(Motor Accident Claim) Disability Is Related To Work Of Victim [Read SC Judgment]

Today, in the Latest Judgment, the Supreme Court has harped upon the Courts to have liberal and realistic approach in determining compensation for Motor Vehicle Accident Claims

On 18.05.2012, a motor accident occurred in which the appellant was injured while travelling to Hapur as a passenger on a bus. The appellant was taken to Dr. Khan’s Rehan hospital and after that, AIIMS Trauma Center. The appellant filed a motor accident compensation claim under Sections 166 and 140 of the Motor Vehicles Act, 1988, impleading the owner, the driver of the vehicle, and the insurer. He claimed compensation to the amount of Rs. 50 lakhs with interest at the rate of 12% per annum.

During the pendency of the above proceedings before the Tribunal, the claimant/appellant applied for the ascertainment of his disability. The disability report mentioned that the claimant/appellant suffered 89% disability with respect to his right upper limb, which had to be amputated. The report also stated that the condition was “non-progressive; therefore, reassessment is not recommended. An FIR regarding the accident was also registered under Sections 279 and 338 of the Indian Penal Code, 1860.

The Tribunal held that the appellant had suffered severe injuries due to rash and negligent driving of the respondent, therefore awarded a compensation of Rs 14,25,000/-. Tribunal assessed the loss of earning capacity by considering the appellant’s income to be Rs. 8000 per month and added 50% towards future prospects. A multiplier of 18 was applied, as at the time of the accident, he was only 20 years old. 

Claimant filed an appeal before the High Court, for enhancement of compensation and another appeal was filed by insurer challenging the award. The High Court revised this head of compensation by doing away with the addition of 50% towards future prospects and reassessed the compensation for loss of earning capacity as Rs 7,77,600 (28000 x 12 x 45% x 18). 

The total compensation was reassessed by the High Court to be 14,36,600, after enhancing the compensation for disfigurement, diet, attendant and conveyance, loss of amenities and enjoyment of life, and pain and suffering. Further, an interest of 9% per annum was imposed. The High Court relied upon the Judgment in the case of National Insurance Company Ltd. v. Pranay Sethi & Ors. and Jagdish v. Mohan & Ors’ both for reducing the amount towards loss of future prospects.

Being aggrieved, the claimant challenged the Judgment and Order of High Court before the Supreme Court by filing a Civil Appeal No. 2567 of 2020.

Issues Involved:

  1. Whether in cases of permanent disablement incurred as a result of a motor accident, the claimant can seek, apart from compensation for future loss of income, amounts for future prospects too?
  2. The extent of disability

Contention of Insurance Company:

  1. Permanent disability of loss of one arm, cannot lead to loss of earning capacity of up to 90% and consequently, the assessment of compensation on the head of loss of earning capacity was correctly fixed at 45%.
  2. There was no proof of payment of income tax to support the claim that the appellant earned Rs 12,000/-per month.

A Bench of Justice L. Nageshwar Rao, Justice Krishna Murari and Justice S. Ravindra Bhatt held as follows:

  1. On the first question, the High Court no doubt is technically correct in holding that Pranay Sethi’ case involved an assessment of compensation in a case where the victim died.
  2. However there was no justification for the High Court to have read the previous rulings of Supreme Court, to exclude the possibility of compensation for future prospects in accident cases involving serious injuries resulting in permanent disablement.
  3. The High Court clearly erred in holding that compensation for loss of future prospects could not be awarded. In addition to the loss of future earnings, the appellant is also entitled to compensation for loss of future prospects, @ 40%.
  4. Thus, loss of one leg to someone carrying on a vocation such as driving or something that entails walking or constant mobility results in severe income-generating impairment or its extinguishment altogether.
  5. Courts should not adopt a stereotypical or myopic approach, but instead, view the matter taking into account the realities of life, both in the assessment of the extent of disabilities, and compensation under various heads.
  6. In the present case, the loss of an arm, in the opinion of the Court, resulted in severe income-earning impairment upon the appellant. As a typist/data entry operator, full functioning of his hands was essential to his livelihood.
  7. Severe limitations inflicted due to such injuries undermine the dignity (which is now recognized as an intrinsic component of the right to life under Article 21) of the individual, thus depriving the person of the essence of the right to a wholesome life which she or he had lived, hitherto.

Considering above the Court enhanced the total compensation for loss of earning capacity and future prospects from Rs. 7,77,600/- to Rs. 19,65,600/-.

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