Supreme Court Enhances Motor-Accident Compensation, Applies Multiplier 18 and 40% Future Prospects

A bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah heard the appeal arising under Section 173(1) of the Motor Vehicles Act, 1988 challenging a Division Bench judgment of the Karnataka High Court which had modified a Motor Accident Claims Tribunal award but declined to apply the multiplier and future prospects contended by the claimant.

The Court allowed the civil appeal in part and held that interference with the High Court's order was warranted. It held that the MACT had assessed the appellant’s age at 24 years, and therefore "the multiplier ‘18’ should be applied" for computation of loss of future earnings; it also held that the appellant was entitled to future prospects at the rate of 40% as laid down in Pranay Sethi. The Court directed recalculation of compensation, awarded the differential amount with interest, and imposed costs for non-appearance by the respondent. The Court, in its reasoning, observed: "That said, the appellant is right in submitting that as per the decision in Pranay Sethi (supra), he is entitled to receive compensation for future prospects at the rate of 40%. Hence, the correct calculation under head of ‘loss of future earning’ would be Rs.4,000/- (Rupees Four Thousand) (Notional income) x 12 x 18(Multiplier) x 1.40 (Future prospects) x 20/100 = Rs.2,41,920/- (Rupees Two Lakhs Forty One Thousand Nine Hundred Twenty)."

Background: The dispute arose from a road accident dated 11.07.2009 in which the appellant, then aged 27, sustained grievous injuries in a collision involving a Maharashtra State Road Transport Corporation bus (Regn. No. MH12CH7027). The claimant filed MVC No.366/2011 seeking Rs.23,50,000 and produced medical records, bills, FIR, chargesheet and a disability certificate. The MACT awarded Rs.2,60,200 (with a 20% disability assessment and interest at 6% from filing) after quantifying heads including pain and suffering, medical expenses, attendant charges, loss of earnings during treatment and loss of future earning calculated on a multiplier of 17. The High Court allowed the claimant’s appeal to a limited extent, increasing medical expenses and loss during treatment and enhancing the award to Rs.3,05,200, but it did not adopt the multiplier of 18 urged by the claimant nor grant addition for future prospects at 40%.

Before the Supreme Court the claimant argued that Sarla Verma v. DTC required use of multiplier 18 given the MACT’s assessment of age and that National Insurance Co. Ltd. v. Pranay Sethi entitled him to 40% future prospects; he sought an enhanced award of Rs.3,83,920 (an increase of Rs.78,720) with interest. The respondent corporation did not appear despite service.

The Supreme Court found "that a case for interference has been made out," held that the multiplier of 18 applied, accepted the claim to 40% future prospects, and directed recalculation accordingly. The Court ordered payment of Rs.3,83,920 as total compensation after adjustment of amounts already paid, directed payment of the differential amount within 30 days with interest at 6% per annum from the date of filing of the claim petition until realization, and provided that failure would attract an additional 8% interest on principal and interest for the period of delay. The Court also imposed costs of Rs.50,000 on the respondent for failure to appear and directed the Registry to send a copy of the judgment to the Managing Director of the respondent corporation. The civil appeal was disposed of modifying the impugned judgment in these terms.

Case Details: Case No.: CIVIL APPEAL NO.12009 OF 2024 Case Title: Madivalappa v. Maharashtra State Road Transport Corporation Appearances: For the Petitioner(s): Not indicated For the Respondent(s): Not indicated