Holding

For a 43‑year‑old deceased, the appropriate multiplier is 10 and the compensation should be Rs 2,00,000 with interest at 6% per annum.

Summary

A 43‑year‑old hawker died when his scooter was hit by a bus owned by Uttaranchal Transport Corporation Ltd. The claimants filed a claim under the Motor Vehicles Act, 1988. The Motor Accident Claims Tribunal awarded Rs 1,64,500 with 9% interest. The Uttaranchal High Court enhanced the award to Rs 3,60,000 by assuming a notional annual income of Rs 36,000 and applying a multiplier of 15, also at 9% interest. The Supreme Court held that the High Court’s multiplier was excessive, that there was no basis for the assumed income, and that for a 43‑year‑old deceased the appropriate multiplier is 10 with interest at 6% per annum. Consequently, the compensation was fixed at Rs 2,00,000 with 6% interest, and the appeal was allowed.

Issues considered

Whether the multiplier of 15 applied by the High Court is appropriate for a 43‑year‑old deceased under the Motor Vehicles Act, 1988.
Whether the notional annual income of Rs 36,000 per annum assumed by the High Court is justified.
What rate of interest should be applied to the compensation awarded in a fatal accident claim.

Legislation cited

Motor Vehicles Act, 1988s. 173

Subjects

Motor Vehicles Actfatal accident compensationmultiplier methodnotional incomeinterest ratedependency lossSupreme Court of Indiaaccident claim

Judgment

[2009] 2 S.C.R. 512

A UTTARANCHAL TRANSPORT CORPORATION LTD.
~-
V.
SMT. VIMLA DEVI AND ORS.
Civil Appeal No.1068 of 2009
FEBRUARY 16, 2009
B
[DR. ARIJIT PASAYAT AND ASOK KUMAR GANGULY,
JJ.]
J-
Motor Vehicles Act, 1988 : 'k

c s. 173 - Fatal accident - Deceased was a 43 year old
hawker - Claimant not satisfied with compensation awarded
by Tribunal - Filed appeal seeking enhancement of
compensation - High Court took the notional income of
deceased at Rs.36,0001- p.a and adopting a multiplier of 15
D awarded Rs. 3. 6 lacs as compensation with interest@ 9% p.a.
<
from the date of the claim - Held: Considering the age of the
>--
deceased, the multiplier adopted by High Court was on the
higher side - On facts, multiplier of 10 is appropriate - Also,
no basis was indicated by the High Court for its presumptuous
E conclusion that the deceased earned Rs. 36, 0001- p. a - Taking
an overall view of the matter including the type of business of '

the deceased, compensation fixed at Rs.2 laks payable with
interest @ 6% from the date of claim. ~

Pursuant to death of a 43 year old hawker in an ~

F accident, a claim petition was filed under the Motor
Vehicles Act, 1988. The Claims Tribunal awarded
compensation of Rs.1.65 lacs alongwith interest @ 9%
p.a. from the date of the claim. The claimants filed appeal
seeking higher compensation. The High Court took the
G notional income of the deceased at Rs.36,0001- p.a and
adopting a multiplier of 15 enhanced the compensation _l
~
to Rs.3.6 lacs with interest @ 9% p.a. from the date of the
claim. Hence the present appeal.

H 512
UTTARANCHAL TRANSPORT CORPORATION LTD. V. 513
SMT. VIMLA DEVI AND ORS.

Disposing of the appeal, the Court A
HELD: The 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 B
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 c
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. 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 o
the lowest would be in respect of a person in the age group
of 60 to 70, which is the normal retirement age. In the
present case, considering the age of the deceased, the
multiplier adopted by the High Court appears to be on
higher side. Keeping in view the parameters indicated, it E
would be appropriate to fix the multiplier at 10 and the
rate of interest @6% p.a. No basis has been indicated by
}' the High Court for its presumptuous conclusion that the
deceased could have earned Rs.36,000/- p.a. Taking the
overall view of the matter including type of business of
the deceased, the compensation is fixed at Rs.2,00,000/- F
payable with interest @ 6% from the date of claim. [Paras
8, 13, 14, 15, 16] [ 515-H; 519-A, 8, C, D, E]
General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. G
1994 (2) SCC 176 and U.P. State Road Transport
Corporation And Others v. Trilok Chandra and Ors. 1996 (4)
sec 362 - referred to.
Davies v. Powell Duffregn Associated Collieries Ltd. 1942
AC 601; Nance v. British Columbia Electric Railway Co. Ltd. H
514 SUPREME COURT REPORTS [2009] 2 S.C.R.

A 1951 (2) All ER 448 and Mallett v. Mc Mangle 1969 (2) All ER _. -
.178 - referred to.
Ha_!sbury's Laws of England, Vol.34, Para 98 - referred
to.

B Case Law Reference
1942 AC 601 referred to Para 7
1951 (2) All ER 448 referred to Para 7 'r

1969 (2) All ER 178 referred to Para 9
·-
c
1994 (2) sec 116 referred to Para 12
1996 (4) sec 362 referred to Para 12
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1068
D of 2009
.,.,
From the final Judgement and Order dated 12.12.2006 of ...
the High Court of Uttaranchal at Nainital in A.O. No. 214of2004.
Pradeep Misra, Suraj Singh, for the Appellant.
E The Judgement of the Court was delivered by
DR. ARIJIT PASAYAT, J.
1. Leave granted. 'I

~
2. Challenge in this appeal is to the judgment of a learned
F 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 1st Additional District Judge-
G cum-Motor Accident Claims Tribunal, Haridwar. (In short the
'MACT'). The MACT had awarded compensation of ~-~
Rs.1,64,500/- alongwith interest @ 9% p.a. from the date of
claim.
3. The claim petition was filed inter-alia stating that on
H
UTTARANCHAL TRANSPORT CORPORATION LTD. V. 515
SMT. VIMLA DEVI AND ORS. [DR. ARIJIT PASAYAT J.}
,- ~
2.9.2003 one Soorveer Singh (hereinafter referred to as the A
'deceased') was driving 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 hawker and earning Rs.5,000/- p.m. The Corporation B
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 claimant. The MACT held that there was no material to
establish the income as claimed and accordingly a sum was c
fixed at Rs.15,000/-p.a. which is the notional income.

4. The High Court held that the notional income has to be
taken at Rs.30,000/- p.a. and since the deceased was a Hawker
he could have easily earned Rs.3,000/- p.m. and accordingly
after making 1/3rd deduction for personal expenses the loss of D
""' ~.
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.
5. In support of the appeal, learned counsel for the appellant
submitted that there was no basis indicated for taking the income E
at Rs.36,000/- p.a .. On surmises the High Court came to the
J conclusion that the claim could have earned at Rs.36,000/- p.a.
-t / There was no basis for coming to such a conclusion. It was also
submitted that the multiplier adopted is high.
F
6. There is no appearance on behalf of the respondents in
spite of service of notice.

7. There 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 G
~ Associated Collieries Ltd. (1942 AC 601) and the second in
Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2)
All ER 448).

8. The multiplier method involves the ascertainment of the ""-
H
516 SUPREME COURT REPORTS [2009] 2 S.C.R.

A loss bf 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
B 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.
" i..,

c 9. The considerations generally relevant in the selection
of multiplicand and multiplier were adverted to by lord Diplock
in his speech in Mallett v. Mc Mong le (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
D selection of multiplicand Lord Diplock observed:
~ "'"
"The starting point in any estimate of the amount of the
'dependency' is the annual value of the material benefits
provided for the dependants out of the earnings of the
~eceased at the date of his death. But. ... there are rnany
E 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 ()t he ·
-\.-
might have had spells of unemployment. As his children
F 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 tbere are two factors to be borne in mind.
G 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 allowan~e
to be made for it in the assessment. The second is that as
a matter of the arithmetic of the calculation of present
H value, the later the change takes place the less will be its
UTTARANCHAL TRANSPORT CORPORATION LTD. V. 517
SMT. VIMLA DEVI AND ORS. [DR ARIJIT PASAYAT J.]

~·+-
effect upon the total award of damages. Thus at interest A
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 B
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 c
---' 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 the damages."
D
~
;.• 10. In regard to the choice of the multiplicand, Halsbury's
Laws of England in vol. 34, para 98 states the principle thus:
"98. Assessment of damages under the Fatal Accident
Act, 1976 - The courts have evolved a method for
calculating the amount of pecuniary benefit that dependants E
could reasonably expect to have received from the
deceased in the future. First the annual value to the
J
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 F
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
G
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
H
518 SUPREME COURT REPORTS [2009] 2 S.C.R.

A of years which have based on the number of years th.at the j,. ...
expectancy would probably have lasted; central to that
calculation is the probable length of the deceased's
working life at the date of death."
-
11. As to the multiplier, Halsbury states:
B
"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 1'
sum award in respect of future loss must be discounted to
c 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 will be exhausted at the age
D ..,
which the court assesses to be the correct age, having
·~
regard to all contingencies. 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
E 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
F 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
total figure."
12. In both General Manager, Kerala State Road Transgort
G
Corgoration, Trivandrum v. Susamma Thomas (Mrs.) and Ors.
(1994 (2) SCC 176) and U.P. State Road Transgort CorQoration ~..-4
And Othersv. Trilok Chandra arid Ors. (1996 (4) SCC 362) the
multiplier appears to have been adopted by this Court taking
note of the prevalent banking rate of interest.
H
UTTARANCHAL TRANSPORT CORPORATION LTD. V. 519
SMT. VIMLA DEVI AND ORS. [DR. ARIJIT PASAYAT J.]

,. ,., 13. In fact in Trilok Chand's case (supra), after reference A
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
I
~
reckoner. However, the appropriate highest multiplier was held
to be 18. The highest multiplier has to be for the age group of B
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
retirement age.
14. Considering the age of the deceased the multiplier as c
adopted appears to be on higher side.
15. Keeping 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
D
·~ the aforesaid basis.
1
16. No basis has been indicated by the High Court for its
presumptuous conclusion that the deceased could have earned
Rs.36,000/- p.a. Taking the overall view of the matter including
type of business of the deceased, we fix the compensation at E
Rs.2,00,000/- payable with interest@6% from the date of claim.
17. It is stated by learned counsel for the appellant that a
)'
sum of Rs.2,50,000/- has been deposited in terms of the order
·f of this Court dated 10.8.2007. The balance amount shall be
deposited in the concerned MACT within a period of 8 weeks. F
The withdrawal of the amount in the fixed deposit shall be fixed
by the MACT taking into account the relevant aspects.
18. The appeal is allowed to the aforesaid extent with no
order as to costs.
G
........
-t
B.B.B. Appeal disposed of.