Sarla Verma & Ors. v. Delhi Transport Corporation & Anr. (2009)

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The case of Sarla Verma is an accident case that occurred in Delhi in 1998, which questioned and challenged the compensation awarded by the Court to the victim’s family under Motor Vehicles Act 1998. The appellant dissatisfied by the decision of lower court and the High Court, moved to the Supreme Court. The Supreme Court focused upon certain mathematical factors, also called multiplier methodology, for calculating the compensation. The deceased, Rajinder Prakash, a 38-year-old, died on April 18, 1998, after sustaining injuries in a motor vehicle accident. The accident involved a Delhi Transport Corporation bus no. DLP 829. The deceased worked in the Indian Council of Agricultural Research (ICAR) on a mere salary of ₹3,402 per month and other benefits. Sarla Verma case is very important to quote because it throws light on what should be the compensation in case of motor accident.

In this case, the court had to decide the critical rule of law that whether the future prospects can be taken into account for determining the income of the deceased? Further, if so, whether pay revisions that occurred during the pendency of the claim proceedings or appeals therefrom should be considered?

Lastly, court needed to take into consideration, whether the deduction towards personal and living expenses of the deceased should be less than one-fourth (1/4th) as contended by the appellants or should be one-third (1/3rd) as contended by the respondents?

After the demise of Rajinder Prakash, he was survived by a widow, three children, parents and grandfather (who died while the trial was in process). The deceased’s wife, filed a case in the Motor Accidents Claims Tribunal (MACT), New Delhi, demanding ₹16,00,000 as compensation. One of the employees of ICAR, while submitting the evidences before MACT, informed the tribunal that the retirement age in ICAR is 60 years and according to the same his salary at the time of retirement would be ₹4,004 per month.

Taking a note of it, the Tribunal calculated the compensation by deducting 1/3 towards the personal living expenses of the deceased and reached the value of ₹27,000 per annum. Then taking into consideration the 22 years of services left of the deceased, the tribunal multiplied the amount of ₹27,000 by 22 and reached the amount of ₹5,94,000 as the final compensation. It also added a 9% interest per annum to the compensation amount from the date on which the petition was filed till the date of realisation. After deducting ₹15,000 which was paid as an interim compensation, the balance compensation was divided among the family as follow: ₹3,00,000 to the widow, ₹75,000 to each of the two daughters, ₹50,000 to the son, ₹30,000 to each of the parents and ₹19,000 to the grandfather. Dissatisfied with the order and award of the tribunal, the appellant moved to the High Court.

The Delhi High Court in 2007, took into account the salary of ₹4,004 of the deceased and also reasoned with the fact that the deceased’s salary would have increased at least by double by the end of his employment tenure, i.e. when he would have retired at the age of 60. The Court was of the opinion that looking at the size of the deceased’s family, it was only logical to deduct ¼ towards the living expenses. After making that deduction, the amount reached out to ₹54,048 per annum. The High Court chose the multiplier of 13 keeping into consideration the age of deceased. The final compensation reached out to be ₹7,19,624 which also included the ₹2,000 (funeral cost) and ₹15,000 (loss of consortium). Still dissatisfied with the compensation, the claimants moved to the Supreme Court.

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When the case moved to the Supreme Court, both the appellant and the respondent had their own contentions. While the respondent adamant with fact that the 1/3 deduction from the salary was the right decision and nothing more than that should be awarded. While the appellant, still dissatisfied by the compensation, stated that the monthly income of the deceased should be taken as ₹18,341 and after deducting ¼ as personal expenses, the compensation would reach to ₹1,65,072 per annum. And also that for a person who died at the age of 38, the appropriate multiplier would be 16. And adding another ₹1,00,000 to the total amount for all the suffering that the appellants family had to go through, the total compensation amount reached out to ₹27,47,152.

The court in reaching to its conclusions for the decision of the final compensation to Rajinder Prakash’s family, considered many judgements. The inconsistency lied in the adoption of Nance Method (Nance v British Columbia Electric Rly. Co. Ltd.[1]) for calculation of the compensation. While some tribunals opted for Nance method, some followed Davies Method (Davies v. Powell Duffryn Associated Collieries Ltd.[2]).

The court in the case of Kerala SRTC v. Susamma Thomas[3], differentiated between the approaches of the two methods and after exhaustive discussions, the Davies method was preferred over Nance method. Further, in the cases of Sarla Dixit v. Balwant Yadav[4], following the footsteps of Susamma Thomas, the court took the average of the actual income of the deceased at the time of his death and considering the fact that he led a normal life, decided his monthly compensation income to be ₹2,200 per month.

Similarly, in the case of Abati Bezbaruah v. Geological Survey of India[5], the deceased who died at the age of 40 was earning ₹42,000 per annum. Keeping his age factor in mind and assuming that his income might have reached till ₹45,000, the court awarded the compensation.

The case of Sarla Verma v. Delhi Transport Corporation, is not the only case where even the courts have been in a dilemma to choose how much and what is the exact amount of compensation that should be awarded to the families of the deceased. Any amount of compensation, is never going to be enough to fill the void in the lives of the families, but a certain respectable amount should be awarded to the families of those who loose their lives in such fatal road accidents.


A compensation can never fulfil the loss of any near and dear in a family. But what all it can do is give the family a little support in its time of need, while it recovers from its loss and starts their lives afresh. “Just compensation” is nothing but a reasonable amount, depending upon the circumstances of the case, to make good for the loss of the families. Even after witnessing numerous accidents and cases that have been filed under the Motor Vehicle Act, wherein the families of the deceased have fought for their rightful compensation, the Indian courts and judiciary have not been able to reach a final course of action that must be followed.  

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There should be a consistent methodology to calculate future prospects to avoid inconsistencies in granting compensations.

No claimants would ever admit that the dead person was a spendthrift. Instead, they might contend that the dead person lived a thrifty life and spent little cash on himself/herself. The Courts, in several cases, have used completely different multipliers. There should be a typical scale for multipliers so there’s consistency within the judgements and compensations awarded by the Courts and Tribunals. An awarded compensation doesn’t become ‘just compensation’ simply because of the judicature deems it to be just. Just compensation’ is adequate compensation that’s honest and equitable, on the facts and circumstances of the case, to form sensible the loss suffered because of the incorrect judgement. Therefore, by applying the well-settled principles regarding the award of compensation. It’s not supposed to be a bonanza, largesse, or supply of profit. Assessment of compensation though involving specific theoretic concerns ought to however be objective. Justice and justness emanate from equality in treatment, consistency and conscientiousness in assessment, and fairness and uniformity within the decision-making method and the selections.


[1] Nance v British Columbia Electric Rly. Co. Ltd. [1951] AC 601

[2] Davies v. Powell Duffryn Associated Collieries Ltd. [1942] AC 601

[3] Kerala SRTC v. Susamma Thomas [1994] 2 SCC 176

[4] Sarla Dixit v. Balwant Yadav [1996] 3 SCC 179

[5] Abati Bezbaruah v. Geological Survey of India [2003] 3 SCC 148