Normally Courts & Tribunals Have To Apply Multiplier As Per Ruling In Sarla Verma Case; Any Deviation From The Same Warrants Special Reasons: SC

The appeal before the Apex Court was filed against the impugned order of the Madhya Pradesh High Court in a motor accident case. The Tribunal awarded compensation of ₹28,66,994. However, the High Court reduced the compensation to ₹19,66,833 observing that the deceased was to remain in service only for another 2 years and thereafter would have retired. A split method for the calculation of dependency was applied.

The Division Bench comprising Justice J.K. Maheshwari and Justice Rajesh Bindal said, “In the case in hand, neither any special reason has been recorded by the High Court while applying the split method nor we find there is one in the facts of the case.”

Advocate Dinesh Kr Tiwary represented the Appellant while AOR Sumit Sinha represented the Respondent.

Factual Background

In the year 2014, Laxman Das Mahour (deceased) was travelling with his son Jugal Kishore, on a bus. After getting off the bus, he was walking on the road when the offending bus dashed against him. Tragically, Laxman Das succumbed to his injuries at the scene of the accident. The appellants are the family of the deceased, who filed the claim petition seeking compensation. Before the Tribunal, the owner and the driver of the offending bus did not appear despite service, hence, were proceeded against ex-parte.

The Respondent/Insurance Company challenged the claim of the appellants by denying the negligence of the bus driver and disputing the income earned by the deceased.

Reasoning

The Bench noted that the deceased who was knocked down by the offending bus died on the spot. He was 57-58 years of age and was employed as a phone mechanic with Bharat Sanchar Nagar Limited (BSNL). He was survived by his widow and four children. Two of his sons were held not to be legally entitled to claim compensation as they were not financially dependent on the deceased. “The present appellants, namely the widow, a dependent son and a daughter of the deceased, are the rightful claimants for compensation”, the Bench said.

The income as proved on record was ₹39,500 per month (Rs 4,74,000 per annum), which after the deduction of income tax was Rs 4,57,000 per annum. The High Court applied a split method. It was opined that after the death of the deceased in the accident he would have drawn a salary of ₹39,500/- for 22 months. Thereafter, an increment was due to him, by adding the same for another 7 months before retirement, he would have drawn a salary of ₹42,500/- per month. Thereafter, the deceased would have been entitled to a pension of ₹21,250/-. The compensation was assessed in terms thereof.

Noting that the High Court made a substantial reduction in compensation on account of the application of a 'split multiplier' to the income of the deceased, the Bench held that the High Court erred in not considering the principles laid down in the cases of Sarla Verma v. DTC (2009) and Sumathi v. M/s. National Insurance Company Lt (2021).The Bench explained that in Sarla Verma’s case (supra), it was held that while calculating the compensation, the multiplier to be used should start 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.

“From the above, it is clear that normally Courts and Tribunals have to apply the multiplier as per the judgement of this Court in Sarla Verma (supra). Any deviation from the same warrants special reasons to be recorded”, the Bench said after finding that no reason was given by the High Court.

It was noticed that the deceased was a technically qualified person and people are generally healthy at that age and continue working even after retirement. Considering such circumstances, the Bench affirmed that the compensation on account of loss of income while applying the multiplier of 9 by the Tribunal without applying the split method was the correct calculation on that account. Moreover, the Tribunal as well as the High Court had failed to award future prospects while calculating the compensation. Considering the age of the deceased, the appellant was held to be entitled to future prospects @ 15%.

“As far as loss of consortium is concerned, there are three claimants, namely, the widow, one son and one daughter. They would be entitled to compensation on account of loss of consortium @ ₹40,000/- each. The Tribunal had erred in awarding only a sum of ₹1,00,000/- in total”, it said. Thus, allowing the appeal, the Bench set aside the impugned award of the High Court and held the appellants entitled to a total compensation of ₹33,03,000 (rounded off). “They shall be entitled to payment of interest at the same rate as was awarded by the Tribunal”, it concluded.

Cause Title: Maya Singh and Others v. The Oriental Insurance Co. Ltd. And Others (Neutral Citation: 2025 INSC 161)

Appearance:

Appellant: Advocates Dinesh Kr Tiwary, AOR Santosh Kumar Tripathi, Advocates Chandan Kr, Anita Pandey, Rakesh Ranjan, Jaya Kumari

Respondent: AOR Sumit Sinha, Advocate Anjali Rajput, AOR Somanatha Padhan, Advocates Sujata Kumari Muni, Akash Kakade

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