Supreme Court Enhances Compensation in Motor Accident Case by Applying Correct Multiplier: Nagar Mal vs. Oriental Insurance (2018)

Date of the Judgment: 19 January 2018

Citation: (2018) INSC 19

Judges: Dipak Misra, CJI, A.M. Khanwilkar, J, Dr. D.Y. Chandrachud, J.

Can the age of the deceased or the age of the parents be the basis for the multiplier in motor accident compensation cases? The Supreme Court of India recently addressed this question while hearing an appeal regarding compensation awarded by the Motor Accident Claims Tribunal (MACT). The Court clarified that the multiplier should be based on the age of the deceased and also addressed the issue of future prospects while computing the income of the deceased.

Case Background

On November 15, 2008, at approximately 9 p.m., Sonu Kumar Goyal was riding his motorcycle from Mandi Neem Ka Thana to his home when a truck with Registration No. RJ-32-GA-0398 collided with his motorcycle. Sonu Kumar sustained fatal injuries and died at the scene. The third respondent was the registered owner of the truck, which was insured by the first respondent. The appellants, who are the family members of the deceased, filed a claim for compensation before the Motor Accident Claims Tribunal (MACT).

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal (MACT) determined that the accident occurred due to the negligence of the truck driver. The MACT held the insurer, owner, and driver jointly and severally liable for compensation. The appellants and the insurer both filed appeals before the High Court. The High Court upheld the Tribunal’s award. Subsequently, the appellants appealed to the Supreme Court.

Legal Framework

The case primarily revolves around the principles of compensation in motor accident cases. The key legal principles are:

• Multiplier Method: This method is used to calculate the loss of dependency by multiplying the annual loss of income by a suitable multiplier based on the age of the deceased or the family members.
• Future Prospects: The concept of adding a percentage to the income of the deceased to account for potential future earnings.

Arguments

Appellants’ Arguments:

• The appellants argued that the Tribunal and the High Court erred in not accepting the income certificates that showed the deceased had a monthly income of Rs 15,000. They contended that the deceased was earning Rs 15,000 per month and the Tribunal should have considered the income certificates.
• The appellants further argued that no addition was made for future prospects.
• The appellants submitted that the multiplier should have been based on the age of the deceased, not the age of the parents.
• They also argued that the interest rate awarded should have been 9% p.a. instead of 6% p.a.

Respondent’s (Insurer) Arguments:

• The insurer contended that the Tribunal and High Court correctly assessed the compensation.
• The insurer argued that the income certificates were not properly proven and the Tribunal’s assessment of income was correct.
• The insurer argued that there was no reason to interfere with the concurrent findings of the lower courts.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. Whether the Tribunal and High Court erred in not accepting the income certificates.
2. Whether the Tribunal erred in not granting the benefit of future prospects.
3. Whether the Tribunal erred in applying the multiplier based on the age of the parents instead of the age of the deceased.
4. Whether the interest rate awarded was correct.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court relied on National Insurance Company Limited v Pranay Sethi [CITATION] to determine that an addition of 40% towards future prospects was warranted. The Court also relied on Sarla Verma v Delhi Transport Corporation [CITATION] to determine that the correct multiplier should be based on the age of the deceased.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure just and fair compensation to the appellants. The Court emphasized the importance of applying the correct multiplier based on the age of the deceased and incorporating future prospects in the calculation of loss of dependency. The Court’s reasoning was heavily based on the precedents set by the Constitution Bench in National Insurance Company Limited v Pranay Sethi and Sarla Verma v Delhi Transport Corporation.

Fact:Law Ratio

The Court’s decision was more influenced by legal principles and precedents than by the factual aspects of the case.

Logical Reasoning

Judgment

The Supreme Court held that the Tribunal had erred in applying the multiplier based on the age of the parents of the deceased instead of the age of the deceased. The Court also held that the Tribunal had erred in not granting the benefit of future prospects. The Supreme Court relied on the Constitution Bench judgment in National Insurance Company Limited v Pranay Sethi and Sarla Verma v Delhi Transport Corporation.

The Court stated, “Having due regard to the judgment delivered by the Constitution Bench of this Court in National Insurance Company Limited v Pranay Sethi and in Sarla Verma v Delhi Transport Corporation the correct multiplier should be 17 having regard to the age of the deceased.”

The Court further stated, “An addition of 40 per cent towards future prospects would also be warranted in terms of the judgment of the Constitution Bench.”

The Court also stated, “The appellants are allowed interest @7.5% p.a. from the date of the filing of the petition before the M.A.C.T. till realization.”

The Court enhanced the compensation to Rs 8,86,800/-. The Court also allowed interest at 7.5% p.a. from the date of filing of the petition before the MACT till realization.

Key Takeaways

• The multiplier in motor accident compensation cases should be based on the age of the deceased, not the age of the parents.
• Future prospects should be considered while calculating the loss of dependency.
• The Supreme Court emphasized the importance of following precedents set by Constitution Benches.
• The Court enhanced the compensation to ensure a just and fair outcome.
• The interest rate was also modified to 7.5% p.a. from the date of filing the petition.

Directions

The Court directed that the enhanced compensation of Rs 8,86,800/- be paid to the appellants along with interest at 7.5% p.a. from the date of filing the petition before the MACT till realization.

Development of Law

The ratio decidendi of this case is that in motor accident compensation cases, the multiplier should be based on the age of the deceased, and future prospects should be considered while calculating the loss of dependency. This case reinforces the principles laid down in National Insurance Company Limited v Pranay Sethi and Sarla Verma v Delhi Transport Corporation, clarifying the correct approach for calculating compensation in such cases.

Conclusion

The Supreme Court allowed the appeal, modifying the compensation awarded by the Tribunal and High Court. The Court emphasized the importance of applying the correct multiplier based on the age of the deceased and including future prospects in the calculation of loss of dependency. The Supreme Court’s decision ensures a more just and equitable outcome for the appellants.