Compensation for a government employee's fatal motor accident was challenged on the ground that retirement required a split multiplier. The court rejected routine use of that method without specific reasons and evidence, and dismissed the insurer's appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
'C.R.'
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.D.RAJAN
TUESDAY ,THE 16TH DAY OF OCTOBER 2018 / 24TH ASWINA, 1940
MACA.NO. 3020 OF 2018
AGAINST THE AWARD IN O.P.(M.V.) NO.1549/2014 OF THE MOTOR ACCIDENTS CLAIMS TRIBUNAL, PATHANAMTHITTA DATED 02-04-2018
APPELLANT/3RD RESPONDENT :
NATIONAL INSURANCE CO. LTD. DIVISIONAL OFFICE, NELSON COMPLEX, PUTHIYIDOM, KAYAMKULAM, PIN-690502, REPRESENTED BY ITS MANAGER.
BY ADV. SRI.N.S.NAJEEB
RESPONDENTS/PETITIONERS 1 AND 2 :
1 LALITHA K.G., W/O.LATE K.P. RADHAKRISHNAN, KOLLAMPARAMBIL HOUSE, THURUTHICAUD P.O., MALLAPPALLY-689597.
2 ARUN K.R. S/O.LATE K.P RADHAKRISHNAN, KOLLAMPARAMBIL HOUSE, THURUTHICAUD P.O., MALLAPPALLY-689 597.
THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING COME UP FOR ADMISSION ON 16.10.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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'C.R.'
JUDGMENT
This appeal has been preferred by the insurer against the award in O.P.(M.V.) No.1549 of 2014 of the Motor Accidents Claims Tribunal, Pathanamthitta. The deceased K.P. Radhakrishnan was a civil police officer aged 53 years and he died in a motor accident. The legal heirs of the deceased who are dependants preferred the above petition for compensation under Section 166 of the Motor Vehicles Act, 1988 and the Motor Accidents Claims Tribunal awarded compensation of Rs.30,03,032/- (Rupees Thirty Lakhs Three Thousand and Thirty Two only) with 9% interest and proportionate cost. Hence this appeal.
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sustained serious injuries and immediately he was removed to hospital, but he succumbed to the injuries at St. Gregorious Hospital, Parumala. The accident was due to the rash and negligent driving of the vehicle by its driver. The owner and driver were ex parte in the lower court and the insurer admitted the insurance of the vehicle.
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claim for damages being allowed. Damages are given for an injury suffered. Compensation is by way of atonement for the injury caused with intend to put either the injured party or those who may suffer on account of the injury in a position as if the injury was not caused by making pecuniary benefits. The concept of just compensation proposes the application of equitable principle and reasonable approach. While assessing compensation in death cases, the Tribunal must take compassionate view following Multiplier method. In this context, I may refer the book Motor Vehicles Laws Vol.(II) Kannan and Vijaya Raghavan, Lexis Nexis, 15th edition, page no.1962 as follows:
“There are at least three methods of computing loss of
future earnings: (A) Interest Method; (B) Lump Sum Method; and (C) Multiplier Method. The first and the second are now replaced by the third. (A) Interest Method: This method comprises in awarding a capital sum the annual interest (at current rates of bank interest) upon which sum will be equivalent to the future annual loss. A similar method is applied in fatal cases to compute loss to the dependents. This interest method has been rejected by
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almost all the Courts. (B) The Lump Sum Method: The lump sum method is an alternative method of computing future loss of earnings. (C) The Multiplier Method: (a) The Traditional Multiplier (b) The Actuary's Multiplier. (a) The Traditional Multiplier: (Three stages) (I) Before the actuaries prepared multiplier tables, Judges were basing their selection of the multiplier on their intuition and experience. They proceeded on the basis that roughly 18 would be the highest multiplier for the youngest person aged (say) 20 years. This was obviously based on the premise that 100 divided by 5½ (applying a rate of discount of 5½% for reducing future payments to present value) would roughly yield a maximum of 18 as multiplier. If the victim's age was higher, the multiplier was being reduced. But the Judges, as pointed by Winfield and Jolowicz on Tort (12th Ed. 1984, P.633) did not “Usually reveal the mathematical process (if such it be) by which they arrived at the appropriate multiplier”. The “Judge's traditional multiplier” is based on pure experience and practice. (ii) The next stage was reached when in 1967, actuarial multipliers were prepared and published (see Kemp and Kemp, 1967 tables prepared by Mr. J.H.Prevett, Actuary) and when the
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Judges proceeded to cross-check their judicial or intuitive “year's purchase” by referring to the multiplier from the Acturay's Tables. This Prof. Mc Lachlin has called the “Cross-check” state. (see 1981, Vol.59 Cn. Bar. Rev.p.1 at p.20). Hawley refers to this cross-check and states: “Generally, an award is made objectively and checked subjectively (1975 (13) Alta. L. Rev.430). Kemp and Kemp (Vol.1, Law and Practice, 1984, p.53) have also referred to this stage elaborately as one used by Judges for “crosschecking” the years' purchase method with the multiplier given in the Acutary's Tables. (iii) To-day, fortunately, the third stage is practically reached when tables of Actuarial Multipliers have come to stay in several countries. The British Law Commission was the first to commend the actuary's tables in 1970-71 (see Working Paper 27). In 1984, the British Government's Actuary Department has published multiplier tables (see Munkman, App. III, p.224). The Privy Council has also in 1984 commended the use of the actuarial tables in Lai Wee Lian v. Singapore Bus Service, (1984) 3 WLR 63 PC. They, however, pointed out that while the Tables in England reflected both (I) mortality rates, and (ii) conversion of future earnings to present value, the
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Singapore Tables were defective as they omitted to take into account at least one of these two exercises. The Canadian Supreme Court has also accepted actuarial calculations in 1978. Thus, today, actuarial tables have finally replaced the “traditional” multiplier of the Judge. (b) The Actuary's Multiplier: What is the basis for the actuary's multiplier: what are the factors it takes into account, is the next question. In the judgment in A.P.S.R.T.C. v. Shafiya Khatoon, AIR 1985AP 83, the mathematical and actuarial background was, perhaps for the first time, explained at considerable length. The net future losses from date of trial for the remaining expected period of life (in accident cases) and the net future losses from date of death of the person (in fatal cases) have to be estimated.”
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revealed that the longevity in his family was more, then it would be safe to take a higher multiplier with a view to arrive at a figure of total compensation. However, the choice of multiplier has to be made by the Court using its own experience and with regard to the facts of each case because the ultimate goal is not to adhere to any rigid formula but to award just compensation. The age of the deceased person cannot be taken to be either a conclusive or a paramount factor in the determination of the compensation except in those cases where the remaining years of the life expectancy are less than the multiplier. Therefore, no uniform or absolute rule can be laid down and multiplier in each case has to be selected bearing in mind the facts and circumstances of the case. This Court in Valsala and Others v. Ulahannan Thomas and Others [2015 (1) KHC 729] held that :
“While fixing the compensation, a balancing of all essential factors, including disadvantages will have to be adopted by the Court. Even though Sri. Georgekutty Mathew, learned counsel for the claimants submitted that based on the age of retirement (which according to him is 56 in Kerala), there is no reason for reducing the multiplicand thereafter, we are of
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the view that when there is a sure date of superannuation, it cannot be ignored at all. As far as the entitlement for pension is concerned, the service under the Government is a pensionable one and therefore the deceased would have earned only monthly pension. If that be so, while balancing the earnings upto the period of retirement and the further remaining period when taking 13 as the multiplier, we will be justified in accepting the pleas of the learned Senior Counsel for the Insurance Company Sri. George Cherian that the reduction of salary going by the date of superannuation will have to be considered by this Court.
Kumily Panchayath v. Maniammal and Others [2017
(5) KHC 606] , it was held that;
It is contended that, the Tribunal ought to have adopted split multiplier method in this case. Based on the above contention, we are persuaded to look into the award in order to ensure that 'just compensation' is awarded to the dependents. There is no dispute that the deceased was drawing a monthly salary of Rs.4,464/- at the time of his death. There is no clear evidence regarding his age at the time of death. Therefore we accept his age as 48 years. Under such circumstances, the deceased was left with service of 7 years, till the date of his superannuation, which was 55 years at the relevant time. But it is pertinent to note that, the Tribunal has not considered anything towards future prospects in the career of the deceased and has not made any addition on the income of the deceased, taking note of the
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probable pay revision, promotion etc. It now remains trite that, for the person having a permanent employment and fixed income, who is in the age group of 40-50, 30% addition need to be provided towards future prospects. Therefore, we are inclined to adopt split multiplier method.
the Tribunals are statutorily entrusted with the responsibility of awarding just compensation. In matters of awarding just compensation, it cannot be equated to a bonanza. The Tribunal must realize that there is a distinction between compensation and damages. The expression compensation may include a claim for damages but compensation is more comprehensive. Normally damages are given for an injury which is suffered, whereas compensation stands on a slightly higher footing. The intention behind grant of compensation is to put back the party as far as possible in the same position, as if the death has not taken place, by way of grant of pecuniary relief. Thus, in the matter of computation of compensation, the approach will be slightly more broad based than what is done in the matter of assessment of damages. At the same time it is true that there cannot be any
rigid or mathematical precision in the matter of
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determination of compensation. In this context, the decision in Puttamma v. Narayana Reddy [2014 (1) KLT 738
(SC)] has to be analyzed.
and 34 read as follows :
“42. We therefore hold that the multiplier is to be used should be as mentioned in Column (4) of the table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every fie years, that is M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years.”
This Court laid down the above guidelines to ensure uniformity and consistency in the selection of multiplier while awarding compensation in motor accident claims made under S.166. The application of multiplier fell for consideration recently before three-Judge Bench in Reshma Kumari & Ors. v. Madan Mohan & Anr. (2013) (2) KLT 304 (SC)= (2013) 9 SCC (65) . In the said case this court held:
“33. We have already noticed the table prepared in Sarla Verma for the selection of multiplier. The table has been prepared in Sarla Verma having regard to the three decisions of this Court, namely, Susamma Thomas (1994 (1) KLT 67 (SC)=(1994) 2 SCC 176), Trilok Chandra (1996 (2) KLT 218 (SC) and Charlie (2005 (3) KLT 227 (SC) for the claims made
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under S.166 of the 1988 Act. The Court said that multiplier shown in Column (4) of the table must be used having regard to the age of the deceased. Perhaps the biggest advantage by employing the table prepared in Sarla Verma is that the uniformity and consistency in selection of the multiplier can be achieved. The assessment of extent of dependency depends on examination of the unique situation of the individual case. Valuing the dependency or the multiplicand is to some extent an arithmetical exercise. The multiplicand is normally based on the net annual value of the dependency on the date of the deceased's death. Once the net annual loss (multiplicand) is assessed, taking into account the age of the deceased, such amount is to be multiplied by a 'multiplier' to arrive at the loss of dependency. In Sarla Verma, this Court had endeavoured to simplify the otherwise complex exercise of assessment of loss of dependency and determination of compensation in a claim made under S.166. It has been rightly stated in Sarla Verma that claimants in case of death claim for the purposes of compensation must establish (a) age of the deceased (b) income of the deceased; and (c) the number of dependants. To arrive at the loss of dependency, the Tribunal must consider (I) additions/deductions to be made for arriving at the income; (ii) the deductions to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. We do not think it is necessary for us to revisit the law on the point as we are in full agreement with the view in Sarla Verma.
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& Anr. (2011 (1) KLT SN 98 (C.No.136) SC = (2011) 4 SCC 689), this Court held as follows:
“14. In the appeal which was filed by the appellants before the High Court, the High Court instead of maintaining the amount of compensation granted by the Tribunal, reduced the same. In doing so, the High Court had not given any reason. The High Court introduced the concept of split multiplier and departed from the multiplier used by the Tribunal without disclosing any reason therefor. The High Court has also not considered the clear and corroborative evidence about the prospect of future increment of the deceased. When the age of the deceased is between 51 and 55 years the multiplier is 11, which is specified in the 2nd column in the Second Schedule to the Motor Vehicles Act, and the Tribunal has not committed any error by accepting the said multiplier. This Court also fails to appreciate why the High Court chose to apply the multiplier of 6.
whether a split multiplier can be taken in routine course to award just compensation to the death of a Government
MACA.NO. 3020 OF 2018 15
employee? While answering this aspect, in view of Puttamma's Case (Supra), first I have looked into whether specific reasons are stated by the appellant and any evidence has been furnished before the Motor Accidents Claims Tribunal to take a split multiplier. Appellant admitted that he has not stated any reason before the Motor Accidents Claims Tribunal and no evidence has been adduced in the lower court for taking a split multiplier. Apex Court in several decisions held that to bring uniformity and certainty in awarding just compensation, 'multiplier method' is acceptable. The expression 'just compensation' has been explained by the Apex Court in several decisions that the compensation awarded by a Tribunal does not become just compensation merely because the Tribunal considered it to be just. “Just Compensation' is adequate compensation which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well-settled principles relating to the award of compensation. After surveying almost all the previous decisions, the Apex Court in
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Puttamma's case standardised the norms for the assessment
of damages in Motor Accidents Claims.
“16. In the method adopted by Viscount Simon in the case of Nance also, first the annual dependency is worked out and then multiplied by the estimated useful life of the deceased. This is generally determined on the basis of longevity. But then, proper discounting on various factors having a bearing on the uncertainties of life, such as, premature death of the deceased or the dependent, remarriage, accelerated payment and increased earning by wise and prudent investments, etc., would become necessary. It was generally felt that discounting on various imponderables made assessment of compensation rather complicated and cumbersome and very often as a rough and ready measure, one-third to one-half of the dependency was reduced, depending on the life-span taken. That is the reason why
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courts in India as well as England preferred the Davies' formula as being simple and more realistic. However, as observed earlier and as pointed out in Susamma Thomas case, usually English Courts rarely exceed 16 as the multiplier. Courts in India too followed the same pattern till recently when Tribunals/Courts began to use a hybrid method of using Nance method without taking deduction for imponderables.”
“15.----- Under the formula advocated by Lord Wright in Davies, the loss has to be ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus assessing the loss to the dependents of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an appropriate multiplier.” (emphasis supplied).
12. In K.S.R.T.C. v. Susamma Thomas [1994 (1)
KLT 67 (SC)] it was held that;
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accustomed to spend upon himself, as regards both selfmaintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year's purchase. Much of the calculation necessarily remains n the realm of hypothesis “ and in that region arithmetic is a good servant but a bad master” since there are so often many imponderables. In every case, “ it is the over-all picture that matters”, and the court must try to assess as best as it can the loss suffered.
The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed up over the period for which the dependency is expected to last.
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178 where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed.
“ The starting point in any estimate of the amount of the “dependency” is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But,.... there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by his for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chance of its occurring and the smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 4&1/2 percent the present value of an annuity for 20 years, of which the first ten years are at Pounds 100 per annum and the second ten years at Pounds 200 per annum, is about 12 years' purchase of the arithmetical average annuity of Pounds 150 per annum, where as if the first ten years are at Pounds 200 per annum and the second ten years at Pounds 100 per annum the present value is about 14 years' purchase of the arithmetical mean of Pounds 150 per annum. If therefore the chances of variations in the
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“Dependency” are to be reflected in the multiplicand of which the years' purchase is the multiplier, variations in the dependency which are not expected to take place Until after ten years should have only a relatively small effect in increasing or diminishing the “dependency” used for the purpose of assessing the damages.”
the pecuniary losses, which is to be suffered by the dependents as a result of the fatal accident. But the calculation of damages to the dependents is very difficult because from the nature of things, it has to take into account many appreciable factors. The life expectancy of the deceased and the dependents are the major factors. The amount that the deceased would have earned during the remaining period of his life, the amount that he would have contributed to the dependents during that period is also relevant. The chances that the deceased may not have lived or the dependents may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better job and earned more income also have to be considered while fixing compensation. It is an admitted fact that the deceased was a Senior Civil Police Officer and
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was getting Rs.30,545/- per month. He was aged 53 years at the time of accident, who will retire after 3 years of service. There is no dispute with regard to the income and occupation. The Tribunal however, came to a conclusion that after deducting income tax the expected financial benefit of the family is Rs.21,076/- per month. Therefore, the starting point is the amount of salary which the deceased was earning through his permanent employment. How much amount was required for his personal and living expenses also have to be taken into consideration. The sum, however, to be paid towards taxes is also a relevant aspect. The promotion prospects of the deceased before superannuation is a relevant factor for assessing the dependency compensation. The revision of pay scale which may apply retrospectively on the basis of Pay Commission is an important factor while determining compensation. After retirement also he is entitled to get half of the salary as pension till his death. The increase in the Dearness allowance of the pensioner is another relevant factor. The benefit received by the dependants of the deceased in the form of pension is not a
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death benefit. A Government servant is entitled to get pension on superannuation as a condition of service and his widow is also entitled to the same if the husband dies after his retirement. This is an incident of service but not a death contribution. What was stated in Puttamma's case (supra) is that, to ensure uniformity, multiplier method should be followed while awarding compensation under Section 166 of the Motor vehicles Act, 1988.
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principle of multiplier method which may result in lack of uniformity in awarding just compensation which is impermissible. Therefore, the submission made by the appellant to take notional income after retirement and take split multiplier without “specific reason” and “evidence” is against the decision of the Apex Court in Puttamma's case (Supra) and it is without any basis. Therefore, when the legislative intention is to grant just compensation and if the computation is made for grant of damages alone, it would be a wholly incorrect approach. The facts and circumstances of the case show that the dependants are entitled to get just compensation following multiplier method. Before parting with this discussion, I may suggest that the following norms have to be borne in mind by the Tribunals and Courts while fixing compensation in death cases:
(1) The Court should take a practical and
reasonably liberal view while awarding just compensation.
(2) Not only age of the deceased is the criterion but also the age of the surviving dependants should be
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taken into consideration.
(3) The salary-income of the deceased at the time
of accident and his future prospects must also be borne
in mind while arriving at the monthly income of the deceased as well as his contribution to the dependants.
(4) The Court should take into account the standard of living and the decreasing money value.
(5) Beyond this, the Court has to do some guess
work with some hypothetical consideration with some amount of sympathy.
I find no merit in the arguments of the appellant and this appeal is dismissed with the above observations.
Sd/-
P.D. RAJAN, JUDGE
/True Copy/
P.A. To Judge
NS
1 issue framed by the court
Can a split multiplier be applied routinely to compensation for a government employee's death without specific reasons and evidence supporting that departure?
Colour shows how this judgement treated each authority
Puttamma Vs. Narayana ReddyApplied¶111
[2014 (1) KLT 738 (SC)]
Valsala and Others v. Ulahannan Thomas and OthersReferred¶40
[2015 (1) KHC 729]
Special Grade Secretary, Kumily Panchayath v. Maniammal and OthersReferred¶44
[2017 (5) KHC 606 (DB)]
Sarla Vema v. Delhi Transport CorporationRelied on¶83
[2010(2) KLT 802 (SC)]
K.S.R.T.C. v. Susamma ThomasRelied on¶91
1994 (1)
1 provisions across 1 enactments
NATIONAL INSURANCE CO. LTD.
LALITHA K.G.
ARUN K.R.
P.D.RAJAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
