1

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2567 OF 2020

PAPPU DEO YADAV ...Appellant(s)

VERSUS

NARESH KUMAR AND ORS. ...Respondent(s)

JUDGMENT

S. RAVINDRA BHAT, J.

1. The appellant questions a decision of the High Court of Delhi 1. On

18.05.2012, the appellant was injured in a motor accident while travelling to
Hapur as a passenger in a bus, having paid the requisite fare. At about 1.30 pm
when the bus reached village Sadikpur, PS-Hafizpur, Hapur, Uttar Pradesh, the
driver of the offending bus (the first respondent) sought to overtake the bus in
which the appellant was travelling, from the wrong side, and zipped the
appellant’s bus, scratching it. This rash and negligent act caused a dent in the
bus where the appellant was seated, as a result of which he suffered injuries.
The appellant was removed to Dr. Khan’s Rehan hospital and thereafter, AIIMS
Trauma Center. The appellant claimed compensation, impleading the owner,
the driver of the vehicle, and the insurer. During the course of proceedings
before the Motor Accident Claims Tribunal, he applied for ascertainment of his
disability. The disability report (Ex. PW-l/9 dated 01.04.2014 issued by Pandit

1
dated 13.09.2018, in M.A.C. APP. 520/ 2016
 2

Madan Mohan Malviya Hospital, during the motor vehicles compensation claim
proceedings) showed that he suffered 89% disability in relation to his right
upper limb, which had to be amputated. The report also went on to say that the
condition was “non progressive, not likely to improve. Reassessment is not
recommended”. A first information report (FIR) regarding the accident was
registered (FIR No. 57/12), as case Crime No. 255/12, Hazifpur Police Station,
Hapur, Uttar Pradesh, under Sections 279 and 338 of the Indian Penal Code,
1860.

2. The appellant, at that time unmarried, was working as a data entry

operator/typist at Tis Hazari Courts. Prior to the injury, he earned an amount of
₹ 12,000 per month. He had applied for grant of compensation under Sections
166 and 140 of the Motor Vehicles Act, 1988, (hereafter “the Act”) claiming a
sum of ₹ 50 lakhs with interest at the rate of 12% per annum against the first
respondent, (the driver of the bus at the time of the accident), the second
respondent (owner of the vehicle), and third respondent (the insurer). The Motor
Accident Claims Tribunal (hereafter the “Tribunal”) rejected the insurer’s
objection regarding its jurisdiction and further held that the appellant had
suffered serious injuries due to rash and negligent driving of the respondent. It
awarded compensation in the following terms:

1. Compensation for medical expenses 11,000

2. Compensation for pain and suffering 30,000

3. Compensation for special diet, attendant 30,000

and conveyance charges

4. Loss of future earning capacity/ income 11,66,400

5. Loss of amenities and enjoyment of life 15,000

 3

6. Compensation for disfigurement 25,000

7. Loss of income during treatment 48,000

8. Future medical expenses 1,00,000

9. TOTAL 14,25,400

3. While assessing loss of earning capacity, the Tribunal took the

appellant’s income to be ₹ 8000 per month, and added 50% towards future
prospects. At the time of the accident, the appellant was only 20 years of age.
Therefore, a multiplier of 18 was applied. The physical disability was assessed
to be 45%, by the Tribunal. The High Court, to which the claimant appealed
(and the insurer cross appealed), revised this head of compensation by doing
away with the addition of 50% towards future prospects, and reassessed the
compensation for loss of earning capacity as ₹ 7,77,600 (₹8000 x 12 x 45% x
18). The total compensation was reassessed by the High Court to be ₹14,36,600,
after enhancing the compensation for disfigurement, diet, attendant and
conveyance, loss of amenities and enjoyment of life, and pain and suffering.
Further, an interest of 9% per annum was imposed. In reducing the amount
awarded for loss of future prospects, the High Court noticed this court’s
judgments in National Insurance Company Ltd. v. Pranay Sethi & Ors.2 and
Jagdish v. Mohan & Ors3 both by three-judge benches of this court.

4. The appellant argues that the impugned judgment is in material error, in

misreading this court’s judgments in Pranay Sethi & Ors4 which was later

2
(2017) 16 SCC 860.
3
(2018) 4 SCC 571
4
Supra n.2
 4

followed in Jagdish5 by a three judge Bench, which had ruled that the benefit of
future prospects should not be confined only to those who have a permanent job
and would extend to self-employed individuals, and in case of self- employed
persons an addition of 40% of established income should be made where the
age of the victim at the time of the accident was below 40 years. It was urged
that the decision in Anant s/o of Sidheshwar Dukre v. Pratap s/o Zhamnnappa
Lamzane & Anr.6 relied on by the High Court, did not assess future prospects.
However, that per se did not preclude claims by persons incurring permanent
disablement as a consequence of motor accidents, from seeking such heads of
compensation. It is urged that the High Court misread and created a distinct
category of cases where addition in income towards "future prospects" can only
be given in case of death, and not for injury, which cannot be the intention of
this court as no such observation is made. It was argued that the High Court
should have reassessed and not reduced 'the loss of future earning capacity' of
the appellant from ₹ 11,66,400/- (determined by the tribunal) to ₹ 7,77,600/- on
the wrongly depressed income of ₹ 8000/-. Learned counsel submitted that the
assessment of monthly income should have been Rs.12,000/- and not Rs.8,000/.
It was submitted that the courts below ignored the fact that in 2012, persons
earning Rs.12, 000/- per month did not have to file income tax returns or pay
tax. The High Court further erred in assessment of physical permanent disability
of injured as 45%, even though it was 100%.

5. Counsel for the insurer, who contested the appeal, urged this court not to
interfere with the impugned judgment, and stated that the assessment of
compensation was made by the High Court in conformity with this Court’s
decisions. It was highlighted that permanent disability of loss of one arm,

5
Supra n.3
6
2018 (9) SCC 450
 5

cannot lead to loss of earning capacity of up to 90% and consequently, the

assessment of compensation on the head of loss of earning capacity was
correctly fixed at 45%. He also argued that as far as income is concerned,
although the appellant relied on the independent testimony of a lawyer (who
stated that he used to pay him about ₹ 300/- per day), there was no proof of
payment of income tax to support the claim that the appellant earned ₹ 12,000/-
per month. The production of the PAN card ipso facto did not establish income
at the level claimed. Further, the counsel urged that the impugned judgment
correctly appreciated the law, and loss of alleged future earning capacity was
turned down.

6. The principle consistently followed by this court in assessing motor

vehicle compensation claims, is to place the victim in as near a position as she
or he was in before the accident, with other compensatory directions for loss of
amenities and other payments. These general principles have been stated and
reiterated in several decisions.7

7. Two questions arise for consideration: one, whether in cases of

permanent disablement incurred as a result of a motor accident, the claimant can
seek, apart from compensation for future loss of income, amounts for future

7
Govind Yadav v. New India Insurance Co. Ltd. [Govind Yadav v. New India Insurance Co. Ltd., (2011)
10 SCC 683. This court referred to the pronouncements in R.D. Hattangadi v. Pest Control (India) (P) Ltd.,
(1995) 1 SCC 551; Nizam's Institute of Medical Sciences v. Prasanth S. Dhananka (2009) 6 SCC
1; Reshma Kumari v. Madan Mohan (2009) 13 SCC 422; Raj Kumar v. Ajay Kumar, (2011) 1 SCC 343.
Govind Yadav spelt out these principles by stating that the courts should,
“in determining the quantum of compensation payable to the victims of accident, who are
disabled either permanently or temporarily. If the victim of the accident suffers permanent
disability, then efforts should always be made to award adequate compensation not only for the
physical injury and treatment, but also for the loss of earning and his inability to lead a normal
life and enjoy amenities, which he would have enjoyed but for the disability caused due to the
accident.”

These decisions were also followed in ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty,
(2018) 3 SCC 686.
 6

prospects too; and two, the extent of disability. On the first question, the High
Court no doubt, is technically correct in holding that Pranay Sethi8 involved
assessment of compensation in a case where the victim died. However, it went
wrong in saying that later, the three-judge bench decision in Jagdish9 was not
binding, but rather that the subsequent decision in Anant10 to the extent that it
did not award compensation for future prospects, was binding. This court is of
the opinion that there was no justification for the High Court to have read the
previous rulings of this court, to exclude the possibility of compensation for
future prospects in accident cases involving serious injuries resulting in
permanent disablement. Such a narrow reading of Pranay Sethi11 is illogical,
because it denies altogether the possibility of the living victim progressing
further in life in accident cases - and admits such possibility of future prospects,
in case of the victim’s death.

8. This court has emphasized time and again that “just compensation”
should include all elements that would go to place the victim in as near a
position as she or he was in, before the occurrence of the accident. Whilst no
amount of money or other material compensation can erase the trauma, pain
and suffering that a victim undergoes after a serious accident, (or replace the
loss of a loved one), monetary compensation is the manner known to law,
whereby society assures some measure of restitution to those who survive, and
the victims who have to face their lives. In Santosh Devi v. National Insurance
Company Limited12, this Court held that:

8
Supra n.2
9
Supra n.3
10
Supra n.6
11
Supra n.2
12
(2012) 6 SCC 421
 7

“14. We find it extremely difficult to fathom any rationale for the

observation made in paragraph 24 of the judgment in Sarla
Verma's case that where the deceased was self-employed or was
on a fixed salary without provision for annual increment, etc.,
the Courts will usually take only the actual income at the time of
death and a departure from this rule should be made only in rare
and exceptional cases involving special circumstances. In our
view, it will be nave to say that the wages or total
emoluments/income of a person who is self-employed or who is
employed on a fixed salary without provision for annual
increment, etc., would remain the same throughout his life.

15. The rise in the cost of living affects everyone across the
board. It does not make any distinction between rich and poor.
As a matter of fact, the effect of rise in prices which directly
impacts the cost of living is minimal on the rich and maximum on
those who are self-employed or who get fixed
income/emoluments. They are the worst affected people.
Therefore, they put extra efforts to generate additional income
necessary for sustaining their families.

16. The salaries of those employed under the Central and State
Governments and their agencies/instrumentalities have been
revised from time to time to provide a cushion against the rising
prices and provisions have been made for providing security to
the families of the deceased employees. The salaries of those
employed in private sectors have also increased manifold. Till
about two decades ago, nobody could have imagined that salary
of Class IV employee of the Government would be in five figures
and total emoluments of those in higher echelons of service will
cross the figure of rupees one lac.

17. Although, the wages/income of those employed in

unorganized sectors has not registered a corresponding increase
and has not kept pace with the increase in the salaries of the
Government employees and those employed in private sectors but
it cannot be denied that there has been incremental enhancement
in the income of those who are self-employed and even those
engaged on daily basis, monthly basis or even seasonal basis. We
can take judicial notice of the fact that with a view to meet the
challenges posed by high cost of living, the persons falling in the
 8

latter category periodically increase the cost of their labour. In

this context, it may be useful to give an example of a tailor who
earns his livelihood by stitching cloths. If the cost of living
increases and the prices of essentials go up, it is but natural for
him to increase the cost of his labour. So will be the cases of
ordinary skilled and unskilled labour, like, barber, blacksmith,
cobbler, mason etc.

18. Therefore, we do not think that while making the

observations in the last three lines of paragraph 24 of Sarla
Verma's judgment, the Court had intended to lay down an
absolute rule that there will be no addition in the income of a
person who is self-employed or who is paid fixed wages. Rather,
it would be reasonable to say that a person who is self-employed
or is engaged on fixed wages will also get 30 per cent increase in
his total income over a period of time and if he / she becomes
victim of accident then the same formula deserves to be applied
for calculating the amount of compensation.”

9. In Jagdish13 the victim, a carpenter, suffered permanent disablement, and

his claim for compensation including for loss of future prospects was
considered by a three-judge bench (which included, incidentally, the judges who
had decided Pranay Sethi14). This court held that:

“13. In the judgment of the Constitution Bench in Pranay

Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16
SCC 680], this Court has held that the benefit of future prospects
should not be confined only to those who have a permanent job
and would extend to self-employed individuals. In the case of a
self-employed person, an addition of 40% of the established
income should be made where the age of the victim at the time of
the accident was below 40 years. Hence, in the present case, the
appellant would be entitled to an enhancement of Rs 2400
towards loss of future prospects.

13
Supra.n.3
14
Supra n.2
 9

14. In making the computation in the present case, the court must
be mindful of the fact that the appellant has suffered a serious
disability in which he has suffered a loss of the use of both his
hands. For a person engaged in manual activities, it requires no
stretch of imagination to understand that a loss of hands is a
complete deprivation of the ability to earn. Nothing—at least in
the facts of this case—can restore lost hands. But the measure of
compensation must reflect a genuine attempt of the law to restore
the dignity of the being. Our yardsticks of compensation should
not be so abysmal as to lead one to question whether our law
values human life. If it does, as it must, it must provide a realistic
recompense for the pain of loss and the trauma of suffering.
Awards of compensation are not law's doles. In a discourse of
rights, they constitute entitlements under law. Our conversations
about law must shift from a paternalistic subordination of the
individual to an assertion of enforceable rights as intrinsic to
human dignity.

15. The Tribunal has noted that the appellant is unable to even
eat or to attend to a visit to the toilet without the assistance of an
attendant. In this background, it would be a denial of justice to
compute the disability at 90%. The disability is indeed total.
Having regard to the age of the appellant, the Tribunal applied a
multiplier of 18. In the circumstances, the compensation payable
to the appellant on account of the loss of income, including
future prospects, would be Rs 18, 14,400. In addition to this
amount, the appellant should be granted an amount of Rs 2 lakhs
on account of pain, suffering and loss of amenities. The amount
awarded by the Tribunal towards medical expenses (Rs 98,908);
for extra nourishment (Rs 25,000) and for attendant's expenses
(Rs 1 lakh) is maintained. The Tribunal has declined to award
any amount towards future treatment. The appellant should be
allowed an amount of Rs 3 lakhs towards future medical
expenses. The appellant is thus awarded a total sum of Rs
25,38,308 by way of compensation. The appellant would be
entitled to interest at the rate of 9% p.a. on the compensation
from the date of the filing of the claim petition. The liability to
pay compensation has been fastened by the Tribunal and by the
High Court on the insurer, owner and driver jointly and
severally which is affirmed. The amount shall be deposited
before the Tribunal within a period of 6 weeks from today and
shall be paid over to the appellant upon proper identification.”
 10

10. The recent decision in Parminder Singh v. New India Assurance Co.
Ltd15, involved an accident victim who underwent surgery for hemiplegia16.
According to the treating medic, he could not work as a labourer or perform any
agricultural work, or work as a driver (as he was wont to); the assessment of his
disability was at 75%, and of a permanent nature. The court held that:

“5.2. On the basis of the affidavit filed by the employer of the

appellant, we accept that the income of the appellant was Rs
10,000 p.m. at the time of the accident, for the purpose of
computing the compensation payable to him.

5.1. The appellant has however, produced an affidavit by his

employer in this Court. As per the said affidavit, the appellant
was earning Rs 10,000 p.m. at the time of the accident.

5.3. Taking the income of the appellant as Rs 10,000 p.m., with

future prospects @ 50% as awarded by the High Court, the total
income of the appellant would come to Rs 15,000 p.m.

5.4. The appellant was 23 years old at the time when the accident
occurred. Applying the multiplier of 18, the loss of future
earnings suffered by the appellant would work out to Rs 15,000
× 12 × 18 = Rs 32,40,000.

********* ********* **********

5.7. In K. Suresh v. New India Assurance Co. Ltd (2012) 12 SCC

274, this Court held that17:

“10. It is noteworthy to state that an adjudicating

authority, while determining the quantum of
compensation, has to keep in view the sufferings of the
injured person which would include his inability to lead a
full life, his incapacity to enjoy the normal amenities
which he would have enjoyed but for the injuries and his
ability to earn as much as he used to earn or could have

15
(2019) 7 SCC 217
16
Weakness of one half of the body on the left side; in this case, caused by an accident.
17
at page 279, para 10
 11

earned. Hence, while computing compensation the

approach of the Tribunal or a court has to be broad-
based. Needless to say, it would involve some guesswork
as there cannot be any mathematical exactitude or a
precise formula to determine the quantum of
compensation. In determination of compensation the
fundamental criterion of “just compensation” should be
inhered.”

******** ********* ********

5.9. In the present case, it is an admitted position that it is not

possible for the appellant to get employed as a driver, or do any
kind of manual labour, or engage in any agricultural operations
whatsoever, for his sustenance. In such circumstances, the High
Court has rightly assessed the appellant's functional disability at
100% insofar as his loss of earning capacity is concerned. The
appellant is, therefore, awarded Rs 32,40,000 towards loss of
earning capacity.”

11. Yet later and more recently in an accident case, which tragically left in its
wake a young girl in a life-long state of paraplegia, this court, in Kajal v.
Jagdish Chand,18 reiterated that in addition to loss of earnings, compensation
for future prospects too could be factored in, and observed that:
“14. In Concord of India Insurance Co. Ltd. v. Nirmala Devi [Concord
of India Insurance Co. Ltd. v. Nirmala Devi, (1979) 4 SCC 365 : 1979
SCC (Cri) 996 : 1980 ACJ 55] , this Court held : (SCC p. 366, para 2)

“2. … the determination of the quantum must be liberal, not

niggardly since the law values life and limb in a free country
in generous scales.”

15. In R.D. Hattangadi v. Pest Control (India) (P) Ltd. [R.D.

Hattangadi v. Pest Control (India) (P) Ltd., (1995) 1 SCC 551 : 1995
SCC (Cri) 250] , dealing with the different heads of compensation in
injury cases this Court held thus : (SCC p. 556, para 9)

18
(2020) 4 SCC 413.
 12

“9. Broadly speaking while fixing the amount of

compensation payable to a victim of an accident, the
damages have to be assessed separately as pecuniary
damages and special damages. Pecuniary damages are those
which the victim has actually incurred and which are capable
of being calculated in terms of money; whereas non-
pecuniary damages are those which are incapable of being
assessed by arithmetical calculations. In order to appreciate
two concepts pecuniary damages may include expenses
incurred by the claimant: (i) medical attendance; (ii) loss of
earning of profit up to the date of trial; (iii) other material
loss. So far as non-pecuniary damages are concerned, they
may include : (i) damages for mental and physical shock,
pain and suffering, already suffered or likely to be suffered in
the future; (ii) damages to compensate for the loss of
amenities of life which may include a variety of matters i.e.
on account of injury the claimant may not be able to walk,
run or sit; (iii) damages for loss of expectation of life i.e. on
account of injury the normal longevity of the person
concerned is shortened; (iv) inconvenience, hardship,
discomfort, disappointment, frustration and mental stress in
life.”

16. In Raj Kumar v. Ajay Kumar [Raj Kumar v. Ajay Kumar, (2011) 1
SCC 343 : (2011) 1 SCC (Civ) 164 : (2011) 1 SCC (Cri) 1161] , this
Court laid down the heads under which compensation is to be awarded
for personal injuries : (SCC p. 348, para 6)

“6. The heads under which compensation is awarded in

personal injury cases are the following:

Pecuniary damages (Special damages)

(i) Expenses relating to treatment, hospitalisation, medicines,
transportation, nourishing food, and miscellaneous
expenditure.
(ii) Loss of earnings (and other gains) which the injured would
have made had he not been injured, comprising:
(a) Loss of earning during the period of treatment;
(b) Loss of future earnings on account of permanent disability.
(iii) Future medical expenses.
Non-pecuniary damages (General damages)
 13

(iv) Damages for pain, suffering and trauma as a consequence

of the injuries.
(v) Loss of amenities (and/or loss of prospects of marriage).
(vi) Loss of expectation of life (shortening of normal
longevity).
In routine personal injury cases, compensation will be
awarded only under heads (i), (ii)(a) and (iv). It is only in
serious cases of injury, where there is specific medical
evidence corroborating the evidence of the claimant, that
compensation will be granted under any of the heads (ii)(b),
(iii), (v) and (vi) relating to loss of future earnings on account
of permanent disability, future medical expenses, loss of
amenities (and/or loss of prospects of marriage) and loss of
expectation of life.”

17. In K. Suresh v. New India Assurance Co. Ltd. [K. Suresh v. New
India Assurance Co. Ltd., (2012) 12 SCC 274 : (2013) 2 SCC (Civ)
279 : (2013) 4 SCC (Cri) 638] , this Court held as follows : (SCC p.
276, para 2)

“2. … There cannot be actual compensation for anguish of the

heart or for mental tribulations. The quintessentiality lies in the
pragmatic computation of the loss sustained which has to be in the
realm of realistic approximation. Therefore, Section 168 of the
Motor Vehicles Act, 1988 (for brevity “the Act”) stipulates that
there should be grant of “just compensation”. Thus, it becomes a
challenge for a court of law to determine “just compensation”
which is neither a bonanza nor a windfall, and simultaneously,
should not be a pittance.”

******* ******** *********

Loss of earnings

20. Both the courts below have held that since the girl was a young
child of 12 years only notional income of Rs 15,000 p.a. can be taken
into consideration. We do not think this is a proper way of assessing
the future loss of income. This young girl after studying could have
worked and would have earned much more than Rs 15,000 p.a. Each
case has to be decided on its own evidence but taking notional
income to be Rs 15,000 p.a. is not at all justified. The appellant has
placed before us material to show that the minimum wages payable
 14

to a skilled workman is Rs 4846 per month. In our opinion, this

would be the minimum amount which she would have earned on
becoming a major. Adding 40% for the future prospects, it works to
be Rs 6784.40 per month i.e. 81,412.80 p.a. Applying the multiplier
of 18, it works out to Rs 14,65,430.40, which is rounded off to Rs
14,66,000.”

12. In view of the above decisive rulings of this court, the High Court clearly
erred in holding that compensation for loss of future prospects could not be
awarded. In addition to loss of future earnings (based on a determination of the
income at the time of accident), the appellant is also entitled to compensation
for loss of future prospects, @ 40% (following the Pranay Sethi principle).
13. The factual narrative discloses that the appellant, a 20-year-old data entry
operator (who had studied up to 12th standard) incurred permanent disability, i.e.
loss of his right hand (which was amputated). The disability was assessed to be
89%. However, the tribunal and the High Court re-assessed the disability to be
only 45%, on the assumption that the assessment for compensation was to be on
a different basis, as the injury entailed loss of only one arm. This approach, in
the opinion of this court, is completely mechanical and entirely ignores realities.
Whilst it is true that assessment of injury of one limb or to one part may not
entail permanent injury to the whole body, the inquiry which the court has to
conduct is the resultant loss which the injury entails to the earning or income
generating capacity of the claimant. Thus, loss of one leg to someone carrying
on a vocation such as driving or something that entails walking or constant
mobility, results in severe income generating impairment or its extinguishment
altogether. Likewise, for one involved in a job like a carpenter or hairdresser, or
machinist, and an experienced one at that, loss of an arm, (more so a functional
arm) leads to near extinction of income generation. If the age of the victim is
beyond 40, the scope of rehabilitation too diminishes. These individual factors
are of crucial importance which are to be borne in mind while determining the
 15

extent of permanent disablement, for the purpose of assessment of loss of

earning capacity.
14. In Neerupam Mohan Mathur v. New India Assurance Company19, this
court considered the case of a victim, whose injury was assessed to 70% as loss
of earning capacity for amputation of the arm; he was a postgraduate diploma
holder in mechanical engineering, 32 years of age and earning about ₹ 3000/-
per month. This court held, approving the High Court’s order (which had
adopted the formula from the Workmen’s Compensation Act, to determine 70%
for the purpose of deciding loss of earning capacity) as follows:
“12. In the present case, the percentage of permanent disability
has not been expressed by the doctors with reference to the full
body or with reference to a particular limb. However, it is not in
dispute that the claimant suffered such a permanent disability as
a result of injuries that he is not in a position of doing the
specialised job of designing, refrigeration and air conditioning.
For the said reason, the claimant's services were terminated by
his employer but that does not mean that the claimant is not
capable to do any other job including the desk job. Having
qualification of BSc degree and postgraduate diploma in
Mechanical Engineering, he can perform any job where
application of mind is required than any physical work.

13. In view of the forgoing discussion we find no grounds made

out to interfere with the finding of the High Court which
determined the percentage of loss of earning capacity to 70%
adopting the percentage of loss of earning capacity as per the
Workmen's Compensation Act. The total loss of income was thus
rightly calculated by the High Court at Rs 6, 04,800.”

15. Later, in another judgment, i.e. Jakir Hussein v. Sabir20 this court had to
consider the correctness of a compensation assessment based on the High
Court’s analysis of the injury to the victim (a driver who suffered permanent
injury to his arm, impairing movement as well as the wrist, which rendered him

19
(2013) 14 SCC 15
20
(2015) 7 SCC 252
 16

incapable of driving any vehicle). The High Court had assessed permanent
disablement at 30% though the doctor had certified it to be 55%. This court,
reversing the High Court order, observed inter alia that:
“… Due to this injury, the doctor has stated that the appellant had
great difficulty to move his shoulder, wrist and elbow and pus was
coming out of the injury even two years after the accident and the
treatment was taken by him. The doctor further stated in his evidence
that the appellant got delayed joined fracture in the humerus bone of
his right hand with wiring and nailing and that he had suffered 55%
disability and cannot drive any motor vehicle in future due to the
same. He was once again operated upon during the pendency of the
appeal before the High Court and he was hospitalised for 10 days.
The appellant was present in person in the High Court and it was
observed and noticed by the High Court that the right hand of the
appellant was completely crushed and deformed. In view of the
doctor's evidence in this case, the Tribunal and the High Court have
erroneously taken the extent of permanent disability at 30% and
55%, respectively for the calculation of amount towards the loss of
future earning capacity. No doubt, the doctor has assessed the
permanent disability of the appellant at 55%. However, it is
important to consider the relevant fact, namely, that the appellant is
a driver and driving the motor vehicle is the only means of livelihood
for himself as well as the members of his family. Further, it is very
crucial to note that the High Court has clearly observed that his
right hand was completely crushed and deformed.

********* ********* **********

16. In Raj Kumar v. Ajay Kumar [(2011) 1 SCC 343, this Court
specifically gave the illustration of a driver who has permanent
disablement of hand and stated that the loss of future earnings
capacity would be virtually 100%. Therefore, clearly when it comes
to loss of earning due to permanent disability, the same may be
treated as 100% loss caused to the appellant since he will never be
able to work as a driver again. The contention of the respondent
Insurance Company that the appellant could take up any other
alternative employment is no justification to avoid their vicarious
liability. Hence, the loss of earning is determined by us at Rs 54,000
per annum. Thus, by applying the appropriate multiplier as per the
principles laid down by this Court in Sarla Verma v. DTC [(2009) 6
SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] , the
 17

total loss of future earnings of the appellant will be at Rs 54,000 ×

16 = Rs 8,64,000.”

16. Recently, in Anthony Alias Anthony Swamy v. Managing Director,

K.S.R.T.C21 where the victim was a painter by profession, a three-judge bench
had followed Raj Kumar v. Ajay Kumar22 and Nagarajappa v. Divisional
Manager, Oriental Insurance Company Limited23. The High Court had assessed
the injury to be 25% permanent disability, although the treating doctor had said
that the injury incurred by the bus passenger (who was earning ₹ 9000/- per
month) was 75% of the left leg and 37.5% for the whole body. In Raj Kumar24,
the physical disability of the upper limb was determined as 68% in proportion to
22-23% of the whole-body. The High Court had assessed the injury as 25% and
granted compensation. However, this court assessed the injury on the basis that
the disability was 75%, stating as follows:

“9. PW.3 had assessed the physical functional disability of the left
leg of the appellant at 75% and total body disability at 37.5%. The
High Court has considered it proper to assess the
physical disability at 25% of the whole body only. There is no
discussion for this reduction in percentage, much less any
consideration of the nature of
permanent functional disability suffered by the appellant. The extent
of physical functional disability, in the facts of the case has to be
considered in a manner so as to grant just and proper compensation
to the appellant towards loss of future earning. The earning capacity
of the appellant as on the date of the accident stands completely
negated and not reduced. He has been rendered permanently
incapable of working as a painter or do any manual work.
Compensation for loss of future earning, therefore has to be proper
and just to enable him to live a life of dignity and not compensation
which is elusive. If the 75% physical disability has rendered the
appellant permanently disabled from pursuing his normal vocation

21
(2020) SCC OnLine SC 493.
22
(2011) 1 SCC 343
23
(2011) 13 SCC 323.
24
Supra n.22
 18

or any similar work, it is difficult to comprehend the grant of

compensation to him in ratio to the disability to the whole body. The
appellant is therefore held entitled to compensation for loss of future
earning based on his 75% permanent physical
functional disability recalculated with the salary of Rs. 5,500/- with
multiplier of 14 at Rs. 6,93,000/-.”
17. The question of amount of compensation payable to one suffering injury
as a result of motor vehicle accident was considered in Syed Sadiq & Ors. v.
25
Divisional Manager, United Insurance Company Limited , when this Court
had to apply the correct standard for awarding compensation for loss of future
prospects for a vegetable vendor, whose right leg had to be amputated, as a
result of a motor accident. The High Court had considered the disability to be
65%. This court held as follows:

“7. Further, the appellant claims that he was working as a vegetable

vendor. It is true that a vegetable vendor might not require mobility
to the extent that he sells vegetables at one place. However, the
occupation of vegetable vending is not confined to selling vegetables
from a particular location. It rather involves procuring vegetables
from the whole-sale market or the farmers and then selling it off in
the retail market. This often involves selling vegetables in the cart
which requires 100% mobility. But even by conservative approach, if
we presume that the vegetable vending by the appellant/claimant
involved selling vegetables from one place, the claimant would
require assistance with his mobility in bringing vegetables to the
market place which otherwise would be extremely difficult for him
with an amputated leg. We are required to be sensitive while dealing
with manual labour cases where loss of limb is often equivalent to
loss of livelihood. Yet, considering that the appellant/claimant is still
capable to fend for his livelihood once he is brought in the market
place, we determine the disability at 85% to determine the loss of
income.

8. The appellant/claimant in his appeal further claimed that he had

been earning [pic]10,000/- p.m. by doing vegetable vending work.
The High Court however, considered the loss of income at
[pic]3500/- p.m. considering that the claimant did not produce any

25
(2014) 2 SCC 735
 19

document to establish his loss of income. It is difficult for us to

convince ourselves as to how a labour involved in an unorganized
sector doing his own business is expected to produce documents to
prove his monthly income.”

18. In Arvind Kumar Mishra v. New India Assurance Co. Ltd26, the appellant
at the time of accident was a final year engineering (Mechanical) degree student
in a reputed college. He was a brilliant student and had passed all his semester
examinations with distinction. He suffered grievous injuries and remained in a
coma for about two months; his studies were disrupted as he was moved to
different hospitals for surgeries. For many months, his condition remained
serious; his right hand was amputated and vision seriously affected. This court
accepted his claim and held that he was permanently disabled to the extent of
70%. In Mohan Soni v. Ram Avtar Tomar27 again a case of injury entailing loss
of a leg, the court held that medical evidence of the extent of disability should
not be mechanically scaled down:
“8. On hearing the counsel for the parties and on going through the
materials on record, we are of the view that both the Tribunal and
the High Court were in error in pegging down the disability of the
appellant to 50% with reference to Schedule I of the Workmen's
Compensation Act, 1923. In the context of loss of future earning, any
physical disability resulting from an accident has to be judged with
reference to the nature of work being performed by the person
suffering the disability. This is the basic premise and once that is
grasped, it clearly follows that the same injury or loss may affect two
different persons in different ways. Take the case of a marginal
farmer who does his cultivation work himself and ploughs his land
with his own two hands; or the puller of a cycle-rickshaw, one of the
main means of transport in hundreds of small towns all over the
country. The loss of one of the legs either to the marginal farmer or
the cycle-rickshaw-puller would be the end of the road insofar as
their earning capacity is concerned. But in case of a person engaged

26
(2010) 10 SCC 254
27
(2012) 2 SCC 267 at page 272
 20

in some kind of desk work in an office, the loss of a leg may not have
the same effect. The loss of a leg (or for that matter the loss of any
limb) to anyone is bound to have very traumatic effects on one's
personal, family or social life but the loss of one of the legs to a
person working in the office would not interfere with his
work/earning capacity in the same degree as in the case of a
marginal farmer or a cycle-rickshaw-puller.

********* ********* *********

10. This Court in K. Janardhan case [(2008) 8 SCC 518 : (2008) 2

SCC (L&S) 733] , set aside the High Court judgment and held
that the tanker driver had suffered 100% disability and
incapacity in earning his keep as a tanker driver as his right leg
was amputated from the knee and, accordingly, restored the
order passed by the Commissioner of Workmen's Compensation.
In K. Janardhan [(2008) 8 SCC 518 : (2008) 2 SCC (L&S) 733]
this Court also referred to and relied upon an earlier decision of
the Court in Pratap Narain Singh Deo v. Srinivas Sabata [(1976)
1 SCC 289 : 1976 SCC (L&S) 52] in which a carpenter who
suffered an amputation of his left arm from the elbow was held to
have suffered complete loss of his earning capacity.

******** ********* ********

13. Any scaling down of the compensation should require

something more tangible than a hypothetical conjecture that
notwithstanding the disability, the victim could make up for the
loss of income by changing his vocation or by adopting another
means of livelihood. The party advocating for a lower amount of
compensation for that reason must plead and show before the
Tribunal that the victim enjoyed some legal protection (as in the
case of persons covered by the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act,
1995) or in case of the vast multitude who earn their livelihood
in the unorganised sector by leading cogent evidence that the
victim had in fact changed his vocation or the means of his
livelihood and by virtue of such change he was deriving a certain
income.

14. The loss of earning capacity of the appellant, according to

us, may be as high as 100% but in no case it would be less than
 21

90%. We, accordingly, find and hold that the compensation for
the loss of the appellant's future earnings must be computed on
that basis. On calculation on that basis, the amount of
compensation would come to Rs 3,56,400 and after addition of a
sum of Rs 30,000 and Rs 15,000 the total amount would be Rs
4,01,400. The additional compensation amount would carry
interest at the rate of 9% per annum from the date of filing of the
claim petition till the date of payment. The additional amount of
compensation along with interest should be paid to the appellant
without delay and not later than three months from today.”

19. One more decision, Sandeep Khanduja v. Atul Dande28 too had dealt with
the precise aspect of assessing the quantum of permanent disablement. The
victim was aged about 30 years, working as a chartered accountant for various
institutions for which he was paid professional fees. The injuries suffered by
him resulted in severe impairment of movement; he had problems in climbing
stairs, back trouble while sleeping, etc. A rod was implanted in his leg. He
suffered 70% permanent disability, and mental and physical agony. This court
enhanced the compensation, observing the proper manner to calculate the extent
of disability:

“9. The percentage of permanent disability is expressed by the

doctors with reference to the whole body, or more often than not,
with reference to a particular limb. When a disability certificate
states that the injured has suffered permanent disability to an
extent of 45% of the left lower limb, it is not the same as 45%
permanent disability with reference to the whole body. The extent
of disability of a limb (or part of the body) expressed in terms of
a percentage of the total functions of that limb, obviously cannot
be assumed to be the extent of disability of the whole body. If
there is 60% permanent disability of the right hand and 80%
permanent disability of left leg, it does not mean that the extent
of permanent disability with reference to the whole body is 140%
(that is 80% plus 60%). If different parts of the body have
suffered different percentages of disabilities, the sum total

28
2017 (3) SCC 351
 22

thereof expressed in terms of the permanent disability with

reference to the whole body cannot obviously exceed 100%.

10. 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 capacity to
the extent (percentage) of permanent disability will result in
award of either too low or too high a compensation.

11. 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.” The crucial factor which has to be taken into
consideration, thus, is to assess as to whether the permanent
disability has any adverse effect on the earning capacity of the
injured. In this sense, the MACT approached the issue in right
direction by taking into consideration the aforesaid test.
However, we feel that the conclusion of the MACT, on the
application of the aforesaid test, is erroneous. A very myopic
view is taken by the MACT in taking the view that 70%
permanent disability suffered by the appellant would not impact
 23

the earning capacity of the appellant.… A person who is engaged

and cannot freely move to attend to his duties may not be able to
match the earning in comparison with the one who is healthy and
bodily abled. Movements of the appellant have been restricted to
a large extent and that too at a young age. Though the High
Court recognised this, it did not go forward to apply the
principle of multiplier. We are of the opinion that in a case like
this and having regard to the injuries suffered by the appellant,
there is a definite loss of earning capacity and it calls for grant
of compensation with the adoption of multiplier method, as held
by this Court in Yadava Kumar v Divisional Manager, National
Insurance Co. Ltd [2010 (10) SCC 341]:

“9. We do not intend to review in detail state of

authorities in relation to assessment of all damages for
personal injury. Suffice it to say that the basis of
assessment of all damages for personal injury is
compensation. The whole idea is to put the claimant in the
same position as he was insofar as money can. Perfect
compensation is hardly possible but one has to keep in
mind that the victim has done no wrong; he has suffered
at the hands of the wrongdoer and the court must take
care to give him full and fair compensation for that he had
suffered.
10. In some cases for personal injury, the claim could be
in respect of lifetime's earnings lost because, though he
will live, he cannot earn his living. In others, the claim
may be made for partial loss of earnings. Each case has
to be considered in the light of its own facts and at the
end, one must ask whether the sum awarded is a fair and
reasonable sum. The conventional basis of assessing
compensation in personal injury cases—and that is now
recognised mode as to the proper measure of
compensation—is taking an appropriate multiplier of an
appropriate multiplicand.” In that case, after following
the judgment in Kerala SRTC v. Susamma Thomas (1994)
2 SCC 176, the Court chose to apply multiplier of 18
keeping in view the age of the victim, who as 25 years at
the time of the accident.

In the instant case, the MACT had quantified the income of the
appellant at ₹10,000, i.e. ₹1,20,000 per annum. Going by the age
of the appellant at the time of the accident, multiplier of 17
 24

would be admissible. Keeping in view that the permanent

disability is 70%, the compensation under this head would be
worked out at ₹14,28,000. The MACT had awarded
compensation of ₹70,000 for permanent disability, which stands
enhanced to ₹14,28,000. For mental and physical agony and
frustration and disappointment towards life, the MACT has
awarded a sum of ₹30,000, which we enhance to ₹1,30,000.”

20. Courts should not adopt a stereotypical or myopic approach, but instead,
view the matter taking into account the realities of life, both in the assessment
of the extent of disabilities, and compensation under various heads. In the
present case, the loss of an arm, in the opinion of the court, resulted in severe
income earning impairment upon the appellant. As a typist/data entry operator,
full functioning of his hands was essential to his livelihood. The extent of his
permanent disablement was assessed at 89%; however, the High Court halved it
to 45% on an entirely wrong application of some ‘proportionate’ principle,
which was illogical and is unsupportable in law. What is to be seen, as
emphasized by decision after decision, is the impact of the injury upon the
income generating capacity of the victim. The loss of a limb (a leg or arm) and
its severity on that account is to be judged in relation to the profession, vocation
or business of the victim; there cannot be a blind arithmetic formula for ready
application. On an overview of the principles outlined in the previous decisions,
it is apparent that the income generating capacity of the appellant was
undoubtedly severely affected. Maybe, it is not to the extent of 89%, given that
he still has the use of one arm, is young and as yet, hopefully training (and
rehabilitating) himself adequately for some other calling. Nevertheless, the
assessment of disability cannot be 45%; it is assessed at 65% in the
circumstances of this case.

21. This court is also of the opinion that the courts below needlessly
discounted the evidence presented by the appellant in respect of the income
earned by him. Working in the informal sector as he did, i.e. as a typist/data
 25

entry operator in court premises in Delhi, his assertion about earning ₹12,000/-
could not be discarded substantially, to the extent of bringing it down to ₹
8,000/- per month. Such self employed professionals, it is noticeable, were not
obliged to file income tax returns for AY 2011-2012, when no levy existed for
anyone earning less than ₹ 1,60,000/- per annum.29 The advocate who deposed
about the earnings of the appellant was believed to the extent that the tribunal
fixed the appellant’s monthly earnings at ₹ 8,000/-. If one takes into account
contemporary minimum wages for skilled workers (which was in the range of ₹
8,500/-) the realistic figure would be ₹10,000/- per month. Adding future
prospects at 40%30, the income should be taken as ₹14,000 for the purpose of
calculation of compensation. Accordingly, this court finds that the
compensation payable for the disability of loss of an arm (assessed at 65%)
would be ₹19,65,600/- (i.e., ₹ 14,000/- x 12 x 65% x 18) or Rupees Nineteen
lakhs sixty five thousand six hundred only.

22. In parting, it needs to be underlined that Courts should be mindful that a

serious injury not only permanently imposes physical limitations and disabilities
but too often inflicts deep mental and emotional scars upon the victim. The
attendant trauma of the victim’s having to live in a world entirely different from
the one she or he is born into, as an invalid, and with degrees of dependence on
others, robbed of complete personal choice or autonomy, should forever be in
the judge's mind, whenever tasked to adjudge compensation claims. Severe
limitations inflicted due to such injuries undermine the dignity (which is now
recognized as an intrinsic component of the right to life under Article 21) of the
individual, thus depriving the person of the essence of the right to a wholesome
life which she or he had lived, hitherto. From the world of the able bodied, the
victim is thrust into the world of the disabled, itself most discomfiting and

29 First Schedule, Finance Act, 2011.

30 By applying the ratio in Pranay Sethi.
 26

unsettling. If courts nit-pick and award niggardly amounts oblivious of these

circumstances, there is resultant affront to the injured victim.

23. The High Court’s assessment of amounts payable under other heads (such
as compensation for medical expenses, compensation for pain and suffering,
compensation for special diet and attendant, conveyance charges, loss of
amenities and enjoyment of life, disfigurement and loss of income during
treatment), do not call for interference. In view of the above conclusions, the
impugned judgment is hereby modified; the sum of ₹19,65,600/- shall be
substituted in place of the amount of ₹7,77,600/-, considering the enhancement
towards loss of earning capacity and future prospects.

24. The appeal is partly allowed; the impugned judgment stands modified in
the above terms. There shall be no order on costs.

.....................................................J
[L. NAGESWARA RAO]

.....................................................J
[KRISHNA MURARI]

.....................................................J
[S. RAVINDRA BHAT]

New Delhi,
September 17, 2020.