Functional disability must be assessed based on the claimant’s specific trade rather than physical disability alone.

On April 19, 2014, the claimant (Respondent No. 1), a carpenter by profession, sustained multiple fractures (right thigh and tibia) in a motor vehicle accident involving an offending vehicle driven by Respondent No. 2 and insured by the Appellant.

The claimant underwent two surgeries and suffered 40% permanent physical disability.

The Motor Accident Claims Tribunal (MACT), Una, awarded Rs. 9,20,900/- in compensation with 9% interest, calculating monthly income at Rs. 15,000/- without documentary proof.

The Insurance Company appealed on the ground of exorbitant quantum, while the claimant sought enhancement to "just compensation".

1. Whether the amount of compensation awarded by the Tribunal falls within the definition of "just compensation" under the Motor Vehicles Act.

2. Whether the Tribunal erred in determining the claimant's monthly income and functional disability for assessing loss of future earning capacity.

The court primarily applied Section 168 of the Motor Vehicles Act, 1988, which mandates the determination of "just compensation".

Principles regarding the distinction between physical disability and functional loss of earning capacity as established in Raj Kumar v. Ajay Kumar (2011).

The court followed National Insurance Co. Ltd. v. Pranay Sethi (2017) for adding 40% for future prospects to the income of self-employed individuals under age 40.

Application of Minimum Wages Act principles and relevant State notifications to determine income in the absence of specific evidence.

The High Court found the Tribunal’s estimation of Rs. 15,000/- monthly income unsustainable as the claimant provided no evidence of earnings; consequently, the Court adopted the minimum wage for skilled workers (Rs. 6,425/-) prevalent in Himachal Pradesh at the time of the accident.

Regarding disability, the Court held that a 40% physical disability of the limbs for a carpenter resulted in a 50% functional disability, as he could no longer perform his specific trade.

Applying the Pranay Sethi formula, the Court added 40% for future prospects, resulting in a monthly multiplicand of Rs. 8,995/-, and applied a multiplier of 15 based on the claimant's age (38).

The Court also revised non-pecuniary heads, reducing "Pain and Suffering" to a per-day hospitalization rate but increasing "Attendant Charges" and "Loss of Enjoyment of Life" to reflect the reality of a four-month convalescence.

The High Court partly allowed the appeal, modifying and enhancing the compensation from Rs. 9,20,900/- to Rs. 10,46,285/-, and reduced the interest rate from 9% to 7.5% per annum.

The Appellant Insurance Company was directed to satisfy the modified award.