Rejecting the Split Multiplier in Motor Accident Claims: The Principle from Maya Singh v. The Oriental Insurance Co. Ltd. (2025)

1. Introduction

In the case of Maya Singh and Others v. The Oriental Insurance Co. Ltd. (2025 INSC 161), the Supreme Court of India revisited the longstanding controversy surrounding the use of the “split multiplier” method for calculating compensation in motor accident claims. The appeal arose from a decision of the Madhya Pradesh High Court that had substantially reduced the compensation awarded by the Motor Accidents Claims Tribunal (hereinafter, “the Tribunal”) on the ground that the deceased would soon have been retired. By applying a split multiplier based on pre-retirement and post-retirement income, the High Court decreased the overall award. The Supreme Court, however, firmly reiterated that, absent special reasons, compensation must be determined by adhering to the multiplier system prescribed in standard precedents, most notably the judgment in Sarla Verma v. DTC.

The key legal question centered on whether the “split multiplier” (i.e., awarding different multipliers for periods before and after the deceased’s retirement) was appropriately applied in the instant case. The appellants argued that the High Court erred in reducing the just compensation by “splitting” the deceased’s income between a short pre-retirement period (salary) and a longer post-retirement period (half salary or pension). On the other hand, the insurer maintained that the approach was just and fair, particularly as the deceased was close to retirement age, meaning the family would have lost only his pension rather than full salary income after retirement.

Ultimately, the Supreme Court reversed the High Court’s finding, restored a single multiplier approach, awarded future prospects, and recalculated the total compensation due to the family of the deceased. This commentary will delve into the details of this judgment, outline the court’s reasoning, and assess its potential impact on the law concerning motor accident compensation claims.

2. Summary of the Judgment

The Supreme Court allowed the appeal, setting aside the Madhya Pradesh High Court’s order that had reduced compensation from ₹28,66,994/- to ₹19,66,833/- by splitting the income into distinct pre-retirement and post-retirement periods. The Court made the following key findings:

• The “split multiplier” method used by the High Court was deemed incorrect because no special reasons were recorded. The Court clarified that the standard multiplier as per Sarla Verma should be applied in most cases of motor accident compensation.
• The Court introduced future prospects at 15% of the deceased’s income, as guided by the earlier landmark decision in National Insurance Company Limited v. Pranay Sethi, when calculating loss of dependency.
• The final compensation was recalculated at ₹33,03,300/- (rounded to ₹33,03,000/-), inclusive of loss of consortium for each dependent, funeral costs, and loss of estate. Interest was granted at the same rate as provided by the Tribunal.

Thus, the Supreme Court conclusively reaffirmed that it is generally improper to diminish the compensation for victims by splitting the total multiplier into one for salary years and another for pension years, unless rare and explicit justifications are provided.

3. Analysis

3.1 Precedents Cited

The Court’s decision relied heavily on the principle established in Sarla Verma v. DTC (2009) and reaffirmed through various subsequent rulings, including Sumathi v. M/s. National Insurance Company Ltd. (2021) and Puttamma v. K.L. Narayana Reddy (2013).

• Sarla Verma v. DTC (2009): This judgment introduced comprehensive guidelines for calculating compensation in motor accident claims, including which multiplier to use according to the age of the deceased. For instance, while the multiplier is diagrammed to start from 18 for younger age brackets, it reduces with age (e.g., 9 for ages 56 to 60). The Supreme Court in the present case emphasized once more that this table of multipliers stands as the most standard approach in computing just compensation.

• Sumathi v. M/s. National Insurance Company Ltd. (2021): In a similar factual scenario, the High Court employed a split multiplier for post-retirement contingencies. However, the Supreme Court set aside that approach, observing that unless there are specific special reasons, applying split multipliers is incorrect, and normal application of the Sarla Verma method is favored.

• Puttamma v. K.L. Narayana Reddy (2013): Here, the Supreme Court also disallowed the practice of ad hoc or arbitrary “split multipliers” and underscored the need for consistent adherence to the standard principles for awarding compensation.

Collectively, these precedents guided the Supreme Court in rejecting the split multiplier methodology in Maya Singh.

3.2 Legal Reasoning

The Court began by recounting how the High Court had significantly reduced the award decided by the Tribunal. The High Court took the view that, given the deceased was 57-58 years old, the compensation should take into account the shorter period of remaining employment and a longer period of retirement benefits (pension). While this approach sounds intuitively fair to some, the Supreme Court, resting upon the robust framework from Sarla Verma, pointed out that such “split” or “bifurcated” calculations risk ignoring the overall legislative purpose of ensuring fair and just compensation to the dependents of the deceased.

The Court further stated that Sarla Verma introduced a table of multipliers that progress downward as the claimant’s (or deceased’s) age increases, implicitly factoring in variables such as retirement, health, and earning potential. Thus, applying an additional split was not aligned with established precedent unless there existed unusual or extraordinary reasons, which were absent here. Indeed, the Supreme Court found that the deceased—having been a “phone mechanic” in a public sector undertaking—would largely remain fit for continued work or other earning opportunities even post his typical retirement age.

Finally, underscoring the Constitution Bench ruling in Pranay Sethi, the Court introduced future prospects of 15% based on the deceased’s age bracket. Additionally, amounts for funeral expenses, loss of estate, and consortium (₹40,000/- for each eligible dependent) were granted to align the award with modern jurisprudential standards.

3.3 Impact

The ruling has far-reaching implications for compensation in motor accident cases. It clarifies beyond doubt that absent cogent, peculiar considerations, courts should not resort to “split multipliers.” Such a practice defies the objective consistency introduced by Sarla Verma and, in effect, shortchanges the rightful heirs or dependents of the deceased.

This strengthens the uniform framework for awarding compensation, promoting predictability and fairness. Guaranteeing future prospects as well means that this decision will influence lower courts to follow the Supreme Court’s lead by awarding a consistent and comprehensive calculation of damages.

Overall, the Maya Singh decision sends a clear message to tribals and High Courts to exercise caution when contemplating a split calculation, ensuring that no arbitrariness creeps into compensation awards—especially for older claimants or those nearing retirement.

4. Complex Concepts Simplified

“Split Multiplier” Approach: This is a method where courts or tribunals separate the compensation calculations into at least two different time segments. For instance, for a death of a person about to retire, one segment addresses the salary-based compensation for the remaining employment years, and another segment addresses pension-based compensation for post-retirement years. The Supreme Court disallows this approach unless there is a highly specific and extraordinary reason for it.

“Multiplier” Method (from Sarla Verma): This is a standard formula used throughout India to calculate the total loss of dependency in motor accident compensation cases. Depending on the age of the deceased, a predetermined multiplier (from 18 down to 5) is applied to the annual loss of income minus personal expenses. This method ensures consistency and fairness across different courts.

Future Prospects: The increase in income that the deceased would have reasonably earned if he or she had not died prematurely. In some landmark cases, including Pranay Sethi, courts have mandated that a certain percentage (depending on the deceased’s age or class of employment) be added to the base income to reflect promotions and other raises that the deceased might have expected during his or her working lifetime.

Loss of Consortium: This is compensation awarded to surviving family members, particularly spouses and children, for the loss of the relationship, love, care, and companionship of the deceased.

5. Conclusion

The Maya Singh v. The Oriental Insurance Co. Ltd. (2025) decision is a pivotal reaffirmation that courts should ordinarily follow the standardized “multiplier method” rather than resorting to an inherently unpredictable “split multiplier” based on retiring and pensionary considerations. By embracing precedents such as Sarla Verma and Sumathi, the Supreme Court reinforces the necessity for a uniform and transparent approach in awarding compensation to the families of victims of motor accidents.

Crucially, the ruling also emphasizes the inclusion of future prospects and appropriate awards for loss of consortium, thereby reflecting a progressive perspective aimed at fully compensating claimants for the long-term impact of a breadwinner’s untimely death. The Maya Singh judgment therefore stands out as a vital precedent, ensuring that claimants receive not just a measure of basic financial reliance but also suitable compensation for emotional and social losses, as recognized in modern Indian motor accidents jurisprudence.