Future Prospects Must Be Added Based on Age of Deceased—Not Speculative Income Reduction Post-Retirement In MACT Cases : Supreme Court

“Split Multiplier Is Foreign to the Motor Vehicles Act” – In a latest judgement  Supreme Court of India holding that the "split multiplier" method of computing compensation under Section 166 of the Motor Vehicles Act, 1988 is "alien" to the statutory framework. The bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra categorically declared that the method cannot be applied except in recorded exceptional circumstances, and even superannuation (retirement) does not qualify as such a circumstance.

This decision is a clear repudiation of inconsistent judicial practices across High Courts, and aims to restore uniformity and certainty in awarding motor accident compensation under Section 166. The Court allowed the appeals, set aside the High Court’s judgment reducing compensation using a split multiplier, and restored the Tribunal’s award with a revised compensation amount of ₹47,76,794, to be remitted to the claimants by 30th November 2025.

"Superannuation from service hardly qualifies as such an exceptional circumstance": Court Rejects Reduction of Multiplier Based on Post-Retirement Income

In a long-pending motor accident compensation case, the Supreme Court has clarified a fundamental principle of compensation computation: “split multiplier” – a concept occasionally applied by certain High Courts to reduce compensation based on future retirement – is incompatible with the Motor Vehicles Act. Reiterating precedents like Sarla Verma v. DTC (2009) and Pranay Sethi (2017), the Court held that the age of the deceased alone governs the applicable multiplier, and future retirement cannot justify deviation from this uniform rule.

This ruling settles an enduring legal controversy among various High Courts and sets a national precedent for consistent application of multiplier principles in motor accident cases.

The case arose from a tragic road accident on 3rd August 2012, in which T.I. Krishnan, a 51-year-old Assistant Engineer in the Public Works Department, died when a bus driven rashly collided with his car on the Pala-Thodupuzha Road in Kerala.

The deceased's wife and children filed a claim under Section 166 of the Motor Vehicles Act, 1988, before the Motor Accident Claims Tribunal (MACT), Pala, on 11th December 2012, seeking compensation of ₹60 lakhs, stating his income was ₹47,860 per month.

The MACT awarded ₹44,04,912 with interest @ 7.5% p.a. on 2nd April 2014, calculating the deceased’s income post-tax, applying 15% future prospects, and using a multiplier of 9.

However, both the insurer and claimants appealed to the Kerala High Court, which reduced the amount to ₹35,10,144 by applying a split multiplier — i.e., one multiplier for the pre-retirement years and a lower one post-retirement — based on the assumption of income reduction after superannuation.

Upon review, the High Court rejected the review petitions, stating that split multiplier is permissible if reasons are recorded. Aggrieved, the appellants approached the Supreme Court, challenging the legality and propriety of the High Court’s reasoning.

The central legal question was whether split multiplier — i.e., applying different multipliers before and after the deceased's notional retirement age — is permissible under the Motor Vehicles Act, 1988, specifically under Section 166, which deals with just compensation.

The Court noted widespread inter-court and intra-court divergence on this issue:

• Some High Courts (e.g., Bombay, Kerala) have used split multiplier citing post-retirement income drop.
• Others (e.g., Gauhati, Karnataka, Orissa) have rejected it, citing uniformity principles laid down in Sarla Verma and Pranay Sethi.

Observing this disharmony, the Court expressed concern:

“Given that there was no uniformity of opinion within a single Court, the Tribunal below is left bereft of guidance leading to differences in compensation awarded for no justifiable reason. This also creates a concerning situation for judicial discipline.”

The Court reminded that multiplier tables based on age alone were introduced to bring consistency, and retirement cannot be treated as a negative circumstance against the deceased.

In para 17, the Court was unequivocal:

“Superannuation from service hardly qualifies as such an exceptional circumstance... The same cannot be taken as a negative circumstance against the deceased person or a person injured severely.”

Reaffirmation of Sarla Verma and Pranay Sethi

The Court emphasized that Sarla Verma v. DTC (2009) and National Insurance Co. Ltd. v. Pranay Sethi (2017) laid down a structured methodology for compensation that bars subjective reductions based on speculative post-retirement income.

Citing para 42 of Sarla Verma, the Court reminded that “multiplier to be used should be as mentioned in Column (4)” of the standard table based solely on age. The Davies method is applicable, and not individual notions of income reduction post-retirement.

Split Multiplier “Foreign to the Act”

The Court observed in para 18:

“In any event, the Constitution Bench in Pranay Sethi had, in para 59.7 observed that the age of the deceased is the criterion to be utilized for multiplier. It does not provide for any other possibilities... split multiplier is a concept foreign to the Motor Vehicles Act, 1988.”

Application Must Be Exceptional – And Retirement Is Not

The judgment again invoked Sumathi v. National Insurance Co. Ltd., where the Court had expressly disapproved the use of split multiplier in the absence of recorded exceptional reasons. The Court reaffirmed:

“The finding of the High Court that the deceased was having leftover service of only four years cannot be construed as a special reason, for applying the split multiplier.”

Using the established methodology, the Supreme Court recalculated compensation as follows:

• Income after 15% future prospects (Rs. 45,408 + 15%): ₹6,26,630 per annum
• Deducting 1/4th for personal expenses: ₹4,17,754
• Multiplier of 11 (based on age 51): ₹45,95,294
• Conventional heads (Estate, Consortium, Funeral): ₹1,81,500
• Total compensation awarded: ₹47,76,794

The Court restored the MACT award with modification, clarified that the interest rate of 7.5% p.a. from the date of filing would apply, and directed remittance of the entire amount before 30th November 2025.

Prospective Operation and Directions to Courts

Recognizing the confusion and judicial divergence this issue had caused, the Court declared that the ruling shall apply prospectively.

Further, the Court directed:

“A copy of this order is directed to be circulated by the Registrar (Judicial) of this Court to the learned Registrars General of all the High Courts for necessary information and compliance. It is requested that an e-copy of the order be also circulated to the Tribunals forthwith.”

This ensures uniform application of the law across all Motor Accident Tribunals and High Courts, effectively eliminating the possibility of inconsistent compensation awards based on split multipliers.

The Supreme Court's judgment in Preetha Krishnan is a landmark in motor accident compensation jurisprudence, putting to rest the controversy over the split multiplier approach. By holding it incompatible with the Motor Vehicles Act, the Court has ensured that age alone remains the guiding parameter for multiplier application, thus upholding fairness, certainty, and judicial discipline.

This decision will have a lasting impact on thousands of pending and future compensation claims, reinforcing the core objective of the Motor Vehicles Act — just and equitable compensation for the victims.

Date of Decision: 6 November 2025