THE BEYOND OBITER LAW BLOG: Legal News
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The Supreme Court has held that while physical disability may be medically assessed at a particular percentage, functional disability affecting earning capacity may, depending on the nature of the victim's occupation, be assessed at a much higher percentage, including 100%.
A Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria made the observation while enhancing compensation awarded to a mason whose right leg was amputated above the knee following a road accident. The Court increased the compensation from ₹23.86 lakh awarded by the Madras High Court to ₹40.29 lakh.
Referring to its decision in Raj Kumar v. Ajay Kumar (2011), the Court reiterated that the relevant consideration for determining compensation is not merely the extent of physical disability but its impact on the victim's earning capacity.
“Though the physical disability may be assessed at a particular percentage, the functional disability affecting earning capacity may, depending upon the nature of avocation carried on by the injured, be assessed at a higher percentage including 100%. The assessment of compensation in cases of permanent disability cannot be undertaken by mechanically applying the percentage of physical disability as the percentage of economic loss,” the Court observed.
The case arose from a 2017 accident in which the appellant, a 30-year-old mason, was hit by a lorry while travelling on a bicycle. He sustained multiple injuries, including severe injuries to his right leg, which ultimately had to be amputated above the knee.
The Motor Accident Claims Tribunal held the lorry driver negligent and awarded compensation based on a disability certificate assessing the claimant's permanent physical disability at 70%. The High Court enhanced the monthly income considered for compensation and granted future prospects but continued to assess the loss of earning capacity at 70%.
Before the Supreme Court, the claimant argued that the amputation had effectively destroyed his ability to continue working as a mason and that the assessment of his loss of earning capacity at 70% failed to account for the practical impact of the injury on his livelihood.
Accepting the contention, the Court observed that masonry is a physically demanding occupation requiring mobility, balance and sustained manual labour. The amputation of the claimant's right leg above the knee had rendered him incapable of effectively carrying on the only vocation through which he earned his livelihood.
“The amputation of the right leg above the knee has not merely caused physical disability to the appellant but has rendered him incapable of effectively carrying on the manual and physical work which constituted his only source of livelihood. In such circumstances, restricting the loss of earning capacity to 70% merely on the basis of physical disability would not be justified,” the Bench held.
The Court noted that both the Tribunal and the High Court failed to examine the distinction between physical disability and functional disability. While the medical disability stood at 70%, the functional disability in the facts of the case was effectively 100%, as the claimant could no longer perform the work of a mason.
The Bench also found an error in the High Court's calculation of future prospects. Although the High Court had enhanced the claimant's monthly income to ₹12,000, it calculated future prospects based on the lower income assessment made by the Tribunal. The Supreme Court held that future prospects should have been calculated on the revised income figure adopted by the High Court itself.
Recalculating the compensation by treating the functional disability as 100%, adopting a monthly income of ₹12,000, granting 40% addition towards future prospects and applying the multiplier of 17, the Court enhanced the compensation payable to ₹40,29,730.
Accordingly, the appeal was partly allowed, and the Insurance Company was directed to deposit the enhanced compensation before the Tribunal within six weeks.