Corp.Ltd. Vs. Vimla Devi & Ors.  INSC 341 (16 February 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2009 (Arising out of
SLP (C) No. 12813 of 2007) Uttaranchal Transport Corporation Ltd. ....Appellant
Versus Smt. Vimla Devi and Ors. ....Respondents
Dr. ARIJIT PASAYAT,
in this appeal is to the judgment of a learned Single Judge of the Uttaranchal
High Court partially allowing the appeal filed by the respondents. The appeal
was filed before the High Court in terms of Section 173 of the Motor Vehicles
Act, 1988 (in short the `Act') seeking enhancement of the compensation as fixed
by learned Ist Additional District Judge-cum-Motor Accident Claims Tribunal,
Haridwar. (In short the `MACT'). The MACT had awarded compensation of
Along with interest @
9% p.a. from the date of claim.
claim petition was filed inter-alia stating that on 2.9.2003 one Bijendra Singh
(hereinafter referred to as the `deceased') was riding a scooter. Suddenly, the
bus owned by the present appellant-Corporation dashed against it. The vehicle
was being driven in a rash and negligent manner. It is stated that the deceased
was aged 43 years at the time of the accident and was a contractor and earning
Rs.12,000/- p.m. The Corporation took the stand that there was actually no rash
and negligent act of the driver. When the scooter was trying to overtake the
truck it lost control and the accident occurred due to negligence of the
deceased. The MACT held that there was no material to establish the income as
claimed and accordingly a sum was fixed at Rs.15,000/-p.a. which is the
High Court held that the notional income has to be taken at Rs.30,000/- p.a.
and since the deceased was a contractor he could have easily earned Rs.3,000/-
p.m. and accordingly after making 1/3rd deduction for personal expenses the
loss of dependency was assessed at Rs.24,000/- p.a. and multiplier of 15 was
adopted. Accordingly, the compensation was fixed at Rs.3,60,000/- with 9%
interest from the date of claim.
In support of the appeal, learned counsel for the appellant submitted that
there was no basis indicated for taking the income at Rs.36,000/- p.a..
On surmises the High
Court came to the conclusion that the deceased could have earned Rs.36,000/-
p.a. There was no basis for coming to such a conclusion. It was also submitted
that the multiplier adopted is high.
is no appearance on behalf of the respondents in spite of service of notice.
were two methods adopted to determine and for calculation of compensation in
fatal accident actions. The first multiplier method mentioned in Davies v.
Powell Duffregn Associated Collieries Ltd. (1942 AC 601) and the second in
Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2) All ER 448).
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.
considerations generally relevant in the selection of multiplicand and multiplier
were adverted to by Lord Diplock in his speech in Mallett v. Mc Mongle (1969
(2) All ER 178) 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 observed:
point in any estimate of the amount of the `dependency` is the annual value of
the material benefits 4 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 chances 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- 1/2% the present value of an annuity for 20 years of which the first ten
years are at $ 100 per annum and the second ten years at $ 200 per annum, is
about 12 years' purchase of the arithmetical average annuity of $ 150 per
annum, whereas if the first ten years are at $200 per annum and the second ten
years at $ 100 per annum the present value is about 14 years' purchase of the
arithmetical mean of $ 150 per annum. If 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
regard to the choice of the multiplicand, Halsbury's Laws of England in vol.
34, para 98 states the principle thus:
of damages under the Fatal Accident Act, 1976 - The courts have evolved a
method for calculating the amount of pecuniary benefit that dependants could
reasonably expect to have received from the deceased in the future. First the
annual value to the dependants of those benefits (the multiplicand) is
assessed. In the ordinary case of the death of a wage- earner that figure is
arrived at by deducting from the wages the estimated amount of his own personal
and living expenses.
The assessment is
split into two parts. The first part comprises damages for the period between
death and trial. The multiplicand is multiplied by the number of years which
have elapsed between those two dates.
Interest at one-half
the short-term investment rate is also awarded on that multiplicand. The second
part is damages for the period from the trial onwards. For that period, the
number of years which have based on the number of years that the expectancy
would probably have lasted; central to that calculation is the probable length
of the deceased's working life at the date of death."
to the multiplier, Halsbury states:
"However, the multiplier
is a figure considerably less than the number of years taken as the duration of
the expectancy. Since the dependants can invest their damages, the lump sum
award in respect of future loss must be discounted to reflect their receipt of
interest on invested funds, the intention being that the dependants will each
year draw interest and some capital (the interest element decreasing and the
capital drawings increasing with the passage of years), so that they are
compensated each year for their annual loss, and the fund 6 will be exhausted
at the age which the court assesses to be the correct age, having regard to all
The contingencies of
life such as illness, disability and unemployment have to be taken into
account. Actuarial evidence is admissible, but the courts do not encourage such
evidence. The calculation depends on selecting an assumed rate of interest. In
practice about 4 or 5 per cent is selected, and inflation is disregarded. It is
assumed that the return on fixed interest bearing securities is so much higher
than 4 to 5 per cent that rough and ready allowance for inflation is thereby
made. The multiplier may be increased where the plaintiff is a high tax payer.
The multiplicand is
based on the rate of wages at the date of trial. No interest is allowed on the
both General Manager, Kerala State Road Transport Corporation, Trivandrum v.
Susamma Thomas (Mrs.) and Ors.
(1994 (2) SCC 176)
and U.P. State Road Transport Corporation And Others v. Trilok Chandra and Ors.
(1996 (4) SCC 362) the multiplier appears to have been adopted by this Court
taking note of the prevalent banking rate of interest.
fact in Trilok Chand's case (supra), 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. The
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
the age of the deceased the multiplier as adopted appears to be on higher side.
in view the parameters indicated above it would be appropriate to fix the
multiplier at 10 and the rate of interest @ 6% p.a. The MACT shall work out the
entitlement on the aforesaid basis.
basis has been indicated by the High Court for its presumptuous conclusion that
the deceased could have earned Rs.36,000/- p.a. Taking an overall view of the
matter and the multiplier to be adopted, as noted above, we fix the quantum of
Rs.2,40,000/- with 6% interest from the date of claim.
is stated by learned counsel for the appellant that a sum of Rs.2,50,000/- has
been deposited in terms of the order of this Court dated 20.7.2007. The balance
amount shall be deposited in the concerned MACT within a period of 8 weeks.
The withdrawal of the amount in the fixed deposit shall be fixed by the MACT
taking into account the relevant aspects.
appeal is allowed to the aforesaid extent with no order as to costs.
(Dr. ARIJIT PASAYAT)
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