Injury compensation must assess functional disability by its impact on the claimant’s earning capacity.

On 1 April 1990, the appellant, an auto-rickshaw driver, was injured when a car insured by respondent No. 2 collided with his rickshaw.

He claimed that before the accident he earned Rs. 200 per day driving the rickshaw and, afterward, could work only as a hawker earning Rs. 1,500 per month.

An injury certificate recorded a tibial fracture and assessed 22% partial permanent disability; the doctor who issued it was not examined.

The Tribunal awarded Rs. 34,000 as a lump sum for disability and pain and suffering, and Rs. 4,000 for treatment, conveyance and special diet.

The claimant appealed, challenging the assessment of compensation.

1. Whether the Tribunal properly assessed the injured claimant’s income and compensation for disability.

2. Whether compensation should be reassessed by determining functional disability and its effect on earning capacity, and by applying a multiplier and future-prospects enhancement.

Under the Motor Vehicles Act, 1988, compensation for an injury-related disability requires assessment of the claimant’s income, physical disability, and functional disability—the effect of the disability on earning capacity—before calculating loss of future earnings.

In Raj Kumar v. Ajay Kumar, (2011) 1 SCC 343, the Supreme Court explained that functional disability depends on the affected body part, the claimant’s occupation, and the use of that body part in performing the occupation; where loss of future earning capacity is less than total, compensation may also be awarded for loss of amenities or expectation of life.

The Court distinguished Indra Bai v. Oriental Insurance Co. Ltd. & Anr., which concerned the codified assessment of disability under the Workmen’s Compensation Act, 1923, rather than a claim under the Motor Vehicles Act.

The Court also considered the principle that future prospects should be taken into account in assessing compensation for injury-related loss of earnings.

The Court held that the Tribunal’s lump-sum approach did not properly distinguish physical disability from its occupational impact.

Although the doctor was not examined and the claimant’s evidence did not establish total incapacity, the claimant’s unchallenged evidence showed that his earnings fell from Rs. 6,000 per month as a rickshaw driver to Rs. 1,500 per month as a hawker.

Considering the knee injury and fracture, but also the absence of amputation and the claimant’s ability to work as a hawker, the Court assessed functional disability at 10%, rather than 22% physical disability or 100% loss of earning capacity.

It applied a monthly income of Rs. 6,000, a multiplier of 18, and a 40% future-prospects enhancement, and separately assessed pain and suffering, loss of amenities, special diet, conveyance, and medical treatment.

In response to the insurer’s objection concerning delay in prosecuting the claim, the Court reduced the quantum across heads rather than excluding interest for the period in question.

The Court assessed total compensation at Rs. 2,50,440 and, after deducting the Tribunal’s Rs. 34,000 award, directed the insured and insurer jointly and severally to pay the enhanced amount of Rs. 2,16,440 within eight weeks.

The enhanced amount carries interest at 6% per annum from the date of the claim petition until payment, subject to payment of deficit court fees.