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Factors to be considered while computing compensation to be given to an employee in a motor vehicle accident

Court :
Supreme Court of India

Brief :
The Supreme Court has observed that while applying the multiplier method in computing Motor Accident Compensation, future prospects on advancement in life and career are also to be taken into consideration.

Citation :
Erudhaya Priya vs State Express Transport Corporation Ltd.

CIVIL APPEAL NOS. 2811-2812 OF 2020
[Arising out of SLP (C) Nos.8495-8496 of 2018]



1. Leave granted.

2. On the fateful day of 16.08.2011, the appellant was travelling from Chennai to Bangalore in a bus owned by the respondent State Corporation bearing registration No. TN-01-N-7531. At about 5.40 a.m., while the bus was moving on the Kolar Bangalore National Highway, it ran into a stationary lorry. The collision resulted in multiple injuries to numerous passengers including the appellant, and caused death of the bus conductor on the spot. The appellant was rushed to R.L. Jallappa Research & Medical College Hospital, Tamak, Kolar and further treatment was administered at the Manipal Hospital, Bangalore where she remained admitted for 8 months. The injuries to the appellant were grievous including fractures in the arms and legs and she suffered a disability of 31.1% of the whole body.

3. An FIR was registered in pursuance of investigation naming the driver of the bus as an accused. Chargesheet was filed. But what is relevant is that the appellant filed a claim petition before the Motor Accident Claims Tribunal (“MACT”), Madurai under Section 166 of the Motor Vehicles Act, 1988 (“MV Act”) read with Rule 3(1) of the Tamil Nadu Motor Vehicles Accident Claims Tribunal Rules, 1989 claiming a compensation of Rupees One Crore for injuries sustained in the accident. Evidence was led by both the parties and
the MACT, on a perusal of the documents and oral testimonies, including the rough sketch and the chargesheet, came to the conclusion that the accident occurred due to the rash and negligent manner of driving of the bus driver of the bus owned by the respondent State Corporation and, thus, held the respondent liable to pay compensation to the appellant. In terms of the judgment dated 20.10.2014, the MACT opined that the permanent disability of 31.1% would have to be considered and applied the multiplier method to calculate the loss of earning power. Since the appellant was 23 years of age, multiplier of 17 was applied on the monthly salary of the appellant as a software engineer and the compensation was worked out for loss of earning power to Rs. 9,27,424/. The compensation was also attributed under various heads of extra nourishment, medical expenses, physiotherapy, loss of matrimonial aspects, loss of comfort and amenities, mental agony, and pain and suffering. The total quantification of the compensation by the MACT was of Rs. 35,24,288/- payable by the respondent State Corporation along with interest @ 7.5% per annum from the date of petition till the date of realization with costs.

4. The respondent State Corporation filed an appeal against this order and the appellant filed cross objections. Both of them were decided by the impugned judgment of the High Court dated 27.10.2017 by a common order. The High Court, confirming the findings of negligence of the bus driver, reduced the compensation to Rs. 25,00,000/- primarily on the ground that the multiplier method for quantifying loss of earning power has been wrongly applied as it had not come on record as to how the injuries suffered by the
appellant would have a bearing on her earning capacity as a software engineer. The interest rate was sustained.

5. The appellant has claimed before this Court that she is entitled to enhancement of compensation even over and above what was granted by the MACT and has quantified the same as Rs. 41,69,831/- under various heads along with claiming a revised interest rate @ 12% per annum.

6. We heard learned counsels for the parties. They have also filed short synopses of their respective claims and rebuttals thereof, with the appellant enlisting the principles which can apply to her case, the law being now well settled in like cases.

To read the full judgement, find the enclosed file


on 06 August 2020
Published in Corporate Law
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