Compensation modified to ₹10 lakh with 6% interest, while preserving the insurer’s recovery rights.

The claimant sustained injuries in a motor-vehicle accident and obtained an award of ₹12,17,775 from the learned Additional District Judge-cum-4th M.A.C.T., Kantamal, in M.A.C. No. 06 of 2018, by judgment dated 7 May 2024.

The Tribunal assessed the claimant’s loss of future earning capacity at 70%, while also granting the Insurance Company a right of recovery against the owner on account of the driver’s invalid driving licence.

The Insurance Company filed the present appeal under Section 173 of the Motor Vehicles Act, 1988, challenging only the quantum of compensation and not the finding granting it a right of recovery.

During the hearing, the claimant agreed to accept ₹10,00,000 with interest as awarded by the Tribunal if the Insurance Company raised the compensation to that amount.

1. Whether the Tribunal erred in assessing the claimant’s functional disability and loss of future earning capacity at 70%, thereby awarding excessive compensation.

2. Whether the compensation could be revised to ₹10,00,000 with interest pursuant to the settlement proposal made during the appeal, while preserving the Insurance Company’s right of recovery.

The appeal was brought under Section 173 of the Motor Vehicles Act, 1988, which provides for an appeal against an award of a Motor Accident Claims Tribunal.

The Court relied on the principle in Raj Kumar v. Ajay Kumar, Civil Appeal No. 8981 of 2010, that compensation for loss of earning capacity must be assessed by evaluating the injured person’s functional disability in relation to his actual occupation and its effect on his earning capacity, rather than merely relying on the percentage of physical disability.

The Court also applied the settled principle that an insurer may retain a right of recovery where the offending vehicle was driven by a person without a valid driving licence.

The Insurance Company contended that the Tribunal had mechanically assessed the claimant’s loss of earning capacity at 70% and had not properly applied Raj Kumar v. Ajay Kumar, particularly while determining the effect of the injuries on the earning capacity of a daily-wage labourer.

The claimant defended the award of ₹12,17,775 by relying on his age, occupation, and the nature of his injuries.

Rather than adjudicating the quantum issue in detail, the Court found that the dispute could be amicably resolved because the difference between the parties was marginal.

The claimant consented to a reduced compensation of ₹10,00,000 with interest, and the Insurance Company left the matter to the Court’s discretion while insisting that its right of recovery be preserved.

On that basis, the Court exercised its discretion to modify the award.

The right of recovery already granted to the Insurance Company by the Tribunal remained undisturbed because the driver did not possess a valid driving licence.

The Court directed that the statutory deposit, along with accrued interest, be refunded to the Insurance Company upon application and production of proof of deposit of the awarded amount.