U.P. STATE ROAD TRANSPORT CORPORATION AND ORS. versus TRILOK CHANDRA AND ORS.

Citation: [1996] SUPP. 2 S.C.R. 443 · Decided: 07-05-1996 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
U.P. STATE ROAD TRANSPORT CORPORATION AND ORS. 
A 
v. 
TRILOK CHANDRA AND ORS. 
MAY 7, 1996 
[AM. AHMADI, C.J., N.P. SINGH AND M.K. MUKHERJEE, JJ.] 
B 
Motor Vehicles Act, 1939 : Section 110-B. 
Fatal accident-'Just' compensation-Detennination of-Held : multi-
plier method to be applied-To bring unifonnity and certainty of the awards C 
made all over the country. 
Motor Vehicles Act, 1988 : Sections 163-A, 163-B, 165-A, 168 and 
second Schedule. 
Fatal accident-Compensation-Calculation of-Held : Second D 
Schedule suffered from several defects in calculation of compensa-
tion-Neither Tribunals nor Courts could go by ready reckonei-lt could only 
be used as guide-Selection of multiplier not solely dependent on Age of 
deceased. 
The respondent, aged 26 years, was knocked down by an omnibus E 
belonging to the appellant·Corporation. His legal representatives 
preferred a claim for compensation. Taking bis earning capacity at Rs. 300 
per month, it was esti111ated that be spent Rs. 200 per month on bis family 
members. Fixing the life expectancy at 60 years, the Tribunal deducted 36 
years and held that the family was deprived of his earning for 24 years. 
The compensation was thus worked out at Rs. 57,600 (200x12x24). This 
amount was raised to Rs. 81,600 as it was realised that the Tribunal had 
wrongly taken the age of the deceased at 36 Instead of 26 years and had, 
therefore, committed an error in employing the multiplier of 24 years' 
purchase factor instead of 34 years' purchase factor. Thus the compensa-
F 
tion came to Rs. 200x12x34 = 81,600. The question before this Court was G 
whether the Tribunal was right in employing the multiplier of 24 or the 
High Court was right in employing the multiplier of 34. 
Disposing of the appeal, this Court 
HELD : 1. In Susamma Thomas' case this Court reiterated that the H 
443 
A 
B 
c 
D 
E 
F 
444 
SUPREME COURT REPORTS [1996J SUPP. 2 S.C.R. 
multiplier method is the sound method of assessing the compensation. It 
was rightly clarified that there should he no departure from the multiplier 
method on the ground that Section 110-B of the Motor Vehicles Act, 1939 
(corresponding to the present provision of Section 168 of the Motor 
Vehicles Act, 1988) envisaged payment of 'just' compensation since the 
multiplier method is the accepted method for determining and ensuring 
payment of just compensation and is expected to bring uniformity and 
certainty of the awards made all over the country. [451-H-452-B] 
General Manager, Kera/a State Road Transport, T1ivand1111n v. Su>am-
ma Thomas, [1994] 2 SCC 176, relied on. 
2. It is necessary to reiterate the method of working out 'just' 
compensation because, of late, the principle on which the multiplier 
method was developed has been lost sight of and once again a hybrid 
method based on the subjectivity of the Tribunal/Court has surfaced, 
introducing uncertainty and lack of reasonable uniformity in the matter 
of determining compensation. It must be realised that the Tribunal/Court 
has to determine a fair amount of compensation awardable to th.e victim 
of an accident which m.ust be proportionate to the injury caused. The two 
English decisions, viz., Davies and Nance provide the guidelines for assess-
ing the loss occasioned to the victim. Under the formula advocated 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. In the method adopted in the case 
of Nance also, first the annual dependency is worked out and then multi-
plied by the estimated useful life of the deceased. This is generally deter-
mined 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 
G and increased earning by wise and prudent investments, etc., would be-
come necessary. It was generally felt that discounting on various im-
ponderables made assessment of compensation rather complicated and 
cumbersome and very often as a rough and ready measure, one-third to 
one-half of dependency was reduced, depending on the life-span taken. 
That is the reason why courts in India as well as in England preferred the 
H Davies

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