Case: Oriental Insurance Co. Ltd Vs. Deo Patodi

1. Leave granted. 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 appeals.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 2/3rd 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

Court's reasoning:
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.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 deceaseds 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 therefore 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.