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In Susamma Thomas (supra) it was observed that the multiplier method is the appropriate one which should ordinarily be not departed from save in rare and extraordinary circumstances and very exceptional cases. The rationale for applying the said principle was laid down stating :-

"17. The multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs. 10,000/ -. If a sum of Rs. 1,00,000/- is invested at 10% annual interest, the interest will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rs. 10,000/- would be 20. Then the multiplier, i.e., the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the  period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependants, whichever is higher) goes up,"

15. However, it is pertinent to notice that the Bench categorically laid down that those mistakes are limited to actual calculations only and not in respect of other items. It was emphasized that the multiplier cannot exceed 18 years' purchase factor. It noticed that the same was an improvement over the earlier position that ordinarily it should not exceed 16.

This Court stated the law thus :-

"15. 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 a 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 determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus assessing the loss to the dependants of the deceased. The annual dependency assessed in this manner is then to be multiplied 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 3500. 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 3500/7=Rs 500 per month. It can thus be assumed that Rs 1000 was spent on X. Since he was a working member some provision for his transport and out-of-pocket expenses 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 1250 per month leaving a balance of  Rs 3500-1250=Rs 2250 per month. This amount can be taken as the monthly loss to X's dependants. The annual dependency comes to Rs 2250x12=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 dependants. Take the appropriate multiplier to be 15. The compensation comes to Rs 27,000x15=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 3000 but now having regard to the fall in the value of the rupee, it can be raised to a figure of not more than Rs10,000. Thus the total comes to Rs 4,05,000+10,000= Rs 4,15,000.

23. Learned Single Judge of the Delhi High Court in the appeal filed against the Award which is subject matter of SLP (C) No. 8205 of 2007 opined that one of the two methods adopted to determine the amount of compensation in fatal accident actions is the multiplier method adopted in Davies v. Powell Duffregn Associaed Colliers Ltd. [ 1942 AC 601 ]. According to learned Judge it takes care of future prospects. A statement has been appended, which we intend to reproduce hereinafter for consideration as to whether the assumption made by him that the Second Schedule takes care of inflation of interest, loss of future prospects, is correct. The statement reads, thus:-

32. The heads of pecuniary loss are basically two. One, loss of earnings upto the date of trial and the other, loss of future earnings. Principally we are concerned with the second issue herein. For calculating future earning, the following factors are taken into consideration:-

       (i)      interest method ;

       (ii)     lump sum method ; and

       (iii)    multiplier method.

Whereas in the first and third method, interest method for all intent and purport has not been applied in India. Multiplier method was applied as a mode of estimating the present value as a loss of benefit to the dependent in Davis (supra) wherein it was observed: