REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    237    OF 2012 [ARISING OUT OF SLP (CIVIL) NO.9850 OF 2010]

MOHAN SONI … APPELLANT

VERSUS

RAM AVTAR TOMAR AND ORS. … RESPONDENTS

J U D G M E N T

Aftab Alam, J.

1. Leave granted.

2. The appellant, victim of a motor vehicle accident has come to  

this Court making grievance about the low amount of compensation  

awarded to him by the Tribunal and the High Court.   

3. The appellant used to earn his livelihood as a cart puller.  On  

December 17, 2003, at about 3.00 P.M. he was carrying some goods  

on a four-wheel cart when he was hit by a tanker which was being  

driven in a rash and negligent manner.  In the accident, the left leg of  

the  appellant  was  crushed.   The  X-Ray  report  showed  multiple

fractures in the left leg.  He was admitted to a hospital where he had  

to undergo two surgeries between December 17, 2003 and January  

3, 2004 and in the end his left leg was amputated below the knee.  

He filed an application (Claim Case No.16/2004) before the Second  

Additional Motor Accident Claims Tribunal, Gwalior, (M.P.), claiming  

compensation for the injuries suffered by him under section 166 of  

the  Motor  Vehicles  Act,  1988.   It  was  stated  by  him  before  the  

Tribunal that at the time of accident his age was 50 years and his  

monthly income, as a cart puller, was Rs.3,300/-. As a result of the  

amputation of his leg, he was no longer in a position to walk without  

support and he was, therefore, rendered incapable of doing any work  

and to earn his livelihood.  

4. The Tribunal found and held that the accident took place as a  

result of the negligent and rash driving by the tanker driver.  It further  

held that at the time of the accident the age of the appellant was 55  

years and his monthly income was Rs.2,400/- and not Rs.3,300/- as  

claimed   by  him.  Coming  to  the  extent  of  disability,  the  Tribunal  

referred to the disabled-person identity card given to the appellant  

(Exhibit P.27) in which his disability was shown as 60%.  The Tribunal

also  observed  that  when  the  claimant  appeared  in  court,  it  was  

evident that his left leg was amputated below the knee. Though the  

appellant’s disabled-person card showed his disability as 60%, the  

Tribunal,  with  reference  to  Schedule  1  of  the  Workmen’s  

Compensation Act, 1923, held that the appellant’s disability could not  

be reckoned above 50%.

5. Having  held  that  that  the  appellant’s  age  at  the  time  of  the  

accident was 55 years, the Tribunal applied the multiplier of 11 and  

on the basis of the findings that the appellant’s monthly income was  

Rs.2,400/- and the extent of his disability was 50%, fixed the amount  

of  Rs.1,58,400/-  as  compensation  for  loss  of  future  earnings.   In  

addition to this,  the Tribunal  gave to the appellant  Rs.30,000/-  for  

mental and physical agony due to permanent disability and a further  

sum  of  Rs.15,000/-  for  medical  expenses  and  special  diet.  

Accordingly, the Tribunal, by its award dated July 31, 2004 held the  

appellant  entitled  to  receive  a  total  sum  of  Rs.2,03,400/-  as  

compensation along with interest at the rate of 9% per annum from  

the date of filing of the claim petition on January 9, 2004 till the date  

of payment.

6. Against the award of the Tribunal,  the appellant preferred an  

appeal (Miscellaneous Appeal No.844 of 2004) before the Madhya  

Pradesh High Court, Gwalior Bench. In the High Court, the case was  

referred  to  Lok  Adalat  where  the  Insurance  Company  agreed  for  

enhancement  of  the  amount  of  compensation  by  Rs.50,000/-.   It,  

however,  appears  that  the  matter  could  not  be settled  in  the  Lok  

Adalat and the appeal came to be finally heard and disposed of by  

the High Court on merits. The High Court by its judgment and order  

dated April 1, 2009 simply raised the amount of the monthly income  

of the appellant from Rs.2,400/- to Rs.3,000/- and, thereby, arrived at  

a  sum  of  Rs.1,98,000/-  as  compensation  for  the  loss  of  future  

earnings.  The  total  compensation  amount  was,  thus,  raised  from  

Rs.2,03,400/-  to Rs.2,58,000/-  (practically what  was offered by the  

Insurance Company before the Lok Adalat on which no settlement  

was arrived at between the parties!)   

7. On hearing counsel for the parties and on going through the  

materials on record, we are of the view that both the Tribunal and the  

High  Court  were  in  error  in  pegging  down  the  disability  of  the  

appellant  to  50% with  reference  to  Schedule  1  of  the  Workmen’s

Compensation Act, 1923.  In the context of loss of future earning, any  

physical disability resulting from an accident has to be judged with  

reference  to  the  nature  of  work  being  performed  by  the  person  

suffering the disability.  This is  the basic premise and once that  is  

grasped, it clearly follows that the same injury or loss may affect two  

different  persons  in  different  ways.  Take  the  case  of  a  marginal  

farmer who does his cultivation work himself and ploughs his land  

with his own two hands; or the puller of a cycle-rickshaw, one of the  

main  means  of  transport  in  hundreds  of  small  towns  all  over  the  

country. The loss of one of the legs either to the marginal farmer or  

the cycle-rickshaw-puller would be the end of the road insofar as their  

earning capacity is concerned. But in case of a person engaged in  

some kind of desk work in an office, the loss of a leg may not have  

the same effect.  The loss of a leg (or for that matter the loss of any  

limb)  to  anyone  is  bound to  have very  traumatic  effects  on one’s  

personal,  family or  social  life  but  the loss of  one of  the legs to  a  

person working in the office would not interfere with his work/earning  

capacity in the same degree as in the case of a marginal farmer or a  

cycle-rickshaw-puller.  

8. The  question  of  loss  of  earning  capacity  resulting  from  

amputation  of  one  the  legs  in  the  case  of  a  tanker  driver  was  

considered by this Court in  K. Janardhan v.  United India Insurance  

Company Limited and another, (2008) 8 SCC 518.  In that case, a  

tanker driver suffered serious injuries in a motor accident and as a  

result, his right leg was amputated upto the knee joint.  He made a  

claim  under  the  Workmen’s  Compensation  Act,  1923.   The  

Commissioner  for  Workmen’s  Compensation  held  that  disability  

suffered by him as a result  of  the loss of  the leg was 100% and  

awarded compensation  to  him  on  that  basis.  In  appeal,  the  High  

Court,  like  in  the  present  case,  referred  to  the  Schedule  to  the  

Workmen’s Compensation Act, 1923 and held that the loss of a leg  

on amputation amounted to reduction in the earning capacity by 60%  

and, accordingly, reduced the compensation awarded to the tanker  

driver. This Court set aside the High Court judgment and held that the  

tanker driver had suffered 100% disability and incapacity in earning  

his keep as a tanker driver as his right leg was amputated from the  

knee  and,  accordingly,  restored  the  order  passed  by  the  

Commissioner  of  Workmen’s Compensation.   In  K. Janardhan this

Court also referred to and relied upon an earlier decision of the Court  

in Pratap Narain Singh Deo v. Srinivas Sabata (1976) 1 SCC 289, in  

which a carpenter who suffered an amputation of his left arm from the  

elbow  was  held  to  have  suffered  complete  loss  of  his  earning  

capacity.   

9. In  a more recent  decision in  Raj  Kumar  v. Ajay  Kumar  and  

another, (2011) 1 SCC 343, this Court considered in great detail the  

correlation between the physical disability suffered in an accident and  

the loss of earning capacity resulting from it. In paragraphs 10, 11  

and 13 of the judgment in Raj Kumar, this Court made the following  

observations:

“10. Where the claimant  suffers  a permanent  disability  as a result of injuries, the assessment of compensation  under the head of loss of future earnings would depend  upon the effect and impact of such permanent disability  on  his  earning  capacity.   The  Tribunal  should  not  mechanically  apply  the  percentage  of  permanent  disability as the percentage of economic loss or loss  of  earning  capacity.   In  most  of  the  cases,  the  percentage of economic loss, that is, the percentage  of loss of earning capacity, arising from a permanent  disability  will  be  different  from  the  percentage  of  permanent disability.  Some Tribunals wrongly assume  that  in  all  cases,  a  particular  extent  (percentage)  of  permanent disability would result in a corresponding loss  of  earning  capacity,  and  consequently,  if  the  evidence

produced show 45% as the permanent disability, will hold  that there is 45% loss of future earning capacity. In most  of the cases, equating the extent (percentage) of loss  of  earning  capacity  to  the  extent  (percentage)  of  permanent disability will result in award of either too  low or too high a compensation.  

11. What requires to be assessed by the Tribunal is the  effect of the permanent disability on the earning capacity  of  the  injured;  and  after  assessing  the  loss  of  earning  capacity in terms of a percentage of the income, it has to  be quantified in terms of  money,  to arrive at  the future  loss  of  earnings  (by  applying  the  standard  multiplier  method used to determine loss of dependency). We may  however  note  that  in  some  cases,  on  appreciation  of  evidence and assessment, the Tribunal may find that the  percentage of loss of earning capacity as a result of the  permanent  disability  is  approximately  the  same  as  the  percentage  of  permanent  disability  in  which  case,  of  course,  the  Tribunal  will  adopt  the  said  percentage for  determination  of  compensation.  (See  for  example,  the  decisions of this Court  in  Arvind Kumar Mishra v.  New  India Assurance Co. Ltd. (2010) 10 SCC 254 and Yadava  Kumar v.  National  Insurance  Co.  Ltd. (2010)  10  SCC  341).  

13. Ascertainment  of  the  effect  of  the  permanent  disability  on  the  actual  earning  capacity  involves  three  steps.  The Tribunal has to first ascertain what activities  the  claimant  could  carry  on  in  spite  of  the  permanent  disability  and  what  he  could  not  do  as  a  result  of  the  permanent  disability  (this  is  also  relevant  for  awarding  compensation under the head of loss of amenities of life).  The second step is to ascertain his avocation, profession  and nature of work before the accident, as also his age.  The third step is to find out  whether  (i)  the claimant is  totally disabled from earning any kind of livelihood, or (ii)  whether in spite of the permanent disability, the claimant

could still effectively carry on the activities and functions,  which he was earlier carrying on, or (iii) whether he was  prevented  or  restricted  from  discharging  his  previous  activities and functions, but could carry on some other or  lesser  scale  of  activities  and  functions  so  that  he  continues to earn or can continue to earn his livelihood.”

10. In light of the aforesaid decisions, we find it extremely difficult to  

uphold the decision of the High Court and the Tribunal based on the  

finding that the loss of the appellant’s earning capacity as a result of  

the amputation of his left leg was only 50%. It is noted above that the  

appellant used to earn his livelihood as a cart puller. The Tribunal has  

found that at the time of the accident his age was 55 years. At that  

age it would be impossible for the appellant to find any job. From the  

trend of cross-examination it appears that an attempt was made to  

suggest that notwithstanding the loss of one leg the appellant could  

still  do some work sitting down such as selling vegetables. It  is all  

very well  to theoretically talk about a cart puller changing his work  

and  becoming  a  vegetable  vendor.  But  the  computation  of  

compensation  payable  to  a  victim of  motor  accident  who  suffered  

some serious permanent disability resulting from the loss of a limb  

etc.  should not take into account  such indeterminate factors.   Any  

scaling down of  the compensation should require  something more

tangible  than  a  hypothetical  conjecture  that  notwithstanding  the  

disability, the victim could make up for the loss of income by changing  

his vocation or by adopting another means of livelihood.  The party  

advocating for a lower amount of compensation for that reason must  

plead and show before  the  Tribunal  that  the victim enjoyed  some  

legal protection (as in the case of persons covered by The Persons  

with Disabilities (Equal  Opportunities, Protection of Rights and Full  

Participation) Act, 1995) or in case of the vast multitude who earn  

their livelihood in the unorganized sector by leading cogent evidence  

that the victim had in fact changed his vocation or the means of his  

livelihood and by virtue of  such change he was deriving a certain  

income.  The loss of earning capacity of the appellant, according to  

us, may be as high as 100% but in no case it would be less than  

90%.  We, accordingly, find and hold that the compensation for the  

loss of appellant’s future earnings must be computed on that basis.  

On  calculation  on  that  basis,  the  amount  of  compensation  would  

come to Rs.3,56,400/- and after addition of a sum of Rs.30,000/- and  

Rs.15,000/- the total amount would be Rs.4,01,400/-.  The additional  

compensation  amount  would  carry  interest  at  the  rate  of  9% per

annum from the  date  of  filing  of  the  claim petition  till  the  date  of  

payment. The additional amount of compensation along with interest  

should be paid to the appellant without delay and not later than three  

months from today.  

11. In  the  result,  the  appeal  is  allowed  to  the  extent  indicated  above.  

……………………………… …….J.

(Aftab Alam)  

……………………………… …….J.

(R.M. Lodha)  New Delhi; January 10, 2012.