Supreme Court holds split multiplier impermissible without recorded reasons; restores and enhances tribunal award in motor accident claim

A bench of Justices J.K. Maheshwari and Rajesh Bindal heard an appeal against a judgment of the Madhya Pradesh High Court in a motor accident claim arising from the death of a BSNL employee, challenging the High Court’s application of a “split multiplier” that substantially reduced the compensation awarded by the Claims Tribunal.

The Court allowed the appeal, held that the High Court erred in applying a split multiplier without recording special reasons, restored the Tribunal’s approach to the multiplier and awarded enhanced compensation. The Court observed that established principles in Sarla Verma v. DTC governed multiplier application and cited earlier decisions including Sumathi and Pranay Sethi. The Court, in its reasoning, observed: “From a reading of the above judgment, it is clear that in normal course, the compensation is to be calculated by applying the multiplier, as per the judgment of this Court in the Case of Sarla Verma. Split multiplier cannot be applied unless specific reasons are recorded. The finding of the High Court that the deceased was having leftover service of only four years, cannot be construed as a special reason, for applying the split multiplier for the purpose of assessing the compensation. In normal course, compensation is to be assessed by applying multiplier as indicated by this Court in the judgment in the case of Sarla Verma. As no other special reason is recorded for applying the split multiplier, judgment of the High Court is fit to be set aside by restoring the award of the Tribunal.”

Background The accident occurred on 07.03.2014 when Laxman Das Mahour, aged about 57–58 and employed as a phone mechanic with BSNL, was struck by a bus and died on the spot. His legal heirs (widow, one son and one daughter) filed Claim Case No. 65 of 2014. The Claims Tribunal awarded total compensation of ₹28,66,994 (including loss of dependency computed as ₹4,57,000 x 9 x 2/3), with interest at 7.5% per annum. The Oriental Insurance Company challenged the award before the High Court, which reduced total compensation to ₹19,66,833 by bifurcating pre- and post-retirement income (applying a split multiplier), reducing consortium to ₹40,000 and cutting funeral and estate heads.

The appellants argued before this Court that the High Court wrongly applied the split method, that the Tribunal’s multiplier and calculation were correct, and that future prospects (15%) should have been awarded in line with Pranay Sethi. The insurer contended that the deceased was close to retirement and post-retirement loss must be assessed with reference to pension (about 50% of last drawn salary), thereby justifying the split approach. The Supreme Court reviewed Sarla Verma and subsequent decisions, including Sumathi, and held that departure from the Sarla Verma multiplier regime required specific reasons; mere proximity to retirement did not suffice.

Applying the Tribunal’s multiplier of 9, awarding future prospects at 15% due to the deceased’s age, and revising consortium to ₹40,000 each for the three claimants, the Court calculated loss of dependency and other heads. The Supreme Court modified the award to a rounded total of ₹33,03,000 in favour of the appellants and directed payment of interest at the same rate as the Tribunal had awarded. Pending applications stood disposed of.

Case Details: Case No.: 2025 INSC 161 (Arising out of S.L.P.(C) No.30398 of 2019) Case Title: Maya Singh and Others v. The Oriental Insurance Co. Ltd. and Others Appearances: For the Petitioner(s): Not indicated in the judgment For the Respondent(s): Not indicated in the judgment