D
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
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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.
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
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
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
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
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 Mahajan5, 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.