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“Don’t Follow Myopic Approach in Granting Compensation Under MV Act”, Says SC

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The Supreme Court depreciated the view of the High Court in not granting compensation for loss of prospects and income to a living victim of a motor vehicle accident. The Bench urged Courts to take into account the mental trauma of the victim and not follow a myopic approach.

Brief Facts of the Case

The Appellant is a victim of a motor accident. He was a passenger on a bus, which was hit by the driver of the Respondent bus. The Respondent Bus sought to overtake the former bus from the wrong side. The collision led to 89% disability in the upper right limb of the Appellant. As a result of the incident, his limb was to be amputated.

He applied for a grant of compensation under Sections 166 and 140 of the Motor Vehicles Act, 1988. He claimed a sum of ₹ 50 lakhs with interest at the rate of 12% per annum against the Respondents. The Motor Accident Claims Tribunal held that the appellant had suffered serious injuries due to the rash and negligent driving of the Respondent and awarded Rs.14,25,400 as compensation.

The Claimant appealed to the High Court of Delhi and the insurer cross-appealed. The total compensation was increased to Rs. 14,36,600 and interest of 9% per annum were imposed. The Appellant appealed against this decision of the High Court.

Appellant’s Arguments

The Appellant argued that the impugned judgment is in material error.t The Counsel argued that the High Court misread the rationale in the Pranay Sethi judgment and the Jagdish judgment. It was added that High Court misread and created a distinct category of cases where addition in income towards prospects can only be given in case of death, and not for injury. The Counsel argued that this cannot be the intention of this Court, as no such observation is made.

Further, it was argued that the High Court should have reassessed and not reduced the loss of future earning capacity of the appellant from Rs. 11,66,400 (determined by the tribunal) to ₹ 7,77,600 on the depressed income of Rs. 8000. It was submitted that the assessment of monthly income should have been Rs.12,000 and not Rs. 8,000.

Also, 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 permanent physical disability of injured as 45%, even though it was 100%.

Respondent’s Arguments

Contesting the appeal, the Respondent-Insurer urged the Court not to interfere with the impugned judgment. It was submitted that the assessment by the High Court conforms with previous decisions of this Court. Further, it was argued that the permanent disability of one arm cannot lead to the loss of earning capacity of up to 90%. Hence, the assessment of compensation on the head of loss of earning capacity was fixed at 45%.

Further, to prove the income, the Appellant had relied on the independent testimony of a lawyer. There was no proof of payment of income tax to support the claim that the appellant earned Rs. 12,000 per month. The Counsel further added that the impugned judgment appreciated the law, and loss of alleged future earning capacity was turned down.

Court’s Observations

The Court observed that two issues were to be considered in this case: 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 prospects too. Two, the extent of disability as ascertained by the Courts.

In dealing with the first question, the Court observed that though the High Court erred in saying that the Jagdish case was not binding. The Court opined that the High Court was wrong in excluding the possibility of compensation for prospects in accident cases involving serious injuries resulting in permanent disablement. The High Court’s narrow reading of Pranay Sethi was termed illogical as it denied the living victim a possibility of progressing further in life while admitting this possibility in case of death of the victim.

The Court called the approach of the High Court in taking 45% disability despite the report showing 89% disability as mechanical and ignoring realities. Further, the Court said that it is true that assessment of an injury of one limb or to one part may not entail permanent injury to the whole body. Ultimately, the inquiry which the court has to conduct is the resultant loss which the injury entails to the earning capacity of the claimant.

The Court added that individual factors are of crucial importance and must be borne in mind while determining the extent of permanent disablement, for assessment of loss of earning capacity. Further, the Court urged that the Courts should be mindful of the emotional trauma of the victim of a serious injury.

Court’s Order

The Bench partly allowed the appeal. The impugned judgment was modified. The amount of Rs. 7,77,600 was substituted with the sum of Rs. 19,65,600 considering the enhancement towards loss of earning capacity and prospects. is now on Telegram. Follow us for regular legal updates and judgments from the Court. Follow us on Google NewsInstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

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