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While applying the multiplier method, future prospects on advancement in life and career are also to

ERUDHAYA PRIYA Vs. STATE EXPRESS TRANSPORT CORPORATION LTD. – CIVIL APPEAL NOS. 2811-2812 OF 2020 [Arising out of SLP (C) Nos.8495-8496 of 2018]

The bench consisting of Justice Sanjay Kishan Kaul, Justice Ajay Rastogi, Justice Aniruddha Bose while allowing an appeal held that in the age group of 15- 25 years, the multiplier has to be ‘18’ along with factoring in the extent of disability.

On the fateful day of 16.08.2011, the appellant was travelling from Chennai to Bangalore in a bus owned by the respondent State Corporation bearing registration No. TN-01-N-7531. At about 5.40 a.m., while the bus was moving on the Kolar Bangalore National Highway, it ran into a stationary lorry. The collision resulted in multiple injuries to numerous passengers including the appellant, and caused death of the bus conductor on the spot. The appellant was rushed to R.L. Jallappa Research & Medical College Hospital, Tamak, Kolar and further treatment was administered at the Manipal Hospital, Bangalore where she remained admitted for 8 months. The injuries to the appellant were grievous including fractures in the arms and legs and she suffered a disability of 31.1% of the whole body.

An FIR was registered in pursuance of investigation naming the driver of the bus as an accused. Chargesheet was filed. But what is relevant is that the appellant filed a claim petition before the Motor Accident Claims Tribunal (“MACT”), Madurai under Section 166 of the Motor Vehicles Act, 1988 (“MV Act”) read with Rule 3(1) of the Tamil Nadu Motor Vehicles Accident Claims Tribunal Rules, 1989 claiming a compensation of Rupees One Crore for injuries sustained in the accident. Evidence was led by both the parties and the MACT, on a perusal of the documents and oral testimonies, including the rough sketch and the chargesheet, came to the conclusion that the accident occurred due to the rash and negligent manner of driving of the bus driver of the bus owned by the respondent State Corporation and, thus, held the respondent liable to pay compensation to the appellant.

In terms of the judgment dated 20.10.2014, the MACT opined that the permanent disability of 31.1% would have to be considered and applied the multiplier method to calculate the loss of earning power. Since the appellant was 23 years of age, multiplier of 17 was applied on the monthly salary of the appellant as a software engineer and the compensation was worked out for loss of earning 2 power to Rs. 9,27,424/. The compensation was also attributed under various heads of extra nourishment, medical expenses, physiotherapy, loss of matrimonial aspects, loss of comfort and amenities, mental agony, and pain and suffering. The total quantification of the compensation by the MACT was of Rs. 35,24,288/- payable by the respondent State Corporation along with interest @ 7.5% per annum from the date of petition till the date of realization with costs.

The respondent filed an appeal against this order. The High Court, confirming the findings of negligence of the bus driver, reduced the compensation to Rs. 25,00,000/- primarily on the ground that the multiplier method for quantifying loss of earning power has been wrongly applied as it had not come on record as to how the injuries suffered by the appellant would have a bearing on her earning capacity as a software engineer. The interest rate was sustained.

The Honorable Supreme Court examined the following three aspects:

  1. The application of multiplier of ‘17’ instead of ‘18’;

Under this aspect, the apex court held that:

“The aforesaidincrease of multiplier is sought on the basis of age of the appellant as 23 years relying on the judgment in National Insurance Company Limited v. Pranay Sethi and Others((2017) 16 SCC 680 ) . In para 42 of the said judgment, the Constitution Bench effectively affirmed the multiplier method to be used as mentioned in the table in the case of Sarla Verma (Smt) and Others. v. Delhi Transport Corporation and Another((2009) 6 SCC 121). In the age group of 15- 25 years, the multiplier has to be ‘18’ along with factoring in the extent of disability.”

2. Loss of earning capacity of the appellant with permanent disability of 31.1%

Supreme court previously in the case of Sandeep Khanuja case opining that the multiplier method was logically sound and legally well established to quantify the loss of income as a result of death or permanent disability suffered in an accident.

The court observed:

“We are, thus, unequivocally of the view that there is merit in the contention of the appellant and the aforesaid principles with regard to future prospects must also be applied in the case of the appellant taking the permanent disability as 31.1%. The quantification of the same on the basis of the judgment in National Insurance Co. Ltd. case (supra), more specifically para 59.3, considering the age of the appellant, would be 50% of the actual salary in the present case”

3. The third and the last aspect is the interest rate claimed as 12%

In respect of the aforesaid, the appellant has watered down the interest rate during the course of hearing to 9% in view of the judicial pronouncements including in the Jagdish case (supra). On this aspect, once 6 again, there was no serious dispute raised by the learned counsel for the respondent once the claim was confined to 9% in line with the interest rates applied by this Court.

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