Future earning loss must be assessed by functional disability, not physical disability percentage alone.

The respondent-claimant, aged 28 years, sustained grievous injuries, including amputation of his right hand, when the bus bearing registration No. AS-01-GC-0266, insured by the appellant, collided with another vehicle while travelling on a National Highway under Samaguri Police Station, Nagaon District.

The claimant filed a petition under Section 166 of the Motor Vehicles Act, 1988. The Motor Accident Claims Tribunal, Tinsukia, awarded him ₹39,74,381 with interest at 8% per annum from the date of filing of the claim petition until realization.

The insurer challenged the award, contending that negligence of the bus driver was not proved, the claimant was contributorily negligent because he had kept his right hand outside the bus window, the unidentified truck was the immediate cause of the accident, the claim ought to have been pursued under Section 163 of the Act, and the Tribunal had erroneously applied a multiplier of 37.

1. Whether the claim petition under Section 166 of the Motor Vehicles Act was maintainable and whether the accident resulted from rash and negligent driving of the insured bus?

2. Whether the claimant was guilty of contributory negligence because he allegedly kept his hand outside the bus window?

3. Whether the Tribunal had correctly assessed the claimant’s loss of future earning capacity, particularly by applying a multiplier of 37 and treating 80% physical disability as equivalent to 80% loss of earning capacity?

4. Whether the compensation awarded by the Tribunal required modification to ensure “just compensation” under Section 168 of the Motor Vehicles Act?

The Court applied Sections 166 and 168 of the Motor Vehicles Act, 1988: a claim under Section 166 requires proof of negligence on the touchstone of preponderance of probabilities, while Section 168 requires the Tribunal to award just, fair and reasonable compensation.

The Court referred to Oriental Insurance Co. Ltd. v. Meena Variyal, (2007) 5 SCC 428, regarding the necessity of proving negligence in a Section 166 claim.

The Court referred to T.O. Antony v. Karvarnan, (2008) 3 SCC 748, on contributory negligence.

The Court referred to Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121, for the applicable multiplier based on the claimant’s age.

The Court referred to Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65, on the requirement that compensation be neither excessive nor inadequate.

The Court referred to Raj Kumar v. Ajay Kumar, (2011) 1 SCC 343, which requires loss of future earning capacity to be assessed with reference to functional disability and its impact on the claimant’s actual earning capacity, rather than merely relying on the percentage of physical disability.

The Court found that the accident and involvement of the insured bus were not seriously disputed. The evidence of the claimant and the co-passenger, together with the FIR, established that the bus collided with another vehicle and that the claimant suffered the amputation injury in the accident, thereby satisfying the requirement of negligence for maintaining a Section 166 claim.

The allegation of contributory negligence was rejected because the evidence did not establish that the claimant had acted negligently or failed to exercise due care; the mere assertion that his hand was outside the window was insufficient to reduce liability.

The Court, however, held that the Tribunal had committed a patent error by applying a multiplier of 37 to a claimant aged 28 years. Under Sarla Verma, the proper multiplier was 17.

Further, although the disability certificate recorded 80% physical disability, the Tribunal had not assessed the claimant’s functional disability or its effect on his occupation as a commission agent.

Applying Raj Kumar, the Court considered 60% to be the appropriate loss of earning capacity, rather than equating the 80% physical disability with 80% economic loss.

The compensation was consequently recalculated on the basis of annual income of ₹78,000, 60% loss of earning capacity and multiplier 17.

However, it modified the Tribunal’s award by applying multiplier 17 and assessing loss of future earning capacity at 60%. The compensation was reduced to ₹24,61,181, comprising ₹7,95,600 for loss of future earning capacity, ₹10,00,000 for future medical expenses, loss of amenities and conveyance, ₹1,65,581 for medical expenses, and ₹5,00,000 for pain and suffering.

The insurer was directed to deposit the balance amount, after adjustment of the ₹7,00,000 already withdrawn by the claimant, before the Tribunal within six weeks, together with interest at 8% per annum from the date of filing of the claim petition until realization.

The statutory deposit was directed to be refunded to the insurer, and the appeal was disposed of accordingly.