Future income loss must apply disability to enhanced income, not residual income, before applying the multiplier.

On 1 February 2018, Rajendra Kumar Rathor was travelling by motorcycle when a Scorpio driven by respondent No. 2 allegedly hit his motorcycle rashly and negligently near Sikri turning, Dipka, causing serious injuries and permanent functional disability.

He filed a claim under the Motor Vehicles Act, 1988 seeking compensation of ₹25,65,000. The Motor Accident Claims Tribunal awarded ₹18,56,836, including ₹11,62,979 towards loss of future income due to disability. The insurer challenged the award under Section 173 of the Motor Vehicles Act, but confined its challenge to the computation of loss of future income, contending that the Tribunal had multiplied the residual income rather than the income lost due to disability.

1. Whether the Tribunal correctly computed the claimant’s loss of future income by applying the claimant’s functional disability and multiplier of 11.

2. Whether the total compensation awarded by the Tribunal required modification on account of an erroneous calculation under the head of loss of future income.

The appeal was considered under Section 173 of the Motor Vehicles Act, 1988, governing appeals against awards of the Motor Accident Claims Tribunal.

For computing loss of future income, the Court applied the multiplier method under Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121, under which the appropriate multiplier is selected with reference to the claimant’s age; for a person aged 53 years, the multiplier is 11.

The Court also applied the principle that compensation for permanent disability must correspond to the loss of earning capacity or functional disability, and that future prospects must be added before determining the income loss attributable to disability.

The Tribunal reasonably assessed the claimant’s monthly income at ₹9,830, despite the absence of documentary proof, by treating him as a skilled worker.

The medical evidence of Dr. Ghanshyam Diwan established whole-body functional disability of 18.52%, which remained uncontroverted.

Although the Tribunal correctly applied the multiplier of 11, it deducted ₹21,846, representing 18.52% of the annual income, from the annual income and then multiplied the remaining income by 11. This incorrectly compensated the claimant for his residual income rather than the income actually lost due to disability.

The High Court recalculated the loss by adding 10% future prospects to the annual income of ₹1,17,960, arriving at ₹1,29,756; applying 18.52% functional disability resulted in an annual loss of ₹24,031, which, multiplied by 11, yielded ₹2,64,341.

The remaining heads of compensation were found reasonable and were not disturbed.

The total compensation was consequently reduced from ₹18,56,836 to ₹9,58,198, while the amounts awarded under the other heads were maintained.

The ₹5,00,000 already deposited by the insurer pursuant to the order dated 27 March 2026 was directed to be adjusted against the modified compensation amount.