The Supreme Court of India, in the landmark judgment Preetha Krishnan & Others v. United India Insurance Co. Ltd. & Others [2025 LiveLaw (SC) 1073], has categorically prohibited the use of the “split multiplier” method in the computation of compensation under the Motor Vehicles Act, 1988.
The decision, delivered by a Division Bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra, clarified that while assessing compensation for loss of dependency, the income of the deceased at the time of death must be taken as the basis — and not a reduced income expected after retirement or any speculative future reduction.
The Court observed that the “split multiplier” approach — which divides the compensation calculation into two parts (pre-retirement and post-retirement periods with different multipliers) — is foreign to the statutory scheme of the Motor Vehicles Act and should not be applied as a matter of routine.
By reaffirming the principles laid down in Sarla Verma v. DTC (2009) and National Insurance Co. Ltd. v. Pranay Sethi (2017), the Supreme Court emphasized the need for uniformity, predictability, and fairness in motor accident compensation awards. The ruling is expected to bring greater consistency in the approach of tribunals and High Courts across the country while determining just compensation under Section 166 of the Act.
Facts of the case
- On 3 August 2012, the deceased, T. I. Krishnan (aged 51), an Assistant Engineer in the Public Works Department, died in a motor accident when his car collided with a bus driven in a rash and negligent manner.
- A claim petition under Section 166 of the Motor Vehicles Act, 1988 was filed by his wife and children on 11 December 2012 for ₹60,00,000.
- The Motor Accidents Claims Tribunal awarded approximately ₹ 44,04,912 (≈ ₹44.04 lakh).
- On appeal, the Kerala High Court reduced the compensation to approximately ₹ 35,10,144 by applying a “split multiplier” reduction (reasoning that the deceased would retire soon and his income would drop post-retirement).
- The Supreme Court granted leave and heard the appeal.
Issues before the Supreme Court
- Whether the application of a split multiplier is permissible in calculating compensation under Section 166 of the Motor Vehicles Act.
- Whether income at the time of death (or immediately prior thereto) must be taken for calculation of dependency compensation (rather than reduced income post-retirement).
- Whether superannuation or retirement of the employee is a sufficient “exceptional circumstance” to reduce the multiplier or income.
Holding / Judgment
- The bench (Justices Sanjay Karol and Prashant Kumar Mishra) held that the concept of “split multiplier” is foreign to the Motor Vehicles Act and must not be applied as a matter of course.
- The Court held that the income of the deceased as on the date of death must be taken for the calculation of compensation for loss of dependency.
- The Court observed that superannuation or retirement is not “exceptional circumstances” that justify the use of a split multiplier. “It is only a natural progression that a person who enters service must also exit at some point in time. The same cannot be taken as a negative circumstance against the deceased person or a person injured severely…”
- On recalculation:
- Monthly income of deceased accepted at ₹ 45,408 (i.e., yearly ₹ 5,44,896).
- Future prospects of 15% (since age was 51).
- Deduction of 1/4 for personal living expenses.
- Multiplier of 11 (for age 51).
- Loss of dependency = ₹ 4,17,754 × 11 = ₹ 45,95,294. Adding other heads (funeral expenses, loss of estate, consortium) the total comes to approx ₹ 47,76,794.
- The appeals were allowed to this extent, modifying the awards accordingly.
- The Court directed that the order be circulated to all High Courts and tribunals for uniform compliance.
- It clarified that the conclusions regarding split multiplier apply prospectively, and do not disturb past judgments.
Key Legal Principles & Implications
- Split Multiplier – The idea of applying different multipliers (or reducing income for a portion of the years) based on an anticipated drop in income (e.g., after retirement) has been rejected as a standard practice unless there are exceptional circumstances. The Court reiterates previous jurisprudence (e.g., Sumathi v. National Insurance Co. Ltd.) that such reduction must be based on cogent reasons.
- Income at Date of Death – The benchmark for calculating loss of dependency is the income of the deceased at the time of death (or immediately prior), not some speculative reduced income post-retirement.
- Future Prospects – The standard approach of applying a percentage increase (future prospects) remains valid (in this case 15% since age 51) unless the nature of employment demands otherwise.
- Multiplier Table – The Court re-emphasises that multiplier should follow age-based norms (as per Sarla Verma v. Delhi Transport Corporation (2009) etc.).
- Retirement/Superannuation Not Automatically a Ground for Reduction – Mere fact of impending retirement does not qualify as an “exceptional circumstance” to reduce income or multiplier.
- Uniformity & Certainty – The judgment is aimed at bringing more uniformity in awards under Section 166, removing divergent practices in various High Courts about split multiplier.
Importance in Practice
- For practitioners dealing with motor accident claims, this judgment signals that reliance on “anticipated lower income post-retirement” or “service ending soon” to reduce compensation will not readily succeed unless backed by strong evidence of exceptional circumstances.
- For dependents of deceased claimants, this tends to favour higher awards (assuming income at date of death is fully reckoned).
- The judgment is relevant if you are dealing with dependency claims under Section 166 (or analogous heads) and may affect how “future income” and multiplier are approached.
- While this relates to motor accident claims (dependency compensation), the fundamental logic (income at date of death, multiplier norms) may also be persuasive in other dependency-loss contexts.
Specifics you may note
- Citation: 2025 LiveLaw (SC) 1073
- Bench: Justices Sanjay Karol and Prashant Kumar Mishra.
- Cause Title: Preetha Krishnan & Ors. vs United India Insurance Co. Ltd. & Ors.
- Key paragraph: “We hold that the income as on the date of death is to be taken … split multiplier is a concept foreign to the Motor Vehicles Act, 1988 and is not to be used…”
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Recomputed award: ₹ 47,76,794.