Supreme Court Bars Split Multiplier in Motor Accident Compensation: Income at Death Sole Basis for Award
Court says superannuation not an exceptional circumstance; compensation must reflect actual income at time of death.
Ruling restores uniformity in accident claims, ending confusion across High Courts on split multiplier use.
By Our Legal Correspondent
New Delhi: November 15, 2025:
In a landmark judgment, the Supreme Court of India has categorically prohibited the use of the split multiplier method in computing compensation under the Motor Vehicles Act, 1988. The ruling, delivered on November 6, 2025, by a bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra, came in the case of Preetha Krishnan & Ors. v. United India Insurance Co. Ltd. & Ors.
The Court held that compensation must be calculated solely based on the deceased’s income at the time of death, rejecting the practice of splitting the multiplier into pre-retirement and post-retirement phases.
Background of the Case
The case arose from a Kerala High Court ruling that applied the split multiplier method to reduce compensation in a motor accident claim. The High Court reasoned that since the deceased would have retired at 60, compensation should be calculated using one multiplier until retirement and a reduced multiplier thereafter.
The claimants challenged this approach, arguing that it unfairly reduced compensation and contradicted established principles under the Motor Vehicles Act.
Supreme Court’s Observations
- The split multiplier method is foreign to the Motor Vehicles Act and has no statutory basis.
- Compensation must be based on the income of the deceased at the time of death, not speculative future earnings.
- Superannuation (retirement) cannot be treated as an exceptional circumstance warranting reduction in compensation.
- The purpose of compensation is to provide just and fair relief to dependents, not to minimize liability through artificial calculations.
Justice Karol observed: “The split multiplier approach introduces uncertainty and inconsistency. Compensation must be uniform, predictable, and based on actual income at death.”
Key Legal Principles Established
- Uniformity in Compensation: Courts must apply a single multiplier based on age, not split it into phases.
- Income at Death as Sole Basis: Compensation must reflect actual earnings at the time of death.
- Superannuation Not Exceptional: Retirement age cannot justify reducing compensation.
- Statutory Consistency: Methods not provided under the Motor Vehicles Act cannot be introduced by courts.
Broader Context: Motor Accident Compensation in India
Motor accident claims are among the most common civil cases in India. The multiplier method, established in earlier Supreme Court rulings such as Sarla Verma v. DTC (2009) and National Insurance Co. Ltd. v. Pranay Sethi (2017), provides a uniform formula for calculating compensation based on age and income.
However, some High Courts began experimenting with the split multiplier, leading to inconsistent awards. The Supreme Court’s latest ruling restores clarity and uniformity.
Importance of the Ruling
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- Clarity for Courts: It ends confusion across High Courts regarding split multiplier use.
- Fairness for Claimants: Dependents will receive compensation based on actual income, without arbitrary reductions.
- Predictability for Insurers: Insurance companies can calculate liabilities with greater certainty.
- Strengthening Rule of Law: The ruling reinforces that compensation methods must align with statutory provisions.
Reactions from Stakeholders
- Claimants’ Lawyers: Welcomed the ruling as a victory for fairness. “The Supreme Court has ensured that dependents are not shortchanged by speculative calculations,” said a senior advocate.
- Insurance Companies: While acknowledging the clarity, insurers noted that the ruling may increase liabilities in some cases.
- Legal Experts: Observed that the judgment strengthens the jurisprudence on accident compensation, aligning it with earlier precedents.
Implications for Future Cases
- For Claimants: Ensures higher and fairer compensation in accident cases.
- For Courts: Provides clear guidance, reducing scope for inconsistent rulings.
- For Insurers: Requires recalibration of liability assessments.
- For Policy Reform: May prompt discussions on revising compensation structures under the Motor Vehicles Act.
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Conclusion
The Supreme Court’s ruling barring the split multiplier method marks a turning point in India’s motor accident compensation jurisprudence. By holding that compensation must be based solely on the deceased’s income at the time of death, the Court has restored uniformity, fairness, and statutory consistency.
For claimants, the ruling ensures just relief. For insurers, it provides clarity. For the judiciary, it reinforces the principle that justice must not be compromised by speculative or artificial methods.
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