IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE R.BASANT & THE HONOURABLE MRS. JUSTICE M.C.HARI RANI THURSDAY, THE 1ST SEPTEMBER 2011 / 10TH BHADRA 1933 MACA.No. 307 of 2011 ---------------------- OPMV.783/2008 of MOTOR ACCIDENT CLAIMS TRIBUNAL, OTTAPALAM .................... APPELLANT/ 1ST PETITIONER ---------------------------- SUMATHIKUTTY, AGED 61 YEARS, W/O.LATE PEETHAMBRAN, KUNNATH HOUSE, (ERAVATHODI), KANNIARKODE VILLAGE, THIRUVILWAMALA, THALAPPALLY TALUK, THRISSUR DISTRICT. BY ADV. SRI.K.B.ARUNKUMAR RESPONDENTS: RESPONDENTS -------------------------- 1. MANOJ N., S/O.NARAYANAN, PANDAMKUNNU VEEDU, PAZHAYANNOOR, THRISSUR DISTRICT, PIN-680587. (DRIVER OF KL-48/8341 TIPPER). 2. C.SURESH, S/O.CHANDRAN, MALACHAKKAL HOUSE, KUMBALACODE P.O., PAZHAYANNOOR, THRISSUR DISTRICT, PIN-680587. (OWNER OF KL-48/8341 TIPPER). 3. ICICI LOMBARD GIC LTD., NO.28/293/6, 2ND FLOOR, R.V.TRADE CENTRE, PATTURACKAL, THRISSUR-680 002. (INSURER OF KL-48/8341 TIPPER). ADV. SRI.K.B.RAMANAND FOR R3 SRI.R.AJITH KUMAR (128/84) FOR R3 THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 01/09/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: R.BASANT & M.C.HARI RANI, JJ. C.R. *********************** M.A.C.A No.307 of 2011 ***************************** Dated this the 1st day of September, 2011 JUDGMENT BASANT, J. Is the age of the dependent claimant irrelevant in a claim under Section 166 of the Motor Vehicles Act ? Does the decision in Sarla Verma v. Delhi Transport Corporation [(2009) 6 SCC 121] followed by P.S.Somanathan V. District Insurance Officer [(2011) 3 S.C.C 566] dispense with the requirement under settled law that the lower multiplier has to be taken into reckoning when different multipliers exist considering the age of the victim/deceased and dependent/claimant in a fatal accident? How are Tribunals to identify the multiplier in such cases under Section 166 of the Motor Vehicles Act (the Act hereafter) in future? These questions are raised before us in this appeal by Sri K.B.Arunkumar, the learned counsel for the appellant. 2. To the vitally relevant facts first. The appellant/claimant is a woman, aged 61 years. She claimed compensation for the loss suffered by her on account of the death of her son Jayan @ Jayesh Kumar in a motor accident MACA 307/2011 2 which took place on 11.06.2008. She preferred to stake the claim under Section 166 of the Act. A total amount of Rs.7 lakhs was claimed. She had staked the claim along with claimants 2 and 3, children of the appellant and siblings of the deceased. 3. The Tribunal by the impugned award came to the conclusion that only the appellant/mother is entitled to compensation. It was further held that only an amount of Rs.1,53,000/- is payable as compensation as per the details given in para.9, which we extract below: Sl.No. Heads of award Amount awarded 1 Transportation expenses Rs. 2,000.00 2 Compensation for mental shock and agony Rs. 5,000.00 3 Loss of dependency Rs.1,26,000.00 (3000X 12 X 7 X ½) 4 Loss of love and affection Rs. 15,000.00 5 Funeral expenses Rs. 5,000.00 Total Rs.1,53,000.00 4. The learned counsel for the appellant/claimant/mother claims to be aggrieved by the impugned award. The other claimants have accepted the award and have not preferred any appeal. We have heard the learned counsel for the appellant and MACA 307/2011 3 the learned counsel for the insurance company. The learned counsel for the appellant assails the impugned award on the following grounds. i) The Tribunal erred grossly in taking into consideration the multiplier applicable to the appellant and not the multiplier applicable to the deceased; ii) At any rate, the quantum of compensation could not have been below the amount payable under Section 163 A of the Act. Ground No.(i) 5. Detailed arguments have been advanced on this aspect. The learned counsel for the appellant Sri Arunkumar contends that whatever may have been the law earlier, after the decision in Sarla Verma (supra), loss of dependency in a case of death is to be ascertained by taking into reckoning the multiplier relevant to the deceased. It is his contention that the multiplier relevant to the claimant is not in any way relevant in the computation of compensation for loss of dependency after the dictum in Sarla Verma (supra). The learned counsel takes us to the decision in Sarla Verma (supra) in detail to contend that there has been a change of law after Sarla Verma (supra) and MACA 307/2011 4 now even in a case under Section 166 of the Act, the multiplier has to be ascertained in a case of death by taking into consideration the age of the deceased only. The multiplier applicable to the claimant is no more relevant, contends the counsel. 6. In support of this contention, the learned counsel for the appellant takes us through the decision in Sarla Verma (supra) in complete detail. The learned counsel wants us to consider specifically the observations in paragraphs 18 and 19 of Sarla Verma (supra). We extract the same below: “18. Basically only three facts need to be established by the claimants for assessing compensation in the case of death: (a) age of the deceased; (b) income of the deceased; and the (c) the number of dependents. The issues to be determined by the Tribunal to arrive at the loss of dependency are: (i) additions/deductions to be made for arriving at the income; MACA 307/2011 5 (ii) the deduction to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. If these determinants are standardised, there will be uniformity and consistency in the decisions. There will be lesser need for detailed evidence. It will also be easier for the insurance companies to settle accident claims without delay. 19. To have uniformity and consistency, Tribunals should determine compensation in cases of death, by the following well settled steps: Step 1 (Ascertaining the multiplicand) The income of the deceased per annum should be determined. Out of the said income a deduction should be made in regard to the amount which the deceased would have spent on himself by way of personal and living expenses. The balance, which is considered to be the contribution to the dependant family, constitutes the multiplicand. MACA 307/2011 6 Step 2 (Ascertaining the multiplier) Having regard to the age of the deceased and period of active career, the appropriate multiplier should be selected. This does not mean ascertaining the number of years he would have lived or worked but for the accident. Having regard to several imponderables in life and economic factors, a table of multipliers with reference to the age has been identified by this Court. The multiplier should be chosen from the said table with reference to the age of the deceased. Step 3 (Actual calculation) The annual contribution to the family (multiplicand) when multiplied by such multiplier gives the `loss of dependency' to the family.” 7. The learned counsel contends that the learned Judges in Sarla Verma (supra) perceived the absolute confusion that was occupying the field in the computation of compensation by the Tribunals. To bring in sanity in the computation of compensation and to standardise the methods adopted, the MACA 307/2011 7 learned Judges have given this prescription in paragraphs 18 and 19 of Sarla Verma (supra). There has been change of law and all Tribunals are expected to follow the precise methods/steps given in meticulous detail in paragraphs 18 and 19 of Sarla Verma (supra). The learned counsel points out that going by the observations in paragraphs 18 and 19, there is no scope for ascertainment of the multiplier with reference to the age of any one other than the deceased. 8. The learned counsel for the appellant then contends that a later decision of the Supreme Court in Somanathan (supra) also confirms that this is the method to be followed by the Tribunals. In that decision, the Tribunal had reckoned 16 as the multiplier taking into account the age of the deceased. The High Court in appeal had held that only 5, which is the multiplier appropriate to the age of the claimant/mother, can be taken into consideration. The Supreme Court had disagreed with the High Court and had taken the view that the High Court must have computed the compensation adopting the multiplier relevant to the age of the deceased, the son of the claimant/mother. 9. Under Section 168 of the Motor Vehicles Act, the MACA 307/2011 8 mandate to the Tribunals is to ensure that just compensation is made available to the victims. In a case of death, the dependents are the claimants. The Tribunals have to ascertain the quantum of compensation with commitment to the primary mandate under Section 168 of the M.V Act. `Just compensation' has to be ascertained. Just compensation is the compensation for loss suffered by the claimant/dependent. Therefore the loss suffered by the claimant has got to be ascertained. To ascertain the amount payable, the multiplier-multiplicand method is pressed into service. It is well settled that the quantum of compensation payable to a dependent/claimant must be sufficient to discharge the duty to ensure that such claimant is not put to loss and gets the amount which such claimant would otherwise have received if the death of the deceased had not taken place. 10. Under the English law, two methods of calculation of compensation used to be adopted. First is known as the Davies Method propounded by their Lordships in Davies V. Powell Duffryn Associated Collieries Ltd. [1942 AC 601] and the Nance method propounded in Nance V. British Columbia Electric Rly. Co. Ltd. [1951 AC 601]. It is now well settled after K.S.R.T.C V. Susamma Thomas [1994(1) KLT 67] that MACA 307/2011 9 Courts in India are to follow the Davies method. The rationale of the Davies Method has been correctly ascertained by their Lordships in Susamma Thomas (supra). The soul, basis, logic or rationale underlying the multiplicand method is seen summarised by the Supreme Court in para.8 in the following words. “The matter of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalised by multiplying it by a figure representing the proper number of year's purchase.” “The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an MACA 307/2011 10 appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed up over the period for which the dependency is expected to last.” (emphasis supplied) In Susamma Thomas (supra) it has clearly been observed that “usually in English Courts the operative multiplier rarely exceeds 16 as the maximum. This will come down “accordingly as the age of the deceased person or that of the dependents whichever is higher goes up”. 11. Following the Davies Method recognised and accepted in Susan Thomas there cannot be a semblance of doubt that while choosing the multiplier, the court has to identify the multiplier applicable to the deceased as also the multiplier applicable to the claimant( youngest of the claimants MACA 307/2011 11 where there are more claimants than one). Only the lesser multiplier (that is applicable to the older of the two) alone can be taken into reckoning while ascertaining the amount using the multiplier multiplicand method. We have no hesitation to agree that such identification of the multiplier would cater to the ends of justice. It has been repeated in many precedents that compensation cannot be a wind fall or bonanza. If an 80 year old dependent claimant were to be awarded compensation adopting the multiplier applicable to a much younger deceased, the endeavour is certainly not likely to result in justice. The 80 year old claimant then is likely to receive much higher amounts - out of all proportion to the actual loss that such claimant is likely to suffer in terms of dependency for the lesser number of years ahead of such claimant. 12. The decision in Davies (Supra) and Susamma Thomas(supra) leaves no trace of doubt in our mind about the method to be followed. To put it differently , it is well settled that the multiplier applicable to the older of the two – claimant or deceased, alone can be accepted while employing the multiplier multiplicand method. 13. A three Judge Bench was later called upon to consider MACA 307/2011 12 the dictum in Susamma Thomas(supra). The three Judge Bench in U.P.S.R.T.C. v. Thrilokchandra[1996(2)K.L.T.218] had occasion to consider this. In paragraph 12 of the judgment, the three Judge Bench with approval referred to the observations in Susamma Thomas (supra). 14. The three Judge Bench later while pointing out the alleged inadequacies in the newly introduced Second Schedule of the Act proceeded to observe the general principle relating to computation of compensation by adopting the multiplier multiplicand method in the following words. “Besides the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. For example, if the deceased, a bachelor dies at the age of 45 and his dependents are his parents, age of the parents would also be relevant in the choice of the multiplier.” 15. It will be appropriate to note that in many later decisions of the Supreme Court, this principle recognised and followed by the three Judge Bench in Trilok chandra (supra) has been followed by two Judge Benches of the Supreme Court. In T.N.S.T.C. v. Rajapriya 2005 (2)K.L.T.848(SC), the court MACA 307/2011 13 specifically observed that the choice of the multiplier was to be determined by the age of the deceased (or that of the claimant whichever is higher) and by the calculation as to what the capital sum if invested at a rate of interest appropriate to a stable economy would yield by way of annual interest. It was further observed that in accepting this, regard must also be had to the fact that ultimately the capital sum would also be consumed up over the period for which the dependency was expected to last. 16. Still later in United India Insurance Co.v. Bindu, 2009(3)S.C.C.705, the Supreme Court reiterated that the choice of the multiplier was to be determined by the age of the deceased (or that of the claimant whichever is higher) and by the calculation of a capital sum which if invested at the rate of interest appropriate to a stable economy would yield by way of annual interest the amount of dependency – ensuring that the capital sum will also be used up by the end of the expected period of dependency. 17. We do not think it necessary to refer to other decisions of the Supreme Court in which this principle – that the lower multiplier applicable to the older person has to be pressed into MACA 307/2011 14 service while computing the compensation by employment of the multiplier multiplicand method is reiterated. 18. It is in this context and at this juncture that a two Judge Bench of the Supreme Court proceeded to elaborately consider the principles relating to computation of compensation in Sarla Verma(supra). 19. To avoid the unfortunate scenario of the quantum of compensation varying with the individual Presiding Officers of the Tribunals, the dictum in Sarla Verma(supra) undertook a drastic attempt to standardise the amount of compensation payable in various situations. It is in this context that we find the relevant observations in paragraphs 18 and 19 of Sarla Verma(supra) extracted above. 20. It is true that in Sarla Verma(supra), the two Judge Bench had proceeded to issue general guidelines which are to hold the field when attempt is being made to ascertain the quantum of compensation payable in cases of death. Their Lordships have in paragraphs 18 and 19 identified the broad tasks in assessing compensation. Steps 1,2 and 3 have been specified so that the Tribunals can simply follow the method to arrive at the quantum of compensation. MACA 307/2011 15 21. It is significant to note that in Sarla Varma,(supra) their Lordships were not at all called upon to consider a case where an older Dependant claimant was staking a claim in respect of the younger deceased. We have been taken through the entire decision in Sarla Verma(supra). We have read and reread the judgment. It is significant to note that Sarla Verma (supra) did not concern itself with cases where an older dependent/ claimant has staked a claim for compensation in respect of a younger deceased. That question did not arise for consideration in Sarla Verma(supra). Their Lordships did not refer to that question at all in Sarla Verma(supra). It is true that general directions were issued in Sarla Verma(supra), but like all other precedents Sarla Verma(supra) must also be considered as a one way ticket which would be helpful to traverse the specific journey undertaken in that precedent – of course with relevant general observations that ought to be followed in similar cases. 22. We come back to the facts of Sarla Verma(supra). It was a case where the claimants included wife and minor children of a deceased person (of course in addition to his parents). The Supreme court evidently was considering the MACA 307/2011 16 claim in such a fact situation. Observations and directions in precedents cannot obviously be read or construed as provisions in a statutory enactment. In Sarla Verma(supra), their Lordships evidently were trying to ascertain the method of computation of compensation in a case like the one that arose before their Lordships – i.e. on the facts and circumstances in Sarla Verma(supra). It will be idle to assume that Sarla Verma(supra) gives stipulations to be followed in all cases in future irrespective of the facts scenario available in each case. 23. It is true that in paragraphs 18 and 19 as also in the chart/table given under paragraph 40 reference was made to the “age of the deceased” only. Can this lead us to the conclusion that age of the deceased alone is relevant and that the age of the dependent/claimant is irrelevant while ascertaining the multiplier in all cases? That is the question that arises before us. We are certainly of the opinion that their Lordships in Sarla Verma(supra) had not at all intended to issue any binding directions in a situation like the instant one where the older dependent claimant is making a claim for compensation in respect of the younger deceased. In these circumstances, even though the observations in paragraphs 18 and 19 in Sarla MACA 307/2011 17 Verma(supra) extracted above suggest that the multiplier has to be ascertained with reference to the age of the deceased, we are unable to agree that multiplier in all cases, irrespective of the fact situation, must always be ascertained and can only be ascertained with reference to the age of the deceased. Such a conclusion does not appear to have been intended by their Lordships in Sarla Verma(supra). We are certainly of the opinion that such understanding of the dictum in Sarla Verma (supra) would result in absolute miscarriage of justice. In respect of death of a 40 year old person, the 80 year old parent in one case as well as 3 year old minor son in another would both be entitled for identical amounts, if such understanding in Sarla Verma(supra) were followed by courts. That evidently was not the intention. That is not evidently the dictum. Sarla Verma (supra)reflects the anxiety of the Judges to translate the mandate of ' just compensation' under Section 168 of the Motor Vehicles Act without fluctuation based on the individual predilections of the Judges. We are unable to understand the dictum in Sarla Verma(supra) as laying down a rigid proposition that the multiplier in all cases of computation of compensation for death has to be ascertained by looking at the MACA 307/2011 18 age of the deceased alone. Such understanding would be contrary to the concept of just compensation under Section 168. It will be opposed to the principles of the multiplier-multiplicand method enunciated in the Davies method followed by the two Judge Bench in Susamma Thomas (supra). Nay, it will be contrary to the conclusion of the three Judge Bench in Trilok Chandra(supra). We are in these circumstances, unable to accept the argument that the age of the deceased alone is relevant (and the age of the dependent claimant is irrelevant) in all cases after Sarla Verma(supra) in the attempt to identify the appropriate multiplier in claims for compensation for death. We do not understand Sarla Verma (supra)to mean so. We cannot, conscious of the law relating to precedents understand the dictum in Sarla Verma(supra) in a manner contrary to the decision of the larger Bench in Trilok Chandra(supra). We, therefore, take the view that identification of the multiplier with reference to the deceased alone can be done only in a case where the claimants are younger to the deceased and not in a case where the claimants are elder to the deceased and the claimants have only a shorter term of life expectancy/dependency than the expected life span of the MACA 307/2011 19 deceased. 24. On principle and from precedents, we are unable to understand Sarla Verma (supra)in the manner that the learned counsel Sri Arunkumar canvasses before us. In respect of claimants who are elder to the deceased, we reiterate that the principle accepted in Trilok Chandra(supra) will have to be employed. 25. The learned counsel Sri Arun Kumar contends that at least in respect of claims under Section 163 A for compensation in respect of death, the same multiplier is adopted in the 2nd schedule to ascertain the quantum of compensation payable to all claimants. The learned counsel brings to our notice that the amounts specified (Rupees in thousands) payable as compensation in the case of death stipulated in the table/chart given under clause(i) of the 2nd schedule takes into account the multiplier applicable to the deceased only and does not make any reference to the age of the claimants. If that can be done in a claim under Section 163 A, why cannot the same approach be made in a claim under Section 166 also, queries counsel. The learned counsel points out other binding precedents in which the Supreme Court has observed that the principles under MACA 307/2011 20 Section 163 A can be imported in claims under Section 166 of the Motor Vehicles Act also. Learned counsel argues that in the light of absence of a specific mention in Sarla Verma (supra)that the lesser multiplier applicable to an older claimant must be pressed into service to ascertain the quantum of compensation, the principle under Section 163 A that the same amount of compensation shall be paid to all claimants depending upon the age of the deceased with no relevance to the age of the claimant can safely be adopted in claims under Section 166 of the Motor Vehicles Act also. 26. We are unable to accept this contention. It appears to us that this contention stems from a failure to correctly comprehend the nature of the relief under Section 163A of the Act. The question has been considered in detail in National Insurance Co.Ltd. v. P.C.Chacko[2011(3)K.H.C.438]. Section 163 A gives a ready reckoner structured formula. It has been referred to as a “take it or leave it” scheme. The amounts that would be payable under Section 163A is not expected to be just compensation to the last decimal. Whoever finds the scheme under Section 163 A to be acceptable can stake a claim under