Supreme Court Clarifies Inapplicability of Split Multiplier in Motor Accident Compensation Awards.


06 November 2025 Motor Accident >> Family Law  

The Supreme Court of India has, by a recent judgment, put an end to the controversy as to the applicability of the method of split multiplier in calculating compensation payable under Section 166 of the Motor Vehicles Act, 1988. The said judgment came on an appeal filed against the judgment of the Kerala High Court, whereby it reduced compensation granted by the Motor Accidents Claims Tribunal by applying a split multiplier on the assumption that the deceased would have shortly retired from government service.

The present appeal related to the death of an Assistant Engineer, 51 years of age, who was in service in the Public Works Department, due to a fatal collision of his car with a bus driven negligently. The Tribunal had calculated the award on his monthly income, adding 15% for future prospects and applying a multiplier of nine, yielding compensation exceeding forty-four lakh rupees. It was against this that the dissatisfied parties preferred an appeal, and the High Court, after a partial modification, reduced the multiplier effect on the assumption of retirement and consequent fall in post-retirement income—a reasoning that the Supreme Court found unsustainable.

 

 

The Supreme Court noted that high courts have taken conflicting views on the issue of split multipliers, with some approving and others rejecting the concept, even within the same High Court. This divergence, the bench said, erodes judicial discipline and creates uncertainty in awards. Referring to the structured approach enunciated in Sarla Verma v. DTC, the Court reiterated that the multiplier is to be selected based exclusively on the age of the deceased at the time of death and not on speculative future employment or retirement prospects.

The judgment emphasized that superannuation cannot be treated as an exceptional circumstance warranting departure from the settled multiplier principle. Since everyone in service necessarily faces retirement eventually, it cannot justify a reduced assessment of dependency. The Court reiterated that compensatory computation is to follow a uniform and predictable methodology in line with earlier binding authority, and any deviation must be supported by cogent and exceptional reasons—which, in this instance, were entirely absent.

The Supreme Court, while restoring the award made by the Tribunal with necessary modifications under the conventional heads as per Pranay Sethi, stated that claimants were entitled to the more amount awarded at the inception. The Court further ordered that the amount of modified compensation shall be directly disbursed to bank accounts of the beneficiaries latest by the end of November 2025 and directed that copies of this judgment be circulated to all the High Courts and all Motor Accident Claims Tribunals so that the legal position may be uniformly applied. 

This judgment marks the reaffirmation of the principle that compensation under the Motor Vehicles Act has to rest on certainty and fairness, and not on speculative deductions on assumed retirement or post-retirement income. The clarification by the Court will bring much-needed consistency in determination of accident compensation across jurisdictions.


Section 166, Motor Vehicles Act - 1988  

Motor Vehicles Act, 1988