Recently, the Kerala High Court examined whether the standard multiplier prescribed in Sarla Verma can be applied when an injured motor accident claimant dies later due to reasons unconnected with the accident. Deciding a reference arising from multiple appeals, the Court held that in such situations, the multiplier must correspond to the actual period the injured person lived after the accident. Importantly, the Court observed that applying the standard multiplier despite an unrelated death would result in a “windfall” that the law does not permit.
Brief Facts:
In the first matter, the injured person suffered multiple fractures in a motor accident and underwent prolonged treatment. He later died after more than two years due to liver cirrhosis and other unrelated ailments. In the second case, the claimant, who had sustained severe skull injuries as a pillion rider, died after more than four years due to bronchitis and lung infection. In both matters, the claimants’ legal heirs sought disability compensation, arguing for the application of the standard multiplier.
Contentions:
Counsel for the appellants argued that the right to compensation crystallizes at the very moment of injury and therefore must be calculated strictly in accordance with the multiplier table in Sarla Verma. They submitted that a subsequent unrelated death cannot reduce the quantum of compensation and that the standardized method ensures uniformity.
On the other hand, it was contended that where the death has no nexus with the accident injuries, applying a multiplier based on normal life expectancy leads to an irrational result and unjust enrichment.
Observations of the Court:
The Court examined the Sarla Verma and Pranay Sethi principles and clarified that these judgments primarily dealt with fatal accident claims and not the special situation where an injured person later dies due to unrelated causes. Referring to the Apex Court’s recent decision in Dhannalal @ Dhanraj v. Nasir Khan, the Court reproduced the following crucial passage, “It is trite that what is awarded to an injured is just compensation and it cannot lead to a windfall for the claimant or his legal heirs… When the consideration is with respect to loss occasioned to the estate of the injured, the multiplier adopted of 14 cannot be applied, which will have to be reduced to the actual life span.”
The Court emphasized that the structured multiplier assumes that the injured would have lived and earned for the corresponding number of years. Once it is known that the person lived for a shorter period due to unrelated causes, the assumption underlying the formula collapses. The Bench also rejected the argument that this principle should then equally apply when an injured claimant outlives the predicted multiplier period, noting that the multiplier system already incorporates several life-expectancy variables and cannot be stretched beyond its purpose.
Accordingly, the Court affirmed that the view earlier taken in Cholamandalam Insurance v. Shailaja represents the correct legal position.
The decision of the Court:
In the first set of appeals, although the Court held that the Tribunal should not have applied the higher multiplier, it found that the claimant’s monthly income had been undervalued. After recalculating the earnings at a reasonable rate, the Court upheld the overall compensation.
In the second appeal, the Court accepted the Tribunal’s finding that the death had no causal connection to the injuries. However, it enhanced the amounts awarded under several heads, including permanent disability, loss of earnings, pain and suffering, and loss of amenities. The Court directed the payment of additional compensation of ₹27,800 with the same rate of interest as awarded by the Tribunal. All connected appeals were accordingly disposed of.
Case Title: The Oriental Insurance Company Ltd. vs. Mini Devadas and Ors.
Case No.: MACA No.1920 of 2011
Coram: Justice Sathish Ninan, Justice P. Krishna Kumar
Advocate for Petitioner: Adv. Mathews Jacob (SR.), P. Jacob Mathew
Advocate for Respondent: Adv. P. Narayanan
Read Judgment @Latestlaws.com
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