Karnataka High Court Rules on Split Multiplier Method in Motor Accident Compensation Claim. Court Holds That Tribunal Justifiably Applied Split Multiplier as Deceased Had Less Than One Year of Service Left.

Appeals against the judgment and award of the Motor Accident Claims Tribunal awarding compensation for death in a road traffic accident.

In MFA 6934/2016, the insurer sought to set aside the award on grounds of no valid permit for the vehicle and excessive compensation; in MFA 6988/2017, the claimants sought enhancement of compensation on the ground that split multiplier should not have been used and that uniform income basis should have been adopted.

Insurer contested liability and quantum; claimants were dissatisfied with the compensation awarded.

The Tribunal in MVC No.147/2014 awarded Rs.20,94,680/- with interest at 6% p.a. applying split multiplier method.

Whether the Tribunal was justified in applying the split multiplier method for calculating compensation under the head of loss of dependency when the deceased had one year of service remaining before retirement? Whether the deduction for personal expenses should be 1/4th or 1/3rd of the deceased's income? Whether the insurer could avoid liability on the ground that the vehicle had no valid permit on the date of accident?

Insurer argued that the vehicle did not have a valid permit on the date of accident, so liability does not arise, and that personal expenses should be deducted at 1/3rd instead of 1/4th. Claimants argued that split multiplier should not be applied and that the last drawn salary should be taken as the income for the entire multiplier period, relying on Puttamma v. K.L. Narayana Reddy. Insurer relied on Union of India v. K.S. Lakshmi Kumar to support application of split multiplier for persons nearing retirement.

In motor accident claims, where the deceased is a salaried employee with a known date of superannuation within a short period from the accident, the split multiplier method can be applied if there are specific reasons and evidence on record justifying departure from a uniform multiplier. The Supreme Court's decision in Puttamma does not bar the use of split multiplier per se; it only cautions against its routine application without specific reasons. The deduction for personal expenses should be appropriate based on the facts.

"Split Multiplier 32. For determination of compensation in motor accident claims under Section 166 this Court always followed multiplier method. ... 34. We, therefore, hold that in absence of any specific reason and evidence on record the Tribunal or the Court should not apply split multiplier in routine course and should apply multiplier as per decision of this Court in Sarla Verma as affirmed in Reshma Kumari." "16. Where the multiplier applicable is higher than the number of years of service which the deceased had before superannuation, the contribution to the family (or loss of dependency) cannot obviously be calculated with the reference to the salary income, for the entire period of multiplier. ... The method adopted in the above illustration will have to be applied in this case." "When the aforesaid two judgments ... are looked into, it would clearly give an indication that the Apex Court while considering the matter with reference to applicability of split multiplier has not specifically over ruled the judgment of the Division Bench of this Court in Union of India –vs- K.S.Lakshmi Kumar’s case ... On the contrary, what is stated by the Apex Court is that, 'in the absence of any specific reason and evidence on record, the Tribunal or the Court should not apply the split multiplier in routine course.' If that is looked into, the Apex Court is not averse to the application of split multiplier for calculation of compensation payable under the head loss of dependency. But, the observation of the Apex Court is, to apply such method there should be enough material and also reason to follow such method." "Therefore, if the case of hand is viewed from that angle, it is clearly seen that deceased – Suresh was permanent employee of BESCOM as on the date of accident and that, his salaried income was Rs.60,637/- per month, which was assured for only one year. Thereafter, for the remaining 8 years, his income is required to be calculated on the basis of income that he would have received after his retirement i.e., his pensionary benefits, particulars of which is available on record. Therefore, in the fact situation, the Tribunal was justified in taking the last drawn salary of deceased for the first year and for the remaining 8 years, 8 out of 9 multiplier, applying the pensionary income that would have derived to him appears to be just and proper and does not call for interference by this Court in view of the judgment of the Apex Court in Puttamma’s case, referred to supra."

The claim petition MVC No.147/2014 was filed before the Senior Civil Judge and JMFC, Additional MACT, Channapattana. The Tribunal awarded Rs.20,94,680/- with interest at 6% p.a. Both the insurer and the claimants filed separate appeals before the High Court under Section 173(1) of the Motor Vehicles Act, 1988. The appeals were heard together and disposed of by common judgment.

• Motor Vehicles Act, 1988: 173(1), 166, Second Schedule