Court case(2009) 6 SCC 121

The husband of the first appellant, a salaried employee in his late thirties, was killed in a road accident involving a bus of the Delhi Transport Corporation. His widow, children and parents claimed compensation under s. 166 of the Motor Vehicles Act 1988. The Claims Tribunal and the High Court assessed the compensation for loss of dependency, but the amounts turned on the income to be taken, the addition for future prospects, the deduction for the personal and living expenses of the deceased and the choice of multiplier. The claimants appealed to the Supreme Court seeking enhancement. The Court noted that tribunals and High Courts across the country applied widely differing deductions and multipliers in similar cases, producing inconsistent and unpredictable awards, and took the opportunity to lay down uniform guidelines.

The Supreme Court enhanced the compensation and laid down a structured method. Compensation for loss of dependency is computed by taking the annual income of the deceased (after tax), adding future prospects (50% of the actual salary for a deceased below 40 in permanent service, 30% between 40 and 50, nil above 50, in the absence of contrary evidence), deducting the personal and living expenses of the deceased (one-third where the dependants are two to three, one-fourth for four to six, one-fifth for more than six; one-half for a bachelor, subject to exceptions), and multiplying the resulting annual dependency by a multiplier chosen from the age of the deceased. The Court tabulated the multiplier: 18 for ages up to 25, 17 for 26-30, 16 for 31-35, 15 for 36-40, 14 for 41-45, 13 for 46-50, 11 for 51-55, 9 for 56-60, 7 for 61-65 and 5 above 65. It added modest conventional amounts for loss of estate, consortium and funeral expenses.