REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6481 OF 2011 (Arising out of Special Leave Petition (C) No. 15747 of 2010)

Sri Ramachandrappa                            ……….. Appellant

versus

The Manager, Royal Sundaram  Alliance Insurance Company Limited            ………. Respondent

J U D G M E N T

H.L. Dattu, J.

1. Leave granted.

2. This  appeal  is  directed against  the Judgment  and Decree  

passed by the High Court of Karnataka in MFA No. 10869 of 2006  

dated 9th day of  December,  2009,  whereby the High Court  has  

partly allowed the appeal and enhanced the compensation awarded  

by the Court of Small  Causes, Bangalore (‘Tribunal’  for short)  in  

MVC Case No. 5124 of 2004 dated 25.03.2006.  The Tribunal has  

awarded a sum of `1,13,900/- with interest at 6% p.a. from the date  

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of the claim petition till the date of deposit as against the claim of  

the  appellant  for  `5,50,000/-.   The  High  Court,  by  its  impugned  

Judgment and order, has marginally increased the compensation  

awarded by the Tribunal.  The appellant,  being aggrieved by the  

compensation awarded by the Tribunal  and the High Court,  has  

filed this appeal.

3. The facts of the present case are as follows :-

The appellant was working as a Coolie and earning `4500/-  

per  month.   He  was  riding  as  pillion  on  a  motorcycle  with  one  

Hanumanthappa,  when  they  met  with  an  accident.   Appellant  

sustained grievous injuries.   He was treated in a private nursing  

home and his treatment continued for  a long time.  In the claim  

petition,  it  was his case and claim that  even after  treatment,  his  

right hand is completely disabled and due to which, his work and  

livelihood completely suffered.  Appellant filed an application under  

Section  166  of  Motor  Vehicles  Act,  1988  for  compensation  of  

`5,50,000/- by way of special and general damages on account of  

injuries, pain, mental  agony, loss of earning, physical  disabilities,  

shortening  of  expectation  of  life  due  to  injuries  sustained  in  the  

accident  and  medical  expenses  incurred  thereon.  

Hanumanthappa, who was Respondent No. 1 in the Claim Petition,  

though served with the notice of petition, did not appear before the  

Court  to  oppose  the  relief  sought  in  the  claim  petition.   The  

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Tribunal, after considering the evidence on record, has awarded a  

compensation of `1,13,900/- with interest at 6% per annum from the  

date of petition till the date of deposit as against the claim of the  

appellant for `5,50,000/-.   

4. Aggrieved  by  the  inadequate  compensation  awarded,  the  

appellant preferred an appeal before the High Court of Karnataka.  

The court, by its order dated 9th of December, 2009, has awarded  

the compensation of `1,33,900/-, as against `1,13,900/- awarded by  

the  Tribunal,  with  interest  at  6%  per  annum  on  the  enhanced  

compensation  from  the  date  of  the  petition  till  the  date  of  

realization.  The appellant, being dissatisfied with the compensation  

awarded, is before us in this appeal.   

5. We have heard the learned counsel for the parties to the lis  

and perused the records.   

6. Before  the  Tribunal,  the  appellant  had  examined  himself  

(PW-1)  and  one  Dr.  P.K.Raju,  Asst.  Professor  in  Orthopaedics  

(PW-2) in support of his claim petition.  The Doctor, in his evidence,  

has stated that the appellant cannot work as a coolie by using his  

right hand and cannot do any other manual work.  Though, he was  

cross-examined, nothing adverse to the claim of the appellant  is  

elicited.  

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7. The learned counsel for the appellant submits that due to the  

injuries sustained by the appellant in the accident, the appellant is  

permanently  disabled,  which  would  affect  his  future  earning  

capacity as a Coolie.  Per contra, learned counsel for the Insurance  

Company submits that since the appellant has suffered only 41% of  

disability,  the  High  Court  was  justified  in  restricting  the  claim  

against the claim made by the appellant.   

8. The  compensation  is  usually  based  upon  the  loss  of  the  

claimant’s  earnings  or  earning  capacity,  or  upon  the  loss  of  

particular faculties or members or use of such members, ordinarily  

in accordance with a definite schedule.  The Courts have time and  

again  observed  that  the  compensation  to  be  awarded  is  not  

measured by the nature, location or degree of the injury, but rather  

by the extent or degree of the incapacity resulting from the injury.  

The  Tribunals  are  expected  to  make  an  award  determining  the  

amount of compensation which should appear to be just, fair and  

proper.

9. The term “disability”,  as so used, ordinarily means loss or  

impairment of earning power and has been held not to mean loss of  

a member of the body.  If the physical  efficiency because of the  

injury has substantially impaired or if he is unable to perform the  

same work  with  the  same ease as  before  he  was  injured  or  is  

unable to do heavy work which he was able to do previous to his  

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injury,  he  will  be  entitled  to  suitable  compensation.   Disability  

benefits are ordinarily graded on the basis of the character of the  

disability as partial or total, and as temporary or permanent.  No  

definite  rule  can  be  established  as  to  what  constitutes  partial  

incapacity in cases not covered by a schedule or fixed liabilities,  

since facts will differ in practically every case.   

10. In  Ramesh Chandra Vs. Randhir Singh (1990) 3 SCC 723,  

this Court drawing distinction between the compensation for future  

loss and pain and enjoyment of life, has observed as under :

“…  The  incapacity  or  disability  to  earn  a  livelihood would have to be viewed not only in   presenti  but  in  futuro  on  reasonable  expectancies and taking into account deprival of   earnings  of  a  conceivable  period.  This  head  being totally different cannot in our view overlap  the  grant  of  compensation  under  the  head  of   pain, suffering and loss of enjoyment of life. One  head  relates  to  the  impairment  of  person's   capacity  to  earn,  the  other  relates  to  the  pain  and suffering and loss of enjoyment of life by the  person himself.”

 11. In K.G. Poovaiah (Dr) v. G.M./Managing Director, Karnataka  

KSRTC, (2001)  9  SCC  167,  the  appellant  was  a  Medical  

Practitioner and was aged about  36 years and had met with an  

accident  in  which  his  hand  was  crushed.   This  Court,  while  

considering the nature of his profession and income, has enhanced  

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the amount of compensation for loss of future earnings.  This Court  

observed :   

“There is no reason to doubt the testimony of the  appellant  so  far  as  his  monthly  income  is  concerned.  Being  a  medical  man  aged  about  36  years  on  the  date  of  the  accident,  the  monthly   salary  received  by  him  cannot  be  said  to  be  exaggerated. He has candidly admitted that he was  not assessed to tax. A salary of Rs 3000 per month   to a medical practitioner cannot be said to be on the   higher side. We, therefore, accept his statement in   this behalf.  We also accept the assessment at Rs  40,000  for  pain  and  suffering.  However,  the  assessment of compensation under the head of loss  of earning capacity is very much on the lower side.   The  injury  to  the  right  hand,  which  has  left  a   permanent  disability  and  which  has  affected  the  functioning of the limb and in particular the fingers,   is  a  serious  handicap  to  a  medical  practitioner.   Patients  would  be  reluctant  to  go  to  him  for  treatment  and,  therefore,  the  loss  of  earning  capacity would be substantial.  Even if we were to   assume that it would reduce his earning capacity by  50% and even if we go by his earnings at the date   of the accident, the monthly loss would come to Rs  1500 i.e. Rs 18,000 per annum. If this monthly loss  of earning is multiplied by 10 years purchase factor   the compensation would work out to Rs 1,80,000.   To that must be added the compensation allowed  under  certain  other  heads,  namely,  pain  and  suffering, loss of amenities, medical expenses, etc.   The total amount comes to Rs 2,38,000.”

12. In  Kapil Kumar v. Kudrat Ali, (2002) 4 SCC 337, a student  

suffered  injuries  on  his  hand  and  the  disability  of  20%  was  

assessed  by  the  Doctors.  This  Court,  while  upholding  the  High  

Court’s observation in relation to compensation for loss of future  

earnings, has held:  

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“However, the disability sustained was assessed at 20  per  cent.  As rightly  observed by the High Court,  the   loss  of  earning  capacity  on  account  of  permanent  partial  disability  suffered  by  the  appellant  cannot  be  calculated  in  terms  of  percentage  only.  It  will  have  serious repercussions on his studies and prospects of   earning.  He will  have to face other  handicaps in life.   Though the High Court did realise the need to enhance  the  compensation,  we  feel  that  the  extent  of  enhancement  is  still  inadequate.  The  increase  of  Rs  5000 is only marginal. Taking inter alia the table in the  Second Schedule as the guiding factor, we are of the   view  that  the  compensation  on  account  of  disability   incurred by the appellant  should be enhanced by Rs  20,000 more; that means, he will get Rs 40,000 instead  of Rs 20,000 awarded by the High Court under the first   head.”

13. In Raj Kumar v. Ajay Kumar, (2011) 1 SCC 343, this Court,  

while considering the award of compensation to the victim of motor  

accident for loss of future earning due to some permanent physical  

disability, has  observed :   

“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  

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capacity  to  the  extent  (percentage)  of  permanent   disability will result in award of either too low or too   high a compensation.

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.4  and  Yadava  Kumar  v.   National Insurance Co. Ltd.5)

Therefore,  the  Tribunal  has  to  first  decide  whether  there is any permanent disability and, if so, the extent   of  such  permanent  disability.  This  means  that  the  Tribunal should consider and decide with reference to  the evidence: (i)  whether  the  disablement  is  permanent  or   temporary; (ii)  if  the  disablement  is  permanent,  whether  it  is   permanent  total  disablement  or  permanent  partial   disablement; (iii)  if  the disablement percentage is expressed with  reference to any specific limb, then the effect of such   disablement  of  the  limb  on  the  functioning  of  the  entire body, that is, the permanent disability suffered   by the person.

If the Tribunal concludes that there is no permanent   disability  then  there  is  no  question  of  proceeding   further  and  determining  the  loss  of  future  earning  capacity.  But if  the Tribunal  concludes that  there is   permanent disability then it will proceed to ascertain  

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its  extent.  After  the  Tribunal  ascertains  the  actual   extent of permanent disability of the claimant based  on the medical evidence, it has to determine whether  such permanent disability  has affected or will  affect   his earning capacity.”

14. In the instant case, it is not in dispute that the appellant was  

aged about 35 years and was working as a Coolie and was earning  

`4500/- per month at the time of accident.  This claim is reduced by  

the Tribunal to a sum of `3000/- only on the assumption that wages  

of the labourer during the relevant period viz. in the year 2004, was  

`100/- per day.  This assumption in our view has no basis. Before  

the  Tribunal,  though Insurance  Company was  served,  it  did  not  

choose to appear before the Court nor did it repudiated the claim of  

the claimant.  Therefore, there was no reason for the Tribunal to  

have reduced the claim of the claimant and determined the monthly  

earning a sum of `3000/- per month.  Secondly, the appellant was  

working  as  a  Coolie  and  therefore,  we  cannot  expect  him  to  

produce any documentary evidence to substantiate his claim.  In  

the absence of any other evidence contrary to the claim made by  

the  claimant,  in  our  view,  in  the  facts  of  the  present  case,  the  

Tribunal  should  have  accepted  the  claim  of  the  claimant.   We  

hasten  to  add  that  in  all  cases  and  in  all  circumstances,  the  

Tribunal need not accept the claim of the claimant in the absence of  

supporting material.  It depends on the facts of each case.  In a  

given case, if the claim made is so exorbitant or if the claim made is  

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contrary to ground realities, the Tribunal may not accept the claim  

and may proceed to determine the possible income by resorting to  

some guess work, which may include the ground realities prevailing  

at the relevant point of time.  In the present case, appellant was  

working as a Coolie and in and around the date of the accident, the  

wage  of  the  labourer  was  between  `100/-  to  150/-  per  day  or  

`4500/- per month.  In our view, the claim was honest and bonafide  

and,  therefore,  there  was  no  reason  for  the  Tribunal  to  have  

reduced  the  monthly  earning  of  the  appellant  from  `4500/-  to  

`3000/-  per month.   We, therefore,  accept his statement that  his  

monthly earning was `4500/-.

15. The appellant, in so far as disability caused due to accident  

is  concerned,  had  stated  in  his  evidence that  he  had sustained  

severe  bodily  injuries  which  has  resulted  in  permanent  partial  

disability,  which  would  affect  his  future  earning  capacity  as  a  

Coolie.  The Doctor, who was examined as claimant’s witness, has  

stated that the appellant has sustained malunited fracture 2nd, 3rd,  

4th,  5th MCB right and malunited fracture scapula right and in his  

opinion, the appellant has suffered permanent physical disability of  

41% to right upper limb and in view of the disability, the claimant  

cannot work as a Coolie and cannot do any other manual work as a  

Coolie.  The Tribunal, while assessing the loss of income has taken  

the disability to the whole body as 1/3rd of particular limb and has  

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assessed the loss of income, at 1/3rd of 41% which comes to about  

13.5%.  So the loss of income taken at 13.5% of `3000/- and has  

quantified the loss of future income at `72,900/-.  We cannot accept  

this quantification arrived at by the Tribunal, since the assessment  

of  compensation  under  the  head  of  loss  of  earning  capacity  is  

calculated  abysmally  on  the  lower  side.   On  the  question  of  

disability caused due to the accident,  the Doctor,  who has been  

examined as claimant’s  witness,  says  that  because of  the injury  

sustained by the claimant, he cannot work as a Coolie and cannot  

do  any  other  manual  work.  This  part  of  the  evidence  is  not  

controverted by the insurance company by subjecting the claimant  

to  cross-examination.   Therefore,  we  can  safely  conclude  that  

claimant has become permanently disabled and, therefore, has lost  

the future earning capacity permanently.   The claimant  has also  

suffered prolonged medical treatment and hospitalization. Looking  

to the amount awarded by the Tribunal, we are of the view that the  

same is too less and,  therefore,  we are inclined to enhance the  

same.   Taking  into  consideration  the  future  economic  loss,  he  

would suffer because of permanent partial disability, which would  

not permit him to work as a Coolie or any other job, the medical  

expenses  incurred,  pain  and  sufferings,  loss  of  income  during  

treatment, period of loss of future amenities and discomfort, in our  

view, interest  of  justice will  be served if  an additional  amount of  

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`2,00,000/- (Rupees Two Lakhs) is granted to the appellant by way  

of compensation.

16. The  respondent-Insurance  company is  directed  to  deposit  

the enhanced compensation amount together with interest from the  

date of petition till the date of deposit before the Tribunal within a  

period of  eight  weeks from today.   The enhanced compensation  

amount with interest shall be paid to the claimant on such deposit.

17. The appeal is allowed to the extent indicated above.  Costs  

are made easy.

…………………………J.                                                                                     [ G. S. SINGHVI ]

             …………………………J.                [ H. L. DATTU ]

New Delhi, August 09, 2011.    

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