LEGAL ISSUE: Determination of the correct multiplier for calculating compensation in motor accident claims involving the death of a bachelor.
CASE TYPE: Motor Accident Compensation
Case Name: Kunjan Sadana & Anr. vs. Mahesh Kumar & Ors.
[Judgment Date]: 10 December 2019
Introduction
Date of the Judgment: 10 December 2019
Citation: (2019) INSC 1149
Judges: S. Abdul Nazeer, J. and Sanjiv Khanna, J.
When a young, unmarried person dies in a motor vehicle accident, how should the compensation be calculated? Specifically, should the age of the deceased or the age of their dependents determine the multiplier used to calculate the loss of dependency? The Supreme Court addressed this critical question in a recent judgment, clarifying the correct approach for assessing compensation in such cases. This case highlights the importance of using the deceased’s age for calculating the multiplier, ensuring fair compensation for the bereaved family.
Case Background
On April 18, 2007, Shri Yitesh Sadana, also known as Prince, a 19-year-old bachelor, tragically died in a motor vehicle accident. The accident occurred due to the negligence of the driver of a bus with registration number DL-1PA-4403. The bus was insured by New India Assurance Co Ltd. At the time of his death, Yitesh was survived by his widowed mother and a younger brother who was a minor. The family filed a claim petition seeking compensation for the loss of their son and brother.
Timeline
| Date | Event |
|---|---|
| April 18, 2007 | Shri Yitesh Sadana dies in a motor vehicle accident. |
| June 06, 2009 | The Tribunal partially allows the claim petition awarding Rs. 3,72,620/- as compensation. |
| August 08, 2017 | The High Court of Delhi partly allows the appeal, enhancing the compensation to Rs. 5,02,620/-. |
| December 10, 2019 | The Supreme Court partly allows the appeal, further enhancing the compensation. |
Course of Proceedings
The Motor Accident Claims Tribunal initially awarded a compensation of Rs. 3,72,620. The Tribunal calculated the loss of dependency based on the deceased’s income of Rs. 3,918 per month. However, the Tribunal incorrectly applied a multiplier of ’15’ based on the age of the deceased’s mother (42 years) instead of the deceased’s age. The Tribunal also deducted 50% of the deceased’s income towards personal expenses.
The appellants, dissatisfied with the compensation, appealed to the High Court of Delhi. The High Court partly allowed the appeal, enhancing the compensation to Rs. 5,02,620. However, the High Court also used the multiplier of ’15’ based on the mother’s age and did not consider future prospects while calculating compensation.
Legal Framework
The case primarily revolves around the calculation of compensation for the loss of dependency in motor accident claims. The key legal principles include:
- Multiplier Method: This method is used to calculate the loss of dependency, which is the financial loss suffered by the dependents due to the death of the victim. The multiplier is based on the age of the deceased or the dependent, depending on the legal interpretation.
- Future Prospects: Compensation may include an addition for future prospects, especially in cases involving young individuals who had the potential for increased earnings.
- Personal Expenses: A deduction is made from the income of the deceased to account for the personal expenses they would have incurred.
The Supreme Court relied on the following authorities:
- National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]: This Constitution Bench decision dealt with the issue of future prospects while granting compensation. It established that for a self-employed person below 40 years of age, an addition of 40% of the established income should be considered for future prospects.
- Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554]: This three-judge bench held that the age of the deceased should be taken into account for adopting a multiplier, even if the deceased is a bachelor and not the age of the dependents.
Arguments
Appellants’ Arguments:
- The appellants argued that the Tribunal and the High Court erred in applying a multiplier of ’15’ based on the age of the mother instead of the deceased’s age. They contended that the correct multiplier for a 19-year-old should be ‘18’.
- The appellants also argued that the High Court failed to consider the future prospects of the deceased while awarding compensation.
Respondent’s (Insurance Company) Arguments:
- The insurance company sought to justify the impugned judgment and order of the High Court, arguing that the compensation awarded was fair and reasonable.
| Main Submission | Sub-Submissions (Appellants) | Sub-Submissions (Respondent) |
|---|---|---|
| Multiplier Application | ✓ The multiplier should be based on the deceased’s age (19 years), which warrants a multiplier of ’18’. | ✓ The High Court’s application of multiplier ’15’ is justified. |
| Future Prospects | ✓ The High Court failed to consider the future prospects of the deceased. | ✓ The compensation awarded is fair and reasonable. |
Issues Framed by the Supreme Court
The Supreme Court considered the following issues:
- Whether the age of the deceased or the age of the dependents should be taken into account for calculating the multiplier in a motor accident claim involving the death of a bachelor?
- Whether the High Court was correct in not considering the future prospects of the deceased while awarding compensation?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Age for Multiplier | Age of the deceased should be considered. | Relied on the three-judge bench decision in Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554] and Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680], which clarified that the age of the deceased should be the basis for applying the multiplier. |
| Future Prospects | Future prospects should be considered. | Relied on the Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680], which held that 40% of the established income should be added for future prospects when the deceased is below 40 years of age. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How it was used |
|---|---|---|---|
| National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680] | Supreme Court of India | Future Prospects and Conventional Heads | The Court relied on this Constitution Bench decision to determine that 40% of the established income should be added for future prospects when the deceased is below 40 years of age. The court also relied on this case for determining the amounts for conventional heads like loss of estate, loss of consortium and funeral expenses. |
| Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554] | Supreme Court of India | Multiplier for Bachelor’s Death | The Court relied on this three-judge bench decision to clarify that the age of the deceased should be taken into account for adopting a multiplier, even if the deceased is a bachelor. |
Judgment
| Submission | How it was treated by the Court? |
|---|---|
| Appellants’ submission that the multiplier should be based on the deceased’s age. | Accepted. The Court held that the age of the deceased should be taken into account for adopting a multiplier. |
| Appellants’ submission that the High Court failed to consider the future prospects of the deceased. | Accepted. The Court held that 40% of the established income should be added for future prospects. |
| Respondent’s submission that the High Court’s decision was justified. | Rejected. The Court held that the multiplier should be based on the age of the deceased and future prospects should be considered. |
How each authority was viewed by the Court?
- The Supreme Court relied on National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]* to determine that 40% of the established income should be added for future prospects when the deceased is below 40 years of age. The court also relied on this case for determining the amounts for conventional heads like loss of estate, loss of consortium and funeral expenses.
- The Supreme Court relied on Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554]* to clarify that the age of the deceased should be taken into account for adopting a multiplier, even if the deceased is a bachelor.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily driven by the need to ensure fair and just compensation for the dependents of the deceased. The Court emphasized the importance of adhering to established legal principles and precedents, particularly the decisions in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680] and Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554]. The Court’s reasoning focused on the following points:
- Age of the Deceased: The Court unequivocally stated that the age of the deceased should be the basis for applying the multiplier, regardless of whether the deceased was a bachelor or had dependents.
- Future Prospects: The Court recognized the potential for future earnings and emphasized the need to include an additional 40% of the established income for future prospects, as the deceased was below 40 years of age.
- Consistency with Precedents: The Court emphasized the importance of following the precedents set by the Constitution Bench in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680] and the three-judge bench in Royal Sundaram Alliance Insurance Company Limited v. Mandala Yadagari Goud and Others [(2019) 5 SCC 554].
| Reason | Percentage |
|---|---|
| Age of the Deceased | 40% |
| Future Prospects | 35% |
| Consistency with Precedents | 25% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning:
The Court considered alternative interpretations but rejected them in favor of established legal principles. The Court’s decision was based on ensuring fair compensation and consistency with precedents.
The Court held that the correct multiplier should be based on the age of the deceased and that future prospects should be considered while calculating compensation. The Court also enhanced the compensation under conventional heads.
“We are convinced that there is no need to once again take up this issue settled by the aforesaid judgments of three-Judge Benches 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.”
“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.”
“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.”
Key Takeaways
- ✓ The age of the deceased, and not the age of the dependents, should be used to determine the multiplier in motor accident compensation cases, even if the deceased is a bachelor.
- ✓ Future prospects must be considered while calculating compensation, especially for young individuals. An addition of 40% of the established income should be added for future prospects when the deceased is below 40 years of age.
- ✓ Compensation under conventional heads such as loss of estate, loss of consortium, and funeral expenses should be awarded as per the guidelines set by the Supreme Court in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680].
This judgment clarifies the approach for calculating compensation in motor accident claims involving the death of a bachelor and ensures that the compensation is fair and just. The judgment will have a significant impact on future cases, as it emphasizes the importance of the deceased’s age and future prospects in determining the multiplier.
Directions
The Supreme Court directed the insurance company to deposit a sum of Rs. 1,60,000/- with simple interest at the rate of 7% per annum from the date of the claim petition till the date of deposit. The insurance company was further directed to deposit the aforesaid amount before the Tribunal within a period of two months from the date of receipt of the copy of the judgment.
Development of Law
The ratio decidendi of this case is that the multiplier for calculating compensation in motor accident claims involving the death of a bachelor should be based on the age of the deceased and not the age of the dependents. This judgment reinforces the position of law established by the Supreme Court in previous cases and clarifies the correct approach for assessing compensation in such cases.
Conclusion
In the case of Kunjan Sadana & Anr. vs. Mahesh Kumar & Ors., the Supreme Court clarified that the age of the deceased should be the basis for applying the multiplier in motor accident compensation cases, even if the deceased is a bachelor. The Court also emphasized the importance of considering future prospects and awarded enhanced compensation to the appellants. This judgment ensures that compensation is calculated fairly and consistently with established legal principles.
Source: Kunjan Sadana vs. Mahesh Kumar