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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. __3482______OF 2009
[Arising out of Special Leave Petition (Civil) No. 2997 of 2007]
ORIENTAL INSURANCE CO. LTD. ...APPELLANT
DEO PATODI & ORS. ... RESPONDENTS
CIVIL APPEAL NO. _3492_______OF 2009
[Arising out of Special Leave Petition (Civil) No. 3807 of 2007]
DEO PATODI & ANR. ...APPELLANTS
DEVENDRA ARORA & ANR. ... RESPONDENTS
S.B. Sinha, J.
1. Leave granted.
2. What should be the appropriate multiplier as also the multiplicand in
a case where a student having a brilliant career and had an offer of
employment from a U.S. based Company is the question involved in these
They arise out of the following factual matrix.
Deepak Patodi was 22 years of age on 12.6.2003 when the accident
took place. He was the only son of the claimants. The accident took place
when he was going to Bhopal along with his friends in a Tata Indica Car. He
was immediately taken to "Chirayu Hospital" at Bhopal and thereafter
shifted to `Bhandari Hospital' in Indore. On 18.6.2003, he succumbed to
the head injury suffered by him in the said incident..
3. His parents filed an application under Section 166 of the Motor
Vehicles Act, 1988 (for short, "the Act") on or about 24.12.2003 inter alia
claiming a sum of Rs.75 lakhs as compensation on the premise that while he
was doing his Business Administration Course in U.K. he was also doing a
part-time job with World Bank on a monthly salary of Rs.80,000/- (UK #
1008.31) and he was offered an employment in the capacity of EU
Controller in GOA LLC, a company registered in USA at an annual
remuneration of Rs.18 lakhs per annum approx. ($41,600/-)
Indisputably, he did not accept the said offer. He intended to pursue
his higher studies in MBA at Central Queensland University in Australia.
4. The learned Tribunal opined that keeping in view his capability he
would have been employed on a monthly salary of Rs.18,000/- per month.
2/3rd was deducted from the said amount for working out the loss of
dependency of the claimants at 1/3 rd. The multiplier of 13 was applied
keeping in view the age of the claimants. An amount of Rs.9,36,000/- by
way of compensation was awarded by the Tribunal. A sum of Rs.2000/-
was also granted towards funeral expenses.
5. The claimants preferred an appeal thereagainst in the High Court
which was registered as M.A. No. 1842 of 2005. Enhancement in the
amount of compensation was claimed inter alia on the premise that the
dependency of the parents should have been taken into consideration at 2/3 rd
of the income of the deceased and furthermore the expenses incurred during
treatment should have also been awarded. The insurance company filed
cross objections in the said appeal in terms of Order XLI Rule 22 of the
Code of Civil Procedure on the ground that the income of the deceased
could not be taken at Rs.18,000/- per month in the absence of any cogent
evidence and that the claimants were not dependents on the deceased.
6. By reason of the impugned judgment, the High court while
maintaining the estimated income of the deceased at Rs.18,000/- per month
on a notional basis opined that the dependency of the claimants should have
been taken at 2/3rd of the income of the deceased. The High court also
noticed that although the Tribunal had found that claimants must have spent
a sum of Rs.2 lakhs towards treatment of the deceased, but no compensation
on that head was awarded by it. The High Court, thus, awarded a sum of
Rs.1,25,000/- towards the medical expenses. Applying the multiplier
of 13, the loss of dependency was calculated at Rs.18,72,000/-. A sum of
Rs.25,000/- was also granted towards the funeral expenses.
Both the insurance company as also the claimants are before us.
7. Mr. M.K. Dua, learned counsel appearing on behalf of the insurance
company would contend that the deceased being a bachelor and for all
intent and purport being a dependant on his parents and as he intended to
pursue his higher studies in Australia, the Tribunal had rightly calculated
the loss of dependency of parents at 1/3rd of his income and not 2/3rd.
8. Mr. Sushil Kumar Jain, learned counsel appearing on behalf of the
claimants, on the other hand, would contend that the learned Tribunal could
not have estimated the income of the deceased only at Rs.18,000/- per
month keeping in view the background as also the salary he had obtained
even as part-time employee as also the offer which he received from an U.S.
9. The question in regard to the calculation of loss of dependency, it is
trite, would vary from case to case.
The fact that the deceased was a brilliant student is not in dispute. He
had graduated in Business Administration in U.K. Even as a student, in a
job on a part-time basis he was being paid a salary of Rs.80,000/- per month
((UK # 1008.31). He paid his income-tax even in U.K.
After his graduation, he came back to India. He was offered a job as
EU Controller by GOA LLC, a company based in Chicago, USA at an
annual salary of Rs.18 lakhs (i.e. $ 41,600/-). However, when the accident
took place he was not working; having not accepted the said offer. He was
still a student. It would have been hazardous for the Tribunal to calculate
the amount of compensation towards the loss of dependency on that basis.
10. The Tribunal and the High Court, however, in our opinion, keeping in
view the aforementioned backdrop might not be correct in holding that he
would have earned only Rs.18,000/- per month. It is true that the cost of
living in the western countries would be higher. The standard of living in
the western countries cannot be followed; in the absence of any material
placed before this Court it should not be followed in India. Even in a case
where the victim of an accident was earning salary in U.S. Dollars, this
Court opined that a lower multiplier should be applied.
In United India Insurance Co. Ltd. & Ors. vs. Patricia Jean Mahajan
& Ors. [(2002) 6 SCC 281], this Court held:
"19. In the present case we find that the parents
of the deceased were 69/73 years. Two daughters
were aged 17 and 19 years. The main question,
which strikes us in this case is that in the given
circumstances the amount of multiplicand also
assumes relevance. The total amount of
dependency as found by the learned Single Judge
and also rightly upheld by the Division Bench
comes to 2,26,297 dollars. Applying multiplier of
10, the amount with interest and the conversion
rate of Rs 47, comes to Rs 10.38 crores and with
multiplier of 13 at the conversion rate of Rs.30 the
amount comes to Rs 16.12 crores with interest.
These amounts are huge indeed. Looking to the
Indian economy, fiscal and financial situation, the
amount is certainly a fabulous amount though in
the background of American conditions it may not
be so. Therefore, where there is so much of
disparity in the economic conditions and affluence
of the two places viz. the place to which the victim
belongs and the place where the compensation is
to be paid, a golden balance must be struck
somewhere, to arrive at a reasonable and fair
mesne. Looking by the Indian standards they may
not be much too overcompensated and similarly
not very much undercompensated as well, in the
background of the country where most of the
dependent beneficiaries reside. Two of the
dependants, namely, parents aged 69/73 years live
in India, but four of them are in the United States.
Shri Soli J. Sorabjee submitted that the amount of
multiplicand shall surely be relevant and in case it
is a high amount, a lower multiplier can
appropriately be applied. We find force in this
20. The court cannot be totally oblivious to the
realities. The Second Schedule while prescribing
the multiplier, had maximum income of Rs. 40,000
p.a. in mind, but it is considered to be a safe guide
for applying the prescribed multiplier in cases of
higher income also but in cases where the gap in
income is so wide as in the present case income is
2,26,297 dollars, in such a situation, it cannot be
said that some deviation in the multiplier would be
impermissible. Therefore, a deviation from
applying the multiplier as provided in the Second
Schedule may have to be made in this case. Apart
from factors indicated earlier the amount of
multiplicand also becomes a factor to be taken into
account which in this case comes to 2,26,297
dollars, that is to say an amount of around Rs. 68
lakhs per annum by converting it at the rate of Rs.
30. By Indian standards it is certainly a high
amount. Therefore, for the purposes of fair
compensation, a lesser multiplier can be applied to
a heavy amount of multiplicand."
The said decision, however, to some extent was clarified by this
Court in Punjab National Bank v. Indian Bank & Anr. [(2003) 6 SCC 79].
11. It is in the aforementioned situation, we are of the opinion that the
fair amount of compensation should have been calculated at Rs.25,000/- per
month being about 1/3rd of the amount which he was receiving in U.K.
12. The next question which arose for our consideration for the purpose
of loss of dependency is whether 1/3rd from the said amount should be
deducted or 2/3rd.
13. Mr. Dua relied on a decision of this Court in Donat Louis Machado &
Ors. v. L. Ravindra & Ors.  8 SCC 633] wherein it was opined:
"Consequently, the total amount would work out
at Rs. 7500 per month during the whole span of
future career and taking an average at 50%, his
future monthly income during the rest of the life
could have worked out at Rs. 3750. On that basis,
12 months' earning would have been Rs.45,000
and adopting a multiplier of 15 looking to the
young age of the deceased the total economical
gain to his estate would work out at Rs. 6,75,000
at least. But taking a conservative figure of Rs 6
lakhs it can easily be visualised that the claimants
who are the parents and unmarried sister and who
are dependent on him would have got at least 1/3
amount as he would have spent the rest of 2/3
amount of his earnings on his own family which
he would have raised and on himself. This would
come to a figure of Rs. 2 lakhs. This can easily be
treated to be the appropriate compensation payable
to the claimants on account of economical loss
suffered by them as a result of the unfortunate
accident to their breadwinner."
In Halkibai and Anr. vs. Managing Director, Rajasthan State Road
Trans. Corpn. and Anr.[2004 ACJ 481], the Division Bench of the High
Court of Madhya Pradesh (Gwalior Bench) held as under:
"As regards determining dependency of the
mother of the deceased is concerned, this question
has already been settled by the Apex Court in the
case of Donat Louis Machado, 1999 ACJ 1400
(SC). This judgment was considered by this court
in a recent decision in the case of Parathsingh v.
Sanjay Sharma, 2003 (1) TAC 103 (MP) and in
Rajesh v. Rajesh alias Pappu, M.A. No. 291 of
2003; decided on 18.8.2003 and ratio has been laid
down that in the case of parents of the deceased,
dependency will be 1/3rd of the income of the
deceased at the time of his death. The judgment of
Supreme Court is binding upon this court and
there is no reason to differ from the said judgment.
Therefore, we hold that the dependency of the
parents of the deceased shall be 1/3rd of income of
the deceased. This view has been taken by various
Division Benches and this being consistent view,
we do not wish to differ from it."
However, somewhat different view was taken by this Court in
Fakeerappa & Anr. vs. Karnataka Cement Pipe Factory & Ors. [(2004) 2
SCC 473], wherein it was held:
"6. Learned counsel for Respondent 2,
submitted that there cannot be any rigid formula as
to what would be the percentage or quantum of
deduction. The Tribunal and the High Court have
taken note of the relevant aspects to hold that 50%
deduction would be appropriate. There is no scope
for any interference with the percentage of
deduction as fixed. Further, before the High Court
there was no challenge to the rate of interest
awarded by the Tribunal. Therefore, for the first
time before this Court such a grievance cannot be
raised. It is also submitted that multiplier of 18 as
adopted is on the higher side.
xxx xxx xxx
8. It has to be noted that the ages of the parents
as disclosed in the claim petition were totally
unbelievable. If the deceased was aged about 27
years as found at the time of post-mortem and
about which there is no dispute, the father and
mother could not have been aged 38 years and 35
years respectively as claimed by them in the claim
petition. Be that as it may, taking into account
special features of the case we feel it would be
appropriate to restrict the deduction for personal
expenses to one-third of the monthly income.
Though the multiplier adopted appears to be
slightly on the higher side, the plea taken by the
insurer cannot be accepted as there was no
challenge by the insurer to the fixation of the
multiplier before the High Court and even in the
appeal filed by the appellants before the High
Court, the plea was not taken."
In Bijoy Kumar Dugar vs. Bidya Dhar Dutta & Ors. [(2006) 3 SCC
242] this court deducted 1/3rd from the earnings of the deceased inter alia
"...It is by now well settled that the compensation
should be the pecuniary loss to the dependants by
the death of a person concerned. While calculating
the compensation, annual dependency of the
dependants should be determined in terms of the
annual loss, according to them, due to the abrupt
termination of life. To determine the quantum of
compensation, the earnings of the deceased at the
time of the accident and the amount, which the
deceased was spending for the dependants, are the
basic determinative factors. The resultant figure
should then be multiplied by a "multiplier". The
multiplier is applied not for the entire span of life
of a person, but it is applied taking into
consideration the imponderables in life, immediate
availability of the amount to the dependants, the
expectancy of the period of dependency of the
claimants and so many other factors. Contribution
towards the expenses of the family, naturally is in
proportion to one's earning capacity. In the
present case, the earning of the deceased and
consequently the amount which he was spending
over the members of his family i.e. dependency is
to be worked out on the basis of the earnings of
the deceased at the time of the accident. The mere
assertion of the claimants that the deceased would
have earned more than Rs.8000 to Rs.10,000 per
month in the span of his lifetime cannot be
accepted as legitimate income unless all the
relevant facts are proved by leading cogent and
reliable evidence before MACT. The claimants
have to prove that the deceased was in a trade
where he would have earned more from time to
time or that he had special merits or qualifications
or opportunities which would have led to an
improvement in his income. There is no evidence
produced on record by the claimants regarding
future prospects of increase of income in the
course of employment or business or profession,
as the case may be. It is stated that the deceased
was about 24 years old at the time of the accident.
MACT has accepted Rs.4000 per month, as the
earning of the deceased and after deducting
Rs .400 per month for his pocket expenses, the
remaining sum of Rs. 3600 has been divided into
three equal shares, out of which two shares i.e.
Rs.2400 per month or Rs.28,800 (wrongly
mentioned as Rs.28,000 in the award), were
assessed as loss to both the claimants, who were
the parents of the deceased. The ages of the
claimants are stated to be between 45 and 50 years
and accordingly multiplier of 12 was applied.
Thus, a sum of Rs 28,800 x 12 = Rs.3,45,600 was
awarded as compensation."
In Bilkish vs. United India Insurance Co. Ltd. [(2008) 4 SCC 259],
this Court held:
"4. After hearing learned Counsel for the parties,
we are of the opinion that the view taken by the
High Court & Tribunal is not correct. The
incumbent was a bachelor and he could not have
spent more than 1/3rd of his total income for
personal use and rest of the amount earned by him
would certainly go to the family kitty. Therefore,
determining the loss of dependency by 50% was
not correct. Therefore, we assess that he must be
spending 1/3rd towards personal use and
contributing 2/3rd of his income to his family....."
Yet again in Bangalore Metropolitan Transport Corporation vs.
Sarojamma & Anr. [(2008) 5 SCC 142], this Court held:
"9. Whereas in determining an application for
grant of compensation under Section 166 of the
Act, the Tribunal may be entitled to find out actual
loss of damages suffered by the claimants, the
formula having not envisaged such a contingency,
we are of the opinion that ordinarily one-third
should be deducted from the income of the
deceased and not the half thereof......"
In Syed Basheer Ahamed & Ors. vs. Mohammed Jameel & Anr.
[(2009) 2 SCC 225], one-half (50%) of the income was held to be
deductible if the deceased was a bachelor.
14. Indisputably, deduction of 1/3rd towards personal expenses is the
ordinary rule in India. We think that in the facts and circumstances of the
case, the same should be applied. The concept of joint family unlike the
western countries where it has been wholly evaporated, although on the
decline, should also be taken into consideration. The deceased's father was
a Doctor working in a Government Hospital; he was aged about 51 years at
the time of the accident; he would have retired from the Government job
after a few years. He might not, therefore, be completely dependent upon his
son. We, therefore, are of the opinion that having regard to his age as also
the age of his wife multiplier of 10 should be applied. We do so keeping in
view the fact that the Court has a duty to grant a just and reasonable
compensation. What would, however, be a just and reasonable
compensation depends upon the fact situation obtaining in each case. No
hard and fast rule therefor can be laid down. The Court must also bear in
mind that compensation should not be treated to be wind-fall.
15. We are not oblivious of the fact that the multiplier referred to in the
Second Schedule in the Act may not automatically be applied in a case
initiated under Section 166 of the Act. We have applied the aforementioned
multiplier keeping in view the fact that the multiplier specified in the
Second Schedule would not ordinarily be applicable in a case under Section
166 of the Act.
16. The finding required to be arrived at by the choice of multiplicand as
also the multiplier would depend upon a large number of factors as this
aspect of the matter has been considered in various judgments, the same
need not be reiterated.
17. The question, in an appropriate case, may require consideration by a
18. In this view of the matter, the appeal filed by the insurance company
is dismissed and that of the appellant is allowed. Tribunal may draw a fresh
award in the light of the observations made hereinbefore. No costs.
[S.B. Sinha] .....................................J.
[Dr. Mukundakam Sharma]New Delhi;
May 12, 2009