# RESHMA KUMARI AND OTHERS v. MADAN MOHAN AND ANOTHER

- **Citation:** [2009] 11 S.C.R. 305
- **Court:** Supreme Court of India
- **Decided:** 2009-07-23
- **Case number:** Civil Appeal No. 4646 of 2009
- **Bench:** S.B. Sinha, Cyriac Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/reshma-kumari-and-others-v-madan-mohan-and-another-25048
- **Pages:** 37

## Headnote

-.
MOTOR VEHICLES ACT, 1939/MOTOR VEHICLES
ACT, 1988:
A
B.
c
Section 110-8/Sections 163-A, 166, Second Schedule -
Structured formula for determination of amount of
compensation -
Future earnings on the basis of life
expectancy - Taking inflation into consideration - Having
regard to the divergence of opinion and certain aspects not
D
having been considered in the earlier decisions of the
~-
Supreme Court and particularly in the absence of clarification
from Parliament despite recommendations made by this
Court in Trilok Chandra's case, matters referred to Larger
Bench.
The
common
questions
which
arose
for
consideration in the present appeals were:
E
1. Whether the multiplier specified in the Second'
Schedule appended to the Act should be scrupulously
F
applied in all the cases?
2. Whether for determination of the multiplicand, the
Act provides for any criterion, particularly as regards
determination of future prospects?
Referring the matter to a larger Bench, the Court
HELD: 1.1. Even prior to the enactment of the
provision, viz. Section 163A of the Motor Vehicles Act,
G
305
H
306
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A 1988, this Court following the decisions of the English
')""
Courts applied structured formula for determination of the
amo.unt of compensation. [Para 9] [315-E-F]
1.2. So far as the question of loss of future earnings
B on the basis of average life expectancy is concerned, this
Court, having regard to the phraseology used in Section
110-B of the Motor Vehicles Act, 1939 envisaging
payment of just compensation to the .victims and/or the
~
successors of the deceased, stated that any application
c of a rigid formula may not be applied. [Para 10] [315-GH; 316-A]
General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas and others,
~-
(1,994) 2 SCC 176; l).P. State Road Transport Corporation.
~
D
v. Trilok Chandra, (1996) 4 SCC 362; Kaushnuma Begum
v. New India Assurance Co. Ltd., (2001) 2 SCC 9; United
,...
~
India Insurance Co. Ltd. v. Patricia Jean Mahajan, (2002) 6
sec 281; Jyoti Kaul v. State of M.P., (2002) 6 sec 306 and
New India Assurance Co. Ltd. v. Shanti Pathak, (2007) 10
E sec 1, referred to.
-'
Mallett's case (1970) AC 166 : (1969) 2 All ER 178,
referred to.
2. The compensation which is required to be
-,,
"'
F
determined must be just. While the claimants are required
to be compensated for the loss of their dependency, the
same should not be considered to be a windfall. Unjust
enrichment should be discouraged. ·This Court cannot
also lose sight of the fact that in given cases, as for
G example death of only son to a mother, she can never be
compensated in monetary terms. [Para 20] [324-C-D]
~
3. The question as to the methodology required to be
applied for determination of compensation as regards
H
prospective loss of future earnings, however, as far as
....
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
307
ANR.
possible should be based on certain principles. A person
A
may have a bright future prospect; he might have become
eligible to promotion immediately; there might have been
chances of an immediate pay revision, whereas in
another the nature of employment was such that he
might not have cont.intmd in service; his chance of B
promotion, having regard to the nature of employment
may be distant or remote. It is, therefore, difficult for any
court to lay down rigid tests which should be applied in
all situations. There are divergent views. In some cases
it has been suggested that some sort of hypotheses or C
guess work may be inevitable. That may be so. [Para 21]
[324-E-G]
Sar/a Dixit v. Ba/want Yadav, (1996) 3 SCC 179; Abati
Bezbaruah v. Dy. Director General, Geological Survey of
India, (2003) 3 SCC 148 and Bhagwandas v. Mohd. Arif, AIR
D
~ 1988 A.P. 99, referred to.
Davies v. Powell Duffregn Associaed Colliers Ltd. 1942
AC 601 and Wells v. Wells [1998] 3 W.L.R. 329, referred to.
4. Indisputably, grant of compensation involving an
accident is within the realm of law of tort

## Text

_Characters 0–39,999 of 67,467. This is a partial read: ask again with offset=39999 for what follows._

I
[2009] 11 S.C.R. 305
RESHMA KUMARI AND OTHERS
v.
MADAN MOHAN AND ANOTHER
(Civil Appeal No. 4646 of 2009)
JULY 23, 2009
(S.B. SINHA AND CYRIAC JOSEPH, JJ.]
-.
MOTOR VEHICLES ACT, 1939/MOTOR VEHICLES
ACT, 1988:
A
B.
c
Section 110-8/Sections 163-A, 166, Second Schedule -
Structured formula for determination of amount of
compensation -
Future earnings on the basis of life
expectancy - Taking inflation into consideration - Having
regard to the divergence of opinion and certain aspects not
D
having been considered in the earlier decisions of the
~-
Supreme Court and particularly in the absence of clarification
from Parliament despite recommendations made by this
Court in Trilok Chandra's case, matters referred to Larger
Bench.
The
common
questions
which
arose
for
consideration in the present appeals were:
E
1. Whether the multiplier specified in the Second'
Schedule appended to the Act should be scrupulously
F
applied in all the cases?
2. Whether for determination of the multiplicand, the
Act provides for any criterion, particularly as regards
determination of future prospects?
Referring the matter to a larger Bench, the Court
HELD: 1.1. Even prior to the enactment of the
provision, viz. Section 163A of the Motor Vehicles Act,
G
305
H
306
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A 1988, this Court following the decisions of the English
')""
Courts applied structured formula for determination of the
amo.unt of compensation. [Para 9] [315-E-F]
1.2. So far as the question of loss of future earnings
B on the basis of average life expectancy is concerned, this
Court, having regard to the phraseology used in Section
110-B of the Motor Vehicles Act, 1939 envisaging
payment of just compensation to the .victims and/or the
~
successors of the deceased, stated that any application
c of a rigid formula may not be applied. [Para 10] [315-GH; 316-A]
General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas and others,
~-
(1,994) 2 SCC 176; l).P. State Road Transport Corporation.
~
D
v. Trilok Chandra, (1996) 4 SCC 362; Kaushnuma Begum
v. New India Assurance Co. Ltd., (2001) 2 SCC 9; United
,...
~
India Insurance Co. Ltd. v. Patricia Jean Mahajan, (2002) 6
sec 281; Jyoti Kaul v. State of M.P., (2002) 6 sec 306 and
New India Assurance Co. Ltd. v. Shanti Pathak, (2007) 10
E sec 1, referred to.
-'
Mallett's case (1970) AC 166 : (1969) 2 All ER 178,
referred to.
2. The compensation which is required to be
-,,
"'
F
determined must be just. While the claimants are required
to be compensated for the loss of their dependency, the
same should not be considered to be a windfall. Unjust
enrichment should be discouraged. ·This Court cannot
also lose sight of the fact that in given cases, as for
G example death of only son to a mother, she can never be
compensated in monetary terms. [Para 20] [324-C-D]
~
3. The question as to the methodology required to be
applied for determination of compensation as regards
H
prospective loss of future earnings, however, as far as
....
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
307
ANR.
possible should be based on certain principles. A person
A
may have a bright future prospect; he might have become
eligible to promotion immediately; there might have been
chances of an immediate pay revision, whereas in
another the nature of employment was such that he
might not have cont.intmd in service; his chance of B
promotion, having regard to the nature of employment
may be distant or remote. It is, therefore, difficult for any
court to lay down rigid tests which should be applied in
all situations. There are divergent views. In some cases
it has been suggested that some sort of hypotheses or C
guess work may be inevitable. That may be so. [Para 21]
[324-E-G]
Sar/a Dixit v. Ba/want Yadav, (1996) 3 SCC 179; Abati
Bezbaruah v. Dy. Director General, Geological Survey of
India, (2003) 3 SCC 148 and Bhagwandas v. Mohd. Arif, AIR
D
~ 1988 A.P. 99, referred to.
Davies v. Powell Duffregn Associaed Colliers Ltd. 1942
AC 601 and Wells v. Wells [1998] 3 W.L.R. 329, referred to.
4. Indisputably, grant of compensation involving an
accident is within the realm of law of torts. It is based on
the principle of restitution in integrum. The said principle
provides that a person entitled to damages should, as
E
•
¥
nearly as possible, get that sum of money which would
put him in the same position as he would have been if
F
he had not sustained the wrong. [Para 30] [335-G-H; 336A]
Livingstone v. Rawyards Coal Co. (1880) 5 AC 25,
refu~d~.
G
5.1. The accident may result in death; it may result
in injuries which may be of different counts. When a
death occurs the benefit accruing to the dependent must
be taken into account; the balance of loss and gain to
H
308
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A him must be ascertained; the position of each dependent
........
B
c
D
E
F·
in each case may have to be considered separately.
[Para 31) (336-B-C]
5.2. An element of sentiment of the deceased was
also introduced while determining compensation payable
to the dependent. One of the factors which had been
taken into consideration in Davis was that the widow
might be again married and ceases to be dependent; in
India, one cannot proceed on such presumption. In the
Indian context several other factors should be taken into
consideration including education of the dependents and
the. nature of job. In the wake of changed soc;etal
conditions and global scenario, future prospects may
have to be· taken into consideration not only having
regard to the status of the employee, his educational
qualification; his past performance but also other relevant
factors, namely - the higher salaries and perks which are
being offered by the private companies these days. [Para
33 and 34) (338-C-E]
General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas and others,
(1994) 2 SCC 176; Gobald Motor Service Ltd., Allahabad v.
R.M.K. Veluswami, AIR 1962 SC 1; Nance v. British
Columbia Electric Railway Co, Ltd. 1951 AC 601 and Oriental
Insurance Company Ltd. v. Jashuben and others, (2008) 4
sec 162, referred to.
Davis v. Powell Duffrya Associated Collieries Ltd. (1942)
AC 601, referred to.
• r
"
•
'
' ., ~:.
"
•.
'
,.. '' t
\l.-• .....
I
G
6. One of the incidental issues which has also to be
taken into consideration is inflation. Unfortunately, unlike
other.·'developed 'coi.Jntries in India there has been no
scientific.,study;·'lt is ·e'xpected that with the
1rising inflation
the rate of interest would go up.~ ·irf Ind fa ·it 'does not
H, happen. It, therefore, -may be a releva'nt factor which may
j...
,
_,
...
's"
r-
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
309
ANR.
.....-- ·
be. taken into consideration for determining the actual
.A.
ground reality. No hard and fast rule, however, can be laid ·
down therefor. [Paras 35 and 36] [338-G-H; 339-A]
---..,{
7. The Second Schedule refers to Section 163-A of
the 1988 Act, which, provides for quantum of 8
compensation to a third party in case of fatal accident or
injuries suffered. It provides for a table. It specifies the
amount required to be paid to the legal heirs/
represe~tatives pf the deceased in the case of fatal
accident and the claimants in the case of injuries suffered
C
by them depending upon his age and annual income as
specified therein. The question which arises for
consideration is as to whether the multiplier specified _in
the second schedule should. be taken to be a guide for
calculation of amount of compensation payable in a case
falling under Section 166 of the 1988 Act? ~Para 38] [339D
D-E]
8.1. In Patricia Jean Mahajan and Abati Bezbaruah and
the other cases following them multiplier specified in the
Second Schedule has been taken to be guiding factor for
E
calculation of the amount of compensation even in a case
under Section 166 of the Act. However, in Shanti Pathak
this Court advocated application of lesser multiplier,
although no legal principle has been laid therein. [Para
39] [339-F-G]
F
8.2. In Trilok Chandra this Court has pointed out
certain purported calculation mistakes in the Second
Schedule. It, however, appears 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 G
lower amount can be said to be the quantum. of
compensation upon applying the multiplier.system. [Para
40] [339-H; 340-A-B]
United India Insurance Co. Ltd. v. Patricia Jean Mahajan,
H
310
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A (2002) 6 SCC 281; Abati Bezbaruah v. Dy. Director General,
,,...,.
8
Geological Survey of India, (2003) 3 SCC 148; New India
Assurance Co. Ltd. v. Shanti Pathak, (2007) 10 SCC 1 and
U.P. State Road Transport Corporation .. v. Trilok Chandra,
('1996) 4 sec 362, referred to.
9.1. Section 163-A of the 1988 Act does not speak of
application of any multiplier. Even the Second Schedule,
so far as the same applies to fatal accident, does not say
so. The multiplier, in terms of the Second Schedule, is
C required to be applied in a case of disability in non fatal
accident. Consideration for payment of compensation in
the case of death in a 'no fault liability' case vis-'-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.
D 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
wherefor the multiplier is not to be applied at all but in a
case involving permanent total disability or permanent
E 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 th.e compensation
and in the .case of permanent partial disablement such
F
percentage 'of compensation which would have been
payable in the case of permanent total disablement as
specified. under item (a) of the Second Schedule. [Para
41) [340-C-F]
G
9.2. The Parliament in its wisdom thought to provide
for a higher amo4nt of compensation in case of
permanent total disablement and proportionate amount
of compensation in case of permanent partial
disablement depending upon the percentage of disability.
H [Para 42] [340-G]
)'--
'
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
311
ANR.
10.1. Prima facie, it appears that the multiplier A
mentioned in the Second Schedule, although in a given
case, may be taken to be a guide but the same is not
decisive. Although a probable amount of compensation
as specified in the Second Schedule in the eve11t the age
of victim is 17 or 20 years and his annual income is
B
Rs.40,000/-, his heirs/ legal representatives is 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, although in
the former case the amount of compensation is to be c
determined on the basis of 'no fault liability' and in the
later on 'fault liability' In the aforementioned situation the
Courts are required to lay down certain principles. [Para
43] [340-H; 341-A-C]
10.2. This Court is not unmindful of the Statement of D
Objects and Reasons to Act 54 of 1994 for introducing
Section 163-A 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
E:
in a similar situation, the injured claimant or his heirs/
legal 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 should also bear that
F
factor in mind. 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 Chandra,
G
the issue, shall be decided by a Larger B_ench. [Paras 44
and 45] [341-0-F]
U.P. State Road Transport Corporation. v. Trilok
H
312
SUPREME COURT REPORTS
[2009] 11 S.C.R.
>y
A
Chandra, (1996) 4 SCC 362, referred to.
'
(1994) 2 sec 116
referred to
Para 9
(1970) AC 166 :
(1969) 2 All ER 178
referred to
Para 9
B
(1996) 4 sec 362
referred to ·
Para 14
(2001) 2 sec 9
referred to
Para 17
~
(2002) 6 sec 281
referred to
Para 17
c
(2002) 6 sec 306
referred to
Para 17
(2001) 1 o sec 1
referred to
Para 18
(1996) 3 sec 119
referred to
Para 22
D
(2003) 3 sec 148
referred to
Para 22
-4.
1942 AC 601
referred to
Para 23
AIR 1988 A.P. 99
referred to
Para 25
E
[1998] 3 W.L.R. 329
referred to
Para 28
(1880) 5 AC 25
referred to
Para 30
AIR 1962 SC 1
referred to
Para 31
1F1951 AC 601
referred to
Para 32
~
F
(2008) 4 sec 162
referred to
Para 34
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4646 of 2009.
G
From the Judgment & Order dated 08.02.2007 of the. High
Court of Delhi at New Delhi in FAQ No.184 of 1992.
,_._,
Ashok K. Mahajan, O.P. Goyal, S.N. Kalra, Yash Pal
Dhingra, Atul Nanda (for M/s. Law Associates & Co)., Anil
H
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
313
ANR.
-y
Kumar Sharma, Dr. Sushil Balwada, A. Subhashini, Sameer
A
Nandwani, K.L. Nandwani, S.K. Mishra and Debasis Misra for
the appearing parties.
The Judgment of the Court was delivered by
5.8. SINHA, J. Leave granted .
B
.....
1. Application of the principles for grant of compensation
~
under the Motor Vehicles Act, 1939 (for short 'the 1939 Act')
and the Motor Vehicles Act, 1988 (for short 'the 1988 Act') is
the question involved herein. Before, embarking on the said c
question we may notice the fact of the matters involved in each
case.
Civil A1meal arising out of SLP {C} N0.8205/2007
2. Madan Mohan Singh Saini met with an accident on 3rd
D
~
September, 1987, when the scooter on which he was riding,
collided with a Maruti van, driven by respondent No.1.
Respondent No.2 is the insurer. He was admitted to Ram
Manohar Lohia Hospital where he succumbed to his injuries on
8th September, 2006.
E
Appellants herein who are, wife, children and mother of the
deceased filed a claim petition before the Motor Accident
..
Claims Tribunal, New Delhi, under Sections 110-A and 92-A
.(
of the Act.
F
By an award dated 13th July, 1992 the Tribunal awarded
a sum of Rs.3,36,000/- by way of compensation with 12%
interest from the date of filing of the claim petition.
3. Aggrieved by and dissatisfied with the said amount,
G
appellants filed an appeal being FAO before the High Court of
....
.,;
Delhi. A learned Single Judge of the High Court by reason of
the impugned judgment and order dated 8th February, 2007
enhanced the compensation by Rs.17,000/-.
The appellants still dissatisfied have filed the present
H
314
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A appeal by obtaining special leave.
Civil Appeal arising out of SLP (C) No.21649 of 2006.
4. Jagmohan Singh, (deceased), husband of appellant
No.1; father of appellant Nos. 2 and 3 and son of appellant Nos.
8 4 and 5, died in an accident with a D.T.C. bus.
The appellants filed a claim petition before the Additional
District Judge/Motor Vehicle Accident Tribunal, Ghaziabad
,,.
claiming a sum of Rs.27,50,000/- by way of compensation.
c
By its order dated 21st May, 1996 a sum of Rs.2,88,000/
- with 12% interest thereon from the date of filing of the claim
petition, was awarded.
5. Feeling dissatisfied, the appellants filed an FAQ before
D the Allahabad High Court. A Division Bench of the said Court
by its judgment and order dated 26th May, 2006 enhanced the
-J..
amount of compensation to Rs. 4,08,000/-.
Aggrieved by and dissatisfied with the said judgment, the
E appellants have preferred this appeal by special leave.
Civil Appeal arising out of SLP {C} No.6791 of 2007.
6. Sergeant Dalbir Singh died in a road accident on 17th
September, 1997 with a truck which was driven by respondent
).
F No.1. Respondent Nos. 2 and 3 are the owner and insurance
company respectively.
The appellants, who are the legal heirs, i.e. wife, children
and mother of the deceased, filed a claim petition before the
G Motor Accident Claims Tribunal, Faridabad under Sections 166
and 1.40 of the 1988 Act for grant of compensatio11 of
Rs.15,00,000/-. The Motor Accident Claims Tribunal by its
')p--- -
award dated 26th June, 2000 awarded a sum of Rs.2,49,600/
-with 12% interest on the said amount by way of compensation.
H
7. Feeling dissatisfied, appellants filed an FAQ before the
j
-
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
315
ANR. [S.8.SINHA, J.]
High Court of Punjab and Haryana at Chandigarh and by the
A
impugned judgment and order, a learned Single Judge of the
High Court partly allowed the appeal and enhanced the amount
compensation by Rs.1,20,600/- besides interest @ 6% per
annum on the enhanced compensation.
B
8. The common questions which arise for our consideration
in these appeals are :-
. (1)
Whether the multiplier specified in the Second
Schedule appended to the Act should be
scrupulously applied in all the cases?
C
(2)
Whether for determination of the multiplicand, the
Act provides for any criterion, particularly as
regards determination of future prospects?
Before we, however, advert to the said questions we may
D
notice that Section 163-A of the Act was inserted on or about
14th November, 1994.
9. Even prior to the enactment of the said provision, this
Court in General Manager, Kera/a State Road Transport
E
Corporation, Trivandrum v. Susamma Thomas and others, [
( 1994) 2 SCC 176 ] following the decisions of the English
Courts applied structured formula for determination of the
amount of compensation. The principle with regard to the
determination of the amount of compensation on the basis of
F
the structured formula in Susamma Thomas (supra) was
considered having regard to the decision of Diplock, J in his
speech in Mallett's case [ (1970) AC 166: (1969) 2 All ER 178
178 ]. We would refer to Mallett (supra) a little later but we may
at this stage notice that the principle laid down therein has been
G
stated to be logically sound and legally well established.
10. So far as the question of loss of future earnings on the
basis of average· life expectancy is concerned, this Court,
having regard to the phraseology used in Section 110-B of the
Motor Vehicles Act, 1939 envisaging payment of just
H
316
SUPREME COURT REPORTS
[2009] 11 S.C.R.
Y"'
A compensation to the victims and/or the successors of the
deceased, stated that any application of a rigid formula may
not be applied.
In Susamma Thomas (supra) it was observed that the
B multiplier method is the appropriate one which should ordinarily
be not depart~d from save in rare and extraordinary
circumstances and very exceptional cases. The rationale for
applying the said principle was laid down stating :-
'f-
'
"17. The multiplier represents the number of years'
c
purchase on which the loss of dependency is capitalised.
Take for instance a case where annual loss of dependency
is Rs. 10,000/ -. If a sum of Rs. 1,00,000/- is invested at
10% annual interest, the interest will take care of the
dependency, perpetually. The multiplier in this case works
D
out to 10. If the rate of interest is 5% per annum and not
•
10% then the multiplier.needed to capitalise the loss of the
"""
annual dependency at Rs. 10,000/~ would be 20. Then the
multiplier, i.e., the number oJ years' purchase of 20 will yield
the annual dependency perpetually. Then allowance to
E
scale down the multiplier would have to be made taking
into account the uncertainties of the future, the allowances
for immediate lump sum payment, the period over which
the dependency is to last being shorter and the capital feed
also to be spent away over the period of dependency is
..
~
F
to last etc; Usually in English Courts the operative multiplier
rarely exceeds 16 as maximum. This will come down
accordingly as the age of the deceased person (or that of
the dependants, whichever is higher) goes up,"
11. It is, however, of some significance to notice that at
G the relevant point of time the rate of bank interest was about
· 12% per annum to whic.h reference has also been made by the
--~
High Court at some length.
12. In Susamma Thomas (supra) apart from applying the
:>
H structured formula with regard to the determination of the amount
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
317
ANR. [S.B.SINHA, J.]
~
of compensation as regards the future prospect, it was opined:-
A
"19. In the present case the deceased was 39 years of
age. His income was Rs 1032 per month. Of course, the
future prospects of advancement in life and career should
also be sounded in terms of money to augment the B
multiplicand. While the chance of the multiplier is
deter.mined by two factors, nam~ly, the rate of interest
....
appropriate to a stable economy and the age of the
deceased or of the claimant whichever is higher, the
ascertainment of the multiplicand is a more difficult exercise. c
Indeed, many factors have to be put into the scales to
evaluate the contingencies of the future. All contingencies
of the future need not necessarily be baneful. The
deceased person in this case had a more or less stable
job. It will not be inappropriate to take a reasonably liberal
D
view of the prospects of the future and in estimating the
>-
gross income it will be unreasonable to estimate the loss
of dependency on the present actual income of Rs 1032
per month. We think, having regard to the prospects of
advancement in the future career, respecting which there
is evidence on record, we will not be in error in making a E
higher estimate of monthly income at Rs 2000 as the gross
income. From this has to be deducted his personal living
expenses, the quantum of which again depends on various
-,;(
factors such as whether the style of living was spartan or
bohemian. In the absence of evidence it is not unusual to
F
deduct one-third of the gross income towards the personal
living expenses and treat the balance as the amount likely
to have been spent on the members of the family and the
dependents. This loss of dependency should capitalize with
the appropriate multiplier. In the present case we can take G
....... -·-.¥'
about Rs 1400 per month or Rs 17,000 per year as the
(
loss of dependency and if capitalized on a multiplier of 12,
which is appropriate to the age of the deceased, the
compensation would work out to (Rs 17,000 x 12 =
Rs '2,04,000) to which is added the usual award for loss H
318
SUPREME COURT REPORTS
[2009] 11 S.C.R.
A
of consortium and loss of the estate each in the
conventional sum of Rs 15,000."
1 ~- Parliament thereafter inserted Section 163A and the
Second Schedule in the Acf. One of the features thereof which
8
we may immediately notice is that it provides for claim of
compensation in a case involving no fault, stating :-
c
D
E
F
G
H
"163A. Special provisions as to payment of 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 oase of death
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 m.ade 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 G~zette, from time to
time amend the Second Schedule."
14. After the aforementioned provision was brought in the
Statute Book, this Court had the occasion to consider the
applicability of the structured formula once again in UP. State
-I.
)...
·~---...,-
)-
RESHMA KUMAR! AND ORS. v. MADAN MOHAN AND
319
ANR. [S.B.SINHA, J.]
-~,
Road Transport Corporation. v. Trilok Chandra, [ (1996) 4 A
SCC 362]. Ahmadi, C.J. noticed certain discrepancies therein
and inter alia pointed out :-,
"18. We must at once point out that the calculation of
compensation and the amount worked out in the Schedule B
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
,.
should be 3000x15=45,000 but the same is worked out at
Rs . 60,000. Similarly, in the second item the multiplier is c
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. "
D
15. However, it is pertinent to notice that the Bench
).._
categorically laid down that those mistakes are limited to actual
calculations only and not in respect of other items. it was
emphasized that the multiplier cannot exceed 18. years'
purchase factor. It noticed that the same was an improvement
E
over the earlier position that ordinarily it should not exceed 16.
This Court stated the law thus :-
...(
"15. We thought it necessary to reiterate the method of
working out 'just' compensation because, of late, we have
F
noticed from the awards made by tribunals arid courts th~t
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 G
uniformity in- the matter of determination of compensation.
-.. -...
It must be 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
H
_;.
A
B
c
D
E
F
G
H
320
SUPREME COURT REPORTS
[2009] 11 S.C.R.
referred earlier provide the guidelines for assessing the
loss 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 of the deceased. The annual dependency ·
assessed in this manner is then to be.multiplied by the use
of an appropriate multiplier. Let us ilh.istrate: X, male, aged
about 35 years, dies in an accident. He leaves behind his
widow and 3 minor children. His monthly.income was 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 Le. 3 units in all, totalling 7 units.Thus
the ·share per unit works out to Rs 3500/?=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. In the present case we estimate the out-ofpocket expense 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 GOmes to
Rs 2250x12=Rs 27,000. This 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 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 regara to the fall
in ·tMe value of the rupee, it can be raised to a figure of not
more than Rs 10,000. Thus the total comes to
J
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
321
ANR. [S.B.SINHA, J.]
-~
Rs 4,05,000+10,000= Rs 4, 15,000.
A
16. We may place on record that despite the
recommendations made by this Court in Trilok Chandra (supra)
the Parliament did not amend the Second Schedule.
17. We must also place on record that according to Mr.
B
Atul Nanda, learned counsel appearing on behalf of the
Insurance Company, the Second Schedule does not contain any
-¥
such mistake. Be that as it may this Court even in subsequent
decisions reiterated the s·aid principle in a large number of
cases. We would, however, notice only a few of them.
c
In Kaushnuma Begum .v. New India Assurance Co. Ltd.,
[ (2001) 2 SCC 9 ] this Court observed:-
22. The appellants claimed a sum of Rs 2,36,000. But PW D
1 widow of the deceased said that her husband's income
,..
was Rs 1500 per month. PW 4 brother of the deceased
also supported the same version. No contra-evidence has
been adduced in regard to that aspect. It is, therefore,
reasonable to believe that the monthly income of the
E;
deceased was Rs. 1500. In calculating the amount of
compensation in this case we lean ourselves to adopt the
structured formuf a provided in the Second Schedule to the
MV Act. Though it was formulated for the purpose of
~
Section 163-A of the MV Act, we find it a safer guidance
for arriving at the amount of compensation than any other
F
method so far as the present case is concerned."
In United India -Insurance Co. Ltd. v. Patricia Jean
Mahajan, [ (2002) 6 SCC 281 ] this Court held :-
::;
"21. The purpose to compensate the dependants of ttie G
victims is that they may not be suddenly deprived of ttie
---...
source of their maintenance and as far as possible they
may be provided with the means as were available to them
before the accident took place. It will be a just and fair
compensation. But in cases where the amount of H
322
SUPREME COURT REPORTS
[2009) 11 S.C.R.
A
compensation may go much higher than the amount
providing the same amenities, comforts and facilities and
also the way of life, in such circumstances also it may be
a case where, while applying the multiplier system, the
lesser multiplier may be applied. In such cases, the amount
B
of multiplicand becomes relevant.. The intention is not to
overcompensate.
c
22. We therefore, hold that ordinarily while awarding
compensation, the provisions contained in the Second
Schedule may be taken as a guide including the multiplier,
but there may arise some cases, as the one in hand, which
may fall in the category having special features or facts
calling for 9eviation from the multiplier usually applicable."
It is evident from the above that this Court in the said
D
decision had taken a departure from the Second Schedule.
In Jyoti Kaul v. State of M.P., [ (2002) 6 SCC 306 ]
~
E
F
G
H
multiplier of 15 was adopted, stating :-
"The aforesaid decision makes it clear that the principle
of multiplier would depend on the facts and circumstances
of each case. Looking to the facts of this case we find that
the Tribunal has given good reasons for applying the
multiplier of 15. This was in addition of taking into
consideration that the predecessors of the deceased all
lived for more than 80 years. The High Court reduced the
multiplier from 15 to 10 without taking into consideration
circumstances considered by the Tr.ibunal and thus
committed the error. We, accordingly, set aside the
findings of the High Court only to the extent of the
application of multiplier and uphold other findings including
reduction of interest-. The present appeal, accordingly,
succeeds in part. The computation of compensation now
shall be made on the basis of multiplier of 15. The
difference of enhanced amount which has yet not been
paid b7 the respondent State shall be paid to the claimants
~--
-
. -
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
323
ANR. [S.B.SINHA, J.]
within a period of three months from today."
A
18. The said decisions have not yet been overruled. We
may, however, immediately notice that recently this Court had
advocated application of a lower multiplier in cases involving
Section 166 of the Act, but no legal principles have been laid
8
down therein. In New India Assurance Co. Ltd. v. Shanti Pathak,
(2007) 10 SCC 1, this Court held :-
6. Considering the income that was taken, the foundation
for working out the compensation cannot be faulted with.
The monthly contribution was fixed at Rs. 3500. In the C
normal course we would have remitted the matter to the
High Court for consideration on the materials placed
before it. But considering the fact that the matter is pending
since long, it would be appropriate to take the multiplier
of 5 considering the fact that the mother of the deceased D
was about 65 years at the time of the accident and age of
the father was more than 65 years. Taking into account the
monthly contribution at Rs 3500 as held by the Tribunal
and the High Court, the entitlement of the claim would be
Rs
2, 10,000. The same shall bear interest @ 7.5% p.a.
E
from the date of the application for compensation. Payment
already made shall be adjusted from the amount due.
8. In the instant case the age of the deceased was 52
years as per the post-mortem report, and the multiplier thus
F
has to be 8 instead of 13 as adopted by the Tribunal and
upheld by the High Court. The rate of interest awarded
does not need any interference. The monthly income has
to be taken as Rs 11,684 and one-third has to be deducted
therefrom for personal expenses. Thus, the annual loss of
income comes to Rs 93,939. The same is rounded to Rs.
G
93,000. The entitlement for loss of income· comes to
Rs 7,44,.000. The other amounts awarded by the Tribunal
totalling Rs 29,500 remain unaltered. Thus, the claimant
is entitled to Rs 7,73,500 along with interest at the rate
fixed by the Tribunal. The payment already made shall be
H
324
SUPREME COURT REPORTS
[2009] 11 S.C.R.
....,.
A
adjusted."
19. Learned counsel for the appellants contended that later
-
decisions should not be followed keeping in view the binding
precedents of this Court in the earlier cases. It was urged that
B
the prospective loss of future earnings by way of career
advancement as also revision in the scale of pay must be taken
into consideration for the purpose of determination of the
-
multiplicand while applying the structured formula contained in
t
the Second Schedule appended to the Act.
c
20. The compensation which is required to be determined
must be just. While the claimants are required to be
compensated for the loss of their dependency, the same should
not be considered to be a windfall. Unjust enrichment should
be discouraged. This Court cannot also lose sight of the fact
D
that in given cases, as for example death of only son to a
"
mother, she can never be compensated in monetary terms.
...
21. The question as to the methodology required to be
applied for determination of compensation as regards
E
prospective loss of future earnings, however, as far as possible
should be based on certain principles. A person may have a
bright future prospect; he ·might have become eligible to
promotion immediately; there might have been chances of an
immediate pay revision, whereas in another the nature of
.-
employment was such that he might not have continued in
).-
F
service; his chance of promotion, having regard to the nature
of employment may be distant or remote. It is, therefore, difficult
for any court to lay down rigid tests which should be applied in
)--
all situations. There are divergent views. In some cases it has
G
been suggested that some sort of hypotheses or guess work
may be inevitable. That may be so.
. 22. As regards future prospects for determination of
~
compensation, some precedents may also be noticed by us.
H
In Sar/a Dixit v. Ba/want Yadav, [ (1996) 3 SCC 179 ], this
RESHMA KUMARI AND ORS. v. MADAN MOHAN AND
325
ANR. [S.B.SINHA, J.]
Court has held :-
A
.
"7. So far as the adoption of the proper multiplier is
concerned, it was observed that the future prospects of
advancement in life and career should also be sounded
in terms of money to augment the multiplicand. While the
B
chance of the multiplier is determined by two factors,
namely, the rate of interest appropriate to a stable
~
economy and the age of the deceased or of the claimant
whichever is higher, the ascertainment of the multiplicand
is a more difficult exercise. Indeed, many factors have to c
be put into the scales to evaluate the contingencies of the
future. All contingencies of the future need not necessarily
be baneful. Applying these principles to the facts of the
(,aSe before this Court in the aforesaid case it was
observed that the deceased in that case was of 39 years
D
of age. His income was Rs 1032 per month. He was more
j.
or less on a stable job and considering the prospects of
advancement in future career the proper higher estimate
of monthly income of Rs 2000 as gross income to be
taken as average gross future income of the deceased
and deducting at least 1/3rd therefrom by way of personal
E
living expenses, had he survived the loss of dependency,
could be capitalised by adopting the multiplicand of
~
Rs 1400 per month or Rs 17,000 per year and that figure
could be capitalised by adopting multiplier of 12 which was
appropriate to the age of deceased being 39 and to that
F
amount was added the conventional figure of Rs. 15,000
by way of loss of consortium and loss of estat~. Adopting
the same scientific yardstick as laid down in the aforesaid
judgment, the computation of compensation in the present
case can almost be subjected to a well-settled G
- ... ./
mathematical fo.rml48. Deceased in the present case, as
seen above, was earning gross salary ©f Rs 1543 per
month. Rounding it up to figure of Rs.1500 and keeping
in view all the future prospects which the deceased had in
stable military service in the light of his brilliant academic
H
326
SUPREME COURT REPORTS
[2009] 11 S.C.R.
+
A
record and performance in the military service spread over
7 years, and also keeping in view the other imponderables
like accidental death while discharging military duties and
..
the hazards of military service, it will not be unreasonable
to predicate that his gross monthly income would have shot
8
. up to at least double than what he was earning at the time
of his death, i.e., up to Rs 3000 per month had he survived
in life and had successfully completed his future military
...
career till the time of superannuation. The average gross
't'
future monthly income could be arrived at by adding the
c
actual gross income at the time of death, namely, Rs 1500
per month to the maximum which he would have otherwise
got had he not died a premature death, i.e., Rs 3000
per month and dividing that figure by two. Thus the average
gross monthly income spread over his entire future career,
D
had it been available, would work out to Rs 4500 divided
by 2, i.e., Rs 2250. Rs 2200 per month would have been
..... .,...
.....
the gross monthly average income available to the family
of the deceased had he survived as a breadwinner. From
that gross monthly income at least 1/3rd will have to' be
E
deducted by way of his personal expenses and other
liabilities like payment of income tax etc. That would roughly
';--
· work out to Rs 730 per month but even taking a higher
figure of Rs 750 per month and deducting the same by way
· of average personal expenses of the deceased from the
-
••
F
· average gross earning of Rs 2200 per month balance of
Rs 1450 which can be rounded up to Rs.