Supreme Court on Split Multiplier in Motor Accident Claims: Concept Declared Foreign to MV Act.

Headnote:

The Supreme Court held that the “split multiplier” method — used by some High Courts to adjust compensation in motor accident claims based on post-retirement income reduction — is foreign to the Motor Vehicles Act, 1988 and cannot be applied except in truly exceptional cases. The Court emphasized that retirement from service is not an exceptional circumstance warranting deviation from the uniform multiplier method laid down in Sarla Verma v. DTC (2009) 6 SCC 121 and affirmed in National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680.

The Court enhanced compensation to ₹47,76,794, restoring the Tribunal’s award with modifications, and directed prospective application of this ruling nationwide.

Background:

1. The deceased, T.I. Krishnan (aged 51), Assistant Engineer in the PWD, died in a road accident on 3 August 2012 after his car collided with a bus driven rashly.
2. His wife and children (claimants) filed a claim petition under Section 166 of the Motor Vehicles Act, 1988, seeking ₹60,00,000.
3. The MACT, Pala awarded ₹44,04,912 with 7.5% annual interest (Order dated 2 April 2014), applying a multiplier of 9 and 15% future prospects.
4. On appeal, the Kerala High Court reduced compensation to ₹35,10,144 by applying a split multiplier, considering reduced post-retirement income.
5. Review petitions were dismissed in 2024, leading to the present appeal before the Supreme Court.

Court’s Observations:

1. Divergent Views: Multiple High Courts had inconsistent rulings—some supporting and others rejecting the split multiplier. This inconsistency led to disparity in awards and undermined judicial discipline.
2. Uniformity Restored: Referring to Sarla Verma, Pranay Sethi, and Sumathi v. National Insurance Co. Ltd. (2021 SCC OnLine SC 3697), the Court reaffirmed that the multiplier is to be based solely on the age of the deceased.
3. Split Multiplier Rejected:
4. Retirement is not an “exceptional circumstance” for split application.
5. The MV Act does not contemplate separate multipliers for pre- and post-retirement phases.
6. Such deviation introduces uncertainty and contradicts the principle of just compensation.
7. Tribunals’ Role: Tribunals and Courts must adhere to standardized methods; any exceptional deviation must be supported by cogent reasons, duly recorded.
8. Directive to Courts: The judgment is to be circulated to all High Courts and Motor Accident Tribunals to ensure uniform implementation.

Legal Provisions and Precedents Discussed

1. Section 166, Motor Vehicles Act, 1988 – Application for compensation.
2. Sarla Verma v. DTC, (2009) 6 SCC 121 – Standardized multiplier method.
3. National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 – Guidelines for future prospects and conventional heads.
4. N. Jayasree v. Cholamandalam MS General Insurance Co. Ltd., (2022) 14 SCC 712 – Split multiplier unjustified for a 52-year-old academic.
5. Sumathi v. National Insurance Co. Ltd., 2021 SCC OnLine SC 3697 – Split multiplier impermissible unless justified by special reasons.

Final Decision

1. Appeals Allowed.
2. High Court’s application of split multiplier set aside.
3. Compensation enhanced to ₹47,76,794 (with interest as awarded by the Tribunal).
4. Directions apply prospectively; earlier High Court rulings remain unaffected.
5. Order to be circulated to all High Courts and MACTs for uniform compliance.

Citation: 2025 INSC 1293

Case: Preetha Krishnan & Ors. v. United India Insurance Co. Ltd. & Ors.

Court: Supreme Court of India

Coram: Justice Sanjay Karol & Justice Prashant Kumar Mishra

Date of Decision: 6 November 2025

Civil Appeal Nos.: Arising out of SLP(C) Nos. 9753–56 of 2025