NEW INDIA ASSURANCE CO. LTD. versus CHARLIE AND ANR.

Citation: [2005] 2 S.C.R. 1173 · Decided: 29-03-2005 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

NEW INDIA ASSURANCE CO. LTD. 
A 
v. 
CHARLIE AND ANR. 
MARCH 29, 2005 
[ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] 
B 
Motor Vehicles Act, 1988 : 
Section 166-Motor accident-Injured about 37 years and married~ 
Was earning Rs. 18, 000 per year-Compensation-Computation of-Multiplier C 
method-Fixation of appropriate multiplier-Held : Where the injured has 
suffered 100%, logic applicable to a deceased can in appropriate cases ~e 
applied-Claimant was deriving income from agriculture, hence, normal rule 
of deprivation of income directly not applicable-Other circumstances to be 
considered-Multiplier of 18 worked out on basis of the prevalent banking D 
rate of interest-Compensation fixed at Rs. 3.5 lakhs with interest @ 7.5% 
p.a. 
Section 166-Accident compensation-Percentage of deduction for 
personal expenditure-Held: Depends upon circumstances of each case-'-On 
facts, where the claimant was about 3 7 years of age and married, 1 !3rd E 
deduction held appropriate for personal expenditure. 
In the present appeal the appellant-Insurance Company has 
challenged the legality of the judgment rendered by High Court hol~ing 
the appellant. liable to pay compensation to respondent No. 1 for the 
injuries sustained by him in an automobile accident. 
F 
Appellant contended that while computing compensation, a 
multiplier of 16 was adopted on the ground that there was permanent 
disability; that the said multiplier is on the higher side and that though 
normally 1/3rd deduction is made from the earning for personal 
expenditure, but in the instant case the multiplier of 16 has been adqpted G 
without making any deduction. 
Allowing the appeal, the Court 
1173 
H 
A 
B 
1174 
SUPREME COURT REPORTS 
[2005] 2 S.C.R. 
HELD : 1. What would be the percentage of deduction for personal 
expenditure cannot be governed by any rigid rule or formula by universal 
application. It would depend upon circumstances of each case. In the 
instant case the claimant was nearly 37 years of age and was married. 
Therefore l/3rd deduction has to be made for personal expenditure. 
(1177-F-GJ 
2.1. In a fatal accident action, the accepted measure of damages 
awarded to the dependants is the pecuniary loss suffered by them as a 
result of the death. (1177-H; 1178-A) 
C 
Municipal Corporation of Delhi v. Subhagwanti, (1966] 3 SCR 649, 
referred to. 
Baker v. Bolton, (1979) 1 All ER 774, referred to. 
Ha/sbury's Laws of England, Vol. 34 para 98, referred to 
D 
2.2. The assessment of damages to comp~nsate the dependants is 
beset with difficulties because from the nature oHhings, it has to take into 
account many imponderables, e.g., the life expectancy of the deceased and 
the dependants, the amount that the deceased would have earned during 
the remainder of his life, the amount that he would have contributed. to 
E the dependants during that period, the chances that the deceased may not 
have lived or the dependants may not live up to the estimated remaining 
period of their life expectancy, the chances that the deceased might have 
got better employment or income or might have lost his employment or 
income together. ( 1179-B-CI 
F 
Goba/d Motor Service Ltd. v. R.M.K. Veluswami, (1962) 1 CR 929, 
referred to. 
3. The manner of arriving at the damages is to ascertain the net 
income of the deceased available for the support of himself and his 
dependants, and to deduct therefrom such part of his income as the 
G deceased was ·accustomed to spend upon himself, as regards both self-
maintenance 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. (1179-D-E( 
H 
4.1. The multiplier method involves the ascertainment of the loss of 
NEW INDIA ASSURANCE CO. LTD. v. CHARLIE 
I I 75 
dependency or the multiplicand having regard to the circumstances of the A 
case and capitalizing the multiplicand by an appropriate multiplier. The 
choice of the multiplier is determined by the age of the deceased (or th.at 
or the claimants wh.ichever 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. ~n B 
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 
dependenc

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