In several instances, compensation offered to consumers doesn’t match up to even the actual costs incurred

Compensation awarded by consumer fora, which is required to discourage businesses from repeating the blunder committed earlier, has often been a contentious issue as many a time it would appear there was no rationale behind arriving at the quantum of compensation. There are several instances where affected consumers end up getting inadequate amount towards damages that don’t match up to even the actual costs incurred.

In such a scenario, the Apex Court’s recent judgement, awarding the highest compensation for medical negligence, is certainly laudable. Kunal Saha’s wife had come to Kolkata from the U.S. in March 1998, developed skin rashes in April, underwent treatment and died in May. In 1999, Dr. Saha filed a complaint in the National Commission (NC), against the hospital and the doctors who attended on his wife, for medical negligence and sought a compensation of Rs.77.7 crore initially, which was enhanced in his appeal later.

Dissatisfied with the quantum of compensation — Rs. 1.73 crore — awarded by the NC in 2012, Dr. Saha preferred an appeal before the Supreme Court (SC). Modifying the award of the NC, the Supreme Court awarded Rs. 6,08,00,550 as compensation, along with interest at six per cent an annum, from the date of application till the date of payment, which totalled to over Rs. 11.41 crore. The Apex Court termed the order a deterrent and a reminder to those doctors, hospitals, nursing homes and other connected establishments who do not take their responsibility seriously.

Among various points that arose for consideration by the SC while deciding the said case, a few important, notable ones were, first, if the claim of the claimant for enhancement of compensation in his appeal was justified. The Supreme Court observed that it was a fact that the claim was pending before NC and SC for more than 15 years, during when, value of money had devalued to a great extent and therefore, inflation should be taken into consideration. “Using Cost of Inflation Index (C.I.I.), determined by the Finance Ministry to appreciate the level of devaluation of money every year, the original claim of Rs. 77.7 crores claimed in 1998 would be equivalent to Rs. 188.6 crores as of 2013 and therefore the enhanced claim preferred by Dr. Saha was legally justifiable,” the Court said.

Next point was whether the NC was justified in adopting the multiplier method (a formula under Section 163A read with Second Schedule of the Motor Vehicles Act, allowing a variation of 5 to 18 in the multiplier on the basis of the age of the victim, earning capacity, dependents, etc.), to determine compensation. Though this method has been followed in many cases, there are several instances where the SC has seen beyond this straight-jacket approach, especially when it came to medical negligence claims. Thus, in this particular case, the SC looked at various claims of the claimant on account of death of his wife, including the income that was being earned by the deceased at the time of her death at the age of 36 and the fact that she could have been earning till the age of 66 in the U.S. and said that the claimant was liable for a just and reasonable compensation.

Finally, on the point if the claimant was entitled to interest on the compensation that would be awarded, the Apex Court observed that “interest is essentially a compensation payable on account of denial of the right to utilize the money due. Accordingly payment of interest follows as a matter of course when a money decree is passed”. The only two views on the subject were, if interest was payable from date when claim for principal sum is made or if such interest is payable only when a determination is made. However, the more consistent view has been the former, the SC said and relying upon various earlier judgements, it held that the National Commission not awarding interest on the compensation amount from date of filing of the complaint up to the date of payment was most unreasonable and opposed to the provisions of the Interest Act, 1978 and thus awarded interest at six per cent an annum on the compensation amount, which was payable from date of filing of complaint till the date of payment.

(The writer works with CAG, which offers free advice on consumer complaints to its members. For membership details / queries contact 2491 4358 / 2446 0387 or