Rep. by Its Chief Law Officer Vs. M. Pentaiah Chary  Insc 880 (30 August 2007)
Sinha & Harjit Singh Bedi
APPEAL NO. 3988 OF 2007 [Arising out of SLP (Civil) No. 860 of 2007] S.B.
SINHA, J :
Whether in the facts and circumstances of this case multiplier of '15' ought to
have been applied by the High Court in its impugned judgment falls for
consideration in this appeal which arises out of a common judgment and order
dated 29.08.2006 passed by the High Court of Judicature of Andhra Pradesh in
Appeal against Order No. 528 of 2000 and C.M.A. No. 3350 of 1999.
Before embarking upon the said question, we may notice the basic fact of the
matter which is not in dispute. Claimant was aged about 38 years on the date of
accident which took place on 26.01.1995. He was a carpenter working in a
company. His monthly salary was said to be Rs. 4500/-. He had 15 years of
experience in woodcrafts. His parents, wife, two daughters and one son were
dependant on him. On the night of 25.01.1995, he was coming back to his house.
When he was riding on a two-wheeler, he met with the accident having been hit
by a bus belonging to the appellant corporation. He was thrown on the road and
dragged to a distance of 10 to 15 yards. He suffered serious multiple injuries,
viz., fracture of left hand (humour); fracture of left eight ribs; rupture of
spleen; loss of skin and rupture of left hand; injury to haemolhorex; injury to
spinal cord, injury to nerve of contracting to spleen; blunt injury to left
forehead; injury to thoracic lumber; blunt injury to thigh; rupture of left
calf muscle, bruises all over the body; closed brain injury with blackouts. He
underwent an operation. A steel rod was inserted in his fractured hand. He
became permanently disabled and lost his earning capacity.
filed an application under Section 166 of the Motor Vehicles Act (for short
"the Act") claiming a sum of Rs. 4,00,000/- as damages. The Tribunal
awarded a sum of Rs. 85,000/- with interest at 12% p.a.
Respondent preferred an appeal thereagainst. The High Court by reason of the
impugned judgment granted further compensation to him for a sum of Rs.
1,62,800/- in addition to the awarded compensation of Rs. 85,000/-.
Application of the multiplier in a structural form was provided in the Second
Schedule appended to the Motor Vehicles Act. Benefit of applying such
structural formula was considered by this Court in General Manager, Kerala
State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs) and Others
[(1994) 2 SCC 176] wherein this Court opined:
The considerations generally relevant in the selection of multiplicand and
multiplier were adverted to by Lord Diplock in his speech in Mallett's case
where the deceased was aged 25 and left behind his widow of about the same age
and three minor children. On the question of selection of multiplicand Lord Diplock
starting point in any estimate of the amount of the "dependency" is
the annual value of the material benefits provided for the dependants out of
the earnings of the deceased at the date of his death. But...there are many
factors which might have led to variations up or down in the future. His
earnings might have increased and with them the amount provided by him for his dependants.
They might have diminished with a recession in trade or he might have had
spells of unemployment. As his children grew up and became independent the
proportion of his earnings spent on his dependants would have been likely to
fall. But in considering the effect to be given in the award of damages to
possible variations in the dependency there are two factors to be borne in
mind. The first is that the more remote in the future is the anticipated change
the less confidence there can be in the chance of its occurring and the smaller
the allowance to be made for it in the assessment. The second is that as a
matter of the arithmetic of the calculation of present value, the later the
change takes place the less will be its effect upon the total award of damages.
Thus at interest rates of 4 = per cent the present value of an annuity for 20
years of which the first ten years are at Pounds 100 per annum and the second
ten years at Pounds 200 per annum, is about 12 years' purchase of the
arithmetical average annuity of Pounds 150 per annum, whereas if the first ten
years are at Pounds 200 per annum and the second ten years at Pounds 100 per
annum the present issue is about 14 years' purchase of the arithmetical mean of
Pounds 150 per annum.
therefore the chances of variations in the "dependency" are to be
reflected in the multiplicand of which the years' purchase is the multiplier,
variations in the dependency which are not expected to take place until after
ten years should have only a relatively small effect in increasing or
diminishing the "dependency" used for the purpose of assessing the
Placing strong reliance upon the observations made therein, the learned counsel
appearing on behalf of the appellant corporation would submit that the correct
multiplier which should have been applied in this case was '12'.
was also placed on Dr. K.G. Poovaiah v. General Manager/ Managing Director
Karnataka State Road Transport Corporation [(2001) 9 SCC 167] wherein this
However, the assessment of compensation under the head of loss of earning
capacity is very much on the lower side. The injury to the right hand, which
has left a permanent disability and which has affected the functioning of the
limb and in particular the fingers, is a serious handicap to a medical
practitioner. Patients would be reluctant to go to him for treatment and,
therefore, the loss of earning capacity would be substantial. Even if we were
to assume that it would reduce his earning capacity by 50% and even if we go by
his earnings at the date of the accident, the monthly loss would come to Rs.
1500 i.e. Rs. 18,000 per annum. If this monthly loss of earning is multiplied
by 10 years purchase factor the compensation would work out to Rs. 1,80,000. To
that must be added the compensation allowed under certain other heads, namely,
pain and suffering, loss of amenities, medical expenses, etc. The total amount
comes to Rs. 2,38,000."
Reliance has also been placed on U.P. State Road Transport Corpn. v. Krishna Bala and Others [(2006) 6 SCC
249] wherein it was held:
In Susamma Thomas case it was noted that the normal rate of interest was about
10% and accordingly the multiplier was worked out. As the interest rate is on
the decline, the multiplier has to consequentially be raised. Therefore,
instead of 16 the multiplier of 18 as was adopted in Trilok Chandra appears to
be appropriate. In fact in Trilok Chandra case, after reference to Second
Schedule to the Act, it was noticed that the same suffers from many defects. It
was pointed out that the same is to serve as a guide, but cannot be said to be
invariable ready reckoner. However, the appropriate highest multiplier was held
to be 18.
highest multiplier has to be for the age group of 21 years to 25 years when an
ordinary Indian citizen starts independently earning and the lowest would be in
respect of a person in the age group of 60 to 70, which is the normal
retirement age. (See: New India Assurance Co. Ltd. v. Charlie)"
against this, the learned counsel appearing on behalf of the respondent would
submit that this is not a fit case where this Court should exercise its
discretionary jurisdiction and in particular having regard to a recent decision
of this Court in Deepal Girishbhai Soni and Ors. v. United India Insurance Co.
Ltd., Baroda [(2004) 5 SCC 385 : AIR 2004 SC
have noticed hereinbefore that the accident took place on 26.01.1995. A few
months prior thereto, the Parliament inserted Section 163-A of the Act by Act
54 of 1994 with effect from 14.11.1994. The said provision contains a non-obstante
clause in terms whereof inter alia the owner of the motor vehicle is made
liable to pay, in the case of death or permanent disablement, compensation, as
indicated in the Second Schedule appended to the Act.
"Total Disablement" has been defined in Section 2(l) of the Workmen's
Compensation Act, 1923 to mean "such disablement," whether of a
temporary or permanent nature, as incapacitates a workman for all work which he
was capable of performing at the time of the accident resulting in such
Section 166 of the Act evidently stands on a different footing. The extent of
compensation payable thereunder may vary from case to case.
other factors including contributory negligence, earning capacity, extent of
negligence on the part of one vehicle or the other, are relevant factors for
computation of damages. Loss of property can also be subject matter of the
Deepal Girishbhai Soni (supra), this Court observed:
163A was, thus, enacted for grant of immediate relief to a section of the
people whose annual income is not more than Rs. 40,000/- having regard to the
fact that in terms of Section 163A of the Act read with the Second Schedule appended
thereto; compensation is to be paid on a structured formula not only having
regard to the age of the victim and his income but also the other factors
relevant therefor. An award made thereunder, therefore, shall be in full and
final settlement of the claim as would appear from the different columns
contained in the Second Schedule appended to the Act. The same is not interim
in nature. The note appended to column 1 which deals with fatal accidents makes
the position furthermore clear stating that from the total amount of
compensation one-third thereof is to reduced in consideration of the expenses
which the victim would have incurred towards maintaining himself had he been
alive. This together with the other heads of compensation as contained in columns
2 to 6 thereof leaves no manner of doubt that the Parliament intended to lay a
comprehensive scheme for the purpose of grant of adequate compensation to a
section of victims who would require the amount of compensation without
fighting any protracted litigation for proving that the accident occurred owing
to negligence on the part of the driver of the motor vehicle or any other fault
arising out of use of a motor vehicle."
We, therefore, fail to visualise that in a case of this nature a claimant can
be deprived of a reasonable amount of compensation despite the fact that he has
permanently lost his capacity to earn and remain dependant on other besides
physical sufferance of such magnitude as to why the multiplier suggested by the
Parliament should not be accepted.
do not, however, intend to lay down a general law. We wish to point out that
minimum compensation payable in a case of this nature should be considered from
the sufferings of disability undergone by the victim. We are not suggesting
that in certain situations, the multiplier specified in the Second Schedule
cannot and should not be altered but therefor there must exist strong
circumstances. In the year 1995, the rate of interest was lower than the rate
of interest taken into consideration in Susamma Thomas (supra). Application of
multiplicative factor should also be considered from that angle.
Thomas (supra) or the other decisions relied upon by the learned counsel, do
not lay down any law in absolute terms.
Krishna Bala (supra), the Division Bench considered that the amount of
compensation will have to be determined having regard to the fact 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. Rate of interest,
therefore, was a relevant factor.
Furthermore, in a case of this nature, we are of the opinion that it is not a
fit and proper case where we should exercise our discretionary jurisdiction
under Article 136 of the Constitution of India.
For the reasons aforementioned, there is no merit in this appeal which is
dismissed accordingly. Appellant shall bear the costs of the respondents.
fee assessed at Rs. 25,000/-.