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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1329 OF 2017 (ARISING OUT OF SLP (C) NO. 22790 OF 2013)

SANDEEP KHANUJA .....APPELLANT(S)

VERSUS

ATUL DANDE & ANR. .....RESPONDENT(S)

J U D G M E N T A.K. SIKRI, J.

Leave granted.

2) In a motor accident, the appellant herein suffered physical injuries.  It

happened on July 08, 2006 when the appellant was going on a scooter

to Gram Pendri  in  the State of  Chhattisgarh.  When he reached near

Gram Pendri, a Hyundai Getz car bearing Registration No. MH 12 CR

6917, driven by respondent No.1, hit the scooter, as a result of which the

appellant  fell  down and sustained fractures on both the legs,  thereby

suffering  permanent  disability  to  some  extent.   He  filed  claim  for

compensation  against  the  respondents  before  the  Motor  Accidents

Claims Tribunal (MACT), Rajnandgaon, Chhattisgarh.  The MACT, vide

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award dated May 05, 2009, granted him compensation in the sum of

5,35,227, under the following heads:₹

Head Amount (in Rs.) Medical & Transport Expenses - 3,10,227 Loss of Income - 1,00,000 Mental & Physical agony - 30,000 Removal  of  rod inserted in  right leg

- 25,000

Permanent  disability  to  some extent

- 70,000

TOTAL - 5,35,227

3) Not  satisfied  with  the  quantum  of  compensation,  the  appellant

approached the High Court by way of appeal under Section 173 of the

Motor Vehicles Act, 1988 (for short, the 'Act').  The High Court has, vide

impugned judgment,  enhanced the compensation  to  6,35,000.   The₹

High Court has not awarded compensation under different heads but has

deemed it  proper  to  award  lump sum compensation  in  the  aforesaid

amount.  Relevant discussion in this behalf can be traced to paras 8 and

9 of the impugned judgment, which reads as under:

“(8)  We have gone through the evidence adduced by the claimant on the issue of injury sustained by him.  In our opinion, taking into consideration the nature of injury, the permanent disability occurred on the body of the appellant (claimant) to some extent, as a result of which he claims to be not as fit as he was prior to accident in his day-to-day work, resulting in reducing his capacity to do some extent of  work,  the  expenditure  incurred  in  receiving  medical treatment in actual, the loss and mental pain suffered due to  his  involvement  in  accident  we  consider  it  proper  to enhance  in  lump  sum  the  compensation  from Rs.5,35,227/-  to  Rs.6,35,000/-.   In  other  words,  in  our view,  the  claimant  is  held  entitled  for  a  total  sum  of Rs.6,35,000/-  by  way  of  compensation  for  the  injuries

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sustained by him.

(9)  In our considered opinion, due to injuries in both legs which is also duly proved in evidence by the claimant and his doctor, he cannot freely move and attend to his duties. His movements are restricted to a large extent and that too in young age.  It is for all these reasons, we feel that the Tribunal  had  awarded  a  less  compensation  under  this head and hence, some enhancement under the head of pain and suffering and also under the head of permanent partial disability and loss of earning capacity is called for. This  enhancement  figure  is  arrived  at  taking  into consideration all relevant factors.”

4) The  appellant  is  not  satisfied  with  the  aforesaid  approach  and  the

manner in which the compensation is awarded.  According to him, had

the Court applied proper provision and principles laid down under the

Act, the appellant would have been entitled to much more compensation.

5) We may state, at the outset, that the MACT recorded a specific finding

that the accident took place due to rash and negligent driving of car by

respondent No.1 which hit  the scooter of  the appellant.   Respondent

No.1  did  not  challenge  the  finding  of  the  MACT and,  therefore,  this

aspect has attained finality and we need not go into the same.  The

dispute, therefore, pertains only to the quantum of the compensation that

has to be awarded.  Few facts relevant for resolving the dispute, which

appear on the record, are as under:

6) At the time of the accident, the appellant was aged about 30 years.  He

was working as a Chartered Accountant.  The appellant had produced

evidence to the effect that he had worked as a Chartered Accountant for

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various  institutions  for  which  he  was  paid  professional  fee.   He  had

produced statements in this behalf (Exhibits P-195 to P-208) and on that

basis he claimed that his monthly income was 34,600.  He also proved₹

on record the income tax return for the year 2006-2007 (Exhibit P-194).

The  certificates  which  were  produced  by  the  appellant  showing  the

professional fee which he had received was not accepted by the MACT

on the ground that he had started the business in the month of March

2006 and there was enough professional competition in the said field.

Moreover, the person issuing the certificate had not been produced.  On

this basis, the Tribunal assessed the monthly income of the appellant at

10,000.₹

7) Insofar  as  injuries  suffered by  the  appellant  in  the said  accident  are

concerned, he had stated that his health had impaired drastically and

lungs infected because of which he was admitted in the Intensive Care

Unit and he was kept on ventilator and was operated thrice.  He had

problem in climbing stairs, running, trouble of back while sleeping, etc.  A

rod  is  planted  in  his  leg.   Because  of  all  this  he  has  suffered  70%

permanent disability, apart from mental and physical agony and the said

disability is going to give him frustration and disappointment towards life.

He pleaded that this disability has affected his efficiency in work as well

resulting in loss of future income as well.   

8) As  already  noticed  above,  the  MACT granted  him  compensation  by

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reimbursing  expenses  incurred  towards  treatment  and  transportation,

loss of income, mental and physical agony and expenses for removing

the rod planted in his leg.  The appellant contends that compensation

awarded for mental agony and physical suffering is too less.  That apart,

his main grievance is that only a paltry sum of  70,000 is awarded by₹

the  MACT  for  permanent  disability  suffered  by  him,  which  is  too

inadequate.

9) We  may  note  in  this  behalf  that  the  MACT,  though  accepted  the

aforesaid injuries and physical incapacity suffered by the appellant, was

of the opinion that even when it was not possible for the appellant to do

work like a healthy person, looking to the nature of  the said injuries,

insofar as work of a Chartered Accountant is concerned, he could still

perform  it  properly  and  there  was  no  impairment  therein.   For  this

reason, the MACT refused to award compensation to the appellant by

applying the principle of  multiplier  based on permanent  disability  and

granted a lump sum amount of 70,000.  The High Court has not gone₹

into this aspect specifically.

10) In this conspectus, the only argument advanced by the learned counsel

for the appellant was that the appellant was entitled to the compensation

on the basis of multiplier, as per the provisions of the Act, fur suffering

permanent disability to the extent of 70% and there was no reason not to

apply the said multiplier.

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11) Learned  counsel  for  the  respondent,  on  the  other  hand,  made  an

endeavour to justify the approach of the MACT with the submission that

when the  injuries  suffered  by  him,  even resulting  in  70% permanent

disability, had no adverse affect on the working of the appellant, who was

a Chartered Accountant, he was not entitled to have the compensation

computed by invoking the principle of multiplier.

12) We  may  observe  at  the  outset  that  it  is  now  a  settled  principle,

repeatedly  stated  and  restated  time and again  by  this  Court,  that  in

awarding  compensation  the  multiplier  method  is  logically  sound  and

legally well established.  This method, known as 'principle of multiplier',

has been evolved to quantify the loss of income as a result of death or

permanent  disability  suffered  in  an  accident.   Recognition  to  this

principle was given for  the first  time in the year  1966 in  the case of

Municipal  Corporation of  Delhi  v.  Subhagwanti  & Ors.1  Again,  in

Madhya  Pradesh  State  Road  Transport  Corporation,  Bairagarh,

Bhopal v. Sudhakar & Ors.2,  the Court referred to an English decision

while emphasising the import of this principle in the following manner:

“4.  A method of assessing damages, usually followed in England,  as  appears  from  Mallet v.  McMonagle3,  is  to calculate the net pecuniary loss upon an annual basis and to  “arrive  at  the  total  award  by  multiplying  the  figure assessed as the amount of the annual ‘dependency’ by a number of ‘year's purchase’  that is the number of years the benefit was expected to last, taking into consideration the imponderable factors in fixing either the multiplier or

1 (1966) 3 SCR 649 2 (1977) 3 SCC 64 3 1969 ACJ 312 (HL. England)

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the multiplicand...”

13) While applying the multiplier method, future prospects on advancement

in life and career are taken into consideration.  In a proceeding under

Section 166 of the Act relating to death of the victim, multiplier method is

applied after taking into consideration the loss of income to the family of

the deceased that resulted due to the said demise.  Thus, the multiplier

method involves the ascertainment  of  the loss of  dependency or  the

multiplicand  having  regard  to  the  circumstances  of  the  case  and

capitalising the multiplicand by an appropriate multiplier.  The choice of

the multiplier is determined by the age of the deceased or that of the

claimant, as the case may be.  In injury cases, the description of the

nature of injury and the permanent disablement are the relevant factors

and  it  has  to  be  seen  as  to  what  would  be  the  impact  of  such

injury/disablement on the earning capacity of the injured.  This Court, in

the case of  U.P. State Road Transport Corporation & Ors.  v.  Trilok

Chandra  &  Ors.4 justified  the  application  of  multiplier  method in  the

following manner:

“13.  It  was  rightly  clarified  that  there  should  be  no departure from the multiplier method on the ground that Section 110-B, Motor Vehicles Act, 1939 (corresponding to the present provision of Section 168, Motor Vehicles Act, 1988) envisaged payment of ‘just’ compensation since the multiplier method is the accepted method for determining and  ensuring  payment  of  just  compensation  and  is expected to bring uniformity and certainty of the awards made all over the country.”

The multiplier system is, thus, based on the doctrine of equity, equality

4 (1996) 4 SCC 362

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and necessity.  A departure therefrom is to be done only in rare and

exceptional cases.

14) In the last few years, law in this aspect has been straightened by this

Court by removing certain cobwebs that had been created because of

some divergent views on certain aspects.  It is not even necessary to

refer to all these cases.  We find that the principle of determination of

compensation in  the case of  permanent/partial  disablement has been

exhaustively dealt  with after referring to the relevant case law on the

subject in the case of Raj Kumar v. Ajay Kumar & Ors.5 in the following

words:

“Assessment  of  future  loss  of  earnings  due  to permanent disability

8.  Disability  refers  to  any restriction or  lack  of  ability  to perform an activity in the manner considered normal for a human being. Permanent disability refers to the residuary incapacity or loss of use of some part of the body, found existing  at  the  end  of  the  period  of  treatment  and recuperation,  after  achieving  the  maximum  bodily improvement or recovery which is likely to remain for the remainder life of the injured. Temporary disability refers to the incapacity or loss of use of some part of the body on account of the injury, which will cease to exist at the end of the  period  of  treatment  and  recuperation.  Permanent disability can be either partial  or total. Partial  permanent disability  refers  to  a  person's  inability  to  perform all  the duties and bodily functions that he could perform before the accident, though he is able to perform some of them and is still  able to engage in some gainful activity. Total permanent  disability  refers  to  a  person's  inability  to perform any avocation or employment related activities as a result  of  the  accident.  The permanent  disabilities  that may  arise  from  motor  accident  injuries,  are  of  a  much wider  range  when  compared  to  the  physical  disabilities which  are  enumerated  in  the  Persons  with  Disabilities (Equal  Opportunities,  Protection  of  Rights  and  Full

5 (2011) 1 SCC 343

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Participation)  Act,  1995 (“the Disabilities  Act”,  for  short). But if any of the disabilities enumerated in Section 2(i) of the Disabilities Act are the result of injuries sustained in a motor accident, they can be permanent disabilities for the purpose of claiming compensation.

9. The percentage of permanent disability is expressed by the doctors with reference to the whole body, or more often than  not,  with  reference  to  a  particular  limb.  When  a disability  certificate  states  that  the  injured  has  suffered permanent disability to an extent of 45% of the left lower limb, it is not the same as 45% permanent disability with reference to the whole body. The extent of disability of a limb  (or  part  of  the  body)  expressed  in  terms  of  a percentage of  the  total  functions  of  that  limb,  obviously cannot  be assumed to be the extent  of  disability  of  the whole  body. If  there  is  60% permanent  disability  of  the right hand and 80% permanent disability of left leg, it does not  mean  that  the  extent  of  permanent  disability  with reference to  the whole body is  140% (that  is  80% plus 60%). If different parts of the body have suffered different percentages of disabilities, the sum total thereof expressed in terms of the permanent disability with reference to the whole body cannot obviously exceed 100%.

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

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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.”

15) The crucial factor which has to be taken into consideration, thus, is to

assess as to whether the permanent disability has any adverse effect on

the earning capacity of the injured.  In this sense, the MACT approached

the issue in right direction by taking into consideration the aforesaid test.

However, we feel that the conclusion of the MACT, on the application of

the aforesaid test,  is  erroneous.  A very myopic view is taken by the

MACT in taking the view that 70% permanent disability suffered by the

appellant would not impact the earning capacity of the appellant.  The

MACT thought that since the appellant is a Chartered Accountant, he is

supposed to do sitting work and, therefore, his working capacity is not

impaired.  Such a conclusion was justified if  the appellant was in the

employment where job requirement could be to do sitting/table work and

receive  monthly  salary  for  the  said  work.   An  important  feature  and

aspect  which  is  ignored  by  the  MACT  is  that  the  appellant  is  a

professional Chartered Accountant.   To do this work efficiently and in

order to augment his income, a Chartered Accountant is supposed to

move around as well.  If a Chartered Accountant is doing taxation work,

he  has  to  appear  before  the  assessing  authorities  and  appellate

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authorities  under  the  Income  Tax  Act,  as  a  Chartered  Accountant  is

allowed to practice up to Income Tax Appellate Tribunal.  Many times

Chartered Accountants are supposed to visit  their  clients as well.   In

case a Chartered Accountant is primarily doing audit work, he is not only

required to visit  his clients but various authorities as well.   There are

many  statutory  functions  under  various  statutes  which  the  Chartered

Accountants perform.  Free movement is involved for  performance of

such functions.  A person who is engaged and cannot freely move to

attend to his duties may not be able to match the earning in comparison

with  the  one  who  is  healthy  and  bodily  abled.   Movements  of  the

appellant have been restricted to a large extent and that too at a young

age.  Though the High Court recognised this, it  did not go forward to

apply the principle of multiplier.  We are of the opinion that in a case like

this and having regard to the injuries suffered by the appellant, there is a

definite loss of earning capacity and it calls for grant of compensation

with the adoption of multiplier method, as held by this Court in Yadava

Kumar v. Divisional Manager, National Insurance Company Limited

& Anr.6:

“9.  We do not intend to review in detail state of authorities in  relation  to  assessment  of  all  damages  for  personal injury. Suffice it to say that the basis of assessment of all damages for personal injury is compensation. The whole idea is to put the claimant in the same position as he was insofar  as  money  can.  Perfect  compensation  is  hardly possible but one has to keep in mind that the victim has done  no  wrong;  he  has  suffered  at  the  hands  of  the wrongdoer and the court must take care to give him full

6 (2010) 10 SCC 341

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and fair compensation for that he had suffered.

10.  In some cases for personal injury, the claim could be in respect of lifetime's earnings lost because, though he will live, he cannot earn his living. In others, the claim may be made for partial loss of earnings. Each case has to be considered in the light of its own facts and at the end, one must  ask  whether  the  sum  awarded  is  a  fair  and reasonable  sum.  The  conventional  basis  of  assessing compensation in personal  injury cases—and that is now recognised  mode  as  to  the  proper  measure  of compensation—is  taking  an  appropriate  multiplier  of  an appropriate multiplicand.”

16) In that case, after following the judgment in Kerala SRTC v. Susamma

Thomas7, the Court chose to apply multiplier of 18 keeping in view the

age of the victim, who as 25 years at the time of the accident.

17) In the instant case, the MACT had quantified the income of the appellant

at 10,000, i.e. 1,20,000 per annum.  Going by the age of the appellant₹ ₹

at  the  time  of  the  accident,  multiplier  of  17  would  be  admissible.

Keeping in view that the permanent disability is 70%, the compensation

under this head would be worked out at 14,28,000.  The MACT had₹

awarded  compensation  of  70,000  for  permanent  disability,  which₹

stands enhanced to 14,28,000.  For mental and physical agony and₹

frustration and disappointment towards life, the MACT has awarded a

sum of 30,000, which we enhance to 1,30,000.  In this manner, the₹ ₹

compensation that is payable to the appellant is worked out as under:

Head Awarded by MACT Amount (in Rs.)

Now Payable Amount (in Rs.)

Medical  &  Transport Expenses

- 3,10,227 3,10,227

7 (1994) 2 SCC 176

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Loss of Income - 1,00,000 1,00,000 Mental  &  Physical agony

- 30,000 1,30,000

Removal of rod inserted in right leg

- 25,000 25,000

Permanent  disability  to some extent

- 70,000 14,28,000

TOTAL - 5,35,227 19,93,227

The appellant shall also be entitled to the interest, as awarded by the

High Court, as well as costs of this appeal.  The amount shall be paid to

the appellant within two months after deducting the payments already

made.

18) The appeal is disposed of accordingly.

.............................................J. (A.K. SIKRI)

.............................................J. (R.K. AGRAWAL)

NEW DELHI; FEBRUARY 02, 2017.