Permanent disability compensation must account for 25% functional loss and applicable future prospects.

The appellant-claimant sustained fractures to the lower end of his right radius and the middle one-third shaft of his left femur in a motor accident on 28.02.2020 involving car No. CG-07-M-6892.

The Claims Tribunal, in Motor Accident Claim Case No. 212/2020, awarded total compensation of ₹2,34,000 by its award dated 09.02.2024.

The Tribunal assessed the claimant’s monthly income at ₹8,000, loss of earning capacity at 10%, and awarded compensation under various heads.

The claimant, aged 50 years and working as a mason, preferred an appeal under Section 173 of the Motor Vehicles Act, 1988, seeking enhancement on the grounds that his income should have been assessed at ₹8,600 per month and his functional disability at 30%.

The insurer opposed the appeal, contending that the Tribunal had correctly assessed the claimant’s loss of earning capacity at 10%.

Whether the claimant’s monthly income ought to be reassessed at ₹8,600 instead of ₹8,000 on the basis of the applicable minimum wages for an unskilled labourer?

Whether the claimant’s loss of earning capacity should be enhanced from 10% to 25% or 30% in view of his medical condition, occupation as a mason, and disability certificate?

Whether the compensation awarded under the heads of future loss of income, future medical expenses, pain and suffering, attendant charges, and loss of income during treatment required enhancement?

The Court exercised appellate jurisdiction under Section 173 of the Motor Vehicles Act, 1988, to examine the adequacy of compensation awarded by the Claims Tribunal.

In assessing loss of future earning capacity, the Court applied the principle that compensation must reflect the claimant’s established or reasonably assessable income and the impact of functional disability on his earning capacity.

Since the claimant’s occupation was treated as unskilled labour and there was no documentary proof of income, the applicable minimum wage of ₹8,600 per month was adopted.

The Court relied on National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, for adding 25% towards future prospects to the income of a 50-year-old claimant and for applying the multiplier of 13.

The Court also considered the medical evidence and disability certificate to determine functional loss, distinguishing physical disability from its impact on earning capacity.

The Tribunal had accepted that the claimant fell within the category of an unskilled labourer but assessed his monthly income at ₹8,000. The High Court found that the applicable minimum wage on the date of the accident was ₹8,600 and accordingly reassessed his income on that basis.

Although the disability certificate had been issued in 2023 by an orthopaedic specialist in his individual capacity rather than by a District Medical Board, the Court accepted it in light of the claimant’s fractures, medical records, and explanation that the COVID-19 pandemic had delayed issuance of the certificate.

Considering the claimant’s occupation as a mason and the resulting impairment from the shortened legs, mal-united fracture, deformity, and wrist stiffness, the Court enhanced the loss of earning capacity from 10% to 25%.

Applying 25% future prospects to the monthly income of ₹8,600, the Court calculated the enhanced monthly income at ₹10,750 and the annual income at ₹1,29,000. A 25% reduction in earning capacity resulted in annual loss of ₹32,250; applying the multiplier of 13, the loss of future income was calculated at ₹4,19,250.

The Court further enhanced appropriate amounts under future medical expenses, pain and suffering, attendant charges, and loss of income during treatment, while retaining the amount for diet, transportation, and miscellaneous expenses.

The total compensation was enhanced from ₹2,34,000 to ₹5,20,050, comprising ₹4,19,250 towards loss of future income, ₹10,000 towards future medical expenses, ₹50,000 towards physical pain and mental agony, ₹10,000 towards diet, transportation and miscellaneous expenses, ₹5,000 towards attendant charges, and ₹25,800 towards loss of income during treatment.

After deducting the amount already awarded by the Tribunal, the claimant became entitled to an additional ₹2,86,050, carrying interest at 6% per annum from the date of filing of the claim application until realization.

The award was modified accordingly, with the remaining conditions left undisturbed.

The Registry was directed to communicate the enhanced amount to the claimant in Hindi, with assistance from paralegal workers where necessary.