you're reading...
legal issues

Motor Vehicles Act, 1988 – s. 166 – Fatal accident of a 22 year old student having brilliant career – Claim for compensation by his parents – Tribunal awarding compensation estimating his monthly income at Rs. 18,000/ Dependency of parents calculated at 1/3 of his income – Cross appeals – High court maintaining estimated income, while holding the dependency as 2/3 of the income – On appeal, held: Income of the deceased should have been estimated at Rs. 25,000/- pm – Deduction of 1/3 of the income justified. Respondents-claimants filed a petition u/s. 166 of Motor Vehicles act, 1988 for the death of their 22 year old son in a motor accident. They made a claim of Rs. 75 lakhs compensation on the premise that while he was doing his studies in U.K., he was earning Rs. 80,000/- per month in a part time job. After competition of his studies, he got an offer in a U.S. Based company at an annual salary of Rs. 18 lakhs. Tribunal passed the award considering his earning capability as Rs. 18,000/- per month and deducting 2/3 thereof as his personal expenses. In view of age of the claimants multiplier of 13 applied. Claimants filed an appeal seeking enhancement in the amount of compensation. Their plea was that dependency of the parents should have been considered at 2/3rd of the income and that expenses incurred during treatment should have been awarded. Cross-objection was filed by the Insurance Company. High court maintained the estimated income of the deceased, but opined that dependency of the claimants should have been at 2/3rd of the income. A sum of Rs. 1,25,000/- was also awarded towards medical expenses. Hence, the present cross-appeals. =Allowing the appeal filed by the claimants and dismissing that filed by the Insurance Company, the Court HELD: 1.1. 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

Tata Indica

Image via Wikipedia




 CIVIL APPEAL NO. __3482______OF 2009
 [Arising out of Special Leave Petition (Civil) No. 2997 of 2007]





 CIVIL APPEAL NO. _3492_______OF 2009
 [Arising out of Special Leave Petition (Civil) No. 3807 of 2007]





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.

based Company..

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. [1998] 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

larger Bench.

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

About advocatemmmohan


Blog Stats

  • 2,891,652 hits



Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,906 other followers
Follow advocatemmmohan on WordPress.com
%d bloggers like this: