The Supreme Court has held that compensation for permanent disability arising from a motor accident must reflect the actual impact of the injuries on the victim’s working capacity and daily life, rather than mechanically follow the disability percentage certified by a medical board.
The Bench of Justice S.V.N. Bhatti and Justice N.V. Anjaria enhanced compensation to ₹77,84,394 for a claimant assessed with 75.5% medical disability, treating his functional disability as 100%. In the connected appeal, the Court increased compensation to ₹69,60,880 for a young claimant with 62% medical disability, assessing his functional disability at 80%.
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The bench emphasised the use of the multiplier method to calculate attendant expenses where serious injuries create a continuing need for assistance.
The claims arose from an accident on October 22, 2016, near the Paliyekkara toll plaza on the Thrissur–Kodara public road in Kerala.
Sunil Kumar, aged 43 at the time, was travelling as a pillion rider on a scooter driven by 22-year-old Sreejith K.S. Another scooter, allegedly driven rashly and negligently, collided with their vehicle. Both were thrown to the ground and sustained serious injuries.
The Motor Accident Claims Tribunal at Irinjalakuda awarded ₹19,91,954 to Sunil Kumar and ₹16,03,400 to Sreejith, with interest at 8% per annum from the filing of their respective claim petitions until realisation.
The Kerala High Court subsequently enhanced the awards to ₹36,22,644 and ₹27,70,664, respectively. Dissatisfied with the extent of enhancement, both claimants approached the Supreme Court.
The central issue was whether the medically certified percentage of disability adequately represented the claimants’ loss of earning capacity.
The Supreme Court explained that medical disability measures physical impairment, while functional disability concerns the consequences of that impairment for the injured person’s everyday activities, occupation and ability to earn.
Relying on Shankar Dutt v. United India Insurance Co. Ltd., Jithendran v. New India Assurance Co. Ltd. and Reliance General Insurance Co. Ltd. v. Priyanka Das, the Court stressed that the assessment must account for the victim’s age, occupation, nature of work and ability to compete in the employment market.
A medical assessment may therefore record a particular percentage of impairment even though the injuries have a substantially greater effect on the person’s livelihood.
Sunil Kumar suffered severe head injuries, including an open diffuse axonal injury, midbrain contusion with Weber’s syndrome and a penetrating injury to his left knee.
Although the Medical Board assessed his permanent disability at 75.5%, the Supreme Court found that the consequences were far more extensive. He would require an attendant throughout his life and could neither independently undertake his own work nor engage in an earning activity to support himself and his family.
The Court consequently assessed his permanent functional disability at 100%.
It retained his monthly income at ₹15,000 and applied a multiplier of 14. With a 25% addition towards future prospects and 100% functional disability, compensation for permanent disability and loss of earning power was calculated at ₹31,50,000.
The Supreme Court also found the earlier provision of ₹1 lakh towards future attendant expenses inadequate.
Referring to Kajal v. Jagdish Chand, the Bench held that the multiplier method should be used for determining attendant charges as well as compensation for loss of income or dependency.
The Court explained that this method accounts for factors including inflation, interest on the lump-sum award, longevity and the uncertainties of life.
For Sunil Kumar, it calculated attendant expenses at ₹15,000 per month, multiplied by 12 and then by the multiplier of 14, resulting in ₹25,20,000.
The final award also included ₹10 lakh for future medical expenses, ₹4,02,394 for medical expenses, and ₹2.5 lakh each for pain and suffering and loss of amenities. His total compensation was fixed at ₹77,84,394.
In Sreejith’s case, the Medical Board had assessed permanent disability at 62%. His injuries included fractures affecting the right wrist and hand, fractures of the first and second metacarpals of the left hand, and a left brachial plexus injury.
Considering their effect on his bodily functions, daily activities and earning capacity, the Supreme Court assessed his permanent functional disability at 80%.
The Bench retained his notional monthly income at ₹10,500, noting the absence of evidence supporting his claimed income of ₹30,000 per month.
Applying a 40% addition towards future prospects and a multiplier of 18, the Court awarded ₹25,40,160 for permanent disability and loss of earning power.
It further awarded ₹22,68,000 towards attendant expenses, calculated using the multiplier method, and ₹8 lakh towards future medical expenses.
The Court separately recognised the impact of the injuries on Sreejith’s marriage prospects.
Observing that he was an able-bodied young man aged 22 when the accident occurred, the Bench relied on Raj Kumar v. Ajay Kumar and awarded ₹5 lakh for loss of future prospects of marriage.
The final compensation table also provided ₹2.5 lakh each for pain and suffering and loss of amenities. The Court fixed his total compensation at ₹69,60,880.
Allowing both appeals, the Supreme Court held that Sunil Kumar was entitled to an additional ₹41,61,750, while Sreejith was entitled to an additional ₹41,90,216 over the amounts awarded by the High Court.
The additional compensation will carry interest at 6.5% per annum from the filing of the respective claim petitions until realisation. The Court distinguished this from the 8% interest awarded by the courts below on the previously granted amounts.
IFFCO Tokio General Insurance Company Ltd. was directed to deposit the additional compensation, together with interest, before the Tribunal within six weeks of the judgment.
The Tribunal was instructed to transfer the amounts directly into the claimants’ bank accounts after verifying their identities and completing the necessary procedure.
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