Motor Accident Compensation: Claimant Entitled To Future Loss Of Income Proportionate To Extent Of Disability Though There Is No Total Loss Of Income - Bombay High Court

The Bombay High Court was hearing an appeal from an impugned judgement of the Motor Accidents Claims Tribunal, Palghar which had awarded a lump sum compensation of Rs.50,000 to the appellant-original claimant for 20% permanent disability suffered during an motor accident.

The tribunal in its impugned judgment and award dated 25th October, 2010 had awarded total compensation of Rs.70,000/-, comprising Rs.20,000/- towards medical expenses and Rs.50,000/- towards the disability suffered by the applicant.

While considering whether the Tribunal was justified in awarding a lump sum compensation of Rs.50,000, the judgement authored by Justice N.J Jamadar observes that under Section 166 of the MV Act, 1988 the courts are statutorily enjoined to award a "just" compensation:

"A compensation can be said to be "just" if it has the element of restoring the claimant to the position prior to the accident, albeit to the extent possible, in full measure. The tribunals and the Courts are expected to be alive to the fact that a person is not only to be compensated for the physical injury but also for the loss, which such injury entails, namely, inability to earn as much as the injured used to earn or could have earned, inability to lead the life to the fullest and not in the least the inability to enjoy the usual amenities and joys which the life offers." (Para 8)

The Court further explains that in order to remove the element of subjectivity and arbitrariness in determining "just" compensation, courts have laid down that compensation in personal injury cases are determined under two broad categories of pecuniary damages and non-pecuniary damages.

"The Supreme Court in the case of Rajkumar V. Ajay Kumar and Anr. (supra) wherein the heads of pecuniary and non pecuniary damages were categorized by the Supreme Court as under :- " 5. 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 earning (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 earning on account of permanent disability (iii) Future medical expenses Non pecuniary damages (General damages) (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 expectation of life (shortening of normal longevity)." (Para 9)

In this light, the Court notes that the Tribunal awarded lump sum compensation without delving into the aspects of the head under which the applicant would be entitled to claim compensation. The Court further notes that in the present case, the applicant would be entitled to claim compensation under two categories- expenses relating to treatment, etc and loss of future earning on account of permanent disability.

Loss of Future Earning

The Tribunal in its impugned order had arrived at the conclusion that there was no loss of income reported as the applicant could earn for the substantial part of the year. To the contrary, the High Court observed that while determining the compensation that applicant would be entitled to on account of loss of future earnings, even if applicant has not suffered total loss of income due to permanent disability suffered by the applicant, he would entitled to proportional of notional income corresponding to the extent of his disability. It notes:

"It is true that the applicant did not claim that he suffered total loss of income. Nor the applicant claimed that he was incapacitated to perform any work. In the face of the material on record to indicate that the applicant had filed income tax return for the financial year 1996-97, it could not have been disputed that the applicant was gainfully self employed. In such circumstances, even assuming the notional income at Rs.5,000/- per month, the 20% permanent disability suffered by the applicant, would have entailed, in the minimum, corresponding 20% loss of income, resulting in the loss of Rs.12,000/- per annum. Once, the annual loss of income is determined, the appropriate method to arrive at just compensation is multiplying the said multiplicand with appropriate multiplier." (Para 16)

Further, the Court observes that the method to arrive at just compensation would be the multiplier method as upheld by the Supreme Court in Sandeep Khanuja v Atul Dande and Another and Sarla Verma & Ors v Delhi Transport Corporaiton and Another. Accounting for the loss of income and other non-pecuniary losses, the High Court in its judgement revised the compensation from Rs.50,000 as was given in the impugned judgement to Rs.2,70,000.

Case Title: Hareshwar Harishchandra Mistry v Pravin B. Nayak

Coram: Justice N.J.Jamdar

Citation : 2022 LiveLaw (Bom) 19

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