Sarla Verma v. Delhi Transport Corporation
Supreme Court of India, 15 April 2009, 2 judges
The Court standardised the computation of compensation in motor accident death claims under Section 166 of the Motor Vehicles Act: additions for future prospects, deductions for personal expenses by family size, and an age-based multiplier table.
Facts
Rajinder Prakash, aged 38 and working as a Scientist in the Indian Council of Agricultural Research, died in an accident in 1988 involving a Delhi Transport Corporation bus. His widow, three minor children, parents and grandfather claimed compensation. In 1993 the Tribunal took his salary as Rs. 3,402 a month, deducted one-third for personal expenses, applied a multiplier of 22 based on his remaining years of service and awarded Rs. 5,94,000. In 2007 the Delhi High Court took the income as Rs. 6,006 a month, the average of his salary of Rs. 4,004 and an estimated doubled salary at retirement, deducted one-fourth, applied a multiplier of 13 and raised the total to Rs. 7,19,624. The claimants appealed, relying on later pay revisions, seeking a one-eighth deduction and a multiplier of 16.
Questions before the Court
- Can future prospects be added to the income of the deceased, and can pay revisions during the pendency of the claim proceedings be taken into account?
- What deduction should be made for the personal and living expenses of the deceased?
- Which multiplier should be applied, and did the High Court err in taking 13?
- What compensation is payable?
What the Court held
- As a rule of thumb, add 50% of actual salary for future prospects where the deceased had a permanent job and was below 40; 30% if aged 40 to 50; nothing above 50. For the self-employed or those on a fixed salary, actual income is usually taken.
- Pay revisions after the death during long pendency of the claim cannot be used to calculate income, since that would reward delay and punish promptness.
- Where the deceased was married, deduct one-third for personal and living expenses if there are 2 to 3 dependants, one-fourth for 4 to 6, and one-fifth above six. For a bachelor, 50% is normally deducted, and ordinarily only the mother is treated as a dependant.
- In claims under Section 166, the multiplier is 18 for ages 15 to 25, falling by one for every five years to 13 at 46 to 50, and then by two for every five years to 5 at 66 to 70. Using remaining years of service as the multiplier, as the Tribunal did, is an inconsistency to avoid.
- Applying these rules (one-fifth deduction for a large family, multiplier 15 for age 38) plus loss of estate, funeral expenses and loss of consortium, the compensation was raised to Rs. 8,84,870, the enhancement to go to the widow.
Why it matters
The judgment sets out a standard method for computing compensation in death cases under Section 166 of the Motor Vehicles Act so that Tribunals award similar sums on similar facts. It fixes a percentage addition for future prospects, a scale of deductions for personal expenses based on the number of dependants, and a multiplier table by age, built from Susamma Thomas, Trilok Chandra and Charlie, and notes errors in the Second Schedule multipliers.
In the Court's words
Copied from the official judgment; each passage links to its page.
“In view of imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years.”
“Having considered several subsequent decisions of this court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependant family members is 4 to 6, and one-fifth (1/5th) where the number of dependant family members exceed six.”
“We therefore hold that the multiplier to be used should be as mentioned in column (4) of the Table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts 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”
“Just compensation is adequate compensation which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well settled principles relating to award of compensation. It is not intended to be a bonanza, largesse or source of profit.”
Provisions interpreted
- Section 166, Motor Vehicles Act, 1988
- Section 163A and Second Schedule, Motor Vehicles Act, 1988 (as in force in 2009)
Related judgments
Case and bench
- Parties
- Smt. Sarla Verma v. Delhi Transport Corporation
- Case
- Civil Appeal No. 3483 of 2008 (arising out of SLP (C) No. 8648 of 2007)
- Decided
- 15 April 2009
- Bench
- R.V. Raveendran, Lokeshwar Singh Panta
- Opinions
- Unanimous. Order delivered by R.V. Raveendran, J.
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