Case: P.S. Somanathan  Vs. District Insurance Officers

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. In ascertaining this, regard was also to 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. In United India Insurance Co. Ltd. v. Bindu & Ors. [(2009) 3 SCC 705] , this Court again reiterated that the choice of the multiplier was to be determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation of a capital sum which, if invested at a rate of interest appropriate to a stable economy, would yield by way of annual interest. 17. In Supe Dei (Smt) & Ors. v. National Insurance Co. Ltd. & Anr. [(2009) 4 SCC 513] , the Court observed that while considering the question of just compensation payable in a case all relevant factors including appropriate multiplier had to be considered, and that the Second Schedule under Section 163-A to the Motor Vehicles Act, 1988, which gave amount of compensation to be determined for purpose of claim under the section, could be taken as a guideline while determining the compensation under Section 166 of the Act. 18. In Sarla Verma (Smt.) & Ors. v. Delhi Transport Corporation & Anr. [(2009) 6 SCC 121] , this Court formulated the principles very lucidly and which are quoted below: "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;(ii) the deduction to be made towards the personal living expenses of the deceased;and(iii) the multiplier to be applied with reference of the age of the deceased.If these determinants are standardized, there will be uniformity and consistency in the decisions. There will lesser need for detailed evidence. It will also be easier for the insurance companies to settle accident claims without delay.To have uniformity and consistency, the 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.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." 19. Further, this Court considered the principles laid down in Susamma (supra), Trilok Chandra (supra) and New India Assurance Co. Ltd. v. Charlie & Anr. [(2005) 10 SCC 720] and gave the following table for multiplier: Age of the DeceasedMultiplier Scale as envisaged in Susamma ThomasMultiplier Scale as adopted by Trilok ChandraMultiplier Scale in Trilok Chandra as clarified in CharlieMultiplier specified in Second column in the Table in Second Schedule to the MV ActMultiplier actually used in Second Schedule to the MV Act (as seen from the quantum of compensation) (1)(2)(3)(4)(5)(6) Up to15 years––––––1520 15 to 20 years1618181619 21 to 25 years1517181718 26 to 30 years1416171817 31 to 35 years1315161716 36 to 40 years1214151615 41 to 45 years1113141514 46 to 50 years1012131312 51 to 55 years911111110 56 to 60 years8100988 61 to 65 years6080756 Above 65 years5050555 20. In the present case, the claimants had filed for compensation under Section 166 of the Motor Vehicles Act, 1988. The original claim petition had been filed by the mother and brother of the deceased and the deceased was 33 years of age when he died in the accident. 21. For the purpose of calculating the multiplier, the High Court held that mother was the real legal representative and others could not claim to be the legal representatives of the deceased, and accordingly applied a multiplier of 5, whereas the Tribunal had calculated compensation by considering a multiplier of 16.22. This Court is of the opinion that the law as has been laid correctly in the case of Sarla Varma (supra), in a very well considered judgment, is to be followed.23. The High Court unfortunately took a very technical view in the matter of applying the multiplier. The High Court cannot keep out of its consideration the claim of the daughter of the first claimant, since the daughter was impleaded, and was 49 years of age. Admittedly, the deceased was looking after the entire family.In determining the age of the mother, the High Court should have accepted the age of the mother at 65, as given in the claim petition, since there is no controversy on that. By accepting the age of mother at 67, the High Court further reduced the multiplier from 6 to 5, even if we accept the reasoning of the High Court to be correct. The reasoning of the High Court is not correct in view of the ratio in Sarla Verma (supra). Following the same the High Court should have proceeded to compute the compensation on the age of the deceased.24. Thus, the finding of the High Court is contrary to the ratio in Sarla Verma (supra), which is the leading decision on this question and which we follow.

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

Explanation:
1[ds]21. For the purpose of calculating the multiplier, the High Court held that mother was the real legal representative and others could not claim to be the legal representatives of the deceased, and accordingly applied a multiplier of 5, whereas the Tribunal had calculated compensation by considering a multiplier of 16.22. This Court is of the opinion that the law as has been laid correctly in the case of Sarla Varma (supra), in a very well considered judgment, is to be followed.23. The High Court unfortunately took a very technical view in the matter of applying the multiplier. The High Court cannot keep out of its consideration the claim of the daughter of the first claimant, since the daughter was impleaded, and was 49 years of age. Admittedly, the deceased was looking after the entire family.In determining the age of the mother, the High Court should have accepted the age of the mother at 65, as given in the claim petition, since there is no controversy on that. By accepting the age of mother at 67, the High Court further reduced the multiplier from 6 to 5, even if we accept the reasoning of the High Court to be correct. The reasoning of the High Court is not correct in view of the ratio in Sarla Verma (supra). Following the same the High Court should have proceeded to compute the compensation on the age of the deceased.24. Thus, the finding of the High Court is contrary to the ratio in Sarla Verma (supra), which is the leading decision on this question and which we follow.