1) Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr1.
2) Reshma Kumari & Ors. v. Madan Mohan & Anr.,
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Arvind Kumar Mishra Vs.
New India Assurance Co. Ltd. and Anr.
2) Reshma Kumari & Ors. v. Madan Mohan & Anr.,
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Arvind Kumar Mishra Vs.
New India Assurance Co. Ltd. and Anr.
7. We do not intend to review in detail state of authorities in relation to assessment of all damages
for personal injury. Suffice it to say that the basis of assessment of all damages for personal injury is
compensation. The whole idea is to put the claimant in the same position as he was in so far as
money can. Perfect compensation is hardly possible but one has to keep in mind that the victim has
done no wrong; he has suffered at the hands of the wrongdoer and the court must take care to give
him full and fair compensation for that he had suffered. In some cases for personal injury, the claim
could be in respect of life time's earnings lost because, though he will live, he cannot earn his living.
In others, the claim may be made for partial loss of earnings. Each case has to be considered in the
light of its own facts and at the end, one must ask whether the sum awarded is a fair and reasonable
sum. The conventional basis of assessing compensation in personal injury cases - and that is now
recognized mode as to the proper measure of compensation - is taking an appropriate multiplier of
an appropriate multiplicand.
8. In General Manager Kerala State Road Transport Corporation, Trivandrum v.. Susamma Thomas (Mrs.) and Ors1., this Court laid down the following principles: "13. 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 (1994) 2 SCC 176 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."
17. The multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs 10,000. If a sum of Rs 1,00,000 is invested at 10% annual interest, the interest will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rs 10,000 would be 20. Then the multiplier, i.e., the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependants, whichever is higher) goes up."
9. The principles laid down in Susamma Thomas1 still hold the field; the only variation has been in respect of maximum multiplier. In the present case the Tribunal as well as the High Court seriously erred in not assessing the compensation for personal injury to the appellant in accord with the recognized mode i.e., by taking an appropriate multiplier of an appropriate multiplicand.
....
11....................... In our opinion, it is fair and reasonable to assess his future earnings at Rs. 60,000/- per annum taking the salary and allowances payable to an Assistant Engineer in public employment as the basis. Since he suffered 70% permanent disability, the future earnings may be discounted by 30% and, accordingly, we estimate upon the facts that the multiplicand should be Rs.42,000/- per annum. The appellant at the time of accident was about 25 years. As per the decision of this Court in Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr1. the operative multiplier would be 18. The loss of future earnings by multiplying the multiplicand of Rs. 42,000/- by a multiplier of 18 (2009) 6 SCC 121 comes to Rs. 7,56,000/-. The damages to compensate the appellant towards loss of future earnings, in our considered judgment, must be Rs. 7,56,000/-. The Tribunal awarded him Rs. 1,50,000/- towards treatment including the medical expenses. The same is maintained as it is and, accordingly, the total amount of compensation to which the appellant is entitled is Rs. 9,06,000/- .
12. Before we close, we must notice in all fairness to the learned counsel for the insurer his submission that the appellant is entitled to compensation in accordance with the Second Schedule appended to the 1988 Act only. This submission overlooks the fact that the appellant made his claim under Section 166 of the 1988 Act and not under Section 163A. It is true that in Reshma Kumari & Ors. v. Madan Mohan & Anr.,1 a two-Judge Bench of this Court has referred the question whether multiplier specified in the Second Schedule should be taken to be a guide for calculation of the amount of compensation payable in a case falling under Section 166 to the larger bench and the said question is not yet authoritatively decided.
for personal injury. Suffice it to say that the basis of assessment of all damages for personal injury is
compensation. The whole idea is to put the claimant in the same position as he was in so far as
money can. Perfect compensation is hardly possible but one has to keep in mind that the victim has
done no wrong; he has suffered at the hands of the wrongdoer and the court must take care to give
him full and fair compensation for that he had suffered. In some cases for personal injury, the claim
could be in respect of life time's earnings lost because, though he will live, he cannot earn his living.
In others, the claim may be made for partial loss of earnings. Each case has to be considered in the
light of its own facts and at the end, one must ask whether the sum awarded is a fair and reasonable
sum. The conventional basis of assessing compensation in personal injury cases - and that is now
recognized mode as to the proper measure of compensation - is taking an appropriate multiplier of
an appropriate multiplicand.
8. In General Manager Kerala State Road Transport Corporation, Trivandrum v.. Susamma Thomas (Mrs.) and Ors1., this Court laid down the following principles: "13. 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 (1994) 2 SCC 176 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."
17. The multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs 10,000. If a sum of Rs 1,00,000 is invested at 10% annual interest, the interest will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rs 10,000 would be 20. Then the multiplier, i.e., the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependants, whichever is higher) goes up."
9. The principles laid down in Susamma Thomas1 still hold the field; the only variation has been in respect of maximum multiplier. In the present case the Tribunal as well as the High Court seriously erred in not assessing the compensation for personal injury to the appellant in accord with the recognized mode i.e., by taking an appropriate multiplier of an appropriate multiplicand.
....
11....................... In our opinion, it is fair and reasonable to assess his future earnings at Rs. 60,000/- per annum taking the salary and allowances payable to an Assistant Engineer in public employment as the basis. Since he suffered 70% permanent disability, the future earnings may be discounted by 30% and, accordingly, we estimate upon the facts that the multiplicand should be Rs.42,000/- per annum. The appellant at the time of accident was about 25 years. As per the decision of this Court in Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr1. the operative multiplier would be 18. The loss of future earnings by multiplying the multiplicand of Rs. 42,000/- by a multiplier of 18 (2009) 6 SCC 121 comes to Rs. 7,56,000/-. The damages to compensate the appellant towards loss of future earnings, in our considered judgment, must be Rs. 7,56,000/-. The Tribunal awarded him Rs. 1,50,000/- towards treatment including the medical expenses. The same is maintained as it is and, accordingly, the total amount of compensation to which the appellant is entitled is Rs. 9,06,000/- .
12. Before we close, we must notice in all fairness to the learned counsel for the insurer his submission that the appellant is entitled to compensation in accordance with the Second Schedule appended to the 1988 Act only. This submission overlooks the fact that the appellant made his claim under Section 166 of the 1988 Act and not under Section 163A. It is true that in Reshma Kumari & Ors. v. Madan Mohan & Anr.,1 a two-Judge Bench of this Court has referred the question whether multiplier specified in the Second Schedule should be taken to be a guide for calculation of the amount of compensation payable in a case falling under Section 166 to the larger bench and the said question is not yet authoritatively decided.
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