Split Multiplier Concept Is Foreign To Motor Vehicles Act; Not To Be Used By Tribunal Or Courts In Calculation Of Compensation: Supreme Court
The appeals before the Supreme Court were directed against the judgment of the Kerala High Court against the order passed by the Motor Accidents Claims Tribunal.
Justice Sanjay Karol, Justice Prashant Kumar Mishra, Supreme Court
While awarding enhanced compensation to the wife and children of a man who died in a motor accident, the Supreme Court has held that the split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used by the Tribunal and/or Courts in the calculation of the compensation.
The appeals before the Apex Court were directed against the judgment of the Kerala High Court against the order passed by the Motor Accidents Claims Tribunal.
The Division Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra asserted,“As such, when dealing with a beneficial legislation which relies on just compensation as its bedrock, it is most prudent to tread the path of certainty, insofar as practicable. This is more so important in the context of age which is the primary basis for computation of compensation. In other words, split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used by the Tribunal and/or Courts in calculation of the compensation.”
AOR Bijo Mathew Joy represented the Appellant, while Advocate Pradeep Gaur represented the Respondent.
Factual Background
The incident dates back to the year 2012, when the deceased, aged 51 years, was driving his car and a bus driven in a rash and negligent manner collided with the car of the deceased. As a result of the incident, the deceased sustained severe injuries and died on his way to the hospital. A claim petition was filed on behalf of the claimant-appellants (the wife and children of the deceased) under Section 166 of the Motor Vehicles Act, 1988, before the Tribunal, seeking compensation to the tune of Rs 60 lakh, stating that the deceased used to earn Rs 47,860 per month, working as an Assistant Engineer in the Public Works Department.The Tribunal awarded an amount of Rs 44,04,912.
Aggrieved by the compensation awarded by the Tribunal, the insurer, as well as the claimant-appellants, approached the High Court. The High Court partly allowed the appeals and reduced the compensation under the head of loss of dependency from Rs 42,29,712 to Rs 35,10,144, by applying a split multiplier considering the post-retirement reduction in the income of the deceased. The High Court directed the Tribunal to disburse the amount to claimant-appellants in the ratio of 70:10:10:10. The claimant-appellants’ applications for review were rejected, stating that if reasons were recorded, a split multiplier would be possible. Dissatisfied with the judgment of the High Court, the appellants approached the Apex Court.
Arguments
The main grievance of the claimant-appellants was the application of the split multiplier by the High Court, causing a significant reduction in the total compensation, as awarded by the Tribunal, vis-à-vis, the High Court.
Reasoning
Highlighting that there was diverging opinion on the application of the split multiplier, the Bench noted that certain High Courts had differences intra-court, and there also existed inter-court differences. The Bench explained that superannuation from service hardly qualifies as an exceptional circumstance, which would justify the use of a split multiplier. “It is only a natural progression that a person who enters service must also exit at some point in time. The same cannot be taken as a negative circumstance against the deceased person or a person injured severely, leading to incapacitation or permanent disability”, it added.
The Bench made it clear that the split multiplier is not to be used by the Tribunal and/or Courts in the calculation of the compensation.
The Bench held that the income as on the date of death was to be taken to calculate the compensation. It was further noticed that the High Court failed to comply with the directives issued in National Insurance Co. Ltd. v. Pranay Sethi (2017) i.e., granting 10% enhancement, every three years under the conventional heads. Thus, allowing the appeal, the Bench granted a compensation of Rs 47,76,794.
Cause Title: Preetha Krishnan v. The United India Insurance Co. Ltd. (Neutral Citation: 2025 INSC 1293)
Appearance
Appellant: AOR Bijo Mathew Joy, Advocate Gifty Marium Joseph
Respondent: Advocates Pradeep Gaur, Amit Gaur, Sweta Sinha, AOR Rameshwar Prasad Goyal