Supreme Court on February 10, 2022, in the case of R Valli & Ors. v. Tamil Nadu State Transport Corporation (CA No. 1269 of 2022) upheld its findings in Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC 121 and National Insurance Company Limited v. Pranay Sethi & Ors, (2017) 16 SCC 680 while hearing a case on an erroneous application of the income multiplier by Madras High Court to compensate the aggrieved party.
The deceased while riding a two-wheeler had been involved in an accident by a bus belonging to the Tamil Nadu State Transport Corporation. The Motor Accident Claim Tribunal, Chennai held that the accident occurred due the rash driving by the bus driver and awarded a compensation of Rs.13,82,628. The Madras High Court affirmed the findings of the Tribunal and enhanced the compensation under the conventional heads to the sum of Rs.15,12,628. The appellants argued that the multiplier methodology applied by the tribunal and affirmed by the High Court is erroneous and is not in line with the judgement of the Supreme Court in Sarla Verma.
Multiplier Methodology in Sarla Verma v. Delhi Transport Corporation and the Subsequent Judgements
The Tribunal in this case had assessed the income of the deceased to be Rs. 23,062. Further, it was observed that the ‘age of superannuation’ was 58 years. Therefore, the dependency was only for 3 years as the deceased died at the age of 54 years. Thereafter, the tribunal assessed that the life dependency of the deceased was of 10 years, subsequently, applied the multiplier of 8. Appellants argued that the multiplier applied by the Tribunal and the High Court by considering the remaining years of service of the deceased was not sustainable, on the basis of the Supreme Court’s judgement in Sarla Verma. Here, the court held that the age of the deceased at the time of death is the base for choosing a multiplier and not the years left in employment.
In Pranay Sethi, this Court held that the age of the deceased is the basis for applying suitable multiplier and that the compensation is to be determined keeping in view the future prospects. The future prospects were held to 15% in respect of a deceased between the age of 50 to 60 years.
“44. At this stage, we must immediately say that insofar as the aforesaid multiplicand/multiplier is concerned, it has to be accepted on the basis of income established by the legal representatives of the deceased. Future prospects are to be added to the sum on the percentage basis and “income” means actual income less the tax paid. The multiplier has already been fixed in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] which has been approved in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] with which we concur.
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59.3. While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. 59.4. 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. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
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59.7 The age of the deceased should be the basis for applying the multiplier.”
The judgments referred to by Mr. Tiwari are prior to the enunciation of law by this Court in Pranay Sethi. Therefore, such judgments no longer can be said to be good law as suitable multiplier is to be applied keeping in view the age of the deceased in terms of para 59.7 of the judgment in Pranay Sethi. A three-Judge Bench in an order reported as United India Insurance Co. Ltd. v. Satinder Kaur alia Satwinder Kaur & Ors.8 has applied the multiplier keeping in view the age of the deceased even if he was a bachelor
It was argued that if a person who dies in an accident is 31 years of age and has 27 years of service left, the
multiplier is not 28 years but keeping in view the judgment of this Court in Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr., the age of the deceased at the time of death is the base for choosing a multiplier and not the years left in employment.
The Supreme Court in Sarla Verma had laid down parameters for the multiplier to be applied in such a case and held that
“42. We, therefore, hold that the multiplier to be used should be as mentioned in Column (4) of the table above…, which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years.”
This was further reaffirmed in the case of Reshma Kumari & Ors. v. Madan Mohan & Anr (2013) 9 SCC 65 and in National Insurance Company Limited v. Pranay Sethi & Ors; (2017) 16 SCC 680. The Apex Court in Pranay Sethi not only reaffirmed the Sarla Verma judgement but also added that future prospects must also be kept in mind while determining the compensation and created age brackets for the same starting at 50% of actual salary in case the deceased had a permanent job and was of less than 40 years; 30% for people between ages of 40 to 50 and 15% for people at the ages of 50 to 60. The Apex Court held that the Tribunal and the High Court applied split multiplier which goes beyond the criteria established by the court in Pranay Sethi and Sarla Verma case, subsequently, granted the compensation of Rs. 24,33,064 to the appellants.
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