Factors to be considered in case of Motor Vehicle Accident Compensation 

Factors to be considered in case of Motor Vehicle Accident Compensation 

Factors to be considered in case of Motor Vehicle Accident Compensation 

In a recent judgment on 27th July 2020, the Supreme Court of India has concluded it shall be necessary to take note of the factors like career prospects and future advancement in life while applying the multiplier method to calculate that while applying the multiplier for providing compensation for an employee.

Background- Facts of the case

Priya was an employee of a software company when in the year 2011 when the bus by which she was traveling hit with a lorry and consequently she suffered injuries and it leads to disability of nearly 31.1% on the whole body. 

She filed a claim petition before the Motor Vehicle Accidents claim Tribunal (MCAT) Madurai seeking relief under section 166 of the MV Act 1988. The MACT asserted opined that such injuries leading to a permanent disability of 31.1% shall be recognized and accordingly, the multiplier method shall be applied to compute the cost of earning power. 

Thus, the MACT decided that the State Corporation be liable for the payment of a compensation of Rs. 35,24,288 along with an interest rate of 7.5% per annum effective from the date of petition till date, in addition to fulfillment of costs. Further in an appeal to the High Court, it was decided that the compensation to Rs.25 Lac's reasoning that, applying the multiplier method to assess compensation for the loss of earning power was not appropriate due to lack of evidence on record that how her earning capacity has affected.

Later, she moved to the Apex Court, maintaining that she was entitled to an enhancement of compensation over and above what was allowed by the MACT. In agreement to her contention, the Supreme Court of India affirmed that the multiplier method was indeed a relevant method for computation of compensation and specifically in the age group of 15-25 years, it shall be “18” along with factoring in the extent of disability. 

The judgment stated that earlier in the case of Sarla Verma & Others vs. Delhi Transport Corporation and Another (supra) the multiplier method was held to be appropriate for use.

The above-mentioned position was not, disputed by learned counsel for the respondent-State Corporation, and thus it was clear that the multiplier method should be applicable in the case of the appellant taking the factor as “18” and not “17”.

Similarly, in re. Sandeep Khanuja(supra) case, maintaining the relevance of the multiplier method, it was held that the multiplier method was logically and legally sound enough to properly establish the amount of compensation in cases of death or any permanent disability caused to an employee in the accident. 

Additionally, it was submitted that while using the multiplier method, it is in the rule of law to consider pertinent factors like the career prospects and future life of the person concerned.

The ruling of the Case:

Permitting the admission of the appeal, the bench decided that it was unfair enough to allow lesser compensation than what ought to have been provided using the multiplier method.

Therefore, the appellant was allowed to a sum of Rs.41, 69,831 alongside with simple interest at the rate of 9% per annum from the date of application till the date of payment.

Which Acts in India provide for accidental compensation to employees?

It is a general principle of law that a person cannot seek the same relief two times. Accordingly, it should be noted that an employee intending to seek compensation for death or permanent disability as a result of an accident caused cannot seek the same under two acts.

Consequently, as per section 167 in the Motor Vehicle Act 1988, the claimant has been provided with an option to seek compensation either under the Worker’s Compensation Act, 1923, or under The Motor Vehicle Act, 1988

In no circumstances, they could be allowed to bring a petition under the provision of both the Acts.


eStartIndia Team

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