Functional Disability Based on Impact on Earning Capacity Must Be Calculated for Future Income Loss Assessment

On March 15, 2010, the appellant was hit by a truck driven negligently by Respondent No. 1, resulting in a fracture of the right shaft femur and other injuries

A Disability Certificate dated May 5, 2011, certified a 42% permanent physical impairment of the right lower limb

The appellant, aged 38, ran a gas stove repair/sales business and worked as a news reporter, claiming a monthly income of Rs. 25,000

The Motor Accident Claims Tribunal (MACT) awarded Rs. 2,47,775, calculating loss of income for only three months and awarding nothing for loss of future earning capacity

The appellant challenged this award, seeking enhancement based on his permanent disability

Whether the MACT erred in failing to assess and award compensation for the loss of future earning capacity despite a certified 42% permanent physical impairment

Whether the functional disability of the appellant should be assessed at a specific percentage relative to his vocation to determine the appropriate multiplier-based compensation

The Court primarily applied the principles established by the Supreme Court in Raj Kumar v. Ajay Kumar (2011) 1 SCC 343, which distinguishes between "physical disability" and "functional disability" (loss of earning capacity)

The rule dictates that the Tribunal must assess the actual impact of the physical impairment on the specific vocation of the claimant

Compensation for future loss of earnings must be quantified using the multiplier method, incorporating future prospects as per standard motor accident jurisprudence

The Court observed that the MACT failed to justify the nominal "loss of income" award of Rs. 52,000 and ignored the long-term impact of a 42% limb disability on a 38-year-old businessman

Applying Raj Kumar v. Ajay Kumar, the Court evaluated the appellant’s vocation—running a shop and reporting—and determined that while he was not totally disabled, his physical impairment significantly hindered his mobility and business activities

Consequently, the Court assessed his functional disability at 35% for the whole body

The Court revised the income calculation by adding 40% for future prospects and applying a multiplier of 15, noting that the physical disability and loss of earning capacity are distinct but often overlap in manual or shop-based vocations

The Court held that the appellant is entitled to Rs. 22,05,000 for loss of future income based on 35% functional disability

The Insurance Company was directed to deposit the enhanced amount with 9% interest per annum from the date of the petition

The Court ordered a lump sum release of Rs. 5,00,000 to the appellant, with the remainder to be secured in phased Fixed Deposit Receipts (FDRs) of Rs. 25,000 each to ensure sustained financial support