Functional disability hinges on vocational impact; tax deductions require income exceeding the minimum taxable threshold.

On 6th April 2007, the claimant, a 32-year-old electrical contractor, suffered an above-elbow amputation of his right upper limb due to a collision with a rashly driven truck

The Motor Accidents Claims Tribunal (MACT) awarded Rs. 22,78,100/- with 9% interest, assessing functional disability at 70% despite a medical certificate of 85% permanent disability to the limb

The MACT also granted recovery rights to the insurer against the vehicle owner for permit violations

Both the Insurance Company (seeking reduction) and the Claimant (seeking enhancement) filed cross-appeals

1. Whether the functional disability was correctly assessed at 70% given the claimant's vocation as a contractor

2. Whether contributory negligence should be attributed to the claimant due to the nature of the head-on collision

3. Whether the 9% interest rate and the non-pecuniary damages awarded were appropriate

4. Whether income tax should be deducted from the assessed income when it falls below the taxable limit

The Court applied the principles from Raj Kumar v. Ajay Kumar (2011) 1 SCC 343, which mandate that functional disability must be assessed based on the actual impact of the physical impairment on the claimant's specific vocation and earning capacity

Regarding financial computations, the Court relied on Sarla Verma v. DTC (2009) 6 SCC 121 and National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680, establishing that income tax deductions from compensation are only permissible if the income falls within a taxable range

The Court rejected the insurer’s plea for contributory negligence, noting that no evidence was led to prove the claimant drove negligently; a site map alone is insufficient to sustain such a plea

Regarding functional disability, the Court upheld the MACT’s 70% assessment, reasoning that although the claimant was a contractor, the amputation of his right arm above the elbow would severely impede fieldwork, client engagement, and physical oversight

The Court found the non-pecuniary damages for "pain and suffering" and "loss of amenities" abysmally low, enhancing each from Rs. 1,00,000/- to Rs. 3,00,000/- to account for disfigurement and trauma

Finally, the Court ruled that the MACT erred in deducting 10% income tax because the claimant's annual income (Rs. 99,862/-) was below the taxable limit for the relevant assessment year

The interest rate of 9% per annum was upheld

The Court directed the enhanced amount to be deposited within four weeks, with specific instructions for immediate lump-sum release of Rs. 1,50,000/- and the remainder to be secured in successive Fixed Deposit Receipts (FDRs) to ensure the claimant’s long-term financial welfare