Supreme Court Sets Aside High Court’s Reduction, Increases Compensation to ₹33.03 Lakh in Motor Accident Case
New Delhi, February 7, 2025 — In a significant ruling today, the Supreme Court of India overturned the High Court’s reduced compensation award in a motor accident claim and restored an enhanced award in favor of the deceased’s family. The apex court, in the matter of Maya Singh and Others (Appellants) vs. The Oriental Insurance Co. Ltd. and Others (Respondents), modified the earlier tribunal award and set aside the High Court’s application of the split multiplier method.
Background of the Case
The case pertains to the tragic death of Laxman Das Mahour, a 57–58-year-old BSNL employee, who lost his life on March 7, 2014, after being struck by a bus (Registration No. MP-06/B-1725) while walking on the road. The accident, which also involved his son, resulted in his immediate death at the scene. The claimants — comprising the widow, one dependent son, and a daughter — had filed for compensation under various heads, including loss of dependency, loss of consortium, loss of estate, and funeral expenses.
Tribunal vs. High Court Calculations
Initially, the Tribunal awarded compensation of ₹28,66,994, calculating the loss of dependency by applying an annual income of ₹4,57,000 with a multiplier of 9 and a one-third deduction for personal expenses. In addition, the Tribunal granted sums for loss of consortium and funeral expenses. However, the respondent, the Oriental Insurance Company, appealed the award. The High Court then reduced the compensation to ₹19,66,833 by bifurcating the calculation between pre-retirement salary and post-retirement pension (i.e., applying a split multiplier), arguing that the deceased would have served only for another 2–3 years before retiring.
Supreme Court’s Ruling
In its detailed judgment, the Supreme Court observed that the High Court’s application of the split multiplier lacked specific reasons and departed from established precedents set in Sarla Verma v. DTC and Sumathi v. M/s. National Insurance Co. Ltd. The apex court stressed that the split multiplier method is not to be applied unless justified by special circumstances, which were not present in the case at hand. Notably, the court pointed out that the deceased, being technically qualified and generally healthy, would likely have continued working post-retirement in some capacity.
The Supreme Court held that the proper method was to adhere to the multiplier system as laid down in Sarla Verma, without resorting to an artificial bifurcation of income. Additionally, the court noted that the claimants were entitled to an enhancement of 15% on account of future prospects, which had been overlooked by both the Tribunal and the High Court.
Final Award
The apex court recalculated the loss of dependency by applying the formula:
Loss of Dependency = (Annual Income × Multiplier × 2/3) × 115%
= (₹4,57,000 × 9 × 2/3) × 1.15 = ₹31,53,300
Further awards included:
- Loss of Consortium: ₹40,000 per claimant (for three claimants, totaling ₹1,20,000)
- Funeral Expenses: ₹15,000
- Loss of Estate: ₹15,000
Thus, the total compensation was fixed at approximately ₹33,03,300 (rounded off to ₹33,03,000), with interest at 7.5% per annum from the date of filing of the claim petition.
Implications
The judgment reinforces the established multiplier method for assessing loss of dependency in motor accident cases and cautions against the unwarranted use of the split multiplier without cogent justification. Legal experts believe this ruling will have a broader impact on future compensation claims, ensuring that claimants receive an award reflective of both current income loss and future earning prospects.
The case marks a victory for the claimants and reiterates the Supreme Court’s commitment to a consistent and principled approach in personal injury compensation matters.