Severe cognitive impairment warrants assessment of functional disability at 70% for loss-of-earning-capacity compensation.

On 15 February 2010, a motorcycle collided with the claimant, causing grievous injuries. The motorcycle was insured, and the insurer’s liability to pay compensation was not disputed.

The rider was charge-sheeted, establishing negligence for the purpose of the claim.

The Motor Accident Claims Tribunal assessed the claimant’s disability at 35%, accepted a monthly income of ₹17,600 based on income-tax returns, and awarded total compensation of ₹8,82,500.

The claimant appealed, contending that the disability and income had been assessed inadequately, particularly because the injuries affected memory, mental functioning, and the ability to continue the pre-accident business.

Whether the claimant’s functional disability was required to be assessed at more than 35%, having regard to the cognitive and behavioural injuries and the inability to continue the pre-accident occupation?

Whether the claimant’s pre-accident income was required to be recalculated by excluding the post-accident income tax return and by adding future prospects?

Whether the amounts awarded under pain and suffering, transportation, special diet, and attendant charges required enhancement?

What additional compensation and interest, if any, was payable to the claimant?

The Court applied the principles governing just compensation under the Motor Vehicles Act, including assessment of loss of future earning capacity on the basis of functional disability rather than merely physical disability.

Where injuries impair cognitive functioning and prevent continuation of the claimant’s occupation, the functional disability may substantially exceed the medical percentage.

Loss of future income is calculated by determining the established pre-accident income, adding appropriate future prospects, applying the percentage of functional disability, and using the appropriate age-based multiplier.

The Court also applied the principle that a post-accident reduction in declared income should not ordinarily depress the assessment of pre-accident earning capacity.

These principles were applied with a 25% addition for future prospects and a multiplier of 14 for a claimant aged approximately 44 years.

The Tribunal’s award of 9% interest was maintained as just and proper.

The Court found that the Tribunal’s own findings showed that the injuries had affected the claimant’s mind, caused memory loss, resulted in child-like behaviour, and rendered the claimant unable to continue the pre-accident business.

The doctor had also stated that there was no likelihood of improvement.

In these circumstances, the Court held that the relevant functional disability was 70%, rather than 35%.

For income, the Court accepted the Tribunal’s reliance on income-tax returns but held that the average should be calculated only from the three pre-accident assessment years—2008–09, 2009–10, and 2010–11—yielding an annual average income of ₹1,65,025; the lower income declared for 2011–12 was excluded because it followed the accident.

Adding 25% future prospects and applying 70% disability with a multiplier of 14, the Court assessed loss of future income at ₹20,21,556.

It further enhanced compensation for pain, shock and suffering to ₹1,00,000 and for transportation, special diet and attendant charges to ₹50,000, while maintaining medical expenses of ₹43,000.

The total compensation was enhanced from ₹8,82,500 to ₹22,97,069, comprising ₹82,513 for actual loss of income, ₹20,21,556 for loss of future income, ₹1,00,000 for pain, shock and suffering, ₹50,000 for transportation, special diet and attendant charges, and ₹43,000 for medical expenses.

The claimant was accordingly awarded additional compensation of ₹14,14,569, carrying interest at 9% per annum as awarded by the Tribunal.

The insurer was directed to deposit the additional compensation with interest within eight weeks of receiving a copy of the judgment.