Permanent disability does not establish equivalent loss of earning capacity; its occupational impact must be assessed.

The claimant was injured when a trailer struck him while he was standing by the roadside on 27 June 2015. He claimed compensation under Section 166 of the Motor Vehicles Act, 1988, alleging serious injuries and continuing treatment.

The City Civil Court awarded him ₹42,47,160 with interest at 9% per annum; the insurer appealed, disputing the assessment of loss of earning capacity and the amount and rate of interest, while the claimant filed a cross-objection seeking enhanced compensation.

The judgment describes the impugned award as dated 22 November 2022 at the outset, but refers to it as dated 22 July 2024 in its concluding directions.

1. Whether the claimant’s permanent disability justified assessing a 50% loss of earning capacity, having regard to his business and the evidence of its income.

2. Whether the compensation and interest awarded by the Tribunal required modification.

Section 166 of the Motor Vehicles Act, 1988 provides the basis for a claim for compensation arising from a motor-vehicle accident, while Section 168 requires the Tribunal to award just compensation.

Applying Raj Kumar v. Ajay Kumar, MANU/SC/1018/2010, the Court reiterated that permanent disability does not automatically equate to an equal percentage of loss of earning capacity; that loss must be assessed by the Tribunal from the evidence as a whole, considering the claimant’s occupation and other relevant circumstances.

The Court found no sufficient basis to conclude that the claimant’s business had closed or that his income loss was wholly attributable to his disability. He employed others in his business, and he had not stated in his examination-in-chief that the business had closed because of his injuries.

Although the income-tax returns showed a fall in income, the Court considered that the claimant’s reduced ability to participate actively and work in the business could have caused some loss of earning capacity. Assessing the disability, the nature of the business and the evidence together, the Court considered ₹30 lakh just and reasonable.

It also reduced the interest rate from 9% to 6% per annum.

The insurer was directed to deposit that amount with the Registrar General within eight weeks, subject to no further deposit being required if the Tribunal’s award had already been deposited. The claimant may withdraw the compensation after completing the required formalities, and any balance, with accrued interest, is to be returned to the insurer.