ERUDHAYA PRIYA – APPELLANT VERSUS STATE EXPRESS TRANSPORT CORPORATION LTD. – RESPONDENT

Core ratio / Key holding

Headnote

Motor Vehicles Act, 1988 — Compensation — Multiplier Method

Motor Vehicles Act, 1988 — Compensation — Permanent Disability — Future Prospects

Motor Vehicles Act, 1988 — Compensation — Interest Rate

Issues for determination

• Whether the multiplier of '17' should be applied instead of '18' for compensation calculation?
• Whether the loss of earning capacity of the appellant with permanent disability of 31.1% should include future prospects?
• What should be the appropriate interest rate for the awarded compensation?

Ratio decidendi

• In motor accident compensation cases, for victims in the age group of 15-25 years, the multiplier to be applied for calculating compensation is '18', in accordance with the principles laid down in Sarla Verma and Pranay Sethi judgments.
• In motor accident compensation cases involving permanent disability, future prospects on advancement in life and career must be taken into consideration while applying the multiplier method, and for victims aged 23, a 50% addition to the actual salary for future prospects is applicable as per National Insurance Co. Ltd. case.
• In motor accident compensation cases, a simple interest rate of 9% per annum from the date of application till the date of payment is appropriate for the awarded compensation, consistent with judicial pronouncements.

Important points

• Held, for motor accident victims aged 15-25 years, the multiplier of '18' is to be applied for compensation.
• Held, future prospects, including 50% addition to actual salary for victims aged 23, must be considered for permanent disability compensation.
• Held, compensation shall carry simple interest at 9% per annum from the date of application till payment.
• Appeals allowed with costs, entitling the appellant to Rs. 41,69,831/- with 9% interest.
• Balance amount to be transmitted by respondent within six weeks from today.