Supreme Court clarifies the use of the deceased’s age for calculating compensation multiplier in motor accident claims: Sube Singh vs. Shyam Singh (2018)

Date of the Judgment: February 9, 2018
Citation: Civil Appeal No. 7176 of 2015
Judges: Dipak Misra, CJI, A.M. Khanwilkar, J., Dr. D.Y. Chandrachud, J.
When determining compensation in motor accident claims, should the age of the deceased or the age of their parents be the deciding factor for the multiplier? The Supreme Court of India addressed this crucial question in a recent judgment. This case clarifies that the multiplier for calculating compensation should be based on the age of the deceased, not the age of the dependents. The judgment was delivered by a three-judge bench comprising Chief Justice Dipak Misra, Justice A.M. Khanwilkar, and Justice Dr. D.Y. Chandrachud, with Justice A.M. Khanwilkar authoring the opinion.

Case Background

On September 22, 2009, Ajit Singh, a 23-year-old, died in a motor vehicle accident. His parents, aged between 40 and 45, filed a claim for compensation. The Motor Accident Claims Tribunal initially determined the deceased’s monthly income to be ₹4,200, then deducted 50% as the deceased was unmarried, arriving at ₹2,100 per month. The tribunal applied a multiplier of 15, considering the age of the parents.

The appellants challenged this decision before the High Court of Punjab and Haryana at Chandigarh. The High Court partly allowed the appeal on other heads of compensation but reduced the multiplier to 14, relying on the Supreme Court’s decision in Ashvinbhai Jayantilal Modi vs. Ramkaran Ramchandra Sharma and Anr. The appellants then approached the Supreme Court, contesting the High Court’s decision on the multiplier.

Timeline

Course of Proceedings

The Motor Accident Claims Tribunal initially applied a multiplier of 15, considering the age of the deceased’s parents. The High Court of Punjab and Haryana, while partly allowing the appeal on other compensation aspects, reduced the multiplier to 14, relying on the decision in Ashvinbhai Jayantilal Modi vs. Ramkaran Ramchandra Sharma and Anr. The appellants then appealed to the Supreme Court, challenging the High Court’s application of the multiplier.

Legal Framework

The core legal issue revolves around the correct application of the multiplier method for calculating compensation in motor accident claims. The Supreme Court referred to its previous decisions in Sarla Verma (Smt.) and Others vs. Delhi Transport Corporation And Anr. and Munna Lal Jain and Anr. vs. Vipin Kumar Sharma and Ors., which established that the multiplier should be based on the age of the deceased, not the dependents. The court also referred to the Constitution Bench decision in National Insurance Company Ltd. vs. Pranay Sethi and Ors. which affirmed the principles laid down in Sarla Verma.

Arguments

The appellants argued that the High Court erred in applying a multiplier of 14 based on the age of the parents. They contended that the correct multiplier should be 18, considering the deceased’s age of 23 at the time of the accident. They relied on the judgments in Sarla Verma (Smt.) and Others vs. Delhi Transport Corporation And Anr. and Munna Lal Jain and Anr. vs. Vipin Kumar Sharma and Ors., which support the principle that the multiplier should be determined by the age of the deceased.

The respondents, on the other hand, supported the High Court’s decision, arguing that the multiplier should be based on the age of the dependents, as was done in the case of Ashvinbhai Jayantilal Modi vs. Ramkaran Ramchandra Sharma and Anr.

Issues Framed by the Supreme Court

The sole issue before the Supreme Court was:

1. Whether the High Court was right in applying a multiplier of 14 for determining the compensation amount in a motor accident claim case, based on the age of the parents of the deceased, while relying on the decision in Ashvinbhai Jayantilal Modi vs. Ramkaran Ramchandra Sharma and Anr.?

Treatment of the Issue by the Court

Authorities

Judgment

The Supreme Court overruled the High Court’s decision to apply a multiplier of 14 based on the age of the parents. The Supreme Court stated that the multiplier should be based on the age of the deceased, relying on the principles laid down in Sarla Verma (Smt.) and Others vs. Delhi Transport Corporation And Anr. and affirmed in Munna Lal Jain and Anr. vs. Vipin Kumar Sharma and Ors..

The Court stated:

• “In the case of Munna Lal Jain (supra) decided by a three Judge Bench of this Court, it is held that multiplier should depend on the age of the deceased and not on the age of the dependants.”
• “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., the appellants are justified in insisting for applying multiplier 18.”
• “A priori, we direct the respondents to pay compensation by applying 18 multiplier, instead of 14 applied by the High Court.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need for consistency and clarity in calculating compensation in motor accident claims. The Court emphasized the principle that the multiplier should be based on the age of the deceased, not the dependents, to avoid ambiguity and ensure uniformity. This approach was supported by previous judgments of the Supreme Court, particularly Sarla Verma and Munna Lal Jain, and affirmed by the Constitution Bench in Pranay Sethi. The Court’s reasoning was thus rooted in established legal principles and the need for a clear, predictable method for determining compensation.

Key Takeaways

• The multiplier for calculating compensation in motor accident claims should be based on the age of the deceased, not the age of the dependents.
• This decision provides clarity and consistency in the application of the multiplier method.
• The Supreme Court has reaffirmed the principles laid down in Sarla Verma and Munna Lal Jain.

Directions

The Supreme Court directed the respondents to pay compensation by applying a multiplier of 18, instead of 14. The compensation was recalculated to ₹6,80,400, and the interest rate was modified to 9% per annum.

Development of Law

The ratio decidendi of this case is that the multiplier for calculating compensation in motor accident claims must be based on the age of the deceased. This judgment reinforces the position of law established in Sarla Verma and Munna Lal Jain, clarifying that the age of the dependents is not relevant for determining the multiplier. The Supreme Court overruled the High Court’s decision which was based on the overruled judgment of Ashvinbhai Jayantilal Modi.

Conclusion

The Supreme Court’s judgment in Sube Singh vs. Shyam Singh clarifies that the multiplier for calculating compensation in motor accident claims must be based on the age of the deceased, not the dependents. This decision reinforces established legal principles and ensures a more consistent approach to determining compensation in such cases. The Court directed the respondents to pay compensation by applying a multiplier of 18, increasing the compensation amount and the rate of interest.