The Supreme Court of India, in a significant judgment, has held that the concept of a “split multiplier”—calculating motor accident compensation differently for pre-retirement and post-retirement periods—is “foreign to the Motor Vehicles Act, 1988” and must not be used by Tribunals or Courts.
A bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra set aside a Kerala High Court judgment that had applied a split multiplier to reduce the compensation awarded to the family of a 51-year-old government engineer killed in a road accident. The Court allowed the appeal filed by the claimants, Preetha Krishnan & Ors., and enhanced the total compensation to Rs. 47,76,794/-.
Background of the Case
The case arises from a motor accident on 3rd August 2012, which resulted in the death of T.I. Krishnan, aged 51. The deceased was driving his car when a bus, “driven in a rash and negligent manner,” collided with him, causing fatal injuries. At the time of his death, Mr. Krishnan was employed as an Assistant Engineer in the Public Works Department, earning Rs. 47,860/- per month.
His wife and children (the claimant-appellants) filed a claim petition under Section 166 of the Motor Vehicles Act before the Motor Accidents Claims Tribunal (MACT), Pala.
On 2nd April 2014, the Tribunal awarded Rs. 44,04,912/-. The Tribunal determined the deceased’s income at Rs. 45,408/- (post-tax), added 15% for future prospects (as the deceased was 51), deducted 1/4th for personal expenses, and applied a multiplier of 9.
High Court’s Reduction of Compensation
Both the insurer, The United India Insurance Co. Ltd., and the claimants filed appeals before the High Court of Kerala.
On 28th June 2024, the High Court partly allowed the appeals and reduced the compensation under ‘loss of dependency’ from Rs. 42,29,712/- to Rs. 35,10,144/-. The High Court’s reasoning for this reduction was the application of a “split multiplier,” based on the rationale that the “deceased would have shortly superannuated from service. Thereafter, there would have been a 50% (approx. reduction) in his monthly take-home pay.”
The claimants’ review petitions against this order were also rejected by the High Court.
Supreme Court’s Analysis and Decision
The claimant-appellants challenged the High Court’s judgment before the Supreme Court, arguing that the court erred in applying the split multiplier without considering the deceased’s educational qualifications and potential to earn even after retirement.
The Supreme Court bench, in its judgment authored by Justice Sanjay Karol, found “force in this point of challenge.”
The Court observed that there were “divergent views” among High Courts regarding the use of the split multiplier, with differences existing even “intra-court.” The judgment noted this “creates a concerning situation for judicial discipline” and leaves Tribunals “bereft of guidance.”
Reaffirming the standardized method established by the Constitution Bench in National Insurance Co. Ltd. v. Pranay Sethi (2017) and Sarla Verma v. DTC (2009), the Supreme Court held that the multiplier must be based on the age of the deceased, not their remaining years of service.
The Court held that impending retirement is not an “exceptional circumstance” justifying a deviation from the standard multiplier. “Superannuation from service hardly qualifies as such an exceptional circumstance, which would justify the use of split multiplier,” the Court observed.
The judgment explicitly cited the precedent in Sumathi v. National Insurance Co. Ltd. (2021), stating: “….it is clear that in normal course, the compensation is to be calculated by applying the multiplier, as per the judgment of this Court 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…”
The Supreme Court found that the High Court’s reliance on other judgments (K.R. Madhusudhan and Puttamma) was misplaced, as retirement from service is not an “out of the ordinary,” “exceptional,” or “cogent” reason required by those precedents.
Concluding the legal issue, the bench declared: “In other words, split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used by the Tribunal and/or Courts in calculation of the compensation.”
The bench also noted the High Court’s failure to apply the 10% enhancement on conventional heads every three years, as mandated by Pranay Sethi.
Final Award
The Supreme Court set aside the High Court’s calculation and awarded compensation as follows:
- Income: Rs. 45,408/- per month
- Future Prospects: 15% (Rs. 6,26,630/- per annum)
- Deduction: 1/4th (for personal expenses)
- Multiplier: 11 (based on the deceased’s age of 51)
- Total Loss of Dependency: Rs. 45,95,294/-
The Court revised the conventional heads (Loss of Estate, Funeral Expenses, Loss of Consortium) in accordance with Pranay Sethi, bringing the total compensation payable to Rs. 47,76,794/-.
The Court allowed the appeals and modified the awards, expressing “surprise regarding the approach adopted by the High Court despite clear observations in Sumathi (supra).” The insurer was directed to remit the amount by 30th November, 2025.
The Court clarified that its directions regarding the split multiplier “shall apply prospectively” and directed the order to be circulated to the Registrars General of all High Courts and to all Tribunals.
