Case: Puttamma &amp; Others Vs. K.L. Narayana Reddy &amp; Another

not earlier than the date of making the claim as may be specified in this behalf. Earlier, 12% was found to be the reasonable rate of simple interest. With a change in economy and the policy of Reserve Bank of India the interest rate has been lowered. The nationalised banks are now granting interest at the rate of 9% on fixed deposits for one year. We, therefore, direct that the compensation amount fixed hereinbefore shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants. The amount of Rs 50,000 paid by the Insurance Company under Section 140 shall be deducted from the principal amount as on the date of its payment, and interest would be recalculated on the balance amount of the principal sum from such date. 60. This Court in Abati Bezbaruah v. Deputy Director General, Geological Survey of India & Anr. (2003) 3 SCC 148 noticed that varying rate of interest is being awarded by the Tribunals, High Courts and this Court. In the said case, this Court held that the rate of interest must be just and reasonable depending on the facts and circumstances of the case and should be decided after taking into consideration relevant factors like inflation, change in economy, policy being adopted by the Reserve Bank of India from time to time, how long the case is pending, loss of enjoyment of life etc. 61. In Supe Dei v. National Insurance Co. Ltd.& Anr. (2009) 4 SCC 513 this Court held that proper interest would be 9% per annum. 62. In view of the aforesaid provisions of the Act, 1988 (Section 171) and the observation of this Court, as noticed above, we keep this question open for Tribunals and Courts to decide the rate of interest after taking into consideration the rate of interest allowed by this Court in similar case and other factors such as inflation, change in economy, policy adopted by the Reserve Bank of India from time to time and the period since when the case is pending. Present Case 63. In the present case, the following fact emerges: The deceased was drawing gross salary of Rs. 13,331/- per month and he was paying a sum of Rs.789/- per month towards income tax and an amount of Rs. 100/- per month towards professional tax. Thus he was paying total amount of Rs.889/- per month towards tax and if that amount is deducted from the gross income of the deceased it comes to Rs.12,442/- per month. The deceased was 48 years old at the time of death. He would have continued in service for another 12 years and he would have been entitled for pension. Therefore, if increase in the future income is taken at 50% it will come to Rs.18,663/- (Rs.12,442/- + Rs. 6221). As per decision in Sarla Verma 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 dependent family members is 4 to 6 and one-fifth (1/5th) where the number of dependent family members exceeds 6. In the present case, there are four dependent family members. Therefore, the deduction towards personal and living expenses of the deceased should be 1/4th. If 1/4th amount is deducted from the income of the deceased it will come to Rs.13,998/- (Rs. 12,442/- + Rs. 6,221 – Rs. 4665). At the time of accident, the deceased was 48 years old, hence on the basis of decision in Sarla Verma multiplier of 13 will be applicable. In that case the claimants should be entitled to get the following benefits: (i) Amount of compensation with 12 months salary and 13 as multiplier (13,998/- x 12 x13) - Rs. 21,83,688/- (ii) Compensation to the family members (children and family members other than wife) for loss of love and affection, deprivation of protection, social security etc. - Rs. 1,00,000/- (iii) Compensation to the widow of the deceased for loss of love and affection, pains and sufferings, loss of consortium, deprivation of protection, social security etc. - Rs. 50,000/- (iv) Cost incurred on account of funeral and ritual expenses - Rs. 10,000/- Total Compensation Rs.23,43,688/- 64. In the appeal which was filed by the claimants before the High Court, the High Court instead of deciding the just compensation allowed meager enhancement of compensation. In doing so, the High Court introduced the concept of split multiplier and departed from the multiplier system generally used in light of the decision in Sarla Verma (supra) case without disclosing any reason. The High Court has also not considered the question of prospect of future increase in salary of the deceased though it noticed that the deceased would have continued in pensionable services for more than 10 years. When the age of the deceased was 48 years at the time of death it wrongly applied multiplier of 10 and not 13 as per decision in Sarla Verma. Thus, we fail to appreciate as to why the High Court chose to apply split multiplier and applied multiplier of 10. We, thus, find that the judgment of the High Court is perverse and contrary to the evidence on record and is fit to be set aside for having not considered the future prospects of the deceased and also for adopting split multiplier method against the law laid down by this Court. In view of our aforesaid finding, we hold that the judgment of the High Court deserves to be set aside. We, accordingly, set aside the impugned judgment and hold that the claimants are entitled for total compensation of Rs.23,43,688/-. They shall also get interest on the enhanced compensation at the rate of 12% per annum from the date of filing of the complaint petition. Respondent No.2-Insurance Company is directed to pay enhanced/additional compensation and interest to the claimants within a period of three months by getting prepared a demand draft in their name.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]64. In the appeal which was filed by the claimants before the High Court, the High Court instead of deciding the just compensation allowed meager enhancement of compensation. In doing so, the High Court introduced the concept of split multiplier and departed from the multiplier system generally used in light of the decision in Sarla Verma (supra) case without disclosing any reason. The High Court has also not considered the question of prospect of future increase in salary of the deceased though it noticed that the deceased would have continued in pensionable services for more than 10 years. When the age of the deceased was 48 years at the time of death it wrongly applied multiplier of 10 and not 13 as per decision in Sarla Verma. Thus, we fail to appreciate as to why the High Court chose to apply split multiplier and applied multiplier of 10. We, thus, find that the judgment of the High Court is perverse and contrary to the evidence on record and is fit to be set aside for having not considered the future prospects of the deceased and also for adopting split multiplier method against the law laid down by this Court. In view of our aforesaid finding, we hold that the judgment of the High Court deserves to be set aside. We, accordingly, set aside the impugned judgment and hold that the claimants are entitled for total compensation of Rs.. They shall also get interest on the enhanced compensation at the rate of 12% per annum from the date of filing of the complaint petition. Respondente Company is directed to pay enhanced/additional compensation and interest to the claimants within a period of three months by getting prepared a demand draft in their name.