The Motor Vehicle Act, 1988 provides for Compensation in place for damages to the injured/dependants from the accident. This has intrigued me and I started researching on the concept of compensation. Is it entirely up to the discretion of the tribunal to decide the extent of compensation or is there any method to such decisions? What all things are considered while awarding such compensation? Factors that are considered by the tribunal etc.
What I found was that the
subject is very comprehensive and has landmark judgements like Smt. Sarla Verma
& Ors. vs. Delhi Transport Corporation & Anr., which explain such
elaborate concepts with ease. It is because of this reason we shall be taking a
look at this landmark judgement and all what the Hon’ble Supreme Court had to
say while resolving the above questions in detail.
Facts of the case:
An accident took place
between and the deceased, Rajinder Prakash, died in a motor accident involving
a bus belonging to Delhi Transport Corporation on 18.04.1988. At the time of
his death, he was only 38 years old and employed as a Scientist in the Indian
Council of Agricultural Research (ICAR), earning Rs. 3402 per month.
The claimants, which
included his widow, three minor children, parents, and grandfather, filed for
compensation of Rs. 16 lakhs before the Motor Accident Claims tribunal. Also, while
the proceedings before the MACT was going on, one officer of ICAR who was
examined as PW-4, gave in his evidence that the age of retirement in the
service of ICAR was 60 years and the salary received by the deceased at the
time of his death was Rs.4004/- per month. This meant that the deceased if
alive, would have gone on to work for 22 years more in the organisation and
that all the compensation that needs to be provided should include the loss of
earnings that could have been a source to provide for his family and dependants.
The Tribunal awarded Rs.
5,94,000 as compensation, with interest at 9% per annum, considering the
deceased's income and future prospects in mind. The tribunal also was inclined
to apportioned the amounts among the claimants, with specific amounts allocated
to each family member which further considered dependant specific expenditure
and needs.
The appellants were
dissatisfied with the Tribunal's award as they contended that on a Salary of Rs.4004/-
the MACT tribunal had errored in interpretation of compensation that needs to
be awarded and using 22 as the multiplier to determine the compensation and hence
filed an appeal.
The Hon’ble High Court
considered all the arguments and counter arguments made by the parties and
decided to enhance the compensation to Rs. 7,19,624 by considering future
salary increments and adjusted for the number of dependents.
The appellants still felt
aggrieved and decided to move to The Supreme Court, which further reviewed the
High Court's judgement and the principles for calculating compensation,
emphasizing the importance of consistency in applying multipliers and
deductions for personal expenses.
The Supreme Court
determined that the final compensation to be awarded shall be Rs. 8,84,870,
with an enhancement of Rs. 1,65,246 over the High Court's award, plus interest
at 6% per annum. The said decision by the Hon’ble Supreme court highlights the
method for calculating just compensation in motor accident claims, considering
the deceased's age, income, future prospects, and the number of dependents.
The Hon’ble Supreme Court held that the method for calculating just compensation in this judgement shall involves a few specific steps:
Step 1: Determine the Income of the Deceased
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 constitutes the
multiplicand.
Step 2: Select the Multiplier
The appropriate
multiplier should be selected with reference to the age of the deceased. This
multiplier is not merely the number of years the deceased would have lived or
worked but reflects various life and economic factors that need to be
considered by the MACT in the live of the deceased and the dependents.
Step 3: Calculate Loss of Dependency
The annual contribution of
the deceased to the family (multiplicand) is multiplied by the multiplier assessed
by the tribunal to give the loss of dependency to the family.
Step 4: Add Conventional Amounts
- Loss of Estate: A conventional amount in the range of ₹5,000 to ₹10,000 may be added.
- Loss of Consortium: If the deceased is survived by a widow, a conventional amount in the range of ₹5,000 to ₹10,000 should be further added to the compensation amount.
- Funeral Expenses: Include expenses for the funeral, transportation of the body (if incurred), and medical treatment before death (if incurred).
Factors that need to be
Considered:
- Future Prospects: Future prospects should be considered if the deceased had a stable job. As a rule of thumb, an addition of 50% of the actual salary should be made if the deceased was below 40 years of age, and 30% if the age was between 40 and 50. No addition for those above 50 years.
- Personal Living Expenses: This deduction varies based on the following grounds:
- Married Deceased: Generally, one-third is deducted if dependents are 2-3, one-fourth if dependents are 4-6, and one-fifth if more than six.
- Bachelors: Typically, 50% is deducted, as a bachelor is assumed to spend more on himself. But, in the case of large families dependent on the deceased, the deduction may be reduced to one-third.
- Selection of Multiplier: This is done based on the deceased's age and is drawn from the guidelines provided in previous judgements. The basic rule of thumb is to be able to determine the income of the deceased for the time he would have lived and would have contributed to his dependants if he/she were alive.
- Income of the Deceased: Rs. 4,004 per month, considering future prospects (Rs. 8008), average income = Rs. 6006 per month.
- Personal Expenses: Considering a family of 8, one-fifth is deducted for personal expenses.
Multiplier: Given the age
of 38, a multiplier of 15 was chosen.
Calculation:-
- Annual Contribution =
₹57,658
- Multiplier = 15
- Loss of Dependency =
₹57,658 x 15 = ₹8,64,870
Additional Amounts:
- Loss of Estate: ₹5,000
- Funeral Expenses:
₹5,000
- Loss of Consortium:
₹10,000
Total Compensation:
₹8,84,870
This structured method
ensures consistency and fairness in awarding compensation for motor accident
claims.
CONCLUSION
The multiplier method for
calculating just compensation in motor accident claims was notably established
and discussed in the Sarla Verma & Ors. v. Delhi Transport Corporation
& Anr. judgement (2009) by the Supreme Court of India. This judgement
emphasized the importance of the multiplier method in ensuring consistent and
fair compensation to the dependents of the deceased.
This judgement aims to
standardize the calculation of compensation, ensuring that it is fair, just,
and equitable for all parties involved. You can find more details about the
judgement here.
Additionally, the
judgement also referenced previous landmark cases such as:
General Manager, Kerala
State Road Transport Corporation v. Susamma Thomas (1994) and U.P. State Road
Transport Corporation v. Trilok Chandra (1996) where it was reiterated the
preference for the Davies method and provided further clarification on the use
of multipliers.
These cases have
collectively contributed to the standardization of the multiplier method in
determining just compensation in motor accident claims in India.
The multiplier method calculates compensation for motor accident claims by multiplying the deceased's annual income (after deducting personal expenses) by a factor (multiplier) based on the deceased's age. It ensures fair and consistent compensation by considering the deceased's age and economic factors. Additional amounts for loss of estate, consortium, and funeral expenses are also added. This method, established in cases like Sarla Verma vs. Delhi Transport Corporation, simplifies determining compensation and ensures uniformity across similar cases.
____________________________________________________________
Sources/ References :
2. National Insurance Co. Ltd vs Pranay Sethi
___________________________________________________________________
1.
Unlocking Justice: A Guide to Plea Bargaining under BNSS
1.
National Lok Adalat: Bridging Justice Beyond Courtrooms With A Hint of Compassion
___________________________________________________________________
Disclaimer:
This Article/essay provides general information and does not constitute legal
advice. Consult a qualified legal professional for specific cases.
Tip: If
you find this Article to be of any relevance, please feel free to give your
feedback to the author via commenting below. Consider following my blog. For
any query or suggestions, you can email the author at support@legalprobe.in
___________________________________________________________________
: w.r.t. Sarla Verma Vs Delhi Transport Corporation & Anr. 2008){kind=link}
0 Comments