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Leela Gupta & Ors vs. State of Uttar Pradesh & Ors dated 2010-08-31

                                               REPORTABLE

 
 

            IN THE SUPREME COURT OF INDIA

             CIVIL APPELLATE JURISDICTION

 

              CIVIL APPEAL NO. 5564 OF 2005

 
 
 
Leela Gupta & Ors.                            ...Appellants
 
                            Versus
 

State of Uttar Pradesh & Ors.                ...Respondents

 
 
 

                        JUDGEMENT

 
 
R.M. Lodha, J.
 
 

           Ganga Prasad Gupta--the deceased, the husband

 

of the first appellant and father of second, third and fourth

 
appellant, was killed in a motor accident on July 8, 1985. He
 

was then aged 39 and was officiating Executive Engineer in the

 

Irrigation Department, State of Uttar Pradesh. Had he lived, it

 
would have been 18 years or so before he reached the age of
 

superannuation (i.e. 58 years). After superannuation, he would

 

have qualified for pension. His wife and three children filed a

 
claim petition under Section 110A of the Motor Vehicles Act,

1939 (for short, `the 1939 Act') before the Motor Accident
 

Claims Tribunal, Mirzapur (for short, `the Tribunal') against the

 
respondents claiming compensation in the sum of Rs.
 
7,00,000/-. His gross salary on the date of accident was Rs.
 

2,680/- per month.     The Tribunal held that deceased would

 

have contributed Rs. 2,200/- per month (Rs. 26,400/- per year)

 

to the family and by applying a multiplier of 18, reached the

 

finding that the pecuniary loss to widow and children would be

 
Rs. 4,75,200/- up to the age of his retirement. The Tribunal
 

then deducted 1/3rd of the above considering the amount being

 
paid in lump sum and uncertainty in life and by further
 
deducting a sum of Rs. 40,000/- towards group insurance
 
scheme, assessed compensation to the extent of Rs.
 

2,76,800/-.    An amount of Rs. 15,000/- having been already

 

paid to the claimants towards no fault liability, the Tribunal in its

 

Award dated February 24, 1987 held that claimants are entitled

 

to a sum of Rs. 2,61,800/- and directed the respondents to pay

 

the said amount with pendente lite and future interest thereon

 
@ 9% per annum.
 

2.            On appeal by the claimants, the High Court held

 
that the claimants were entitled to Rs. 4,70,000/- as

                                                                  2


compensation along with 9% simple interest per annum from
 
the date of the claim petition until the actual payment was
 
made. The High Court considered the matter thus :
 

          "......Taking income of deceased at Rs. 2,700/- per

          month, the same can be assumed safely as Rs. 2700 X

          2 = 5,400/- had the deceased lived. Now, 1/3rd is to be

          deduced being the amount spent on deceased himself

          towards his personal expenses, it gives us a figure of

          Rs. 3,600/- per month. Thus, the expected benefit to be

          derived by the claimants comes to Rs. 3,600 X 12 =

          43,200/- per annum as contribution towards his family.

          Taking into account the age of the deceased, we find

          that multiplier of 16 is available. The annual income of

          Rs. 43,200/- being multiplied by 16, comes to Rs.

          6,91,200/-. However, considering imponderability and

          uncertainty of life, this amount is reduced by 1-3rd. It

          gives the figure of Rs. 4,70,000/- (on rounding)."

 
 
 

3.                The conventional approach in England for over a

 
century has been that the damages are to be assessed on the
 
basis that the fundamental purpose of an award is to achieve
 

as nearly as possible full compensation to the plaintiff for the

 

injuries sustained. This         rule   has been accepted in fatal

 
accident actions as well.         The House of Lords in Taff Vale
 
Railway Co. v. Jenkins1 laid down the test that award of
 
damages in fatal accident action is compensation for the
 

reasonable expectation of pecuniary benefit by the deceased's

 
1
    [1913] AC 1

                                                                     3


family.         The purpose of award of compensation is to put the

 
dependants of the deceased, who had been bread-winner of
 

the family, in the same position financially as if he had lived his

 

natural span of life; it is not designed to put the claimants in a

 
better financial position in which they would otherwise have
 
been if the accident had not occurred. At the same time, the
 

determination of compensation is not an exact science and the

 

exercise         involves an assessment based on estimation and

 
conjectures here and there as many imponderable factors and
 

unpredictable          contingencies   have   to   be   taken   into

 
consideration. The statutory rule enacted in Section 110B of
 

the 1939 Act (now Section 168 of the Motor Vehicles Act, 1988)

 
is award of `just compensation'.
 

4.                In General Manager, Kerala State Road Transport

 

Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.2

 

this Court extensively considered the English decisions as well

 

as previous decisions of this Court and also the decisions of

 

various high courts and laid down that the multiplier method is

 
logically sound and legally well established and           must be
 

followed; a departure from which can only be justified in rare

 
2
    (1994) 2 SCC 176

                                                                 4


and extraordinary circumstances and very exceptional cases.
 
In para 13 of the Report, this Court stated as follows :
 

      "13. The multiplier method involves the ascertainment of

      the loss of dependency or the multiplicand having

      regard to the circumstances of the case and capitalizing

      the multiplicand by an appropriate multiplier. The choice

      of the multiplier is determined by the age of the

      deceased (or that of the claimants whichever is higher)

      and by the calculation as to what capital sum, if invested

      at a rate of interest appropriate to a stable economy,

      would yield the multiplicand by way of annual interest. In

      ascertaining this, 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."

 
In para 17, it was further stated:
 

      "17. The multiplier represents the number of years'

      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 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 of years' purchase of 20 will yield the annual

      dependency perpetually. Then allowance to 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 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."

 
 

                                                                     5


While dealing with the aspect of multiplicand, the Court stated

 

that in ascertainment of the multiplicand many factors have to

 
be put into the scales to evaluate the contingencies of the
 
future.
 

5.                 The case of Susamma Thomas2 arose out of the

 
1939 Act and the appeal was decided by this Court on January
 
6, 1993. The 1939 Act stood repealed by the Motor Vehicles
 

Act, 1988 (for short, `the 1988 Act'). After decision of this Court

 
in Susamma Thomas2 , the 1988 Act was amended and, inter
 
alia, Section 163A was inserted along with the Second
 

Schedule w.e.f. November 14, 1994. Vide Section 163A, the

 
special provisions with regard to payment of compensation on
 
structured formula basis were introduced in the 1988 Act and
 

the Second Schedule provided for compensation for third party

 

fatal accident/injury cases claims. Under the Second Schedule,

 

the maximum multiplier could be upto 18 and not 16 as was laid

 

down in Susamma Thomas2 . In U.P. State Road Transport

 
Corporation and Ors. v. Trilok Chandra and Ors.3, a three-
 
Judge Bench of this Court considered change in statutory
 
 
 
 
3
    (1996) 4 SCC 362

                                                                6


provisions, particularly, insertion of Section 163A and Second

 
Schedule in the 1988 Act and observed thus :
 

         "17. The situation has now undergone a change with the

         enactment of the Motor Vehicles Act, 1988, as amended

         by Amendment Act 54 of 1994. The most important

         change introduced by the amendment insofar as it

         relates to determination of compensation is the insertion

         of Sections 163-A and 163-B in Chapter XI entitled

         "Insurance of Motor Vehicles against Third Party Risks".

         Section 165-A begins with a non obstante clause and

         provides for payment of compensation, as indicated in

         the Second Schedule, to the legal representatives of the

         deceased or injured, as the case may be. Now if we turn

         to the Second Schedule, we find a table fixing the mode

         of calculation of compensation for third party accident

         injury claims arising out of fatal accidents. The first

         column gives the age group of the victims of accident,

         the second column indicates the multiplier and the

         subsequent horizontal figures indicate the quantum of

         compensation in thousand payable to the heirs of the

         deceased victim. According to this table the multiplier

         varies from 5 to 18 depending on the age group to

         which the victim belonged. Thus, under this Schedule

         the maximum multiplier can be up to 18 and not 16 as

         was held in Susamma Thomas case."

 
 

6.               The short question presented in this appeal is

 

whether the High Court was in error in reducing by 1/3 rd the

 
compensation assessed after ascertainment of multiplicand
 

capitalized with the multiplier of 16. But before we pass to the

 
above question, we may notice two recent decisions of this
 
Court, namely, (1) Sarla Verma (Smt.) & Ors., v. Delhi
 

Transport Corporation & Anr.4 and (2) Reshma Kumari & Ors. v.

4
    (2009) 6 SCC 121

                                                                     7


Madan Mohan & Anr.5             In the case of Sarla Verma4, a two-

 
Judge bench of this Court considered Susamma Thomas2 and
 

Trilok Chandra3; few other decisions, namely, Abati Bezbaruah

 

v. Geological Survey of India6; Fakeerappa & Anr. v. Karnataka

 

Cement Pipe Factory & Ors.7; T.N. State Transport Corpn. Ltd.

 
v. S. Rajapriya & Ors.8;        New India Assurance Co. Ltd. v.
 

Charlie & Anr.9; U.P.State Road Transport Corpn. v. Krishna

 

Bala & Ors.10 and Oriental Insurance Co. Ltd. v. Meena Variyal

 

& Ors.11 and also two English decisions - namely; Davies &

 
Anr. v. Powell Duffryn Associated Collieries Ltd.12 and       Nance
 

v. British Columbia Electric Railway Co. Ltd.13 and laid down

 
certain principles relating to assessment of compensation in
 

cases of death.          While dealing with the aspect of     future

 
prospects, in paragraph 24 of the Report, it was stated as
 
follows:-
 
 

        "In Susamma Thomas [(1994) 2 SCC 176] this Court

        increased the income by nearly 100%, in Sarla Dixit

        [(1996) 3 SCC 179] the income was increased only

        by 50% and in Abati Bezbaruah [(2003) 2 SCC 148]

5
   (2009) 13 SCC 422
6
   (2003) 2 SCC 148
7
   (2004) 2 SCC 473
8
   (2005) 6 SCC 236
9
   (2005) 10 SCC 720
10
   (2006) 6 SCC 249
11
   (2007) 5 SCC 428
12
   (1942) 1 All ER 657
13
   (1951) 2 All ER 448

                                                                 8


        the income was increased by a mere 7%. In view of

        the 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 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 should be no addition, where the age of the

        deceased is more than 50 years. Though the

        evidence may indicate a different percentage of

        increase, it is necessary to standardise the addition

        to avoid different yardsticks being applied or different

        methods of calculation being adopted. Where the

        deceased was self-employed or was on a fixed

        salary (without provision for annual increments, etc.),

        the courts will usually take only the actual income at

        the time of death. A departure therefrom should be

        made only in rare and exceptional cases involving

        special circumstances."

 
 

As regards deduction for personal expenses, this Court stated

 
thus:
 
 

        "Though in some cases the deduction to be made

        towards personal and living expenses is calculated

        on the basis of units indicated in Trilok Chandra

        [(1996) 4 SCC 362], the general practice is to apply

        standardised deductions. Having considered

        several subsequent decisions of this Court, we are

        of the view that where the deceased was married,

        the deduction towards personal and living expenses

        of the deceased, should be one-third (1/3rd) where

        the number of dependent family members is 2 to 3,

        one-fourth (1/4th) where the number of dependent

        family members is 4 to 6, and one-fifth (1/5th)

        where the number of dependent family members

        exceeds six."

 
 
 

                                                                   9


With regard to multiplier in the cases falling under Section 166

 

of 1988 Act, this Court held that Davies12 method is applicable

 
and set out the following Table:
 

Age of the      Multiplier        Multiplier       Multiplier        Multiplier      Multiplier

Deceased        Scale        as   scale       as   scale in Trilok   specified in   actually used in

                envisaged    in   adopted     by   Chandra      as   Second          Second

                Susamma           Trilok Chandra   clarified    in   Column in the   Schedule to the

                Thomas                             Charlie           Table      in  MV Act (as seen

                                                                     Second          from         the

                                                                     Schedule   to   quantum       of

                                                                     the MV Act      compensation)

 
     (1)              (2)              (3)               (4)              (5)               (6)

Upto 15 yrs            -                 -                -               15                20

15 to 20 yrs          16               18                18               16                19

21 to 25 yrs          15               17                18               17                18

26 to 30 yrs          14               16                17               18                17

31 to 35 yrs          13               15                16               17                16

36 to 40 yrs          12               14                15               16                15

41 to 45 yrs          11               13                14               15                14

46 to 50 yrs          10               12                13               13                12

51 to 55 yrs           9               11                11               11                10

56 to 60 yrs           8               10                09                8                8

61 to 65 yrs           6               08                07                5                6

Above      65          5               05                05                5                5
Yrs
 
 
 
After setting out the aforesaid Table, this Court stated as
 
follows:-
 

        "Tribunals/courts adopt and apply different

        operative multipliers. Some follow the multiplier with

        reference to Susamma Thomas [(1994) 2 SCC 176]

        [set out in Column (2) of the table above]; some

        follow the multiplier with reference to Trilok

        ChandraI[(1996) 4 SCC 362], [set out in Column (3)

        of the table above]; some follow the multiplier with

        reference to Charlie [(2005) 10 SCC 720] [set out

                                                                                                  10


     in Column (4) of the table above]; many follow the

     multiplier given in the second column of the table in

     the Second Schedule of the MV Act [extracted in

     Column (5) of the table above]; and some follow the

     multiplier actually adopted in the Second Schedule

     while calculating the quantum of compensation [set

     out in Column (6) of the table above]. For example if

     the deceased is aged 38 years, the multiplier would

     be 12 as per Susamma Thomas, 14 as per Trilok

     Chandra, 15 as per Charlie, or 16 as per the

     multiplier given in Column (2) of the Second

     Schedule to the MV Act or 15 as per the multiplier

     actually adopted in the Second Schedule to the MV

     Act. Some tribunals, as in this case, apply the

     multiplier of 22 by taking the balance years of

     service with reference to the retiring age. It is

     necessary to avoid this kind of inconsistency. We

     are concerned with cases falling under Section 166

     and not under Section 163-A of the MV Act. In

     cases falling under Section 166 of the MV Act,

     Davies method is applicable."

 

     We therefore hold that the multiplier to be used

     should be as mentioned in Column (4) of the table

     above (prepared by applying 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, 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."

 
7.         In   Reshma Kumari5, a two-Judge bench of this
 
Court again noticed a long line of Indian and English cases,
 
most of which were noticed in Sarla Verma4 (but Sarla Verma4
 
was not noticed) and in view of divergence of opinion to the
 
 

                                                             11


question whether the multiplier specified in the Second
 

Schedule should be taken to be a guide for calculation of the

 
amount of compensation payable in a case falling under
 

Section 166 of the 1988 Act referred the matter to the larger

 
bench.
 

8.           The issue     whether the multiplier specified in

 
Second Schedule for the purposes of Section 163A of 1988 Act
 
could be taken to be guide for computation of amount of
 
compensation in a motor accident claim case falling under
 

Section 166 of the 1988 Act is not yet authoritatively decided

 
and is pending consideration before the larger bench.    Insofar
 

as present appeal is concerned it arises out of a motor accident

 

claim filed under Section 110-A of the 1939 Act and, therefore,

 
the Second Schedule that refers to Section 163A of the 1988
 
Act may not be of much guidance.       To revert to the question
 
stated above, it must be stated immediately that deceased at
 

the time of accident had settled and stable job in the Irrigation

 
Department, Government of U.P.          He was officiating as
 
Executive Engineer and had fair chance of regular promotion
 

to the post of Executive Engineer and Superintending Engineer

 
in due course of time; he had about 18 years of service left

                                                               12


before superannuation. He would have got annual increments
 
etc. besides promotion during this period of 18 years.     But
 

vicissitudes of life cannot be ignored, he might not have lived

 

up to that age; he might have been dismissed from service. In

 

a fatal accident case, everything that might have happened to

 
the deceased after the date of death remains uncertain. That
 
his gross salary at the time of accident was Rs. 2680/-, is
 
reflected from his last pay certificate.   Having regard to the
 
prospects of advancement and future career, the High Court
 
assumed the income of the deceased at Rs. 5400/- per month
 

by doubling the last gross salary and making it a round figure.

 
The High Court then deducted 1/3rd amount towards his
 

personal expenditure and arrived at a figure of Rs. 3600/- per

 
month as the expected contribution by the deceased to the
 
family and applying a multiplier of 16, assessed the
 
dependency at Rs. 6,91,200/- but, however, made a further
 
deduction by 1/3rd considering imponderability and uncertainty
 
of life and thereby awarded a sum of Rs. 4,70,000/- only as
 
compensation. We have seen that in Susamma Thomas2 100%
 
increase to the income which the deceased was having at the
 
time of accident was estimated as the gross income of the
                                                             13

deceased.     On the other hand, in Sarla Verma4 this Court

 

prescribed the rule of thumb i.e., an addition of 50% towards

 
future prospects where the deceased had a permanent job and
 
was below 40 years. As regards deduction to be made towards
 
personal expenditure, in Sarla Verma4 this Court stated that
 
where the deceased was married and where the number of
 
dependant family members is 4 to 6 then 1/4th of the gross
 
income should be deducted while in Susamma Thomas2, the
 
conventional 1/3rd of the gross income was deducted on that
 
count in the absence of any evidence. Then as per Table set
 

out in Sarla Verma4, if the age of deceased is 36 to 40 years,

 
multiplier of 15 is applicable whereas in Susamma Thomas2
 
the loss of dependency was capitalized on a multiplier of 12
 
(the deceased was 39 years of age). The question is whether
 

value of dependency should be recalculated in this appeal. We

 

do not think so. The High Court ascertained the multiplicand or

 

in other words the value of dependency at Rs. 3600/- per month

 
keeping in view the judgment of this Court in          Susamma
 

Thomas2.     In our opinion, it is neither proper nor desirable to

 

recalculate the     multiplicand at this distance of time in

 

jurisdiction under Article 136 of the Constitution by applying the

                                                                14


guidelines indicated in Sarla Verma4.         The High Court has
 
taken into account in ascertaining the multiplicand the
 
guidelines laid down in Susamma Thomas2 which, in our view,
 

warrants   no reconsideration.       However, we      think that

 

capitalization of   multiplicand on a multiplier of 16 is on the

 

higher side and multiplier of 14 in the facts of the case such as

 

the present one would meet the ends of justice. In this way, the

 
appellants become entitled to Rs. 6,04,800/- as compensation
 
which, in our opinion, is fair, just and equitable.   Before we
 
close, however, it has to be held and we hold that the High
 

Court was clearly in error in reducing by 1/3rd the compensation

 

assessed after ascertainment of multiplicand capitalized on a

 

particular multiplier since the very method of ascertainment of

 

multiplicand   takes   into   consideration   many   factors   of

 
imponderables and the contingencies of the future. Once the
 

multiplicand and multiplier are ascertained, the assessment of

 
damages to compensate the dependants is arrived at by
 

multiplying the two and no further deduction needs to be made

 
towards uncertainties and other contingencies.
 

9.          In the result, the appeal is allowed in part and the

 
compensation awarded by the High Court in the sum of Rs.

                                                                15


4,70,000/- is enhanced to Rs. 6,04,800/-. The appellants shall

 

also be entitled to   9% simple interest per annum on the

 

enhanced amount from the date of filing of claim petition until

 

the date of its actual payment. The parties shall bear their own

 
costs.
 
 
 
 

                                         .....................J.

                                             [AFTAB ALAM]

 
 

                                         .....................J.

                                              [R.M. LODHA]

New Delhi
August 31, 2010.
 
 
 
 

                                                                   16


 


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