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What requires to be assessed by the Tribunal is the effect of the permanent disability on the earning capacity of the injured; and after assessing the loss of earning capacity in terms of a percentage of the income, it has to be quantified in terms of money, to arrive at the future loss of earnings (by applying the standard multiplier method used to determine loss of dependency). The appellant was working as a Coolie and earning `4500/- per month. He was riding as pillion on a motorcycle with one Hanumanthappa, when they met with an accident. Appellant sustained grievous injuries. He was treated in a private nursing home and his treatment continued for a long time. In the claim petition, it was his case and claim that even after treatment, his right hand is completely disabled and due to which, his work and livelihood completely suffered. Appellant filed an application under Section 166 of Motor Vehicles Act, 1988 for compensation of `5,50,000/- by way of special and general damages on account of injuries, pain, mental agony, loss of earning, physical disabilities, shortening of expectation of life due to injuries sustained in the accident and medical expenses incurred thereon. Hanumanthappa, who was Respondent No. 1 in the Claim Petition, though served with the notice of petition, did not appear before the Court to oppose the relief sought in the claim petition.

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                                                                              REPORTABLE

                       IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                         CIVIL APPEAL NO.6481 OF 2011

        (Arising out of Special Leave Petition (C) No. 15747 of 2010)

Sri Ramachandrappa                                                     ........... Appellant

                                             versus

The Manager, Royal Sundaram 

Alliance Insurance Company Limited                           .......... Respondent

                                     J U D G M E N T

H.L. Dattu, J.

1.                   Leave granted.

2.                   This   appeal   is   directed   against   the   Judgment   and   Decree 

             passed by the High Court of Karnataka in MFA No. 10869 of 2006 

             dated   9th   day   of   December,   2009,   whereby   the   High   Court   has 

             partly allowed the appeal and enhanced the compensation awarded 

             by   the   Court   of   Small   Causes,   Bangalore   (`Tribunal'   for   short)   in 

             MVC Case No. 5124 of 2004 dated 25.03.2006.   The Tribunal has 

             awarded a sum of `1,13,900/- with interest at 6% p.a. from the date 

                                                                                             1

      of the claim petition till the date of deposit as against the claim of 

      the   appellant   for   `5,50,000/-.     The   High   Court,   by   its   impugned 

      Judgment   and   order,   has   marginally   increased   the   compensation 

      awarded   by   the   Tribunal.     The   appellant,   being   aggrieved   by   the 

      compensation   awarded   by   the   Tribunal   and   the   High   Court,   has 

      filed this appeal.

3.            The facts of the present case are as follows :-

              The appellant was working as a Coolie and earning `4500/- 

      per   month.     He   was   riding   as   pillion   on   a   motorcycle   with   one 

      Hanumanthappa,   when   they   met   with   an   accident.     Appellant 

      sustained   grievous   injuries.     He   was   treated   in   a   private   nursing 

      home   and   his   treatment   continued   for   a   long   time.     In   the   claim 

      petition,   it   was   his   case   and   claim   that   even   after   treatment,   his 

      right  hand  is  completely disabled  and  due  to which,  his   work and 

      livelihood completely suffered.  Appellant filed an application under 

      Section   166   of   Motor   Vehicles   Act,   1988   for   compensation   of 

      `5,50,000/- by way of special and general damages on account of 

      injuries,   pain,   mental   agony,   loss   of   earning,   physical   disabilities, 

      shortening   of   expectation   of   life   due   to   injuries   sustained   in   the 

      accident          and         medical         expenses         incurred         thereon. 

      Hanumanthappa, who was Respondent No. 1 in the Claim Petition, 

      though served with the notice of petition, did not appear before the 

      Court   to   oppose   the   relief   sought   in   the   claim   petition.     The 

                                                                                          2

      Tribunal, after considering the evidence on record, has awarded a 

      compensation of `1,13,900/- with interest at 6% per annum from the 

      date   of  petition  till   the  date   of  deposit  as  against   the  claim  of  the 

      appellant for `5,50,000/-.  

4.            Aggrieved   by   the   inadequate   compensation   awarded,   the 

      appellant preferred an appeal before the High Court of Karnataka. 

      The court, by its order dated 9th  of December, 2009, has awarded 

      the compensation of `1,33,900/-, as against `1,13,900/- awarded by 

      the   Tribunal,   with   interest   at   6%   per   annum   on   the   enhanced 

      compensation   from   the   date   of   the   petition   till   the   date   of 

      realization.  The appellant, being dissatisfied with the compensation 

      awarded, is before us in this appeal.  

5.            We have heard the learned counsel for the parties to the lis 

      and perused the records.  

6.            Before   the   Tribunal,   the   appellant   had   examined   himself 

      (PW-1)   and   one   Dr.   P.K.Raju,   Asst.   Professor   in   Orthopaedics 

      (PW-2) in support of his claim petition.  The Doctor, in his evidence, 

      has stated that the appellant cannot work as a coolie by using his 

      right hand and cannot do any other manual work.  Though, he was 

      cross-examined,   nothing   adverse   to   the   claim   of   the   appellant   is 

      elicited. 

                                                                                       3

7.            The learned counsel for the appellant submits that due to the 

      injuries sustained by the appellant in the accident, the appellant is 

      permanently   disabled,   which   would   affect   his   future   earning 

      capacity as a Coolie.  Per contra, learned counsel for the Insurance 

      Company submits that since the appellant has suffered only 41% of 

      disability,   the   High   Court   was   justified   in   restricting   the   claim 

      against the claim made by the appellant.  

8.            The   compensation   is   usually   based   upon   the   loss   of   the 

      claimant's   earnings   or   earning   capacity,   or   upon   the   loss   of 

      particular faculties or members or use of such members, ordinarily 

      in accordance with a definite schedule.  The Courts have time and 

      again   observed   that   the   compensation   to   be   awarded   is   not 

      measured by the nature, location or degree of the injury, but rather 

      by the extent or degree of the incapacity resulting from the injury. 

      The   Tribunals   are   expected   to   make   an   award   determining   the 

      amount  of compensation  which should  appear  to  be just,  fair  and 

      proper.

9.            The   term   "disability",   as   so   used,   ordinarily   means   loss   or 

      impairment of earning power and has been held not to mean loss of 

      a   member   of   the   body.     If   the   physical   efficiency   because   of   the 

      injury  has   substantially   impaired   or   if   he   is   unable   to   perform   the 

      same   work   with   the   same   ease   as   before   he   was   injured   or   is 

      unable to do heavy work which he was able to do previous to his 

                                                                                         4

         injury,   he   will   be   entitled   to   suitable   compensation.     Disability 

         benefits are ordinarily graded on the basis of the character of the 

         disability   as   partial   or   total,   and   as   temporary   or   permanent.     No 

         definite   rule   can   be   established   as   to   what   constitutes   partial 

         incapacity   in   cases   not   covered   by   a   schedule   or   fixed   liabilities, 

         since facts will differ in practically every case.  

10.              In  Ramesh Chandra Vs. Randhir Singh  (1990) 3 SCC 723, 

         this Court drawing distinction between the compensation for future 

         loss and pain and enjoyment of life, has observed as under :

                   "...   The   incapacity   or   disability   to   earn   a  

                   livelihood   would   have   to   be   viewed   not   only   in  

                   presenti   but   in   futuro   on   reasonable  

                   expectancies and taking into account deprival of  

                   earnings   of   a   conceivable   period.   This   head  

                   being totally different cannot in our view overlap  

                   the   grant   of   compensation   under   the   head   of  

                   pain, suffering and loss of enjoyment of life. One  

                   head   relates   to   the   impairment   of   person's  

                   capacity   to   earn,   the   other   relates   to   the   pain  

                   and suffering and loss of enjoyment of life by the  

                   person himself."

  11.            In K.G. Poovaiah (Dr) v. G.M./Managing Director, Karnataka  

         KSRTC,  (2001)   9   SCC   167,   the   appellant   was   a   Medical 

         Practitioner   and   was   aged   about   36   years   and   had   met   with   an 

         accident   in   which   his   hand   was   crushed.     This   Court,   while 

         considering the nature of his profession and income, has enhanced 

                                                                                           5

       the amount of compensation for loss of future earnings.  This Court 

       observed :  

               "There   is   no   reason   to   doubt   the   testimony   of   the  

               appellant   so   far   as   his   monthly   income   is  

               concerned.   Being   a   medical   man   aged   about   36  

               years   on   the   date   of   the   accident,   the   monthly  

               salary   received   by   him   cannot   be   said   to   be  

               exaggerated. He has candidly admitted that he was  

               not assessed to tax. A salary of Rs 3000 per month  

               to a medical practitioner cannot be said to be on the  

               higher side. We, therefore, accept his statement in  

               this   behalf.   We   also   accept   the   assessment   at   Rs  

               40,000   for   pain   and   suffering.   However,   the  

               assessment of compensation under the head of loss  

               of earning capacity is very much on the lower side.  

               The   injury   to   the   right   hand,   which   has   left   a  

               permanent   disability   and   which   has   affected   the  

               functioning of the limb and in particular the fingers,  

               is   a   serious   handicap   to   a   medical   practitioner.  

               Patients   would   be   reluctant   to   go   to   him   for  

               treatment   and,   therefore,   the   loss   of   earning  

               capacity   would   be   substantial.   Even   if   we   were   to  

               assume that it would reduce his earning capacity by  

               50% and even if we go by his earnings at the date  

               of the accident, the monthly loss would come to Rs  

               1500 i.e. Rs 18,000 per annum. If this monthly loss  

               of earning is multiplied by 10 years purchase factor  

               the   compensation   would   work   out   to   Rs   1,80,000.  

               To   that   must   be   added   the   compensation   allowed  

               under   certain   other   heads,   namely,   pain   and  

               suffering, loss of amenities, medical expenses, etc.  

               The total amount comes to Rs 2,38,000."

12.            In  Kapil  Kumar  v. Kudrat  Ali,  (2002)  4 SCC  337,  a student 

       suffered   injuries   on   his   hand   and   the   disability   of   20%   was 

       assessed   by   the   Doctors.   This   Court,   while   upholding   the   High 

       Court's   observation   in   relation   to   compensation   for   loss   of   future 

       earnings, has held: 

                                                                                        6

            "However, the disability sustained was assessed at 20  

            per   cent.   As   rightly   observed   by   the   High   Court,   the  

            loss   of   earning   capacity   on   account   of   permanent  

            partial   disability   suffered   by   the   appellant   cannot   be  

            calculated   in   terms   of   percentage   only.   It   will   have  

            serious repercussions on his studies and prospects of  

            earning.   He   will   have   to   face   other   handicaps   in   life.  

            Though the High Court did realise the need to enhance  

            the   compensation,   we   feel   that   the   extent   of  

            enhancement   is   still   inadequate.   The   increase   of   Rs  

            5000 is only marginal. Taking inter alia the table in the  

            Second Schedule as the  guiding  factor, we are of the  

            view   that   the   compensation   on   account   of   disability  

            incurred   by   the   appellant   should   be   enhanced   by   Rs  

            20,000 more; that means, he will get Rs 40,000 instead  

            of Rs 20,000 awarded by the High Court under the first  

            head."

13.           In  Raj Kumar v. Ajay Kumar, (2011) 1 SCC 343, this Court, 

       while considering the award of compensation to the victim of motor 

       accident for loss of future earning due to some permanent physical 

       disability, has  observed :  

            "Where the claimant suffers a permanent disability as  

            a result of injuries,  the assessment  of compensation  

            under   the   head   of   loss   of   future   earnings   would  

            depend   upon   the   effect   and   impact   of   such  

            permanent   disability   on   his   earning   capacity.   The  

            Tribunal   should   not   mechanically   apply   the  

            percentage of permanent disability as the percentage  

            of economic loss or loss of earning capacity. In most  

            of the cases, the percentage of economic loss, that is,  

            the   percentage   of   loss   of   earning   capacity,   arising  

            from a permanent disability  will  be different  from the  

            percentage   of   permanent   disability.   Some   Tribunals  

            wrongly assume that in all  cases, a particular extent  

            (percentage) of permanent disability would result in a  

            corresponding   loss   of   earning   capacity,   and  

            consequently, if the evidence produced show 45% as  

            the   permanent   disability,   will   hold   that   there   is   45%  

            loss of future earning capacity. In most of the cases,  

            equating   the   extent   (percentage)   of   loss   of   earning  

                                                                                          7

capacity   to   the   extent   (percentage)   of   permanent  

disability   will   result   in  award   of  either   too  low   or  too  

high a compensation.

What requires to be assessed by the Tribunal is the  

effect   of   the   permanent   disability   on   the   earning  

capacity of the injured; and after assessing the loss of  

earning   capacity   in   terms   of   a   percentage   of   the  

income, it has to be quantified in terms of money, to  

arrive at the future  loss of  earnings  (by  applying  the  

standard multiplier method used to determine loss of  

dependency).   We   may   however   note   that   in   some  

cases, on appreciation of evidence and assessment,  

the   Tribunal   may   find   that   the   percentage   of   loss   of  

earning   capacity   as   a   result   of   the   permanent  

disability,   is   approximately   the   same   as   the  

percentage  of  permanent  disability  in  which case, of  

course, the Tribunal will adopt the said percentage for  

determination of compensation. (See for example, the  

decisions of this Court in Arvind Kumar Mishra v. New  

India   Assurance   Co.   Ltd.4   and   Yadava   Kumar   v.  

National Insurance Co. Ltd.5)

Therefore,   the   Tribunal   has   to   first   decide   whether  

there is any permanent disability and, if so, the extent  

of   such   permanent   disability.   This   means   that   the  

Tribunal should consider and decide with reference to  

the evidence:

(i)   whether   the   disablement   is   permanent   or  

temporary;

(ii)   if   the   disablement   is   permanent,   whether   it   is  

permanent   total   disablement   or   permanent   partial  

disablement;

(iii)   if   the   disablement   percentage   is   expressed   with  

reference to any specific limb, then the effect of such  

disablement   of   the   limb   on   the   functioning   of   the  

entire body, that is, the permanent disability suffered  

by the person.

If  the Tribunal  concludes that there  is no permanent  

disability   then   there   is   no   question   of   proceeding  

further   and   determining   the   loss   of   future   earning  

capacity.   But   if   the   Tribunal   concludes   that   there   is  

permanent  disability   then   it  will   proceed  to   ascertain  

                                                                              8

             its   extent.   After   the   Tribunal   ascertains   the   actual  

             extent   of   permanent   disability   of   the   claimant   based  

             on the medical evidence, it has to determine whether  

             such   permanent   disability   has   affected   or   will   affect  

             his earning capacity."

14.            In the instant case, it is not in dispute that the appellant was 

       aged about 35 years and was working as a Coolie and was earning 

       `4500/- per month at the time of accident.  This claim is reduced by 

       the Tribunal to a sum of `3000/- only on the assumption that wages 

       of the labourer during the relevant period viz. in the year 2004, was 

       `100/- per day.   This assumption in our view has no basis. Before 

       the   Tribunal,   though   Insurance   Company   was   served,   it   did   not 

       choose to appear before the Court nor did it repudiated the claim of 

       the   claimant.     Therefore,   there   was   no   reason   for   the   Tribunal   to 

       have reduced the claim of the claimant and determined the monthly 

       earning a sum of `3000/- per month.   Secondly, the appellant was 

       working   as   a   Coolie   and   therefore,   we   cannot   expect   him   to 

       produce   any   documentary   evidence   to   substantiate   his   claim.     In 

       the absence of any other evidence contrary to the claim made by 

       the   claimant,   in   our   view,   in   the   facts   of   the   present   case,   the 

       Tribunal   should   have   accepted   the   claim   of   the   claimant.     We 

       hasten   to   add   that   in   all   cases   and   in   all   circumstances,   the 

       Tribunal need not accept the claim of the claimant in the absence of 

       supporting   material.     It   depends   on   the   facts   of   each   case.     In   a 

       given case, if the claim made is so exorbitant or if the claim made is 

                                                                                           9

       contrary to ground realities, the Tribunal may not accept the claim 

       and may proceed to determine the possible income by resorting to 

       some guess work, which may include the ground realities prevailing 

       at   the   relevant   point   of   time.     In   the   present   case,   appellant   was 

       working as a Coolie and in and around the date of the accident, the 

       wage   of   the   labourer   was   between   `100/-   to   150/-   per   day   or 

       `4500/- per month.  In our view, the claim was honest and bonafide 

       and,   therefore,   there   was   no   reason   for   the   Tribunal   to   have 

       reduced   the   monthly   earning   of   the   appellant   from   `4500/-   to 

       `3000/-   per   month.     We,   therefore,   accept   his   statement   that   his 

       monthly earning was `4500/-.

15.            The appellant, in so far as disability caused due to accident 

       is   concerned,   had   stated   in   his   evidence   that   he   had   sustained 

       severe   bodily   injuries   which   has   resulted   in   permanent   partial 

       disability,   which   would   affect   his   future   earning   capacity   as   a 

       Coolie.  The Doctor, who was examined as claimant's witness, has 

       stated   that  the appellant  has  sustained  malunited  fracture   2nd,  3rd, 

       4th,   5th  MCB   right   and   malunited   fracture   scapula   right   and   in   his 

       opinion, the appellant has suffered permanent physical disability of 

       41% to right  upper limb and in  view  of the disability,  the claimant 

       cannot work as a Coolie and cannot do any other manual work as a 

       Coolie.  The Tribunal, while assessing the loss of income has taken 

       the disability to the whole body as 1/3rd  of particular limb and has 

                                                                                           10

assessed the loss of income, at 1/3rd of 41% which comes to about 

13.5%.   So the loss of income taken at 13.5% of `3000/- and has 

quantified the loss of future income at `72,900/-.  We cannot accept 

this quantification arrived at by the Tribunal, since the assessment 

of   compensation   under   the   head   of   loss   of   earning   capacity   is 

calculated   abysmally   on   the   lower   side.     On   the   question   of 

disability   caused   due   to   the   accident,   the   Doctor,   who   has   been 

examined   as   claimant's   witness,   says   that   because   of   the   injury 

sustained by the claimant, he cannot work as a Coolie and cannot 

do   any   other   manual   work.   This   part   of   the   evidence   is   not 

controverted by the insurance company by subjecting the claimant 

to   cross-examination.     Therefore,   we   can   safely   conclude   that 

claimant has become permanently disabled and, therefore, has lost 

the   future   earning   capacity   permanently.     The   claimant   has   also 

suffered  prolonged   medical  treatment   and  hospitalization.   Looking 

to the amount awarded by the Tribunal, we are of the view that the 

same   is   too   less   and,   therefore,   we   are   inclined   to   enhance   the 

same.     Taking   into   consideration   the   future   economic   loss,   he 

would   suffer   because   of   permanent   partial   disability,   which   would 

not   permit   him   to   work   as   a   Coolie   or   any   other   job,   the   medical 

expenses   incurred,   pain   and   sufferings,   loss   of   income   during 

treatment, period of loss of future amenities and discomfort, in our 

view,   interest   of   justice   will   be   served   if   an   additional   amount   of 

                                                                                     11

               `2,00,000/- (Rupees Two Lakhs) is granted to the appellant by way 

               of compensation.

16.                       The   respondent-Insurance   company   is   directed   to   deposit 

               the enhanced compensation amount together with interest from the 

               date of petition till the date of deposit before the Tribunal within a 

               period   of   eight   weeks   from   today.     The   enhanced   compensation 

               amount with interest shall be paid to the claimant on such deposit.

17.                       The appeal is allowed to the extent indicated above.   Costs 

               are made easy.

                                                                                    ..............................J.

                                                                                                [ G. S. SINGHVI ]

                                                                                   ..............................J. 

                                                                                                  [ H. L. DATTU ]

       New Delhi,       August 09, 2011.                                                                                                                12

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