Holding

The appropriate multiplier is 10 and the rate of interest is 6% per annum, resulting in compensation of Rs 2,40,000 (approximately Rs 2,40,900) with 6% interest.

Summary

The appellant, Uttarnachal Transport Corporation Ltd., was involved in a fatal road accident where a contractor, Bijendra Singh, aged 43, riding a scooter was killed. Under Section 173 of the Motor Vehicles Act, 1988, the claim for enhancement of compensation was filed. The Motor Accident Claims Tribunal awarded Rs 1,84,500 with 9% interest; the High Court increased the notional income to Rs 36,000 per annum and applied a multiplier of 15, fixing compensation at Rs 3,60,000 with 9% interest. The Supreme Court held that the High Court had no basis for the higher notional income and multiplier, and, considering the deceased’s age, fixed the multiplier at 10 and the interest rate at 6% p.a., awarding Rs 2,40,000 (approximately Rs 2,40,900) with 6% interest. The appeal was partially allowed, directing the MACT to work out the entitlement on this basis.

Issues considered

Whether the High Court erred in fixing the notional income at Rs 36,000 per annum for the deceased.
Whether a multiplier of 15 is appropriate for a 43‑year‑old deceased under Section 173 of the Motor Vehicles Act.
What rate of interest should be applied to the enhanced compensation.

Legislation cited

Motor Vehicles Act, 1988s. 173

Subjects

Motor Vehicles ActSection 173fatal accident compensationmultiplier methodnotional incomeinterest ratedependency lossenhancement of compensation

Judgment

[2009] 2 S.C.R. 504

A UTTARNACHAL TRANSPORT CORPORATION LTD. ';

. v.
SMT. VIMLA DEVI AND ORS.
Civil Appeal No. 1069 of 2009
' t'

FEBRUARY 16, 2009
B
[DR. ARIJIT PASAYAT AN.O ASOK KUMAR GANGULY,
JJ.]
Motor Vehicles Act, 1988 : •..
c s. 173 - Enhancement of compensation - Appropriate
multiplier - Determination of - Fatal acpident of contractor
aged 43 years - Compensation of Rs, 1,84,500 by tribunal -
High Court taking notional income as Rs. 36, 0001- and "'
adopting multiplier of 15 enhanced compensation to Rs.
3, 60, 0001- - On appeal, held: In view of the parameters,
D ,..
multiplier fixed at 10 - Rs. 2, 40, 0001- awarded as
).-
compensation with 6% interest from date of claim.
BS-contractor, aged 43 years met with a fatal
accident while riding a scooter when bus of the appellant-
E Corporation dashed against it. MACT fixed Rs. 15,000/-
p.a. as notional income of deceased and awarded
· compensation of Rs. 1,84,500/- with 9% p.a. from the date
of claim. High Court fixed notional income as Rs. 36,000/
- p.a. It adopted multiplier of 15 and awarded Rs. 3,60,000/ ....
F - with 9% interest from the date of claim. Hence, the
present appeal.
Partly allowing the appeal, the Court
·HELD: 1.1 The multiplier method involves the
G,
ascertainment of the loss of dependency or the multi- .
plicand having regard to the circumstances of the case
,~
and capitalizing the multiplicand by an appropriate '
multiplier. The choice of the multiplier is determine.d by the '
'
age of the deceased (or that of the claimants whichever is
\-
H 504
UTTARNACHAL TRANSPORT CORPORATION LTD. V. 505
SMT. VIMLA DEVI AND ORS.

higher) and by the calculation as to what capital sum, if A
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 B
is expected to last. [Para 8] [507-F, G]
1.2 Considering the age of the deceased the multiplier
as adopted appears to be on higher side. Keeping in view
the parameters, it would be appropriate to fix the multiplier
at 10 and the rate of interest @ 6% p.a. No basis has been C
indicated by the High Court for its presumptuous
conclusion that the deceased could· have earned
Rs.36,000/- p.a. Taking an overall view of the matter and
the multiplier to be adopted, the quantum of Rs.2,40,900/
- with 6% interest is fixed from the date of claim. [Paras o
14, 15 and 16) [ 510-H; 511-A, B]
General Manager, Kera/a State Road Transport
Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.
i994 (2) SCC 176; U.P State Road Transport Corporation and
Ors. v. Trilok Chandra and Ors. 1996 (4) SCC 362 - referred E
to. I

Davies v. Powell Duffregn Associated Collieries Ltd. 1942
AC 601; Nance v. British Columbia Electric Railway Co. Ltd.
1951 (2) All ER 448; Mallett v. Mc Mangle 1969 (2) All ER 178
-refurr~~. F
Halsbury's Laws of England vol. 34, para 98 - referred to.
Case Law Reference_
1942 AC 601 Referred to. Para 7
G
1951 (2) All ER 448 Referred to. Para 7
1969 (2) All ER 178 Referred to. Para 9
1994 (2) sec 11s Referred to. Para 12
1996 (4) sec 362 Referred to. Para 12 H
506 SUPREME COURT REPORTS [2009] 2 S.C.R.

A CIVILAPPELLATE.JURISDICTION: CivilAppeal No. 1069
~
of 2009
From the Judgement and Order dated 29.11.2006 of the
High Court of Uttaranchal at Nainital in A.O. No. 213 of 2004.

B Pradeep Misra, for the Appellant.
The Judgement of the Court was delivered by,
DR. -ARIJIT PASAYAT, J. t-

1. Leave granted.
c
2. Challenge in this appeal is to the judgment of a learned
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
D ...
compensation as fixed by learned 1st Additional District Judge- )r
cum-Motor Accident Claims Tribunal, Haridwar. (In short the
'MACT'). The MACT had awarded compensation of
Rs.1,84,500/- alongwith interest @ 9% p.a. from the date of
claim.
E
3. The claim petition was filed inter-alia stating that on
2.9.2003 one Bijendra Singh (hereinafter referred to as the
'deceased') was riding a scooter. Suddenly, the bus owned by \

the present appellant-Corporation dashed against it. The vehicle Ir'

F 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 contractor and e?rning Rs.12,000/- p.r;n. The
Corporation took the stand that there was actually no rash and
.negligent act of the driver. When the scooter was trying to
G overtake the truck it lost control and the accident occurred due
to negligence of the deceased. The MACT held that there was }.-·
no material to establish the income as claimed and accordingly
a sum-Was fixed at Rs.15,000/-p.a. ~hie~ is the notional income.
4. The High Court held that the notional income has to be
H.., taken af Rs.30,000/- p.a. and since the deceased was a
UTTARNACHAL TRANSPORT CORPORATION LTD. V. 507
SMT. VIMLA DEVI AND ORS. [DR. ARIJIT PASAYAT J.]

contractor he could have easily earned Rs.3,000/- p.m. and A
accordingly after making 1/3rd deduction for personal expenses
the loss of 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. B
5, In support of the appeal, learned counsel forthe appellant
:J
submitted that there was no basis indicated for taking the income
at Rs.36,000/- p.a .. On surmises the High Court came to the
,;, -conclusion that jhe deceased could have earned Rs.36,000/-
p.a. There was no basis for coming to such a conclusion. It was c
also submitted that the multiplier adopted is high.
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 D
~ calculation of compensation in fatal accident actions. The first
multiplier method mentioned in Davies v. Powell Duffregn
Associated Collieries Ltd. (1942 AC 601) and the second in
Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2)
All ER 448). E
8. 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
-f
an appropriate multiplier. The choice of the multiplier is
detefmined by the age of the deceased (or that of the claimants F
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 be had to the fact that
ultimately the capital sum should also be consumed-up over the G
t- ~ period for which the dependency is expected to last.
9. The considerations generally relevant in the selection
of multiplicand and multiplier were adverted to by Lord Oiplock
in his speech in Mallett v. Mc Mong le (1969 (2) All ER 178) where
H
508 SUPREME COURT REPORTS [2009] 2 S.C.R.

A the deceased was aged 2s·and left behind his widow of about
the same age and, three minor children. On the question of
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
B provided for the dependants out of the earnings of the
deceased at the date of his death. But.. .. there are many
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
""
c might have diminished with a recession in trade or he
might have had spells of unemployment. As his children -!
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
D award of damages to possible variations in the ,..
dependency there are two factors to be borne in mind. )w:

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 ~nd the smaller the allowance
E to be madefor it in the assessment. The second is that as
a matter of the arithmetic of the calculation of present
value, the later the change takes place the less will be its
effect upon the total award of damages. Thus at interest ·~

rates of 4- 112% the pres~nt value of an annuity for 20 :y

F 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 $200
per annum and the second ten years at$ 100 per annum
the present value is about 14 years' purchase of the
G
arithmetical mean of $ 150 per annum. If therefore the
-t
chances of variations in the 'dependency' are to be )-

reflected in the multiplicand of which the years' purchase
is the multiplier, variations in the dependency which are
not expected to take place until after ten years should
H
UTTARNACHAL TRANSPORT CORPORATION LTD. V. 509
SMT. VIMLA DEVI AND ORS. [DR ARIJIT PASAYAT J.]

have only a relatively small effect in increasing or A
diminishing the 'dependency' used for the purpose of
assessing the damages."
10. In regard to the choice of the multiplicand, Halsbury's
Laws of England in vol. 34, para 98 states the principle thus:
8
"98. Assessment of damages under the Fatal Accident
Act, 1976 - The courts have evolved a method for
cf

. calculating the amount of pecuniary benefit that dependants
could reasonably expect to have received from the
deceased in the future. First the annual value to the c
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
the estimated amount of his own personal and living
expenses.
D
"' The assessment is split into two parts. The first part
"" comprises damages for the period between death and
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 E
on that multiplicand. The second part is damages for the
period from the trial onwards. For that period, the number
7
of years which have based on the number of years that the
. expectancy would probably have lasted; central to that
calculation is the probable length of the deceased's F
working life at the date of death."
11. As to the multiplier, Halsbury states:
"However, the multiplier is a figure considerably less than
the number of years taken as the duration of the expectancy.
G
t... Since the dependants can invest their damages, the lump
~
sum award in respect of future loss must be discounted to
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
H
·,,

510 SUPREME COURT REPORTS [2009] 2 S.C.R.

A 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 exhawsted at the age
which the' court assesses to be the correct age, having
regard to all contingencies. The contingencies of life such
B 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
,_
depends on selecting an assumed rate of interest. In
\...
practice about 4 or 5 per cent is selected, and inflation· is
c 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
made. The multiplier may be increased where the plaintiff
is a high tax payer. The multiplicand is based on the rate
o of wages at the date of trial. No interest is allowed on the
total figure."
}K

· 12. In both General Manager, Kerala State Road Transgort
Corgoration, Trivandrum v. Susamma Thomas {Mrs.} and Ors:
( 1994 (2) SCC 176) and U. P. State Road Trans12ort Corgoration
E . And Others v. Trilok Chandra and Ors. (1996 (4) SCC 362) the
multiplier appears to have been adopted by this Court taking
note of the prevalent banking rate of interest.
13. In fact in Trilok Chand's case (supra), after referen9e
~
to Second Schedule to the Act, it was noticed that the same
F 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
reckoner. Hpwever, the appropriate highest multiplier was held
to be 18. The highest multiplier has to be for the age group of
21 years to 25 years when an ordinary Indian Citizen starts
G 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
adopted appears to be on higher side.
H
UTTARNACHAL TRANSPORT CORPORATION LTD. V. 511
SMT. VIMLA DEVI AND ORS. [DR. ARIJIT PASAYAT J.]
_ .,,._
15. Keeping in view the parameters indicated above it A
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
the aforesaid basis.
16. No basis has been indicated by the High Court for its
presumptuous conclusion that the deceased could have earned B
Rs.36,000/- p.a. Taking an overall view of the matter and the
-j multiplier to be adopted, as noted above, we fix the quantum of
... Rs.2,40,000/- with 6% interest from the date of claim .

17. It is stated by learned counsel for the appellant that a c
sum of Rs.2,50,000/- has been deposited in terms of the order
of this Court dated 20.7.2007. The balance amount shall be
deposited in the concerned MACT within a period of 8 weeks.
The withdrawal of the amount in the fixed deposit shall be fixed
by the MACT taking into account the relevant aspects.
..,.. D
.I, 18. The appeal is allowed to the aforesaid extent with no
order as to costs.

N.J. Appeal party allowed.