Harbans Lal, J.
1. The subject-matter of the present reference is important but quite baffling a question, as to how the damages should be quantified which the offender, who is held responsible for terminating prematurely the life of another person by this culpable act, negligence or default is liable to pay to the legal representatives or the dependants of the deceased or, in other words, the determination of the amount of compensation which the legal representatives or dependants are entitled to get from such offender.
2. The injured person, who was the victim of any injury at the hand of another person which resulted in permanent or temporary incapacity causing thereby some loss of earning, has always been held to be entitled to get damages against the offender under the law of torts, but there was no specific provision for getting damages before 1855 in India if such injury resulted in the death of the injured person, nor was there any legal provision as to who will be entitled to get the damages or the compensation in such a contingency. The Indian Fatal Accidents Act, 1855 (hereinafter to be called the Act), for the first time provided for such damages or compensation and also enumerated the parties entitled to the same in S. 1A of the Act, which is reproduced below:
'Whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, the party who would have been liable if death had not ensued shall be liable to an action or suit for damages, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony or other crime.
Every such action or suit shall be for the benefit of the wife, husband, parent and child, if any, of the person whose death shall have been so caused, and shall be brought by and in the name of the executor, administrator or representative of the person deceased;
and in every such action the Court may give such damages as it may think proportioned to the loss resulting from such death to the parties respectively, for whom and for whose benefit such action shall be brought, and the amount so recovered, after deducting all costs and expenses, including the costs not recovered from the defendant, shall be divided amongst the before-mentioned parties, or any of them, in such shares as the Court by its judgment or decree shall direct.'
Section 2 similarly provides for the recovery of pecuniary loss to the estate of the deceased in an action or a suit by the executor, administrator, or the representative of the deceased. The preamble of the Act which gives the background and the purpose for enacting the legislation is to the following effect:
'An Act to provide compensation to families for loss occasioned by the death of a person caused by actionable wrong.'
Citation : AIR Vol.66 Year 1979
3. Section 1 of the Act is, in substance, reproduction of the English Fatal Accidents Act, 1846 (9 and 10 Vict. C. 93), known as the Lord Campbell's Act, the scope of which was under discussion by the House of Lords in Davies v. Powell Duffryn Associated Collieries Ltd., 1942 AC 601. Lord Wright in his judgment while dealing with the question relating to the determination of the amount of wages which the deceased was earning, held-
'There is no question here of what may be called sentimental damage, bereavement or pain and suffering. It is a hard matter of pounds, shillings and pence, subject to the element of reasonable future probabilities. The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his appointment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependant, and other like matters of speculation and doubt.'
According to Lord Russell, in the said case, the balance of loss and gain to the dependant by the death under question has to be determined. It was held as under:
'The general rule which has always prevailed in regard to the assessment of damages under the Fatal Accidents Acts is well settled, namely, that any benefit accruing to a dependant by reason of the relevant death must be taken into account. Under those Acts the balance of loss and gain to a dependant by the death must be ascertained, the position of each dependant being considered separately.'
4. In Nance v. British Columbia Electric Rly. Co. Ltd., 1951 AC 601, Viscount Simon was of the opinion that the claim to damages in cases of death fell under two separate heads: first, what sums the deceased would have probably applied out of his income to the maintenance of his wife and family if the deceased had not been killed and would have lived the full span of life; second, what would have been the additional savings which the deceased would or might have accumulated during the period he would have lived but for the premature death, which would probably have accrued to his wife and family. For the purpose of arriving at the correct assessment under these two heads, Viscount Simon laid down the following principles:
'Under the first head--indeed, for the purpose of both heads--it is necessary first to estimate what was the deceased man's expectation of life if he had not been killed when he was: (let this be 'x' years) and next what sums during these x years he would probably have applied to the support of his wife. In fixing x, regard must be had not only to his age and bodily health, but to the possibility of a premature determination of his life by a later accident. In estimating future provision for his wife, the amounts he usually applied in this way before his death are obviously relevant, and often the best evidence available; though not conclusive, since if he had survived, his means might have expanded or shrunk, and his liberality might have grown or wilted.'
Their Lordship of the Supreme Court in Gobald Motor Service Ltd. v. R. M. K. Veluswamy, AIR 1962 SC 1, relied upon the principles as enunciated and reproduced above in the two English cases. Therein, one passenger going in a bus was killed when the bus met with an accident. The victim was 34 years of age at the time of his death and his annual earning was estimated at Rs. 3,000/-. The suit for damage had been filed by his widow, father and his children. The Claims Tribunal had awarded a sum of Rs. 25,000/- as compensation. the following principles as laid down by Viscount Simon in Nance'' case (supra) were relied upon:
1. The deceased man's expectation of the life has to be estimated keeping in view his age, his bodily health and the possibility of premature determination of his life by subsequent accident;
2. The amount required for the future provision of his wife should be estimated having regard to the amount the deceased used to spend on her during his life time;
3. This estimated annual sum should be multiplied by the number of years of the man's estimated span of life.
4. The said amount must be discounted so as to arrive at the correct equivalent in the form of lump sum payable on his death, after making deductions for the benefit accruing to the widow for the acceleration of her interest in the estate, and
5. Deductions should also be made for the possibility of the wife dying earlier if the husband had full span of his life and also for the possibility that in case the widow remarries, that may result in the improvement of her financial position.
It was also held therein that any mode of estimation of damage has to take into account a number of imponderables. It was held,--
'The actual extent of the pecuniary loss to the respondent may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture. Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained.'
Their Lordships in the above case approved the award of Rs. 25,000/- and dismissed the appeal by the bus company for reduction of amount. In the opinion of their Lordships, this sum would have been sufficient for the expenditure of the dependants for just over eight years and as such, it was held to be a 'moderate sum; rather a conservative estimate.'
5. In the Municipal Corporation of Delhi v. Subhagwanti, AIR 1966 SC 1750, the Clock Tower in Chandni Chowk, Delhi, owned by the Municipal Corporation, had collapsed resulting in the death of three persons. Three separate suits had been filed by the dependants in each case. In one case, it was found that the deceased was spending about Rs. 150/- per mensem for the subsistence of his wife and children, and was 30 years of age at the time of the accident. His widow was aged 28 years and his son and 2 daughters' aged ranged from 2 years to 14 years. A total compensation of Rs. 27,000/- was awarded by capitalising the yearly loss for a period of 15 years. Relying on the above referred to two decisions of the English Courts, this award was approved thus approving the principles of law laid down by Lord Wright in Davie's case (1942 AC 601) (supra) that at first the basic figure regarding the annual loss to the dependants should be worked out and the same should be capitalised into a lump sum by taking a certain number of years' purchase. While doing so, regard has to be taken for the various possibilities including the one that the widow may remarry and then cease to be dependant. This method has been generally termed as a 'multiplier theory.'
6. Though the basic principles regarding the annual earnings of the deceased and on that basis the estimate of the annual dependency of the dependants and thereafter working out the lump sum payable to the dependants by taking into consideration the various possibilities and uncertainties like widow remarrying, were laid down in the abovementioned two English cases, but the principle of arriving at the lump sum payable to the dependants by the following the multiplier doctrine was not expressly laid down although the final amount payable was arrived at in terms of the annual dependency by multiplying the same by a number of years' purchase. However, in Mallet v. McMonagle, 1969 Acc CJ 312 (HL), after taking into consideration all the previous decisions, it was held as under by the Court of Appeal, Northern Ireland:
'Thus, the usual method in our Courts to arrive at Fatal Accidents Act damages is to settle on the basic annual figure of dependency and then apply a multiplier which affects to take care of the uncertainties and vicissitudes of life, also the fact that the widow is getting an immediate lump sum which can be invested.' When the appeal went before the House of Lords. Lord Diplock laid down the following principles for the purpose of working out the annual dependency, in paragraph 42:
'To assess the damages it is necessary to form a view on three matters each of which is in greater or less degree one of speculation: (i) the value of the material benefits for his dependants which the deceased would have provided out of his earnings for each year in the future during which he would have provided them had he not been killed, (ii) the value of any material benefits which the dependents will be able to obtain in each such year from sources (other than insurance) which would not have been available to them had the deceased lived but which will become available to them as a result of his death, (iii) the amount of capital sum which with prudent management will produce annual amounts equal to the difference between (i) and (ii) (i.e., 'the dependency') for each of the years during which the deceased would have provided material benefits for the dependents had he not been killed.' The effect of inflation was also considered, but he was of the opinion that the same can be set off to some extent at any rate by prudent investment in buying a home, in growth stock, or in the short-term high-interest bearing securities. After considering the argument that along with the inflation the rate of bank interest had also been rising and the investment of the amount in bank was likely to produce enhanced income, he came to the following conclusions in para 47:
'In my view, the only practicable course for Courts to adopt in assessing damages awarded under the Fatal Accidents Acts is to leave out of account the risk of further inflation on the one hand and the high interest rates which reflect the fear of it and capital appreciation of the property and equities which are the consequence of it on the other hand. In estimating the amount of the annual dependency in the future, had the deceased not been killed, money should be treated as retaining its value at the date of the judgment, and in calculating the present value of annual payments which would have been received in future years, interest rates appropriate to times of stable currency such as 4 per cent to 5 per cent should be adopted.' According to the learned Judge, for the purpose of determining the multiplier to be applied to the annual dependency the factors like prospects of increase in wages, recession in trade, spells of unemployment, possibilities of the children beginning to earn when grow up, remarriage of the widow as well as the presence of the children diminishing the chances of remarriage have to be taken into consideration.
7. In Madhya Pradesh State Road Transport Corporation, Bairagarh v. Sudhakaran 1977 Acc CJ 290: (AIR 1977 SC 1189), one woman aged 23 years and one year's old son had died while travelling in a bus as a result of an accident. At the time of her death, she was a physical instructress and drew Rs. 190/-. Claim application had been filled by her husband. The tribunal assessed the monthly dependency to the husband at Rs. 50/- and awarded the sum of Rs. 15,000/- as compensation. In appeal, the High Court enhanced this amount to Rs. 50,000/-. The Supreme Court in appeal against the decision affirmed the award of the tribunal by adopting 20 years' multiplier. The principle regarding the application of multiplier doctrine was laid down in Mallett's case (supra) was approved and it was held (at p. 1191 of AIR):
'A method of assessing damages usually followed in England, as appears from Mallett v. McMonagle (supra), is to calculate the net pecuniary loss upon an annual basis and to arrive at the total award by multiplying the figure assessed as the amount of the annual 'dependency' by a number of 'year's purchase', that is, the number of years the benefit was expected to last, taking into the consideration the imponderable factors in fixing either the multiplier or the multiplicand. The husband may not be dependent on the wife's income, the basis of assessing the damages payable to the husband for the death of his wife would be similar. Here, the lady had 35 years of service before her when she died. We have found that the claimant's loss reasonably works out to Rs. 50/- a month i.e. Rs. 600/- a year. Keeping in mind all the relevant facts and contingencies and taking 20 as the suitable multiplier, the figure come to Rs. 12,000/-. The Tribunal's award cannot therefore be challenged as to low though it was not based on proper grounds.'
8. In Mrs. Manjushri Raha v. B. L. Gupta 1977 Acc CJ 134: (AIR 1977 SC 1158) the deceased was 37 years of age who had died in the bus accident. His monthly salary was assessed at Rs. 620/-. Award of the tribunal for Rs. 60,000/- in favour of the widow and the children was affirmed by the High Court. In appeal by the claimants, the Supreme Court enhanced the amount from Rs. 60,000/- to Rs. one lac. According to their Lordships of the Supreme Court, the lower Courts while fixing the annual salary of the deceased as yearly dependency for the purpose of determining the lump sum to be awarded to the claimants, had not taken into account the salary which he would have earned while reaching the maximum of his grade long before his retirement. It was estimated that the deceased would have reached the maximum grade of Rs. 900/- at the age of 45 years before his superannuation. However, a close scrutiny of the entire judgment shows that the doctrine of multiplier for the purpose of capitalising the annual dependency was neither argued, nor considered.
9. In C. K. Subramonia Iyer v. T. Kunhikuttan Nair AIR 1970 SC 376, a child of eight years was hit by a bus with the result that he sustained very serious injuries; was rendered unconscious and died in the hospital on the next morning. Claim application filed by the parents was allowed. The principles for assessing the damages were laid down as under (at p. 380):
'There can be no exact uniform rule for measuring the value of the human life and the measure of the damages cannot be arrived at by precise mathematical calculations, but the amount recoverable depends on the particular facts and circumstances of each case. The life expectancy of the deceased or of the beneficiaries whichever is shorter is an important factor. Since the elements which go to make up the value of the life of the deceased to the designated beneficiaries are necessarily personal to each other, in the very nature of things, there can be no exact or uniform rule for measuring the value of human life. In assessing damages, the Court must exclude all considerations of matters which rest in speculation or fancy though conjecture to some extent is inevitable. As a general rule parents are entitled to recover the present cash value of the prospective service of the deceased minor child. In addition they may receive compensation for loss of pecuniary benefits reasonably to be expected after the child attains majority.'
Its perusal shows that for the purpose of determination of damages not only the actual earning of the deceased at the time of his death is to be taken into consideration, but also the present cash value of the prospective earning of the deceased is also a relevant and essential factor for consideration.
10. In Sheikhupura Transport Co. Ltd. v. Northern India Transporters Insurance Co. Ltd. AIR 1971 SC 1624, two persons Bachan Singh and Narinder Nath, aged 42 and 43 years respectively, travelling in a passenger bus died as a result of the accident to the bus. The owner and the driver of the bus were held liable to pay damages to the dependents claimants. Though the accidents claims tribunal assessed the monthly loss to the dependents at less amount, the High Court in appeal keeping in view the earning of the deceased, came to the conclusion that the monthly dependency in each case was Rs. 200/- and fixed the total amount of compensation by capitalising this amount on the basis of 15 years' purchase. This was challenged in appeal by the bus company and the insurance company. The same were dismissed. The following general principles of law as laid down in Gobald Motor Service's case (AIR 1962 SC 1) (supra), were reiterated (at pp. 1626-27):
'The general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever sources come to them by reason of the death, that is, the balance of loss and gain to a dependent by the death must be ascertained.'
11. From a close scrutiny of the various judgments of the Supreme Court, as referred to above, it can be safely held to have been settled that in order to determine the quantum of damages in case of fatal accidents, a basic figure indicative of the annual loss to the dependents from the premature death has to be arrived at. This amount is to be worked out not only on the basis of the salary or earning of the deceased at the time of the accident but also by taking into consideration the entire relevant data regarding the future prospects of increase in the course of the employment or business, as the case may be. This basic figure has then to be converted into a lump sum by applying a suitable multiplier. In order to arrive at the correct multiplier, a number of factors which have been indicated in various judgments, as discussed above, have to be born in mind. Whereas the Courts in England have so far gone to the extent of multiplying the basic figure of annual dependency by 16 years' purchase, the Supreme Court approved in one case 20 times as the suitable multiplier.
12. A perusal of the various judgments of this Court from time to time, however, shows that no uniform principle has been followed.
13. In Smt. Jaswant Kaur v. Ratti Ram 1971 Acc CJ 31 (Punj), the deceased at the time of the accident was 44 years old. His life expectancy was determined at 65 years. The amount of total claim was arrived at by multiplying the annual loss by 21, that is, by the number of the years by which the life had been cut short. It was held by Sodhi, J., that it was not necessary to make any deduction on account of the fact that the amount was being paid in lump sum.
14. In Damyanti Devi v. Sita Devi 1972 Acc CJ 334 (Punj), similarly, a Division Bench of this Court also held that it was not necessary to make any deduction on account of the lump sum payment and the amount of annual loss was multiplied by the number of years by which the life had been cut short.
15. In another Division Bench judgment of this Court as reported in Parsani Devi v. State of Haryana 1973 Acc CJ 531 (Punj) the amount of damages was arrived at by multiplying the annual dependency by the number of the years till the age of retirement. From its perusal it appears that no arguments were addressed on the principle of applicability of multiplier to determine the damages, nor was any deduction made in lieu of payment of compensation in lump sum.
16. However, in the State of Haryana v. Balbir Singh Hooda 1975 Acc CJ 1 (Punj) the Claims Tribunal after determining the total amount of damages reduced the same by 15 per cent on account of payment of lump sum and the learned Single Judge approved the principle of reduction of lump sum by 15 per cent though the amount was reduced on account of other relevant considerations.
17. The learned counsel for the appellants, placed strong reliance on Surjit Singh v. The Co-operative General Insurance Society Ltd., 1974-76 Punj LR 353, for the proposition that only such amount should be allowed to the claimants which will ensure the amount of interest equal to the annual dependency if the same were invested on a long-term basis in some bank. In the said case, the Tribunal had awarded compensation amounting to Rs. 50,000/-. In appeal, the learned Single Judge reduced the said amount to Rs. 10,000/- only. In L.P.A., the Division Bench upheld the decision of the learned Single Judge holding that the claimants' dependency was Rs. 50/- per mensem which will be ensured by the total amount of Rs. 10,000/- as the same will yield this much interest if it were invested in a bank on a long-term basis. This is quite a short judgment. Its perusal shows that no arguments had been addressed against the application of the principle in such matters, nor was the same considered in the background of the multiplier theory. This judgment was followed in Sukhdev Raj Jain v. Shanti Devi 1975 Acc CJ 246(Punj), by a learned single Judge of this Court, and in Jagir Kaur v. Uttam Singh Chatter Singh 1975 Acc CJ 26 (Punj), by a single Judge of the Himachal Pradesh High Court, without going into the merits of the principle. These decisions, however, were not agreed to by a Full Bench of this Court in the Vanguard Insurance Co. Ltd. v. Smt. Naresh Kanta 1977-79 Pun LR 328: (AIR 1977 Punj & Har 214), wherein after scrutinising these judgments, it was held (at p. 219 of AIR):
'However, this interest theory cannot be adopted as an inflexible principle for the purpose of assessing the compensation specially in these days when the purchasing power in terms of money is being eroded after short intervals on account of run away inflation.'
The judgment in the aforesaid Full Bench case was also rendered by me. After closely considering the arguments by the learned counsel in the present case, I am still of the view that the interest theory ought not be made the basis of determining the quantum of compensation due to the claimants.
18. In Mallet's case (1969 Acc CJ 312 (HL)) (supra), the appellate Court in England also held that both the inflation and the high bank interest rates which are adopted to curb the same should not be taken into consideration for the purpose of arriving at the correct amount of compensation. It was also held that for the purpose of calculating the present value of annual payments to which the claimants will be entitled in future, interest rates in times of stable currency such as 4 per cent to 5 per cent, may be relevant considerations.
19. In present day India when our economy is not so highly developed as in western countries and the banking system has not taken deep roots especially in the villages, it is too unrealistic to adopt interest theory for determining the damages. In a large number of villages, there are neither any banks nor are the people accustomed to make investments therein. Besides, bank interest rates are not stable and static and the same go on fluctuating in view of the inflationary trends in the economy. Only a decade back, the normal bank interest rate did not exceed 4 per cent. As inflation in the course of time becomes an essential part of the economy, the banks, in order to mop up the surplus money in the hands of the people, contrived of the inducement to pay higher rates of interest and these interest and these interest have been going up from time to time. The adoption of interest theory presumes that the claim in the bank which will ensure the amount of monthly dependency. In this manner, the claimants while getting the monthly interest will also be having the capital invested in the bank as intact. This argument may be further advanced for the purpose of further reduction in the total amount of compensation. To my mind, the interest theory is impracticable and unrealistic and will not be a proper yardstick for determining the correct amount of compensation.
20. After eliminating the interest theory from our consideration, we are left with the following options:
(1) After determining the basic figure relating to the annual dependency of the claimant, the same should be multiplied by the number of years by which the life expectancy of the victim has been cut short without making any deduction whatsoever;
(2) Some deduction should be made in the above amount in lieu of lump sum payment to the claimants; and
(3) The basic figure of annual dependency should be multiplied by a suitable multiplier which will take into consideration the life expectancy of the deceased as well as the average life of the dependants amongst other relevant factors.
21. In view of the judgments of the English Courts, and the Supreme Court, as discussed in the most 'just and reasonable' view appears to be that the total amount of damages should be arrived at by multiplying the annual dependency by a suitable multiplier. The sole basis of awarding compensation to the dependents of the deceased is that on account of culpable negligence or default of the offender, a valuable life who was the source of livelihood to the claimants is cut short. Before the termination of life, the deceased was making some earning either through salary in Government service or any business or cultivation of land. A part of the same he was spending for his own maintenance and some part, if no the whole, was being utilised for up-keep and maintenance of the dependants who may be his widow, parents or his children. There can be cases where after spending the earnings on all the members of the family, still surplus may be left and may have been utilised for bringing into existence an estate or property. Thus, abrupt termination of life results in loss to the dependents or to the estate. The basic figure of annual dependency has, thus, to be determined after excluding the amount which the deceased was spending on himself or which he was investing in some capital investment or formation of the estate.
22. The second stage is as to how to convert the same into the total amount of compensation. For this purpose, the relevant factors are obviously the number of years by which the unfortunate life has been cut short. In order to determine the same, the average life expectancy has to be worked out. Along with this, the ages of the dependents have also to be kept in view. The total amount of compensation due to old parents who may be expected to live for about five or ten years more cannot be the same as in the case of children and the widow who may have a long life still to go though the victim who has met the tragic and may be young. Besides this, the other relevant considerations are the uncertainties of life such as the victim may have died a natural death on account of any disease or ailment earlier even if the accident had not taken place. The widow may remarry and thus may not be dependent on the earnings of the husband. The children after getting education may get employed and may become self-employed. Trade and business of the victim may not flourish and may be the victim of recession and other uncertain factors. According to the Supreme Court, the determination of the account of compensation is basically a net balance of the loss and gain to the survivors or the dependents. In this calculation, in the very nature of things, it is not possible to visualise and measure in exact terms all the uncertainties, hazards and the windfall of life. According to their Lordships of the Supreme Court, there is bound to be some sort of general estimate, but mere speculations or wild guess work has to be avoided. In order to do justice between the parties, the method of multiplying the annual dependency by the number of the years by which the life has been cut short without any further reduction is unreasonable and unrealistic. The amount of damages or compensation should not serve as windfall to the dependents. This amount would have been available to them if the accident had not taken place only from month to month and from year to year. That is why, in some cases, the method of making some percentage of deduction from the lump sum so arrived at, was adopted, but the same is too arbitrary and vague to serve the purpose of award of just compensation. The principle of working out the suitable multiplier with which annual dependency be multiplied and capital amount arrived at appears to be the only just and reasonable method because the same takes into consideration not only the age of the victim, but also the ages of the dependents and all uncertainties of life, both in the realm of enhancement in the income as well as factors justifying reduction in the amount of compensation. For the purpose of determining this multiplier, no exact and mathematical calculation can be provided. The English Courts have held in some cases that 16 times multiplier was quite sound and reasonable. The Supreme Court have gone further and in one case even 20 times was considered to be a suitable multiplier.
23. In Taylor v. O'Connor (1970) 1 All ER 365, Lord Reid while dealing with this aspect of the matter held,--
'Damages to make good the loss of dependency over a period of years must be awarded as a lump sum, and that sum is generally calculated by applying a multiplier to the amount of one year's dependency. That is a perfectly good method in the ordinary case, but it conceals the fact that there are two quite separate matters involved--the present value of the series of future payments, and the discounting of that present value to allow for the fact that, for one reason or another, the person receiving the damages might never have enjoyed the whole of the benefit of the dependency. It is quite unnecessary in the ordinary case to deal with these matters separately. Judges and counsel have a wealth of experience which is an adequate guide to the selection of the multiplier and any expert evidence is rightly discouraged.'
In the opinion of the Lord Guest, the multiplier was intended to provide in a rough measure adequate compensation for the loss sustained. No precise method can be expected. It is well hallowed in practice, and depends in some measure on the expertise of Judges accustomed to try these cases. Thus, out of all alternatives, methods which have been adopted so far for determining the just amount of compensation, multiplier method appears to be realistic and reasonable and ensures better justice between the parties.
24. In Smt. Naresh Kanta's case (AIR 1977 Punj & Har 214) (FB) (supra), however, a different principle of law appears to have been laid down. Therein, it was held (at pp. 218, 219)-
'The guiding star, according to the above mentioned judgments for the assessment of damages is that the annual earnings of the deceased, taking into consideration also the prospective benefits in the form of increments or promotions, should be ascertained after making deductions of the benefits which may accrue to the dependents as a result of the death and also the amount which the deceased was expected to have spent on his own person. This estimated income should be multiplied by the number of years by which the life of the deceased is estimated to be cut short. the result would be the fair capitalised amount of compensation to which the dependants may be entitled.'
The judgment in the above Full Bench case was written by me. As I look back, and it is also manifest from a close perusal of the judgment, the main contention in the said case centred round the applicability of the interest principle. No arguments were addressed and the mind was not specifically applied to the question regarding the determination of damages from all angles including the multiplier principle. On re-consideration and in view of the discussion of the various judgments of the English Courts, and the Supreme Courts, as held above. I am of the considered opinion, that the above view needs modification. The multiplier principle appears to be more sound and equitable. The statement of law to the same effect has been enunciated by their Lordships of the Supreme Court.
25. It is manifest from a perusal of the various judgments of this Court that the multiplier method has not been applied and compensation in cases under the Act, and the Motor Vehicles Act, has been assessed on erroneous basis. Keeping in view the decisions in the Supreme Court cases and some English cases, noticed above, we hold that the following principles be observed and followed while assessing the compensation;
(1) The compensation to be assessed is pecuniary loss caused to the dependents by the death of the person concerned, and no compensation is to be assessed on any extraneous consideration like love, affection, mental agony or any such similar consideration. Solatium is alien to the concept of compensation;
(2) For the purpose of calculating the just compensation, annual dependency of the dependents should be determined in terms of the annual loss accruing to them due to the abrupt termination of life. For this purpose, annual earning of the deceased at the time of the accident and the amount out of the same which he was spending for the maintenance of the dependents will be the determining factor. This basic figure will then be multiplied by a suitable multiplier;
(3) The suitable multiplier; as referred to in 2 above, shall be determined as held in Sudhakar's case (AIR 1977 SC 1189) (supra), decided by the Supreme Court as well as in Mallet's case (1969 Acc CJ 312) (HL) (supra), by taking into consideration the number of the years of the dependency of the various dependents, the number of years by which the life of the deceased was cut short and the various imponderable factors such like early natural death of the deceased, his becoming incapable of supporting the dependents due to illness or any other natural handicap or calamity, the prospects of the remarriage of the widow, the coming up of the age of the dependents and their developing their independent sources of income as well as the pecuniary benefits which might accrue to the dependents on account of the death of the person concerned. Such benefits, however, should not include the amount of the insurance policy of the deceased to which the dependents may become entitled on account of its maturity as a result of the death.
(4) The method adopted in certain decisions of this Court of multiplying the amount of the annual loss to the dependents with number of years by which the life has been cut short without anything else cannot be sustained and all those decisions in which this view has been taken are hereby overruled;
(5) The compensation cannot be assessed on the basis of the so-called interest theory as the same provides the dependents with the capital as well as the amount of annual loss earned by way of interest and it also suffers from a number of other defects, as have been discussed in this judgment; and
(6) Considerations of ever growing inflation and the deceased in the money value are also not relevant for the purpose of assessment of compensation.
26. Now, adverting to the facts of the present case, according to the finding of the trial Court, one Karnail Singh, aged 23 years, was murdered by the appellants on Sept. 30, 1960. Suit for damages was filed by the parents, widow, two minor sons and two minor daughters of the deceased. A total compensation to the tune of Rs. 57,200/- was claimed. In reply, not only the commission of the murder was denied, but the appellants also disputed the amount of damages as claimed in the alternative. After scrutinising the evidence, the trial Court came to the positive conclusion that the murder of Karnail Singh had been committed by the appellants and that they were liable to pay damages to the claimants. At the time of his death, Karnail Singh was found to be 23 years of age. It was further held that at the time of his death, he was possessed of a healthy and stout physique. Regarding the earning of the deceased, the evidence on behalf of the claimants was to the effect that his annual income was between Rs. 2,000/- to Rs. 2,500/-. According to the conclusion of the trial Court, the same was in exaggerated figure. However, it was held that the deceased was a stout young man and that he was cultivating the land of other persons at the relevant time. It was held that the deceased could be expected to earn Rs. 3/- per day as agricultural labour. In view of this estimate, his annual income was calculated at Rupees 1,080/-. In the opinion of the trial Court, Rs. 480/- were likely to be spent by Karnail Singh on himself and thus Rs. 600/- annually were incurred for the maintenance of his family. This amount was thus the annual dependency of the claimants.
27. Regarding life expectancy of the deceased, it was held that in view of the normal expectancy of life at 60 years, life of Karnail Singh had been cut short as a result of murder by 37 years. Multiplying the annual dependency by 37, a total amount of Rs. 22,200/- was allowed as compensation to the claimants. This calculation has been challenged by the appellants in the present appeal. The finding regarding the commission of murder by the appellants and the award of Rs. 300/- on account of funeral expenses by the trial Court, however, has not been disputed.
28. As the deceased was a stout young man possessing good health at the time of the fatal accident and was working as a cultivator on others' lands, the finding of the trial Court to the effect that the deceased was expected to earn Rs. 3/- per day as agricultural labour appears to be rather on the low side. In our opinion, his daily earning cannot be estimated at less than Rs. 4/-. Thus, his annual income can be justly estimated to be Rs. 1,440/- at this rate. He was supporting his family consisting of his wife and four children, and the old parents. if he spent one-third of the income on himself, the annual dependency of the claimant will be Rs. 960/-.
29. According to the trial Court, the normal expectancy of life in case of Karnail Singh, deceased, was 60 years. Thus, his life was cut short by 37 years. Keeping in view all the circumstances of the case as well as the hazards and uncertainties of the life in the villages, in our opinion, 16 will be a suitable multiplier. Thus, the respondents are entitled to a total amount of Rs. 15,360/- as compensation and not more. In view of this finding, the amount of Rs. 22,200/- as awarded by the trial Court has to be reduced to this extent. Adding the undisputed amount of Rs. 300/- awarded in lieu of the funeral expenses, the respondents are held entitled to a total compensation of Rs. 15,600/-. The decree of the trial Court for Rs. 22,500/- is modified and the decretal amount is reduced to Rs. 15,600/-.
With this modification, this appeal is dismissed with no order as to costs.
S.S. Sandhawalia, C.J.
30. I agree.
S.C. Mital, J.
31. I agree.
D.B. Lal, J.
32. I agree.
S.P. Goyal, J.
33. I agree.
34. Appeal dismissed and decree modified.