Motor Accident Claims| Guidelines Of State Legal Services Authority On Disability Compensation Not Binding On HC/MACT : Supreme Court

The Supreme Court observed that the guidelines issued by the State Legal Services Authority for deciding the disability compensation in motor accident claims ought not to be made applicable for determining just and reasonable compensation in the cases where the proof of earning has been brought on record.

The Court said that the guidelines issued by the Legal Services Authority would be made applicable where the proof of earning is not available and to settle such disputes in Lok Adalat. Even in the absence of evidence regarding earning, the guidelines of the Legal Services Authority are not binding on the High Court and the Supreme Court and can be used only for guidance, the Supreme Court added.

It was a case where the appellant suffered 63% permanent disabilities involving partial paralysis, difficulty in moving, speaking, writing, and doing work by hand, etc. A claim awarded by the Motor Accident Claim Tribunal ("MACT") to the appellant was reduced by the High Court relying on the guidelines issued by the Rajasthan State Legal Services Authority. MACT awarded compensation amounting to ₹15,51,000/- accepting annual earnings of ₹1,00,000/- relying upon the Income Tax returns, however, the High Court reduced the amount, and relied upon the guidelines of the Rajasthan State Legal Services Authority, in particular, clause 3 (d) thereof, and reduced the compensation to ₹7,35,000/- only.

Aggrieved by the High Court's decision, the appellant approached he Supreme Court.

Upon hearing the submissions canvassed by the parties, the bench comprising Justices J.K. Maheshwari and Sanjay Karol observed that the High Court committed an error by reducing the justified amount of compensation based on the guidelines issued by the State Legal Services Authority. The Court said the High Court misdirected itself while applying the said guidelines overlooking the fact that the appellant's proof of income was available. 

"Having considered the submissions and looking at the findings recorded by the High Court, it is required to be observed that the guidelines issued from time to time by the State Legal Services Authority were to ordinarily apply where the proof of earning is not available and to settle such disputes in Lok Adalat. It is also required to be observed that such guidelines ought not to be made applicable for determining just and reasonable compensation in the cases where the proof of earning has been brought on record.", the court observed.

"..henceforth, the guidelines, if any, issued by any of the State Legal Services Authority of the High Court would apply as guiding factor in the cases where the proof of income is not available and ordinarily to decide the cases in Lok Adalat.

Such guidelines are not binding either on the High Court or on MACT to determine just and fair compensation. The Courts are at liberty to decide the amount of compensation while appreciating the evidence so brought on record and what is just and reasonable in the facts. In absence of such evidence, the guidelines of the legal services authority may be relied upon but only for guidance.", the Court added.

Accordingly, the appeal was allowed by setting aside the award of the High Court to reduce the amount of compensation and restore the award of MACT.

Case Title: HANS RAJ VERSUS ORIENTAL INSURANCE COMPANY LIMITED & ANR.

Citation : 2024 LiveLaw (SC) 714

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