Friday, 12 June 2020

Supreme Court: Three steps inquiry for ascertaining the effect of permanent disability on earning capacity of the victim of a motor accident

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

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s). 2551 OF 2020

SRI ANTHONY alias ANTHONY SWAMY  Vs  THE MANAGING DIRECTOR, K.S.R.T.C.

NAVIN SINHA, J.
Dated: June 10, 2020

Leave granted.
2. The appellant is in appeal aggrieved by the order of the High
Court, claiming inadequacy of compensation granted to him in a
motor accident case.
3. The appellant was travelling in a bus of the respondent
Corporation and met with an accident on 19.02.2010, due to rash
and negligent driving of the bus driver who hit a lorry from behind.
As a consequence of the injuries suffered, the left leg of the
appellant had to be amputated. The Tribunal awarded a
compensation of Rs.4,08,850/.
The High Court in appeal enhanced
the same to Rs.5,10,350/.
The appeal preferred by the respondent
Corporation was dismissed.
4. Shri Ashwin Kotemath, learned counsel for the appellant
submitted that the compensation enhanced by the High Court is
niggardly and grossly inadequate considering the nature of injuries
suffered. The appellant was a painter by vocation. He had a daily
income of Rs.300/cumulated
at Rs.9,000/per
month, supported
by the evidence of his employer PW.2, which has been wrongly
rejected. The permanent disability of the appellant contrary to the
evidence of PW.3, Dr. S. Ramachandra the treating Doctor, has been
wrongly fixed at 25% of the whole body without any reasoning to
support the same, in the nature of the injury, suffering, future
medical treatment and loss of future income caused to the
appellant.
5. Shri S.N. Bhat, learned counsel for the respondent, submitted
that the High Court has reasonably enhanced the compensation
and it calls for no interference. The appellant had failed to
substantiate the claimed income with substantive evidence. The

extent of disability suffered has been adequately assessed. The
evidence of the employer and the treating doctor have all been
considered adequately.
6. We have considered the submissions on behalf of the parties.
The appellant was initially taken to the government hospital on the
date of the accident but was shifted to a private hospital on
25.02.2010 where he remained as an inpatient till 16.09.2010 and
also underwent surgery requiring amputation of his left leg from
above the knee. PW.3, the treating doctor, deposed that the
appellant had suffered Type III ‘B’ commuted fracture of Tibia and
Fibula of the left leg with an active infection of Chronic
Osteomyelitis emanating foul smell which prevented him from
mixing and socialising in public. There was no alternative to
amputation and fixation of an artificial leg. The physical disability
suffered by the appellant of the left lower limb was assessed at 75%
which was about 37.5% of the whole body. PW.3 further opined that
the appellant had suffered shortening of the left lower limb by 3
cms. He could not stand independently or walk without aid of a
walker or attendant. The appellant cannot sit cross legged, squat or

use an Indian toilet. He could not climb up and down a staircase.
The appellant was incapable of any manual work including painting.
The appellant who was 45 years of age, considering average life
expectancy of 65 years would require at least three further
replacements of the artificial limb in his lifetime, the cost of which
was assessed at approximately between Rs.75,000 to Rs.1,50,000/.
7. The High Court enhanced the monthly income of the appellant
to Rs.5,500/.
He has been awarded a sum of Rs.1,00,000/towards
pain and suffering and Rs.7,350/towards
medical
expenses along with Rs.21,000/for
attendant charges. The loss of
earnings during the period of treatment has been enhanced by the
High Court to Rs.66,000/.
Conveyance charges have been paid at
Rs.10,000/.
We find no reason to interfere to the aforesaid extent.
8. The physical disability of the appellant without any reasoning
has been assessed at 25% of the whole body with which we are
unable to concur. The compensation granted towards loss of future
earning on account of disability at Rs.2,31,000/is
considered
grossly inadequate in the facts and circumstances of the case, as

also the compensation of Rs.50,000/towards
future medical
expenses and only Rs.25,000/towards
loss of amenities.
9. PW.3 had assessed the physical functional disability of the left
leg of the appellant at 75% and total body disability at 37.5%. The
High Court has considered it proper to assess the physical disability
at 25% of the whole body only. There is no discussion for this
reduction in percentage, much less any consideration of the nature
of permanent functional disability suffered by the appellant. The
extent of physical functional disability, in the facts of the case has
to be considered in a manner so as to grant just and proper
compensation to the appellant towards loss of future earning. The
earning capacity of the appellant as on the date of the accident
stands completely negated and not reduced. He has been rendered
permanently incapable of working as a painter or do any manual
work. Compensation for loss of future earning therefore has to be
proper and just to enable him to live a life of dignity and not
compensation which is elusive. If the 75% physical disability has
rendered the appellant permanently disabled from pursuing his
normal vocation or any similar work, it is difficult to comprehend

the grant of compensation to him in ratio to the disability to the
whole body. The appellant is therefore held entitled to compensation
for loss of future earning based on his 75% permanent physical
functional disability recalculated with the salary of Rs.5,500/with
multiplier of 14 at Rs. 6,93,000/.
10. Raj Kumar vs. Ajay Kumar and another, 2011 (1) SCC 343
lucidly sets out the principles for grant of compensation in cases of
permanent physical functional disability as follows:
“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. and Yadava Kumar v. National Insurance Co.
Ltd.)
xxxx xxxx xxxx
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.
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 per cent, 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
future earning capacity, taking note of the reduced
earning capacity.
11. In Nagarajappa vs. Divisional Manager, Oriental
Insurance Company Limited, 2011 (13) SCC 323, the physical
8
disability of the upper limb was determined as 68% in proportion to
2223%
of the wholebody.
This court opined as follows:
“9. 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 cm”. As a result, the doctor stated
that the appellant could not work as a coolie and could
not also do any other manual work. The doctor assessed
permanent residual physical disability of the upper limb at
68% and 2223%
of the whole body.
10. 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 by the
ratio in Raj Kumar and from the fact that the appellant is
severely hampered and perhaps forever handicapped from
performing his occupation as a coolie.”
12. The High Court also erred in granting a sum of Rs.50,000/only
towards future medical expenses. PW.3 deposed that the
9
appellant would require three more replacements of the artificial left
leg during his lifetime. We consider it proper to enhance the same
by Rs.2,50,000/in
addition to that granted by the High Court.
The compensation granted towards loss of amenities is also
enhanced to Rs.50,000/considering
that the appellant was
deprived of social mixing as deposed by PW.3.
13. Thus, the compensation awarded by the High Court is
modified and recalculated as under:
Sr.
No.
Particulars Amount
(in Rs.)
1. Pain and sufferings 1,00,000
2. Medical expenses 7,350
3. Attendant charges 21,000
4. Loss of earnings during the period of
treatment
66,000
5. Conveyance charges 10,000
6. Loss of future earnings on account of
disability
6,93,000
7. Future medical expenses 2,50,000
8. Loss of amenities 50,000
TOTAL 11,97,350
10
14. We modify the award of the High Court accordingly to be paid
along with interest @ 6 per cent from the date of petition till the
realization.
15. The appeal is allowed.
.……………………….J.
(R.F. Nariman)
………………………..J.
(Navin Sinha)
………………………..J.
(B.R. Gavai)
New Delhi,
June 10, 2020

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