• Whether, for working out compensation under Motor Vehicles Act in the case of a bachelor, selection of multiplier is to be made by reference to the age of the deceased or that of the claimant?

Legal Position:
The Three Judge Bench in the case of [U. P. State Road Transport Corporation & Ors. Vs Trilok Chandra & Ors, 1996 ACJ 831 (SC)] on the issue regarding selection of multiplier to be adopted to the age of the deceased or that of claimant/claimants in Para No.18 held as under;

"18. We must at once point out that the calculation of compensation and the amount worked out in the Schedule suffer from several defects. For example, in Item 1 for a victim aged 15 years, the multiplier is shown to be 15 years and the multiplicand is shown to be Rs 3000. The total should be 3000 - 15 = 45, 000 but the same is worked out at Rs 60, 000. Similarly, in the Second Item the multiplier is 16 and the annual income is Rs 9000; the total should have been Rs 1, 44, 000 but is shown to be Rs 1, 71, 000.

To put it briefly, the Table abounds in such mistakes. Neither the Tribunals nor the Courts can go by the ready reckoner. It can only be used as a guide. Besides, the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in the choice of the multiplier. But these mistakes are limited to actual calculations only and not in respect of other items. What we propose to emphasise is that the multiplier cannot exceed 18 years' purchase factor. This is the improvement over the earlier position that ordinarily it should not exceed.

16. We thought it necessary to state the correct legal position as Courts and Tribunals are using higher multiplier as in the present case where the Tribunal used the multiplier of 24 which the High Court raised to 34, thereby showing lack of awareness of the background of the multiplier system in Davies case (1994) 2 SCC 176."

In Trilok Chandra's case (supra), the Three Judge Bench affirmed in an earlier decision of the Supreme Court in the case of [General Manager, Kerala State Road Transport Corporation Vs. Susamma Thomas, 1994 ACJ 1 (SC)] with regard to the adoption and selection of multiplier according to the age of the deceased or the claimant whichever is higher.

There was some confusion as to the selection of multiplier because of the multiplier table as given in the Second Schedule to the Motor Vehicles Act, 1988 under Section 163-A. In some of the cases, the Courts had adopted the multiplier as given in the Second Schedule.

In Trilok Chandra's case, the three Judge Bench had noticed some clerical mistakes in the multiplier table as given in the Second Schedule and had held that the said Table was not conclusive on the applicability of the multiplier and, therefore, could be taken as a guide.

Noticing the wide variations in the selection of multiplier, a Two Judge Bench Supreme Court in [Sarla Verma & Ors. Vs Delhi Transport Corporation & Anr., AIR 2009 SC 3104] made an attempt to reconcile the method of selection of multiplier as adopted in the cases of Susamma Thomas, Trilok Chandra and [New India Assurance Company Ltd Vs Charlie & Anr, (2005) ACJ 1131 (SC)] and in the Second Schedule.

20. It compared what was provided in the aforesaid Judgments and the Second Schedule in a tabulated form. What was ultimately provided in Sarla Verma's case (supra) is contained in Paras 20 and 21 of the said decision which, reproduced hereunder:
20. Tribunals/courts adopt and apply different operative multipliers. Some follow the multiplier with reference to Susamma Thomas (set out in Column 2 of the Table above); some follow the multiplier with reference to Trilok Chandra, (set out in Column 3 of the Table above); some follow the multiplier with reference to Charlie (Set out in Column (4) of the Table above); many follow the multiplier given in Second Column of the Table in the Second Schedule of 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 M V Act or 15 as per the multiplier actually adopted in the Second Schedule to M V 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 M V Act. In cases falling under Section 166 of the M V Act, Davies method is applicable.

21. 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".

In Sarla Verma's case (supra), the Supreme Court was very specific and categoric that the multiplier, to be applied, should be with reference to the age of the deceased. What was observed by the Supreme Court in Para No. 9 of the aforesaid decision is noteworthy and is reproduced hereunder:

9. Basically only three facts need to be established by the claimants for assessing compensation in the case of death:

1. Age of the deceased;
2. income of the deceased; and
3. the number of dependents.

The issues to be determined by the Tribunal to arrive at the loss of dependency are:

1. Additions/deductions to be made for arriving at the income;
2. The deduction to be made towards the personal living expenses of the deceased; and
3. The multiplier to be applied with reference of the age of the deceased.

Though it was a Two Judge Bench which decided Sarla Verma's case but later on, the Judgment in Sarla Verma's case (supra) was considered by a Three Judge Bench in the case of [Reshma Kumari & Ors. Vs Madan Mohan & Anr., 2013 (9) SCC 65].

In Reshma Kumari's case, a Three Judge Bench was answering the reference. What was said by a Three Judge Bench in Reshma Kumri's case is succinctly stated in Para 36 which reads thus:

33. In Sarla Verma, this Court has endeavoured to simplify the otherwise complex exercise of assessment of loss of dependency and determination of compensation in a claim made under Section 166.

It has been rightly stated in Sarla Verma that claimants in case of death claim for the purposes of compensation must establish:

1. age of the deceased;
2. income of the deceased; and
3. the number of dependants.

To arrive at the loss of dependency, the Tribunal must consider:

1. Additions/deductions to be made for arriving at the income;
2. The deductions to be made towards the personal living expenses of the deceased; and
3. The multiplier to be applied with reference to the age of the deceased.

We do not think it is necessary for us to revisit the law on the point as we are in full agreement with the view in Sarla Verma.

Subsequently, in the case of [Munna Lal Jain & Anr. Vs Vipin Kumar Sharma & Ors., 2015 (6) SC 347], the position of law with regard to the applicability of multiplier was restated by holding that the multiplier should depend on the age of the deceased and not on the age of the dependent.

The ratio laid down in Sarla Verma's case and approved in the case of Reshma Kumari's (supra) was, thus, reiterated in Munna Lal Jain's case. In view of the cleavage of opinion between Reshma Kumari's case (supra) and [Rajesh & Ors. Vs Rajbir Singh & Ors., 2013 (9) SC 54,] both Three Judge Bench decisions, a Two Judge Bench of the Supreme Court in [National Insurance Company Ltd Vs Pushpa & Ors., (2015) 9 SCC 166] referred the matter to the Larger Bench for authoritative pronouncement.

The reference came to be heard by a Constitution Bench in [National Insurance Co. Ltd Vs Pranay Sethi, 2017 ACJ 2700]. The Constitution Bench after thoroughly surveying the law with regard to the computation of compensation in the case of a death in a motor vehicular accident summed up its conclusions in Para 61, which reads thus:

61. In view of the aforesaid analysis, we proceed to record our conclusions:

1. The Two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a Larger Bench as it was taking a different view than what has been stated in Sarla Verma, a Judgment by a Co-ordinate Bench. It is because a Co-ordinate Bench of the same strength cannot take a contrary view than what has been held by another Co-ordinate Bench.
    
2. As Rajesh has not taken note of the decision in Reshma Kumari, which was delivered at earlier point of time, the decision in Rajesh is not a binding precedent.
    
3. While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age group of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.
    
4. In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
    
5. For determination of the multiplicand, the deduction for personal and living expenses, the Tribunals and the Courts shall be guided by Paragraphs 30 to 32 of Sarla Verma which we have reproduced hereinbefore.
    
6. The selection of multiplier shall be as indicated in the Table in Sarla Verma read with Paragraph 42 of that Judgment.
    
7. The age of the deceased should be the basis for applying the multiplier.
    
8. Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15, 000/-, Rs. 40, 000/- and Rs. 15, 000/- respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years

In view of the authoritative pronouncement of the Constitution Bench the issue with regard to the applicability of multiplier was set at rest.

Despite the law having been clearly stated by the Supreme Court that the multiplier, to be applied, should be with reference to the age of the deceased, yet the controversy has refused to die. Various High Courts have given contrary Judgments making a fictional distinction for the purposes of applying the multiplier in the case of a deceased bachelor.

From the case law discussed above, nowhere the Supreme Court has made any distinction between the deceased who may be 15, 16 or 18 years old or a bachelor. The multiplier to be applied has been uniformly provided in Sarla Verma's case which has been approved by a Three Judge Bench in the cases of Reshma Kumari, Munna Lal Jain and finally in Pranay Sethi.

It is in this context, the issue came up for consideration once again before the Supreme Court in the case of [Sube Singh & Anr. Vs Shyam Singh (Dead) & Ors., 2018 (1) Law Hearld 350]. Three Judge Bench of Hon'ble Supreme Court of India in the case of Sube Singh (supra) while disagreeing with Two Judge Bench in [Ashvinbhai Jayantilal Modi Vs Ramkaran Ramchandra Sharma & Anr., 2014 (5) Law Hearld (SC) 3552] and considering the principle expounded in Sarla Verma's case (supra), and Munna Lal Jain reaffirmed the law as laid down in the aforementioned Judgments and approved by the Constitution Bench in Pranay Sethi's case (supra). What was stated by the Supreme Court in Sube Singh's case (supra) in Para 4 is also reproduced hereunder:

On the basis of the finding recorded by the Tribunal and affirmed by the High Court, it is evident that the deceased was 23 years of age on the date of accident i.e. 22.09.2009. He was unmarried and his parents who filed the petition for compensation were in the age group of 40 to 45 years.

The High Court relying on the decision in the case of Ashvinbhai Jayantilal Modi (supra), held that multiplier 14 will be applicable in the present case, keeping in mind the age of the parents of the deceased. The legal position, however, is no more re integra

 In the case of Munna Lal Jain (supra) decided by a Three Judge Bench of this Court, it is held that the multiplier should depend on the age of the deceased and not on the age of the dependents. We may usefully refer to the exposition in Paragraph Nos. 11 and 12 of the reported decision, which read thus:

11. The remaining question is only on multiplier.
The High Court following Santosh Devi (supra), has taken 13as the multiplier. Whether the multiplier should depend on the age of the dependent s or that of the deceased, has been hanging fire for sometime; but that has been given a quietus by another three Judge Bench decision in Reshma Kumar (supra).

It was held that the multiplier is to be used with reference to the age of the deceased. One reason appears to be that there is certainty with regard to the age of the deceased but as far as that of dependents is concerned, there will always be room for dispute as to whether the age of the eldest or youngest or even the average etc. is to be taken. To quote

36. In Sarla Verma, this Court has endeavoured to simplify the otherwise complex exercise of assessment of loss of dependency and determination of compensation in a claim made under Section 166.

It has been rightly stated in Sarla Verma that the claimants in case of death claim for the purposes of compensation must establish:

1. Age of the deceased;
2. Income of the deceased; and
3. The number of dependents.

To arrive at the loss of dependency, the Tribunal must consider:

1. Additions/deductions to be made for arriving at the income;
2. The deductions to be made towards the personal living expenses of the deceased; and
3. The multiplier to be applied with reference to the age of the deceased.

We do not think it is necessary for us to revisit the law on the Point as we are in full agreement with the view in Sarla Verma"

12. In Sarla Verma (supra), at Paragraph 19, a Two Judge Bench dealt with this aspect in Step 2. To quote:
19. xxxx xxxxxx xxxx
Step 2 (ascertaining the multiplier)
Having regard to the age of the deceased and period of active career, the appropriate multiplier should be selected. This does not mean ascertaining the number of years he would have lived or worked out for the accident having regard to several imponderables in life and economic factors, a table of multipliers with reference to be age has been identified by this Court. The multiplier should be chosen from the said table with reference to the age of the deceased.

Considering the aforementioned principle expounded in Sarla Verma (supra), which has been affirmed by the Constitution Bench of this Court in National Insurance Company Ltd. Vs. Pranay Sethi and Ors., (2017) (4) Law Herald 2970 (SC): 2017 Law Herald. Org. 1565: AIR 2017 SC 5157, the appellants are justified in insisting for applying multiplier 18."

The Three Judge Bench of Hon'ble Supreme Court of India in [Royal Sundaram Alliance Insurance Company Ltd. Vs Mandala Yadagari Goud & Ors., 2019 (2) Law Hearld (SC) 1152] reiterated that it the age of the deceased which has to be taken into account and not the age of the dependents for the purposes of taking the multiplier to be applied and summed up its conclusions in Paras 11, 12 & 13 as under:

11. A reading of the Judgment in Sube Singh (supra) shows that where a Three Judge Bench has categorically taken the view that it is the age of the deceased and not the age of the parents that would be the factor for the purposes of taking the multiplier to be applied. This Judgment undoubtedly relied upon the case of Munna Lal Jain (supra) which is also a Three Judge Bench Judgment in this behalf.

The relevant portion of the Judgment has also been extracted. Once again the extracted portion in turn refers to the Judgment of a Three Judge Bench in Reshma Kumari & Ors. Vs. Madan Mohan & Anr. [2013 (2) Law Hearl (SC) 1583]. The relevant portion of Reshma Kumari in turn has referred to Sarla Verma (supra) case and given its imprimatur to the same.

The loss of dependency is thus stated to be based on:

1. Additions/deductions to be made for arriving at the income;
2. The deductions to be made towards the personal living expenses of the deceased; and
3. The multiplier to be applied with reference to the age of the deceased. It is the third aspect which is of significance and Reshma Kumari categorically states that it does not want to revisit the law settled in Sarla Verma case in this behalf.

12. Not only this, the subsequent Judgment of the Constitution Bench in Pranay Sethi (supra) has also been referred to in Sube Singh for the purpose of calculation of the multiplier.

13. We are convinced that there is no need to once again take up this issue settled by the aforesaid Judgments of Three Judge Bench and also relying upon the Constitution Bench that it is the age of the deceased which has to be taken into account and not the age of the dependents.

Conclusion
In view of the foregoing discussion, where the deceased is a bachelor or otherwise, multiplier to be applied for computing the compensation is to be with reference to the age of the deceased and not the age of the parents or other dependents.

Written By: Dinesh Singh Chauhan, Advocate - High Court of Judicature, J&K, Jammu.
Email: [email protected]; [email protected].