Court case(2013) 9 SCC 65

A two-judge bench, faced with conflicting decisions on the method of computing compensation in fatal accident claims, referred two questions to a larger bench: whether the multiplier specified in the Second Schedule to the Motor Vehicles Act (which governed structured-formula claims under s. 163A) should be the measure in claims under s. 166, and whether the guidelines in Sarla Verma v. Delhi Transport Corporation (2009) on deduction for personal expenses and the choice of multiplier should be followed. The reference arose from appeals in claims for the deaths of persons in road accidents in which the tribunals and High Courts had used different multipliers and deductions.

The three-judge bench answered the reference. It held that the Second Schedule was framed for the special no-fault structured-formula scheme of s. 163A and was not to be applied as such to claims under s. 166, where the Tribunal must determine just compensation on evidence. For s. 166 claims the multiplier should be chosen according to the table in Sarla Verma, which the Court approved, and the deduction for personal and living expenses should ordinarily follow the Sarla Verma fractions (one-third, one-fourth, one-fifth according to the number of dependants, one-half for a bachelor), subject to departure where the facts justify it. Standardisation of this kind was necessary to avoid arbitrary differences between awards.