2006 (7) TMI 674 - SC - Indian Laws

Supreme Court revises compensation in fatal accident case, adjusts multiplier and interest rate.

The Supreme Court adjusted the multiplier and interest rate in a fatal accident compensation case. The Court found the original multiplier of 22 excessive ... - Issues:Challenge to the judgment of the Division Bench of the Allahabad High Court dismissing the First Appeal against the Award passed by a Motor Accident Claims Tribunal.Detailed Analysis:1. Multiplier and Interest Rate Dispute:The Tribunal awarded compensation to the claimants, calculating the loss of dependency and applying a multiplier of 22 along with an interest rate of 12%. The Corporation challenged the correctness of the award, arguing that the multiplier and interest rate were high. The High Court dismissed the appeal, upholding the Tribunal's decision. The appellant contended that the multiplier of 22 was excessive given the deceased's age, and the interest rate of 12% was also deemed high. In contrast, the respondents argued that the multiplier and interest were correctly applied, and the awarded amount was minimal, thus no interference was warranted.2. Principles for Compensation Calculation:The Supreme Court highlighted principles from previous cases regarding the calculation of compensation in fatal accident actions. The measure of damages awarded to dependents is the pecuniary loss resulting from the deceased's death. The calculation involves determining the deceased's earnings, personal expenses, and estimating the dependency loss. Two methods were identified for compensation calculation: the multiplier method and the Nance method. The multiplier method factors in the loss of dependency, the deceased's age, and the expected capital sum that would yield the multiplicand annually. The selection of multiplicand and multiplier considers various contingencies and uncertainties affecting the dependency.3. Multiplier Application and Adjustment:The Court discussed the application of multipliers in compensation calculations, emphasizing the need to adjust the multiplier based on prevailing interest rates. Reference was made to cases where multipliers were determined based on banking interest rates. The appropriate multiplier was assessed considering factors like age and earning capacity. In this case, the Court found the multiplier of 22 adopted by the Tribunal to be indefensible, suggesting a revised multiplier of 13 based on the deceased's age. By recalculating the compensation with a monthly loss of dependency at Rs. 2,000, the revised award amount was determined to be Rs. 3,37,000, along with additional amounts for love and affection and funeral expenses.4. Final Decision:Based on the principles discussed and the recalculated compensation amount, the Supreme Court allowed the appeal to the extent of adjusting the multiplier and interest rate. The revised compensation of Rs. 3,37,000 was awarded to the claimants, with an interest rate of 9% from the date of filing the claim petition. No costs were imposed in this decision. The judgment serves as a comprehensive analysis of the factors involved in determining compensation in fatal accident cases, emphasizing the need for a balanced approach considering various contingencies and economic factors.