SARLA VERMA & ORS. V. DELHI TRANSPORT CORPORATION & ANR (2009) 6 SCC 121:

DATE: 15/04/2009

COURT: Supreme Court of India

BENCH: Justice R.V. Raveendran and Justice Lokeshwar Singh Panta

FACTS:

This case arose from a motor accident claim filed by the dependents of Sarla Verma, who died in a road accident caused by the rash and negligent driving of a Delhi Transport Corporation (DTC) bus. On 23 April 1988, Sarla Verma, aged 38 years, was travelling as a pillion rider on a scooter driven by her husband, R.K. Verma, when they were hit by the DTC bus. As a result of the collision, Sarla Verma sustained fatal injuries. Her legal heirs, including her husband and two sons, filed a claim petition under the Motor Vehicles Act, 1988, seeking compensation for her death. The Motor Accident Claims Tribunal (MACT) awarded a compensation of Rs. 4.5 lakhs, applying a multiplier of 13 and deducting one-third of the deceased's income towards personal expenses. The Tribunal also awarded interest at 12% per annum on the compensation amount.

Aggrieved by the compensation awarded, both the claimants and the DTC filed appeals before the Delhi High Court. The High Court reduced the compensation to Rs. 3.75 lakhs, applying a multiplier of 11 instead of 13 and making similar deductions for personal expenses. Dissatisfied with the reduced compensation, the claimants appealed before the Supreme Court, seeking a higher compensation. The case primarily revolved around determining the appropriate method for calculating compensation in motor accident claims, particularly concerning the selection of the correct multiplier, deduction for personal expenses, and the assessment of future prospects of the deceased’s income.

ISSUES:

The primary issues were the calculation of compensation in motor accident claims, specifically regarding the appropriate multiplier, deduction for personal expenses, and the inclusion of future prospects in determining the compensation amount. The case also addressed the need for a standardized method to ensure consistency in such claims.

JUDGEMENT WITH REASONING:

The Supreme Court laid down standardized guidelines for calculating compensation in motor accident claims. It held that the multiplier method should be uniformly applied based on the deceased's age and the claimant's age, and introduced a structured formula for deducting personal expenses. The Court also ruled that future prospects should not be included in the compensation calculation unless the deceased had a permanent job with established career growth.

The Court reasoned that the multiplier method ensures fairness and consistency in awarding compensation by factoring in the victim’s age, income, and remaining working years. It found that inconsistent application of multipliers by various courts had led to arbitrary and unequal awards. To rectify this, the Court adopted a standardized multiplier table based on the victim's age, promoting uniformity and reducing judicial discretion. It also clarified that the deduction for personal expenses should typically be one-third for a married person and one-half for an unmarried individual, accounting for the deceased’s contribution to dependents.

The Court further reasoned that future prospects should only be considered in cases involving victims with a stable, permanent job and predictable career growth. It concluded that including future prospects in all cases would lead to inflated and speculative compensation, creating inconsistencies. By excluding future prospects for self-employed and fixed-income individuals, the Court aimed to ensure a realistic and equitable compensation framework, balancing the interests of both claimants and insurers.

ANALYSIS:

The Supreme Court's judgment in Sarla Verma & Ors. v. Delhi Transport Corporation & Anr introduced a standardized framework for calculating compensation in motor accident claims, bringing consistency and predictability to such cases. By establishing a uniform multiplier table based on the deceased's age, the Court ensured that compensation awards became more objective and less prone to judicial discretion. The ruling also clarified the deduction for personal expenses, specifying one-third for married individuals and one-half for unmarried individuals, thereby ensuring that the compensation accurately reflected the financial support lost by the dependents. This standardized method reduced the scope for inconsistent or arbitrary awards by lower courts, promoting fairness and judicial efficiency in determining compensation.

The Court's decision to exclude future prospects from compensation calculations, except in cases involving individuals with stable, permanent employment, introduced a practical and realistic approach. By limiting the inclusion of future prospects to cases with predictable income growth, the Court aimed to prevent speculative and inflated claims. This distinction created a clear standard, ensuring that compensation reflected the actual economic loss rather than hypothetical future earnings. The ruling also struck a balance between protecting the interests of accident victims’ families and preventing excessive financial liability for insurers, thereby promoting equity and consistency in motor accident claim adjudication.