Supreme Court Restores Multiplier Method for 31.1% Disability and Adds 50% Future Prospects for Injured Software Engineer Under Motor Vehicles Act

Case Name: Erudhaya Priya v State Express Transport Corporation Ltd.
Citation: 2020 INSC 466; Civil Appeal Nos. 2811-2812 of 2020 (arising out of SLP (C) Nos. 8495-8496 of 2018)
Date of Judgment/Order: July 27, 2020
Bench: Sanjay Kishan Kaul, Ajay Rastogi, Aniruddha Bose

Held: The Supreme Court held that in a personal injury claim under Section 166 of the Motor Vehicles Act, where permanent disability is proved and the evidence shows prolonged hospitalisation and serious fractures, loss of earning capacity must be computed by applying the multiplier method with the correct multiplier as per Sarla Verma (affirmed in Pranay Sethi), and future prospects must also be added while computing loss of earning power, since compensation must fairly account for the impact of disability on the victim’s life and career trajectory.

Summary: The appellant, a 23-year-old software engineer, suffered grievous multiple fractures and 31.1% whole-body permanent disability when the respondent’s bus collided with a stationary lorry on 16.08.2011, leading to prolonged treatment including an eight-month hospitalisation and repeated admissions over about one and a half years; the MACT held the bus driver negligent and awarded Rs. 35,24,288/- with 7.5% interest applying a multiplier of 17 and computing loss of earning power using the multiplier method, but the High Court, while maintaining negligence, reduced the award to Rs. 25,00,000/- mainly on the reasoning that the multiplier method was wrongly applied because the effect on earning capacity as a software engineer was not established. The Supreme Court examined the settled principles on compensation for disability and loss of future income, held that for the age bracket of 15–25 the correct multiplier is 18, found the nature and extent of the injuries and disability sufficient to justify multiplier-based computation of loss of earning capacity, held that future prospects must be considered even in disability cases, and accepted the computation leading to an enhanced total compensation of Rs. 41,69,831/-, while also aligning the interest rate to 9% per annum.

Decision: The appeals were allowed with costs throughout; the Supreme Court enhanced the compensation to Rs. 41,69,831/- with simple interest at 9% per annum from the date of application till payment, and directed the respondent State Corporation to transmit the balance amount to the appellant within six weeks.