Amputation of four fingers warrants 50% loss of earning capacity assessment unless total functional incapacity is proved.

The claimant, Sh. Digambar, was employed as a conductor on a vehicle owned by respondent No. 2 and insured by the appellant.

On 26.02.2018, while inspecting the engine after a breakdown, his left hand caught in the fan belt, leading to the amputation of four fingers.

The claimant sought compensation under the Employee's Compensation Act, 1923 ('EC Act').

The Commissioner, Employees' Compensation, awarded compensation by treating the injury as resulting in a 100% loss of earning capacity.

The Insurance Company appealed, challenging the employer-employee relationship and the assessment of 100% functional disability for the loss of four fingers.

1. Whether there existed an employer-employee relationship and if the accident arose out of and in the course of employment.

2. Whether the Commissioner was legally justified in assessing the loss of earning capacity at 100% for the amputation of four fingers of the left hand.

Section 4 read with Entry 7 of Part II, Schedule I of the Employees' Compensation Act, 1923, which classifies the loss of four fingers of one hand as "Permanent Partial Disablement" carrying a statutory 50% loss of earning capacity.

Pratap Narain Singh Deo v. Srinivas Sabata (1976) 1 SCC 289, which allows for a 100% assessment if the injury renders the workman incapable of all work he was capable of performing.

Oriental Insurance Co. Ltd. v. Mohd. Nasir (2009) 6 SCC 280 and National Insurance Co. Ltd. v. Mubasir Ahmed (2007) 2 SCC 349, establishing that physical disability and loss of earning capacity are distinct, and any departure from the Schedule must be supported by cogent evidence of total functional incapacity.

The Court affirmed the Commissioner’s finding on the employer-employee relationship, noting the appellant failed to provide evidence to rebut the testimony of the claimant and the employer.

Regarding the quantum, the Court found the Commissioner’s reliance on Pratap Narain Singh Deo misplaced. In that precedent, the claimant was a carpenter whose vocation required full hand use; here, the claimant was a conductor.

The Court observed that the Commissioner failed to conduct an independent analysis or provide evidence demonstrating that the claimant was rendered "completely incapable" of all gainful employment.

Since the injury (loss of four fingers) is a scheduled injury under Part II of Schedule I, and no evidence of total functional collapse was presented, the statutory assessment of 50% must prevail over an arbitrary 100% assessment.

The High Court held that the claimant's loss of earning capacity should be assessed at 50% instead of 100%.

The impugned award was modified, and the Commissioner was directed to recompute the compensation with statutory interest, giving due adjustment for amounts already deposited.

The parties were directed to appear before the Commissioner on 01.08.2026.