# SMT. SARLA VERMA & ORS v. DELHI TRANSPORT CORPORATION & ANR

- **Citation:** [2009] 5 S.C.R. 1098
- **Court:** Supreme Court of India
- **Decided:** 2009-04-15
- **Case number:** Civil Appeal No. 3483 OF 2008
- **Bench:** R.V. Raveendran, Lokeshwar Singh Panta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/smt-sarla-verma-ors-v-delhi-transport-corporation-anr-25793
- **Pages:** 32

## Headnote

MOTOR VEHICLES ACT, 1988:
Motor vehicle accident - Compensation awarded by
Tribunal - Enhanced by High Court - On appeal, Held:
Income of the deceased towards future prospects could be
taken into account - Standardization thereof - Deduction
o towards personal and living expenses - Guidelines given -
Selection of multiplier - Criteria laid down - Computation of
compensation taking into account future pay revisions - ff
claimants delay the proceedings they can rely upon revised
higher pay scales that may come into effect during such
E pendency - However, promptness cannot be punished in this
manner - Hence revision in pay scale subsequent to death
and before final hearing cannot be taken into account for
determining the income for calculating compensation -
Personal and living expenses determined - Enhancement of
F compensation and interest thereon allowed - Enhanced
compensation awarded to be taken by the widow exclusively.
The appeal has been filed against the High Court
judgment. It sought higher compensation. On the basis
of the contentions raised by the appellants and
G respondents, the following questions arose for
consideration:
(i) Whether the future prospects can be taken into
H
1098
\.
SARLA VERMA & ORS. v. DELHI TRANSPORT
1099
)
CORPORATION & ANR.
account for determining the income of the deceased ? If A
so, whether pay revisions that occurred during the
pendency of the claim proceedings or appeals therefrom
should be taken into account ?
(ii) Whether the deduction towards personal and
B
living expenses of the deceased should be less than onefourth (1/4th) as contended by the appellants, or should
be one-third (1/3rd) as contended by the respondents ?
(iii) Whether the High Court erred in taking the c
multiplier as 13 ?
(iv) What should be the compensation ?
Partly allowing the appeal, the Court
Di
HELD:1. Lack of uniformity and consistency in
awarding compensation has been a matter of grave
concern. Every district has one or more Motor Accident
Claims Tribunal/s. If different Tribunals calculate
compensation differently on the same facts, the claimant,
E
the litigant, the common man will be confused, perplexed
and bewildered. If there is significant divergence among
Tribunals in determining the quantum of compensation
on similar facts, it will lead to dissatisfaction and distrust
in the system. [Para 8) [1113-F-G]
F
General Manager, Kera/a State Road Transport
Corporation v. Susamma Thomas 1994 (2) SCC 176 and UP
State Road Transport Corporation vs. Trilok Chandra 1996 (4)
sec 362, relied on.
G
Nance v. British Columbia Electric Rly. Co. Ltd. [1951 AC
601 and Davies v. Powell Duffryn Associated Collieries Ltd.,
1942 AC 601, referred to.
H
1100
SUPREME COURT REPORTS [2009] 5 S.C.R.
A
2. 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
B award of compensation. It is not intended to be a
bonanza, largesse or source of profit. Assessment of
compensation though involving certain hypothetical
considerations, should nevertheless be objective. Justice
and justness emanate from equality in treatment,
c 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
0 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 adjudication to arrive
at just compensation. [Para 8] [1114-G-H; 1115-A]
E
3. Basically only three facts need to be established
by the claimants for assessing compensation in the case
of death : (a) age of the deceased; {b) income of the
deceased; and the (c) the num

## Text

_Characters 0–39,896 of 59,651. This is a partial read: ask again with offset=39896 for what follows._

A
B
c
[2009] 5 S.C.R. 1098
SMT. SARLA VERMA & ORS.
v.
DELHI TRANSPORT CORPORATION & ANR.
(Civil Appeal No. 3483 OF 2008)
APRIL 15, 2009
[R.V. RAVEENDRAN AND LOKESHWAR SINGH
PANTA, JJ.)
MOTOR VEHICLES ACT, 1988:
Motor vehicle accident - Compensation awarded by
Tribunal - Enhanced by High Court - On appeal, Held:
Income of the deceased towards future prospects could be
taken into account - Standardization thereof - Deduction
o towards personal and living expenses - Guidelines given -
Selection of multiplier - Criteria laid down - Computation of
compensation taking into account future pay revisions - ff
claimants delay the proceedings they can rely upon revised
higher pay scales that may come into effect during such
E pendency - However, promptness cannot be punished in this
manner - Hence revision in pay scale subsequent to death
and before final hearing cannot be taken into account for
determining the income for calculating compensation -
Personal and living expenses determined - Enhancement of
F compensation and interest thereon allowed - Enhanced
compensation awarded to be taken by the widow exclusively.
The appeal has been filed against the High Court
judgment. It sought higher compensation. On the basis
of the contentions raised by the appellants and
G respondents, the following questions arose for
consideration:
(i) Whether the future prospects can be taken into
H
1098
\.
SARLA VERMA & ORS. v. DELHI TRANSPORT
1099
)
CORPORATION & ANR.
account for determining the income of the deceased ? If A
so, whether pay revisions that occurred during the
pendency of the claim proceedings or appeals therefrom
should be taken into account ?
(ii) Whether the deduction towards personal and
B
living expenses of the deceased should be less than onefourth (1/4th) as contended by the appellants, or should
be one-third (1/3rd) as contended by the respondents ?
(iii) Whether the High Court erred in taking the c
multiplier as 13 ?
(iv) What should be the compensation ?
Partly allowing the appeal, the Court
Di
HELD:1. Lack of uniformity and consistency in
awarding compensation has been a matter of grave
concern. Every district has one or more Motor Accident
Claims Tribunal/s. If different Tribunals calculate
compensation differently on the same facts, the claimant,
E
the litigant, the common man will be confused, perplexed
and bewildered. If there is significant divergence among
Tribunals in determining the quantum of compensation
on similar facts, it will lead to dissatisfaction and distrust
in the system. [Para 8) [1113-F-G]
F
General Manager, Kera/a State Road Transport
Corporation v. Susamma Thomas 1994 (2) SCC 176 and UP
State Road Transport Corporation vs. Trilok Chandra 1996 (4)
sec 362, relied on.
G
Nance v. British Columbia Electric Rly. Co. Ltd. [1951 AC
601 and Davies v. Powell Duffryn Associated Collieries Ltd.,
1942 AC 601, referred to.
H
1100
SUPREME COURT REPORTS [2009] 5 S.C.R.
A
2. 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
B award of compensation. It is not intended to be a
bonanza, largesse or source of profit. Assessment of
compensation though involving certain hypothetical
considerations, should nevertheless be objective. Justice
and justness emanate from equality in treatment,
c 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
0 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 adjudication to arrive
at just compensation. [Para 8] [1114-G-H; 1115-A]
E
3. Basically only three facts need to be established
by the claimants for assessing compensation in the case
of death : (a) age of the deceased; {b) income of the
deceased; and the (c) the number of dependents. The
issues to be determined by the Tribunal to arrive at the
F 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 (iii) the multiplier to be applied with
reference of the age of the deceased. If these
G determinants are standardized, there will be uniformity
dnd consistency in the decisions. There will lesser need
for detailed evidence. It will also be easier for the
insurance companies to settle accident claims without
H
SARLA VERMA & ORS. v. DELHI TRANSPORT
1101
)
CORPORATION & ANR.
delay. To have uniformity and consistency, Tribunals
A
should determine compensation in cases of death, by the
following well settled steps, viz. Step 1 (Ascertaining the
multiplicand); Step 2 (Ascertaining the multiplier) and
Step 3 (Actual calculation). [Para 9] [1115-C-F; 1116-C]
B
4. In view of imponderables and uncertainties, this
Court is 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 c
years. [Where the annual income is in the taxable range,
the words ·actual salary' should be read as 'actual salary
less tax']. The addition should be only 30% if the age of
the deceased was 40 to 50 years. There should be no
addition, where the age of deceased is more than 50
years. Though the evidence may indicate a different D
percentage of increase, it is necessary to standardize the
addition to avoid different yardsticks being applied or
different methods of calculations being adopted. Where
the deceased was self-employed or was on a fixed salary
E
(without provision for annual increments etc.), the courts
will usually take only the actual income at the time of
death. A departure therefrom should be made only in rare
and exceptional cases involving special circumstances.
[Para 11] [1117-F-H; 1118-A-B]
F
Sar/a Dixit v. Ba/want Yadav 1996 (3) SCC 179 and
Abati Bezbaruah v. Dy. Director General, Geological Survey
of India 2003 (3) sec 148, relied on.
5.1. No evidence need be led to show the actual G
expenses of the deceased. In fact, any evidence in that
behalf will be wholly unverifiable and likely to be
unreliable. Claimants will obviously tend to claim that the
deceased was very frugal and did not have any
H
1102
SUPREME COURT REPORTS [2009] 5 S.C.R.
A expensive habits and was spending virtually the entire
income on the family. In some cases, it may be so. No
claimant would admit that the deceased was a
spendthrift, even if he was one. It is also very difficult for
the respondents in a claim petition to produce evidence
B to show that the deceased was spending a considerable
part of the income on himself or that he was contributing
only a small part of the income on his family. Therefore,
it became necessary to standardize the deductions to be
made under the head of personal and living expenses of
c the deceased. This lead to the practice of deducting
towards personal and living expenses of the deceased,
one-third of the income if the deceased was married, and
one-half (50%) of the income if the deceased was a
bachelor. This practice was evolved out of experience,
o logic and convenience. In fact one-third deduction, got
statutory recognition under Second Schedule to the Act,
in respect of claims under Section 163A of the Motor
Vehicles Act, 1988. But, such percentage of deduction is
not an inflexible rule and offers merely a guideline. In view
E of the special features of the case, this Court however
restricted the deduction towards personal and living
expenses to one-third of the income. [Para 12 and 13)
[1118-D-H; 1119-A; 1120-D]
5.2. Where the deceased was married, the deduction
F towards personal and living expenses of the deceased,
should be one-third (1/3rd) where the number of
dependent family members is 2 to 3, one-fourth (1/4th)
where the number of dependant family members is 4 to
6, and one-fifth (1/5th) where the number of dependant
G family members exceed six. [Para 14) [1120-F]
5.3. Where the deceased was a bachelor and the
claimants are the parents, the deduction follows a
different principle. In regard to bachelors, normally, 50%
H is deducted as personal and living expenses, because it
l
'
SARLA VERMA & ORS. v. DELHI TRANSPORT
1103
CORPORATION & ANR.
is assumed that a bachelor would tend to spend more on
A
himself. Even otherwise, there is also the possibility of his
getting married in a short time, in which event the
contribution to the parent/s and siblings is likely to be cut
,
drastically. Further, subject to evidence to the contrary,
the father is likely to have his own income and will not
B
J
be considered as a dependant and the mother alone will
_,
be considered as a dependent. In the absence of
.
evidence to the contrary, brothers and sisters will not be
'
considered as dependents, because they will either be
independent and earning, or married, or be dependant on c
'
the father. Thus even if the deceased is survived by
parents and siblings, only the mother would be
considered to be a dependant, and 50% would be treated
as the personal and living expenses of the bachelor and
50% as the contribution to the family. However, where
D
)
family of the bachelor is large and dependant on the
income of the deceased, as in a case where he has a
widowed mother and large number of younger nonearning sisters or brothers, his personal and living
expenses may be restricted to one-third and contribution
E
to the family will be taken as two-third. [Para 15) [1120-GH; 1121-A-D]
General Manager, Kera/a State Road Transport
Corporation v. Susamma Thomas 1994 (2) SCC 176; Abati
F
Bezbaruah v. Dy. Dir~tor General, Geological Survey of India
2003 (3) SCC 148 and Fakeerappa vs. Karnataka Cement
Pipe Factory 2004 (2) SCC 473, referred to.
6. The multiplier to be used should be as mentioned
in column (4) of the Table (prepared by applying G
Susamma Thomas, Trilok Chandra and Charlie), which
-'-
starts with an operative multiplier of 18 (for the age
groups of 15 to 20 and 21 to 25 years), reduced by one
unit for every five years, that is M-17 for 26 to 30 years,
H
1104
SUPREME COURT REPORTS l2UU9] 5 S.C.R.
A M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for
41 to 45 years, and M-13 for 46 to 50 years, then reduced
by two units for every five years, that is, M-11 for 51 to
55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years
and M-5 for 66 to 70 years. [Para 21] [1126-0-E]
B
General Manager, Kera/a State Road Transport
Corporation v. Susamma Thomas 1994 (2) SCC 176; New
India Assurance Co. Ltd. vs. Charlie 2005 (10) SCC 720
and UP State Road Transport Corporation vs. Trilok
c Chandra 1996 (4) SCC 362 - relied on.
Oriental Insurance Co. Ltd. vs. Meena Variyal 2007 (5)
SCC 428; TN State Road Transport Corporation Ltd. vs.
Rajapriya 2005 (6) SCC 236 and UP State Road Transport
D
Corporation vs. Krishna Bala 2006 (6) SCC 249, referred to.
7.1. The assumption of the appellants that the actual
I
future pay revisions should be taken into account for the
purpose of calculating the income is not sound. As
against the contention of the appellants that if the
E deceased had been alive, he would have earned the
benefit of revised pay scales, it is equally possible that if
he had not died in the accident, he might have died on
account of ill health or other accident, or lost the
employment or met some other calamity or disadvantage.
F The imponderables in life are too many. Another
significant aspect is the non-existence of such evidence
at the time of accident. In this case, the accident and
death occurred in the year 1988. The award was made by
the Tribunal in the year 1993. The High Court decided the
G appeal in 2007. The pendency of the claim proceedings
and appeal for nearly two decades is a fortuitous
circumstance and that will not entitle the appellants to
.:.
rely upon the two pay revisions which took place in the
course of the said two decades. If the claim petition filed
H
SARLA VERMA & ORS. v. DELHI TRANSPORT
1105
.J
CORPORATION & ANR.
in 1988 had been disposed of in the year 1988-89 itself A
and if the appeal had been decided by the High Court in
the year 1989-90, then obviously the compensation
would have been decided only with reference to the scale
of pay applicable at the time of death and not with
reference to any future revision in pay scales. If the
B
contention urged by the claimants is accepted, it would
lead to the following situation: The claimants could only
rely upon the pay scales in force at the time of the
accident, if they are prompt in conducting the case. But
if they delay the proceedings, they can rely upon the c
'
revised higher pay scales that may come into effect
/
during such pendency. Surely, promptness cannot be
-._ ...
punished in this manner. (Para 24] (1127-D-H;. 1128-A-B]
~
7.2. The percentage of deduction on account of D
personal and living expenses can certainly vary with
reference to the number of dependant members in the
family. But as noticed earlier, the personal living
expenses of the deceased need not exactly correspond
to the number of dependants. As an earning member, the
E
deceased would have spent more on himself than the
other members of the family apart from the fact that he
would have incurred expenditure on travelling/
transportation and other needs. Therefore, interest of
justice would be met if one-fifth is deducted as the
F
personal and living expenses of the deceased. After such
deduction, the contribution to the family (dependants) is
determined as Rs.57,658/- per annum. The multiplier will
be 15 having regard to the age of the deceased at the
time of death (38 years). Therefore the total loss of
G
dependency would be Rs.57,658 x 15 = Rs.8,64,870/-.
[Para 25] (1128-E-G]
8. In addition, the claimants will be entitled to a sum
of Rs.5,000/- under the head of 'loss of estate' and
H
1106
SUPREME COURT REPOk I'> lt:u09] 5 S.C.R.
A Rs.5000/- towards funeral expenses. The widow will be
entitled to Rs.10,000/- as loss of consortium. Thus, the
total compensation will be Rs.8,84,870/-. After deducting
Rs. 7, 19,624/-
awarded by the High Court, the
enhancement would be Rs.1,65,246/-. Thus, the
B appellants will be entitled to the said sum of Rs.165,246/
- in addition to what is already awarded, with interest at
the rate of 6% per annum from the date of petition till the
date of realization. The increase in compensation
awarded by this Court shall be taken by the widow
c exclusively. [Para 26 and 27] (1128-H; 1129-A-C]
D
E
F
G
H
Case Law Reference:
1994 (2) sec 176
1994 (2) sec 176
1996 (4) sec 362
1951 AC 601
1942 AC 601
1996 (3) sec 119
2003 (3) sec 148
2003 (3) sec 148
2004 (2) sec 473
2001 (5) sec 428
2oos (10) sec 120
2005 (6) sec 236
2006 (6) sec 249
relied on
referred to
relied on
referred to
referred to
relied on
relied on
referred to
referred to
referred to
referred to
referred to
referred to
Para 7
Para 7
Para 7
Para 7
Para 7
Para 10
Para 10
Para 10
Para 13
Para 18
Para 19
Para 19
Para 19
y ...
r
SARLA VERMA & ORS. v. DELHI TRANSPORT
1107
CORPORATION & ANR.
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
A
3483 of 2008.
From the Judgment & Order dated 15.02.2007 of the High
Court of Delhi at New Delhi in FAO No. 220/1993.
Ashok K. Mahajan for the Appellant.
Dr. Monika Gusain for the Respondents.
The Order of the Court was delivered by
ORDER
R.V. RAVEENDRAN, J. 1. The claimants in a motor
accident claim have filed this appeal by special leave seeking
. increase in compensation.
B
c
D
2. One Rajinder Prakash died on account of injuries
sustained in a motor accident which occurred on 18.4.1988
involving a bus bearing No.OLP 829 belonging to the Delhi
Transport Corporation. At the time of the accident and untimely
death, the deceased was aged 38 years, and was working as
E
a Scientist in the Indian Council of Agricultural Research (ICAR)
on a monthly salary of Rs.3402/- and other benefits. His widow,
three minor children, parents and grandfather (who is no more)
filed a claim for Rs.16 lakhs before the Motor Accidents Claims
Tribunal, New Delhi. An officer of ICAR, examined as PW-4,
F
gave evidence that the age of retirement in the service of ICAR
was 60 years and the salary received by the deceased at the
time of his death was Rs.4004/- per month.
3. The Tribunal by its judgment and award dated 6.8.1993 G
allowed the claim in part. The Tribunal calculated the
compensation by taking the monthly salary of the deceased as
Rs.3402. It deducted one-third towards the personal and living
expenses of the deceased, and arrived at the contribution to
H
1108
SUPREME COURT REPORTS [2009] 5 S.C.R.
A the family as Rs.2250 per month (or Rs.27,000/- per annum).
In view of the evidence that the age of retirement was 60 years,
it held that the period of service lost on account of the untimely
death was 22 years. Therefore it applied the multiplier of 22
and arrived at the loss of dependency to the family as
B Rs.5,94,000/-. It awarded the said amount with interest at the
rate of 9% per annum from the date of petition till the date of
realization. After deducting Rs.15000/- paid as interim
compensation, it apportioned the balance compensation among
the claimants, that is, Rs.3,00,000/- to the widow, Rs.75000/-
C to each of the two daughters, Rs.50000/- to the son, Rs.19000/
- to the grandfather and Rs.30000/- to each of the parents.
,t
4. Dissatisfied with the quantum of compensation, the
appellants filed an appeal. The Delhi High Court by its judgment
<"
D dated 15.2.2007 allowed the said appeal in part. The High
Court was of the view that though in the claim petition the pay
was mentioned as Rs.3,402 plus other benefits, the pay should
be taken as Rs.4,004/- per month as per the evidence of PW4. Having regard to the fact that the deceased had 22 years of
service left at the time of death and would have earned annual
E increments and pay revisions during that period, it held that the
salary would have at least doubled (Rs.8008/- per month) by
the time he retired. It therefore determined the income of the
deceased as Rs.6006/- per month, being the average of
Rs.4,004/- (salary which he was getting at the time of death)
F and Rs.8,008/- (salary which he would have received at the time
of retirement). Having regard to the large number of members
in the family, the High Court was of the view that only one fourth
should be deducted towards personal and living expenses of
the deceased, instead of the standard one-third deduction. After
G such deduction, it arrived at the contribution to the family as
Rs.4,504/- per month or Rs.54,048/- per annum. Having regard
to the age of the deceased, the High Court chose the multiplier
of 13. Thus it arrived at the loss of dependency as Rs. 702,624/
-. By adding Rs.15,000/- towards loss of consortium and
H
-
SARLA VERMA & ORS. v. DELHI TRANSPORT
1109
CORPORATION & ANR. [RV. RAVEENDRAN, J.]
Rs.2,000/- as funeral expenses, the total compensation was
A
determined as Rs. 7, 19,624/-. Thus it disposed of the appeal
by increasing the compensation by Rs.1,25,624/- with interest
at the rate of 6% P.A. from the date of claim petition.
5. Not being satisfied with the said increase, the
B
appellants have filed this appeal. They contend that the High
Court erred in holding that there was no evidence in regard to
future prospects; and that though there is no error in the method
adopted for calculations, the High Court ought to have taken a
higher amount as the income of the deceased. They submit that c
two applications were filed before the High Court on 2.6.2000
and 5.5.2005 bringing to the notice of the High Court that having
regard to the pay revisions, the pay of the deceased would have
been Rs.20,890/- per month as on 31.12.1999 and Rs.32,678/
-as on 1.10.2005, had he been alive. To establish the revisions 0
in pay scales and consequential re-fixation, the appellants
produced letters of confirmation dated 7.12.1998 and
28.10.2005 issued by the employer (ICAR). Their grievance is
that the High Court did not take note of those indisputable
documents to calculate the income and the loss of dependency.
E
They contend that the monthly income of the deceased should
be taken as Rs.18341/- being the average of Rs.32,678/-
(income shown as on 1.10.2005) and Rs.4,004/- (income at the
time of death). They submit that only one-eighth should have
been deducted towards personal and living expenses of the
F
deceased. They point out that even if only one fourth (Rs.4585/
-) was deducted therefrom towards personal and living
expenses of the deceased, the contribution to the family would
have been Rs.13,756/- per month or Rs.1,65,072/- per annum.
They submit that having regard to the Second Schedule to the
G
Motor Vehicles Act, 1988 ('Act' for short), the appropriate
multiplier for a person dying at the age of 38 years would be
16 and therefore the total loss of dependency would be
Rs.26,41, 152/-. They also contend that Rs.1,00,000/- should be
added towards pain and suffering undergone by the claimants.
H
1110
SUPREME COURT REPORTS [2009] 5 S.C.R.
A They therefore submit that Rs.27,47, 152/- should be determined
as the compensation payable to them.
6. The contentions urged by the parties give rise to the
following questions:
B
(i}
Whether the future prospects can be taken into
account for determining the income of the
deceased ? If so, whether pay revisions that
occurred during the pendency of the claim
c
proceedings or appeals therefrom should be taken
into account ?
(ii)
Whether the deduction towards personal and living
expenses of the deceased should be less than onefourth (1/4th) as contended by the appellants, or
D
should be one-third (1/3 rd) as contended by the
respondents ?
(iii)
Whether the High Court erred in taking the multiplier
as 13?.
E
(iv)
What should be the compensation?
. The general principles
7. Before considering the questions arising for decision,
F it would be appropriate to recall the relevant principles relating
-
to assessment of compensation in cases of death. Earlier, there
used to be considerable variation and inconsistency in the
decisions of courts Tribunals on account ofsome adopting the
Nance method enunciated in Nance v. British Columbia
G Electric Rly. Co. Ltd. [1951 AC 601] and some adopting the
Davies method enunciated in Davies v. Powell Duffryn
Associated Collieries Ltd., [1942 AC 601]. The difference
..
betwe1~n the two methods was considered and explained by
this Court in General Manager, Kera/a State Road Transport
H Corporation v. Susamma Thomas [1994 (2) SCC 176]. After
)
SARLA VERMA & ORS. v. DELHI TRANSPORT
1111
CORPORATION & ANR. [R.V. RAVEENDRAN, J.]
exhaustive consideration, this Court preferred the Davies
A
method to Nance method. We extract below the principles laid
down in Susamma Thomas:
"In fatal accident action, the measure of damage is the
pecuniary loss suffered and is likely to be suffered by each
B
dependant as a result of the death. 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 c
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
D
expectancy, the chances that the deceased might have got
better employment or income or might have lost his
employment or income altogether."
"The matter of arriving at the damages is to ascertain the
net income of the deceased available for the support of
E
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
F
dependants. Then that should be capitalized by multiplying
it by a figure representing the proper number of year's
purchase."
"The multiplier method involves the ascertainment of the
G
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
H
A
B
c
D
E
1112
SUPREME COURT REPORTS [2009] 5 S.C.R.
of the claimants whichever is higher) and by the calculation
as to what capital sum, if invested at a rate of interest
appropriate to a stable economy, would yield the
multiplicand by way of annual interest. In ascertaining this,
regard should also be had to the fact that ultimately the
capital sum should also be consumed-up over the period
for which the dependency is expected to last."
"It is necessary to reiterate that the multiplier method is
logically sound and legally well-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 uncertainties of
future life and award the resulting sum as compensation.
This is clearly unscientific. For instance, if the deceased
was, say 25 year 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 - 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."
In UP State Road Transport Corporation vs. Trilok Chandra
F [1996 (4) SCC 362], this Court, while reiterating the preference
to Davies method followed in Susamma Thomas, stated thus :
"In the method adopted by Viscount Simon in the case of
Nance also, first the annual dependency is worked out and
G
then multiplied by the estimated useful life of the deceased.
H
This is generally determined on the basis of longevity. But
then, proper discounting on various factors having a
bearing on the uncertainties of life, such as, premature
death of the deceased or the dependent, remarriage,
.i
SARLA VERMA & ORS. v. DELHI TRANSPORT
1113
CORPORATION & ANR. [R.V. RAVEENDRAN, J.]
accelerated payment and increased earning by wise and
A
prudent investments, etc., would become necessary. It was
generally felt that discounting on various imponderables
made assessment of compensation rather complicated
and cumbersome and very often as a rough and ready
measure, one-third to one-half of the dependency was
B
reduced, depending on the life-span taken. That is the
reason why courts in India as well as England preferred
the Davies' formula as being simple and more realistic.
Ho'A'.ever, as observed earlier and as pointed out in
Susamma Thomas' case, usually English courts rarely C
exceed 16 as the multiplier. Courts in India too followed
the same pattern till recently when Tribunals/Courts began
to use a hybrid method of using Nance's method without
making deduction for imponderables ........ Under the
formula advocated by Lord Wright in Davies, the loss o
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 dependents. of the deceased. The annual
dependency assessed in this manner is then to be E
multiplied by the use of an appropriate multiplier."
[emphasis supplied]
8. The lack of uniformity and consistency in awarding
compensation has been a matter of grave concern. Every
F
district has one or rnore Motor Accident Claims Tribunal/s. If
different Tribunals calculate compensation differently on the
same facts, the claimant, the litigant, the common man will be
confused, perplexed and bewildered. If there is significant
divergence among Tribunals in determining the quantum of G
compensation on similar facts, it will lead to dissatisfaction and
distrust in the system, We may refer to the following
observations in Trilok Chandra:
·we thought it necessary to reiterate the method of working
H
1114
SUPREME COURT REPORTS [2009] 5 S.C.R.
A
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
B
surfaced, introducing uncertainty and lack of reasonable
uniformity in the matter of determination of compensation.
It must be realized 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
C
caused."
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 (say deceased aged
0 40 years having annual income of 45,000/- leaving him 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 last case, is just compensation.
E 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. Assessment of compensation
F 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
G 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
H
SARLA VERMA & ORS. v. DELHI TRANSPORT
1115
CORPORATION & ANR. [R.V. RAVEENDRAN,\J.]
result of adjudication to arrive at just compensation. In
A
Susamma Thomas, this Court stated :
"So the proper method of comP.utation is the multiplier
method. Any departure, except in exceptional and extraordinary cases, would introduce inconsistency of principle,
8
lack of uniformity and an element of unpredictability, for the
assessment of compensation."
9. Basically only three facts need to be established by the
claimants for assessing compensation in the case of death : C
(a) age of the deceased; (b) income of the deceased; and the
(c) the number of dependents. The issues to be determined by
the Tribunal to 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 (iii) the multiplier to be applied with
D
reference of the age of the deceased. If these determinants are
standardized, there will be uniformity and consistency in the
decisions. There will lesser need for detailed evidence. It will
also be easier for the insurance companies to settle accident
claims without delay. To have uniformity and consistency,
E
Tribunals should determine compensation in cases of death,
by the following well settled steps:
Step 1 (Ascertaining the multiplicand)
F
The income of the deceased per annum should be
determined. Out of the said income a deduction should be
made in regard to the amount which the deceased would
have spent on himself by way of personal and living
expenses. The balance, which is considered to be the
G
contribution to the dependant family, constitutes the
multiplicand.
Step 2 (Ascertaining the multiplier)
Having regard to the age of the deceased and period of
H
1116
SUPREME COURT REPORTS (2009) 5 S.C.R.
'
A
active career, the appropriate multiplier should be selected.
This does not mean ascertaining the number of years he
would have lived or worked but for the accident. Having
regard to several imponderables in life and economic
factors, a table of multipliers with reference to the age has
B
been identified by this Court. The multiplier should be
chosen from the said table with reference to the age of the
deceased.
Step 3 (Actual calculation)
c
The annual contribution to the family (multiplicand) when
multiplied by such multiplier gives the 'loss of dependency'
to the family.
Thereafter, a conventional amount in the range of Rs. 5,000/
D
- to Rs.10,000/- may be added as loss of estate. Where
the deceased is survived by his widow, another
conventional amount in the range of 5,000/- to 10,000/-
should be added under the head of loss of consortium. But
no amount is to be awarded under the head of pain,
E
suffering or hardship caused to the legal heirs of the
deceased.
The funeral expenses, cost of transportation of the body
(if incurred) and cost of any medical treatment of the
F
deceased before death (if incurred) should also added.
Question (i) - addition to income for future prospects
10. Generally the actual income of the deceased less
G
income tax should be the starting point for calculating the
compensation. The question is whether actual income at the
ti"11e of death should be taken as the income or whether any
addition should be made by taking note of future prospects. In
'
Susamma Thomas, this Court held that the future prospects
of advancement in life and career should also be sounded in
H terms of money to augment the multiplicand (annual contribution
SARLA VERMA & ORS. v. DELHI TRANSPORT
1117
•
CORPORATION & ANR. [R.V. RAVEENDRAN, J.]
to the dependants); and that where the deceased had a stable
A
job, the court can take note of the prospects of the future and it
will be unreasonable to estimate the loss of dependency on the
actual income of the deceased at the time of death. In that case,
the salary of the deceased, aged 39 years at the time of death,
was Rs.1032/- per month. Having regard to the evidence in
B
regard to future prospects, this Court was of the view that the
higher estimate of monthly income could be ma9e at Rs.2000/
- as gross income before deducting the personal living
expenses. The decision in Susamma Thomas was followed in
Sarfa Dixit v. Ba/want Yadav [1996 (3) SCC 179], where the c
deceased was getting a gross salary of Rs.1543/- per month.
Having regard to the future prospects of promotions and
increases, this Court assumed that by the time he retired, his
earning would have nearly doubled, say Rs.3000/-. This court
took the average of the actual income at the time of death and
D
the projected income if he had lived a normal life period, and
determined the monthly income as Rs.2200/- per month. In
Abati Bezbaruah v. Dy. Director General, Geological Survey
of India [2003 (3) sec 148], as against the actual salary
income of Rs.42,000/- per annum, (Rs.3500/- per month) at the
E
time of accident, this court assumed the income as Rs.45,000/
- per annum, having regard to the future prospects and career
advancement of the deceased who was 40 years of age .
.,.,
11. In Susamma Thomas, this Court increased the income
F
by nearly 100%, in sarta Dixit, the income was increased only
by 50% and in Abati Bezbaruah the income was increased by
a mere 7%. In view of imponderables and uncertainties, we are
in favour of adopting as a rule of thumb, an addition of 50% of
actual salary to the actual salary income of the deceased G
towards future prospects, where the deceased had a
permanent job and was below 40 years. [Where the annual
•
income is in the taxable range, the words 'actual salary' should
be read as 'actual salary less tax']. The addition should be only
30% if the age of the deceased was 40 to 50 years. There
H
1118
SUPREME COURT REPORTS [2009] 5 S.C.R.
A should be no addition, where the age of deceased is more than
50 years. Though the evidence may indicate a different -·
percentage of increase, it is necessary to standardize the
addition to avoid different yardsticks being applied or different
methods of calculations being adopted. Where the deceased
B was self-employed or was on a fixed salary (without provision
for annual increments etc.), the courts will usually take only the
actual income at the time of death. A departure therefrom
should be made only in rare and exceptional cases involving
special circumstances.
c Re : Question (ii) - deduction for personal and living
expenses
12. We have already noticed that the personal and living
expenses of the deceased should be deducted from the
D income, to arrive at the contribution to the dependents. No
evidence need be led to show the actual expenses of the
deceased. In fact, any evidence in that behalf will be wholly
unverifiable and likely to be unreliable. Claimants will obviously
tend to claim that the deceased was very frugal and did not
E have any expensive habits and was spending virtually the entire
income on the family. In some cases, it may be so. No claimant
would admit that the deceased was a spendthrift, even if he was
one. It is also very difficult for the respondents in a claim petition
to produce evidence to show that the deceased was spending
F a considerable part of the income on himself or that he was
contributing only a small part of the income on his family.
Therefore, it became necessary to standardize the deductions
to be made under the head of personal and living expenses of
the deceased. This lead to the practice of deducting towards
G personal and living expenses of the deceased, one-third of the
i!'lcome if the deceased was a married, and one-half (50%) of
the income if the deceased was a bachelor. This practice was
evolved out of experience, logic and convenience. In fact onethird deduction, got statutory recognition under Second
H Schedule to the Act, in respect of claims under Section 163A
•
SARLA VERMA & ORS. v. DELHI TRANSPORT
1119
CORPORATION & ANR. [R.V. RAVEENDRAN, J.]
of the Motor Vehicles Act, 1988 ('MV Act' for short).
A
13. But, such percentage of deduction is not an inflexible
rule and offers merely a guideline. In Susamma Thomas, it was
observed that in the absence of evidence, it is not unusual to
deduct one-third of the gross income towards the personal living
B
expenses of the deceased and treat the balance as the amount
:l
likely to have been spent on the members of the family/
~
dependants. In UPSRTC v. Trilok Chandra [1996 (4) SCC
<
362], this Court held that if the number of dependents in the
I ..
family of the deceased was large, in the absence of specific c
evidence in regard to contribution to the family, the Court may
adopt the unit method for arriving at the contribution of the
deceased to his family. By this method, two units is allotted to
each adult and one unit is allotted to each minor, and total
number of units are determined. Then the income is divided by
D
-
~
the total number of units. The quotient is multiplied by two to
arrive at the personal living expenses of the deceased. This
Court gave the following illustration:
...
"X, male, aged about 35 years, dies in an accident. He
leaves behind his widow and 3 minor children. His monthly
E
income was Rs. 3500. First, deduct the amount spent on
X every month.