Anil Dev Singh, J.— This Letters Patent Appeal has been preferred against the order of the learned Single Judge dated April 30, 1990 in FAO No. 99/90. Briefly stated the facts of the case are as follows:

On March 27, 1984 at about 9.15 a.m Shri Vivek Gupta, who was riding a two wheeler was hit by a matador driven by the fourth respondent and belonging to the second and third respondents. Shri Vivek Gupta sustained serious head injuries. He succumbed to his injuries in the hospital on the sixth day of the accident. The deceased Shri Vivek Gupta at the time of the incident was only 24 years old. He was a bachelor and was the only son of his parents. He was survived by his father aged 58 years, mother 50 years old and four younger sisters. Shri Vivek Gupta was B.E(Mechanical) and was working as a Trainee Engineer with M/s. Batliboi & Co. He was drawing a stipend of Rs. 1,300/- per month. On completion of the training, he would have received about Rs. 2,300/- per month from the company.

2. The appellants herein, father and mother of the deceased, filed a claim petition before the Motor Accident Claims Tribunal claiming compensation of Rs. 10 lakhs from the New India Assurance Company, the first respondent, owners—the second and the third respondents, and the driver of the offending vehicle—the fourth respondent. The Motor Accident Claims Tribunal found that Shri Vivek Gupta died due to rash and negligent driving of vehicle No. DEG-7290 by the fourth respondent and passed an award of Rs. 72,000/- against the respondents. The claimants not being satisfied with the compensation awarded by the Motor Accident Claims Tribunal by its order dated November 6, 1989, filed an appeal. But the appeal was dismissed by the learned Single Judge on April 30, 1990 without giving any reasons. It is against this order that the appellants have filed the instant Letters Patent Appeal.

3. We have heard learned Counsel for the parties. The first question to be decided is whether or not the amount of compensation awarded by the Motor Accident Claims Tribunal needs to be enhanced. To answer the question it will be necessary to notice that the Tribunal has awarded compensation of Rs. 72,000/- with interest at the rate of 12% per annum from the date of filing of the claim petition till its realisation against the respondents and in favour of the appellants. The appellants claim that the compensation awarded by the Tribunal is highly inadequate. They have highlighted the fact that the deceased at the time of accident was 24 years of age and was drawing a stipend of Rs. 1,300/- from M/s. Batliboi & Co. It was submitted that on completion of the probation, which event was to take place after a very short time, the deceased would have been put in a regular scale and would have reached an income of about Rs. 5,000/- per month. According to the learned Counsel for the appellants the deceased was a brilliant youngman and would have risen very high in his career.

4. The principles on the basis of which compensation is to be worked out have been laid down in various decisions of the Supreme Court and the High Courts. In U.P State Road Transport Corpn. v. Trilok Chandra, 1 (1996) ACC 592 (SC), a three-Judge Bench of the Supreme Court after review of various decisions, namely, Gobald Motor Services Limited v. R.M.K Veluswami, AIR 1962 S.C 1; Davies v. Powell Duffryn Associated Collieries Ltd., 1942 AC 601; Municipal Corporation Of Delhi v. Subhagwanti & Others, AIR 1966 SC 1750; General Manager, Kerala State Road Transport, Trivendrum v. Susamma Thomas, (1994) 2 SCC 176; C.K.S Iyer v. T.K Nair, (1969) 3 SCC 64 : AIR 1970 S.C 376; Hirji Virji Transport v. Basiranbibi, (1971) 12 Gujarat Law Reporter 783; Mallet v. McMonagle, 1969 (2) All England Reports 178; and Taylor v. O'Conor, 1970 (1) All England Reports 36, evolved the principles for determining just compensation. In this regard, the Supreme Court observed as follows:

“We thought it necessary to reiterate the method of working out ‘just’ compensation because, of late, we have noticed from the awards made by Tribunals and Courts that the principle on which the multiplier method was developed has been lost sight of and once again hybrid method based on the subjectivity of the Tribunal/Court has surfaced, introducing uncertainty and lack of reasonable uniformity in the matter of determination of compensation. It must be realised that the Tribunal/Court has to determine a fair amount of compensation awardable to the victim of an accident which must be proportionate to the injury caused. The two English decisions to which we have referred earlier provide the guidelines for assessing the loss occasioned to the victims. Under the formula advocated by Lord Wright in Davies, the loss has to be ascertained by first by the use of an appropriate multiplier. Let us illustrate: X, male, aged about 35 years, dies in an accident. He leaves behind his widow and 3 minor children. His monthly income was Rs. 3,500/-. First, deduct the amount spent on X every month. The rough and ready method hitherto adopted where no definite evidence was forthcoming, was to break up the family into units, taking two units for an adult and one unit for a minor. Thus, X and his wife make 2+2=4 units and each minor one unit, i.e, 3 units in all, totalling 7 units. Thus the share per unit works out to Rs. 3,500/7=Rs. 500/- per month. It can thus be assumed that Rs. 1,000/- was spent on X. Since he was a working member some provision for his transport and out-of-pocket expense has to be estimated. In the present case we estimate the out-of-pocket expense at Rs. 250/-. Thus the amount spent on the deceased X works out to Rs. 1,250/- per month leaving a balance of Rs. 3,500—1,250=Rs. 2,250/- per month. This amount can be taken as the monthly loss to X's dependents. The annual dependency comes to Rs. 2,250 × 12=Rs. 27,000/-. This annual dependency has to be multiplied by the use of an appropriate multiplier to assess the compensation under the head of loss to the dependents. Take the appropriate multiplier to be 15. The compensation comes to Rs. 27,000/- × 15=Rs. 4,05,000/-. To this may be added a conventional amount by way of loss of expectation of life. Earlier this conventional amount was pegged down to Rs. 3,000/- but now having regard to the fall in the value of the rupee, it can be raised to a figure of not more than Rs. 10,000/-. Thus the total comes to Rs. 4,05,000 + Rs. 10,000=Rs. 4,15,000/-.”

5. It may be noted that the multiplier method was also approved in General Manager, Kerala State Road Transport's case (supra) to which a reference was made in the aforesaid decision. In this case the Supreme Court after assessing dependency worked out the loss of dependency by adopting a multiplier of 12. They also added Rs. 15,000/- for loss of consortium and loss of the estate. Besides, estimate of income of the victim was made having regard to the possibility of his future advancement in career.

6. In a nut shell, the Forum required to determine the compensation for the family of the victim of an accident ought to proceed in the following manner:

(1) Break the family into units by taking two units for an adult and one unit for a minor and add them up.

(2) Determine the possible reasonable monthly income of the victim.

(3) While calculating the monthly income of the victim regard must be had to future advancement in career and increase in income (see General Manager, Kerala State Road Transport Corpn. v. Susamma Thomas, 1994 ACJ 1 (SC).

(4) Determine the share of a unit per month by dividing the income of the victim per month arrived in consonance with (2) above with the total number of units arrived at as per (1) above. Add the share of two units together. This would depict the share of the victim. It can be assumed that this amount the victim would have spent on himself, if he was alive. Rather, he would have also spent some amount for his transport and out of pocket expenses as he happened to be a working member. So add to the share of the victim reasonable amount for his transport and out of pocket expenses.

(5) The amount worked out as expenses of the deceased are to be deducted from the total earnings of the deceased per month. The balance amount is to be taken as the amount which the family has been deprived of because of the death of an earning member. The amount thus arrived at is the monthly loss to victim's dependents.

(6) The balance is then to be multiplied by 12 which would give annual dependency of the dependents on the victim if he would have been alive.

(7) The annual dependency thereafter is to be multiplied by an appropriate multiplier to assess the compensation under the head ‘loss to the dependents’.

(8) The amount on account of loss of consortium and loss of estate is to be added to the amount worked out under (6) above.

7. The multiplier must be selected keeping in view the age of the victim, the age of the dependents and the normal life expectancy in the family. While determining the multiplier on the basis of longevity, discounting for various factors would be necessary. These factors, having a bearing on the uncertainties of life, premature death of the deceased or the dependents, marriage/remarriage, increased earning by wise and prudent investments, accelerated payment, etc.

8. In U.P State Road Transport Corpn's case (supra) the Supreme Court emphasised that the multiplier cannot exceed 18 years purchase factor. Now applying the aforesaid principles to the facts of the present case, the amount of compensation payable to the appellants is to worked out. It is established from evidence on record that the deceased at the time of his death was 24 years of age and was drawing a stipend of Rs. 1,300/-. It is also clear that on completion of his training period he would have received a salary of about Rs. 2,300/- which in course of time would have increased suitably. Considering the future advancement of the deceased it will be reasonable to estimate the emoluments of the deceased at Rs. 3,000/- per month. At the time of his death the family consisted of the victim himself, his two parents and four sisters, three sisters were already married and the fourth was married after his death. Therefore, effectively the family consisted of three persons at the time of death of the victim Vivek Gupta. Next the family is required to be broken into units by taking two units for each of the family members and the salary has to be divided into six units for the purpose of arriving at the share of each unit. This works out to be Rs. 3,000/6=Rs. 500/-. Thus, taking two units for the deceased, Rs. 1,000 (2 units=Rs. 50×2) per month would have been the expenses of the victim. As he was a working member of the family an additional amount of Rs. 250/- can be considered for his transport and out of pocket expenses. It can be assumed that the total amount that the victim would have spent on himself, if he was alive, works out to be Rs. 1,250/- per month. This leaves a balance of Rs. 1,750/- per month (Rs. 3,000/-—Rs. 1,250). This estimate can be considered as the dependency of the appellants per month. The annual dependency comes to Rs. 1,750 × 12=Rs. 21,000/-. The annual dependency has now tp be multiplied by the use of an appropriate multiplier for computing the compensation for loss to the dependents of the victim. As the deceased was only 24 years of age at the time of his death and the father and mother at the time of his death were 58 and 52 years respectively, and there is evidence of longevity in the family, multiplier of 18 would be reasonable. Taking the multiplier of 18, the compensation would come to Rs. 3,78,000/- (Rs. 21,000 × 18). To this amount of compensation, an amount of Rs. 15,000/- on account of loss of consortium and Rs. 15,000/- on account of loss of estate need to be added. The total compensation, therefore, payable by the respondents to the appellants would be Rs. 3,78,000 + 15,000 + 15,000=Rs. 4,08,000/-.

9. Learned Counsel for the appellants submitted that the Tribunal was not right in coming to the conclusion that the liability of the Insurance Company was limited to Rs. 1,50,000/-. He urged that the insured took a policy covering a higher risk than contemplated by Section 95 of the Motor Vehicles Act, 1939 (for short ‘the Act’) as it stood on the date of the accident. He submitted that the statutory provisions have to be read subject to the terms of the policy of insurance issued by the insurer, viz., the first respondent. On the other hand, learned Counsel for the insurance company, the first respondent, submitted that the policy which was taken out in the instant case does not undertake higher risk than envisaged in Section 95 of the Act.

10. We have considered the submissions of learned Counsel for the parties. Section 95 of the Act was construed by the Supreme Court in Pushpabai Purushottam Udeshi v. Ranjit Ginning and Pressing Co. (P) Ltd., (1977) 2 SCC 745, wherein it was held that the insured can take a policy covering a risk higher than the one covered by the said provision. Again, the Supreme Court in Amrit Lal Sood v. Kaushalya Devi Thakur, IV (1998) SLT 522, held that the statutory provisions of the Act do not prevent an insurer from entering into a contract of insurance covering a risk wider than the minimum requirement of the statute.

11. Thus, according to the law laid down by the Supreme Court, the liability of the Insurance Company depends upon the terms of the agreement governing the insured and the insurer as contained in the policy. Though Section 95 of the Act lays down the liability of the insurer in the case of an accident, it does not restrict the legal liability of the insurer in case the policy of insurance undertakes a liability in excess of the statutory liability. In other words, the statutory liability of the insurer to indemnify the insured under Section 95 of the Act does not fetter the parties from entering into a contract whereby the insurer is required to pay a higher amount than fixed in the statutory provisions in case of bodily injury or death arising out of an accident.

12. The question which arises is whether or not the parties in the instant case have entered into an agreement whereby the insurer has undertaken a wider liability than the statutory liability. The answer to the question depends upon relevant provisions of the policy (Ext. RW1/1). At this stage it will be convenient to set out the same:

“XXXXXX

Schedule of Premium

Basic Prem. Rs. 180.00 Add one driver Rs. 8.00 Rs. 188.00

XXXXXX

(Limits of the liability) Limits of (Company's liability under (Section II-(i) (in respect of (any one accident (Limits of the amount of the Company's liability under Section Il-I(ii) in respect of any one claim or series of claims arising out one event Rs. 1,50,000/-” Such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939.

XXXXXX

Section II—Liability to Third Parties:

1. Subject to the limits of liability the Company will indemnify the insured against all sums including claimant's cost and expenses which the insured shall become legally liable to pay in respect.

(i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the motor vehicle.

XXXXXX”

13. Thus, from the reading of Clause 1 of Section II of the policy, the insurer undertook to indemnify the insured against all sums including claims, costs and expenses which the insured shall become legally liable to pay in respect of death or of bodily injury to any person caused by or arising out of the use of the motor vehicle in question. It is also clear that against the column “Limits of Liability”, the insurer had agreed to pay “such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939.”

14. It was argued by the learned Counsel for the appellants that the words “such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939” are of wider connotation and indicate that the Insurance Company has under taken to indemnify the insured against all sums which the insured has become liable to pay to the claimants in respect of death of the victim of the accident, and the liability of the insurer is not confined to the limits set by Section 95(2) of the Act.

15. We have given our thoughtful consideration to the submissions of the learned Counsel for the appellants, but we regret our inability to accept the same. The words “such amount as is necessary to meet the requirements of Motor Vehicles Act, 1939” show that the liability of the insurer is limited to the one indicated in the statutory provision, which at the relevant time was Rs. 1,50,000/-.

16. The aforesaid Schedule of Premium in the policy shows that the basic premium of Rs. 180/- plus a further sum of Rs. 8/- (on account of “add one driver”) was paid by the insured to the insurer. It also reveals that no additional premium was paid with regard to a case falling under Section II(l)(i) of the policy by the insured to the Insurance Company. In National Insurance Co. Lid, New Delhi v. Jugal Kishore, (1988) 1 SCC 626 : AIR 1988 S.C 719 : I (1988) ACC 327 (SC), the Supreme Court while dealing with an identical policy observed as follows:

“7. A perusal of the policy, therefore, indicates that the liability undertaken with regard to the death of or bodily injury to any person caused by or arising out of the use (including the loading and or unloading) of the motor vehicle falling under Section II(1)(i) has been confined to “such amount as is necessary to meet the requirements of the Motor Vehicles Act, 1939”. This liability, as is apparent from Clause (b) of Sub-section (2) of Section 95 of the Act, was at the relevant time Rs. 20,000/- only. The details of the premium also indicate that no additional premium with regard to a case falling under Section II(1)(i) was paid by the owner of the vehicle to the Insurance Company. It is only the vehicle which was comprehensively insured, the insured's estimate of value including accessories (I.E.V) thereof having been shown as Rs. 40,000/-. In view of the matter the submission made by learned Counsel for the respondents that the appellant had in the instant case undertaken an unlimited liability does not obviously have any substance. The liability under the policy in the instant case was the same as the statutory liability contemplated by Clause (b) of Sub-section (2) of Section 95 of the Act, namely, Rs. 20,000/-. An award against the appellant could not, therefore, have been made in excess of the said statutory liability.”

17. Again in National Insurance Co. Ltd. v. Nathilal and Ithers, (1999) 1 SCC 552, it was held that taking out of a comprehensive insurance of a vehicle and payment of higher premium do not mean that the limit of the liability with regard to third-party risk becomes unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act. It was also observed that for saddling the Insurance Company with unlimited liability or liability higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act, there has to be a specific agreement between the owner and the Insurance Company and separate premium has to be paid with regard to the amount of liability undertaken by the Insurance Company in this behalf. Applying the ratio of the aforesaid decisions, since no additional premium was paid by the owner for the purpose of making the liability of the Insurance Company unlimited or higher than the statutory liability fixed under the said provisions, it cannot be held that the Insurance Company is liable to pay the entire sum of compensation which has been awarded in favour of the claimants. In the case in hand, since in the policy the insured did not undertake a liability in excess of the statutory liability, the compensation awarded against it could only be within the limit sets out in Section 95 of the Act. Therefore, we hold that the Insurance Company cannot be asked to pay in excess of the statutory liability, viz., Rs. 1,50,000/-.

18. Learned Counsel for the appellant cited National Insurance Co. Ltd. v. Kamla Devi, 1995 ACJ 546 (Madhya Pradesh); Tulsi Ram Agarwal v. Manjinder Singh, 1 (2000) ACC 415 (Rajasthan); Draupadi Devi v. Inder Kumar, 1998 ACJ 418 (Rajasthan); New India Assurance Co. Ltd. v. Pushpa Kakkar, 1993 ACJ 328 : II (1992) ACC 191 (Delhi), and some more decisions in support of his submission that the liability of the insurer was unlimited inasmuch as the insured had paid premium over and above the basic premium and the policy indicates that the insurer is liable to pay such amount as compensation as is necessary to meet the requirements of the Motor Vehicles Act, 1939. We find that the authorities cited by the learned Counsel are of no avail to him. In each of the decisions cited by him it was found as a matter of fact that extra premium over and above the basic premium was paid to create unlimited third party liability. However, in the instant case no extra or special premium has been paid for creating unlimited third party liability of the insurer. As already noticed, the insured had paid Rs. 180/- as basic premium and Rs. 8/- in respect of “Add One Driver”. Thus, the insured had paid premium for ‘Act Only Policy’.

19. In view of the aforesaid discussion, the appeal is allowed and order of the learned Single Judge dated April 30, 1990 is set aside. Consequently, we modify the order of the Tribunal and enhance the compensation payable to the appellants to Rs. 4,08,000/-. They shall also be entitled to interest at the rate of 12% per annum from the date of filing of the claim petition till realisation.

20. The liability of the respondents to pay the aforesaid amount of compensation and interest thereon to the appellants shall be as follows:

(1) Respondent No. 1 shall pay to the appellants a sum of Rs. 1,50,000/- with interest at the rate of 12% per annum from the date of filing of the claim petition by the appellants till realisation of the amount.

(2) Respondents 2 to 4 shall pay to the appellants a sum of Rs. 2,58,000/- with interest at the rate of 12% per annum from the date of filing of the claim petition by the appellants till realisation of the amount. Respondents 2 to 4 shall be jointly and severally responsible to pay the aforesaid amount of compensation and interest to the appellants.

Appeal allowed.