REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3203       OF 2011 (Arising out of Special Leave Petition (C) No.6128/2010)

Sri Nagarajappa  ...Appellant(s)

- Versus -

The Divisional Manager,  ...Respondent(s) The Oriental Insurance Co. Ltd.

J U D G M E N T

GANGULY, J.

1. Leave granted.

2. On 13.08.2004 at about 6 p.m., the appellant was  

crossing the road carefully when a BMTC bus (bearing  

registration  No.KA-05-B-5245)  came  in  a  rash  and  

negligent  manner  and  dashed  against  the  appellant  

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whereupon he was admitted in hospital for treatment as  

he had sustained multiple injuries.

3. The appellant filed a claim petition under Section  

166  of  the  Motor  Vehicles  Act,  1988  claiming  

compensation  of  Rs.5,00,000/-.  The  appellant  was  

working as a coolie and claimed that he was earning a  

monthly income of Rs.4,500/- p.m.

4. The Tribunal concluded that the accident occurred  

for the rash and negligent driving of the bus driver as  

a result of which the appellant had sustained injuries  

in the accident. On perusal of evidence it was found  

that the appellant had sustained injuries of compound  

fracture of ulnar styloid process of the left hand and  

subluxation  of  the  left  wrist.  The  doctor  assessed  

disability  at  23%  of  the  whole  body.  Therefore,  it  

awarded Rs.20,000/- for loss of amenities, Rs.30,000/-  

for  pain  and  suffering,  Rs.30,000/-  for  medical  

expenses  and  conveyance  and  Rs.2,000/-  for  future  

medical treatment. For loss of income during the period  

of treatment, the Tribunal found that due to the nature  

of the disability the appellant was unable to work as a  2

coolie or do other manual work. It also added that only  

the left hand was injured, so the right hand was free  

to work. The appellant was an indoor patient for 55  

days. Thus, the Tribunal presumed that the appellant  

was unable to work for 3 months. Further, though the  

appellant claimed to be earning Rs.4,500/- p.m., it was  

not  supported  by  documentary  evidence.  Hence,  the  

Tribunal presumed his income to be Rs.3000/- p.m. and  

awarded Rs.9,000/- for loss of income during the period  

of treatment. For computation of loss of future income  

due to disability, the Tribunal took into consideration  

that disability of the whole body of the appellant had  

been assessed at 23%, however, his right hand was still  

free  to  work.  Thus,  it  assessed  disability  at  20%.  

Medical evidence showed that the appellant was around  

55  years  at  the  time  of  the  accident,  for  which  a  

multiplier  of  11  was  adopted.  Accordingly,  loss  of  

future income was calculated to be Rs.79,200/- (Rs.3000  

X 12 X 11 X 20/100). The Tribunal fastened liability on  

the  insurance  company.  Thus,  total  compensation  was  

Rs.1,70,200/-  payable  to  the  appellant  jointly  and  

severally, with interest @ 6% from date of the claim  

petition till realization. 3

5. On appeal, the High Court enhanced compensation for  

pain  and  suffering,  medical  expenses,  future  medical  

expenses, loss of amenities and loss of future income  

as against the amount awarded by the Tribunal. For loss  

of future income, the High Court concluded that from  

material on record, the age of the claimant was between  

45 to 55 years. Thus, it took 50 years as the safe age  

and adopted a multiplier of 13, income was taken as  

Rs.3000/- p.m. and disability @ 20%. Accordingly, loss  

of future income was calculated at Rs.93,600/- (Rs.3000  

X 12 X 13 X 20/100). Compensation was thus enhanced and  

awarded as follows:

Pain and suffering -Rs.40,000/-

Medical expenses, nourishment, attendant  

Charges and other incidental expenses -Rs.40,000/-

Loss of income during treatment -Rs.9,000/-

Loss of future income -Rs.93,600/-

Loss of amenities -Rs.30,000/-

Future medical expenses -Rs.10,000/-

TOTAL -Rs.2,22,600/-

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6. Being  still  aggrieved  by  the  compensation  

awarded, the appellant approached this Court by filing  

an  Special  Leave  Petition  praying  for  further  

enhancement of compensation.

7. Having gone through the records, we are of the  

opinion that Rs.2,22,600/- awarded by the High Court is  

inadequate considering the nature of injuries suffered  

by the appellant and the consequent adverse effect it  

has on the performance of his avocation.

8. In reaching our decision, we are drawn to, if  

we  may  so,  a  very  well-considered  judgment  of  this  

Court in Raj Kumar v. Ajay Kumar & Anr. [(2011) 1 SCC  

343],  wherein  the  Bench,  comprising  of  Hon’ble  

Raveendran and Gokhale, JJ., has propounded the law on  

compensation in motor accidents claims cases resulting  

in disability in a comprehensive manner. The relevant  

portions of the judgment are extracted below:

“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  

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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. …  …”

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 terns  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].

12. xxx xxx xxx

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 ability (this is  also relevant for awarding compensation under  the head of loss of amenities of life). The  second  step  is  to  ascertain  his  avocation,  

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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.

14.  For  example,  if  the  left  hand  of  a  claimant is amputated, the permanent physical  or  functional  disablement  may  be  assessed  around 60%. If the claimant was a driver or a  carpenter, the actual loss of earning capacity  may virtually be hundred percent, if he is  neither able to drive or do carpentry. On the  other hand, if the claimant was a clerk in  government service, the loss of his left hand  may not result in loss of employment and he  may still be continued as a clerk as he could  perform his clerical functions; and in that  event the loss of earning capacity will not be  100% as in the case of a driver or carpenter,  nor  60%  which  is  the  actual  physical  disability, but far less. In fact, there may  not  be  any  need  to  award  any  compensation  under the head of “loss of future earnings”,  if  the  claimant  continues  in  government  service, though he may be awarded compensation  under  the  head  of  loss  of  amenities  as  a  consequence of losing his hand. Sometimes the  injured claimant may be continued in service,  but may not be found suitable for discharging  the duties attached to the post or job which  he  was  earlier  holding,  on  account  of  his  disability, and may therefore be shifted to  some  other  suitable  but  lesser  post  with  lesser emoluments, in which case there should  be a limited award under the head of loss of  

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future earning capacity, taking note of the  reduced earning capacity.

15. xxx xxx xxx

16. … … Sections 168 and 169 of the Act make  it evident that the Tribunal does not function  as a neutral umpire as in a civil suit, but as  an active explorer and seeker of truth who is  required to “hold an enquiry into the claim”  for determining the “just compensation”. The  Tribunal should therefore take an active role  to ascertain the true and correct position so  that it can assess the “just compensation”.  While dealing with personal injury cases, the  Tribunal should preferably equip itself with a  Medical  Dictionary  and  a  Handbook  for  evaluation of permanent physical impairment…”

9. We  are  in  complete  agreement  with  the  

abovementioned judgment.  

10. On  perusal  of  the  doctor’s  evidence  with  

respect  to  the  nature  of  injuries  suffered  by  the  

appellant, the appellant was found, inter alia, to be  

suffering from the following disabilities as a result  

of the accident- “gross deformity of the left forearm,  

wrist and hand, wasting and weakness of the muscles of  

the left upper limb and shortening of the left upper  

limb by 1 c.m.” As a result, the doctor stated that the  

appellant could not work as a coolie and could not also  

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do any other manual work. The doctor assessed permanent  

residual physical disability of the upper limb at 68%  

and 22-23% of the whole body.

11. The appellant is working as a manual labourer,  

for which he requires the use of both his hands. The  

fact that the accident has left him with one useless  

hand will severely affect his ability to perform his  

work as a coolie or any other manual work, and this has  

also been certified by the doctor. Thus, while awarding  

compensation  it  has  to  be  kept  in  mind  that  the  

appellant is to do manual work for the rest of his life  

without full use of his left hand, and this is bound to  

affect the quality of his work and also his ability to  

find  work  considering  his  disability.  Hence,  while  

computing loss of future income, disability should be  

taken  to  be  68%  and  not  20%,  as  was  done  by  the  

Tribunal and the High Court. Our view is supported from  

the ratio in Raj Kumar (supra) and from the fact that  

the appellant is severely hampered and perhaps forever  

handicapped from performing his occupation as a coolie.

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12. Thus,  loss  of  future  income  will  amount  to  

Rs.3,18,240/-  (Rs.3000 X 12 X 13 X 68/100). We also  

enhance  the amount  awarded for  loss of  amenities to  

Rs.40,000/-, as against Rs.30,000/- awarded by the High  

Court. We also enhance the amount awarded for future  

medical expenses to Rs.30,000/-, as against Rs.10,000/-  

awarded  by  the  High  Court.  We  are  satisfied  by  the  

amount awarded under the remaining heads awarded by the  

High Court and sustain the same.

13. The break-up of compensation is as follows:

Loss of future income - Rs.3,18,240/-

Loss of amenities - Rs.40,000/-

Pain and suffering - Rs.40,000/-

Future medical expenses - Rs.30,000/-

Medical expenses, nourishment, attendant  

Charges and other incidental expenses-Rs.40,000/-

Loss of income during treatment -Rs.9,000/-

TOTAL -Rs.4,77,240/-

14. Accordingly, total compensation payable to the  

appellant amounts to Rs.4,77,640/-, which we round off  

to  Rs.4,77,000/-.  The  same  shall  be  payable  at  an  1

interest of 6% from the date of claim petition till  

realization. We direct the respondent to calculate the  

amount and deposit the same by way of bank or demand  

draft in the Motor Accident Claims Tribunal, Bangalore  

and the Presiding Officer of the Tribunal will deposit  

the same in the bank account of the appellant. If there  

is  no  such  bank  account  one  shall  be  opened  in  a  

nationalized  bank  and  the  demand  draft  will  be  

deposited there.

15. Accordingly, the appeal is allowed.  

16. No order as to costs.

.......................J. (G.S. SINGHVI)

.......................J. New Delhi (ASOK KUMAR GANGULY) April 11, 2011

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