Supreme Court Enhances Compensation for Accident Victim with 75% Disability: Anant vs. Pratap (21 August 2018)

Date of the Judgment: 21 August 2018

Citation: (2018) Civil Appeal No. 8420 of 2018

Judges: R. F. Nariman, J., Indu Malhotra, J.

How should courts determine compensation for accident victims who suffer severe, life-altering injuries? The Supreme Court of India recently addressed this critical question in a case involving a man who sustained a 75% permanent disability due to a motor vehicle accident. The court’s decision clarifies the principles for calculating “just compensation” in such cases, ensuring victims receive adequate support for their losses.

This judgment, delivered by a bench of Justices R. F. Nariman and Indu Malhotra, delves into the nuances of calculating compensation for loss of future income, medical expenses, and pain and suffering, setting a precedent for future motor accident claim cases. Justice Indu Malhotra authored the judgment.

Case Background

On October 16, 2009, the appellant, Anant, a 29-year-old driver earning Rs. 8,500 per month, was traveling with his wife on a motorcycle from Pune towards Tambewasi. A Maruti car, driven by Respondent No. 1, collided with their motorcycle. The car was coming from the wrong side of the road while trying to overtake a State Transport Bus.

Anant suffered severe injuries, including fractures to his right thigh, right ankle, and right arm. He underwent multiple surgeries, with steel rods inserted in his right thigh and knee, and artificial material in his right shoulder. These injuries resulted in a 75% permanent disability, as certified by a doctor. Consequently, he lost his ability to drive and his livelihood.

Anant filed a claim petition before the Motor Accident Claims Tribunal (MACT), seeking Rs. 20,00,000 in compensation from the car owner (Respondent No. 1) and the insurance company (Respondent No. 2).

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal (MACT) partly allowed Anant’s claim, awarding a lump sum compensation of Rs. 7,00,000, along with 7% interest from the date of the claim petition. The MACT did not follow the multiplier method for calculating compensation, nor did it grant compensation under specific heads such as loss of income, medical expenses, and compensation for permanent disability.

Dissatisfied with the MACT’s decision, Anant appealed to the High Court of Judicature at Bombay (Aurangabad Bench). The High Court partly allowed the appeal, enhancing the compensation to Rs. 14,65,500 with 9% interest. The High Court correctly applied the multiplier method but reduced the monthly income of the Appellant to Rs. 5,000, stating that Rs. 8,500 was too high for a driver. The High Court also awarded compensation under various heads, including loss of future income, medical expenses, and pain and suffering.

Anant then filed a Special Leave Petition before the Supreme Court, challenging the High Court’s judgment, particularly the reduction of his monthly income and the overall quantum of compensation.

Legal Framework

The case primarily revolves around the principles of compensation under the Motor Vehicles Act. The key legal principle is that a person injured in a motor accident is entitled to “just compensation” which should restore them to the position they were in before the accident. This includes compensation for both pecuniary and non-pecuniary losses.

The Supreme Court referred to its previous judgment in Yadav Kumar v. The Divisional Manager, National Insurance Company Ltd., [(2010) 10 SCC 341] which explained that “just compensation” implies the application of fair and equitable principles and a reasonable approach by the Tribunals and Courts.

The court also considered the multiplier method as laid down in Sarla Verma and Ors. v. Delhi Transport Corporation and Ors. [(2009) 6 SCC 121] for calculating loss of future income. The multiplier is determined based on the age of the claimant at the time of the accident.

The court also discussed the principle laid down in Raj Kumar v. Ajay Kumar [(2011) 1 SCC 343], that the assessment of compensation for loss of future earnings depends on the impact of the permanent disability on the earning capacity of the claimant.

The Supreme Court also referred to Puttamma and Ors. v. K.L. Narayana Reddy and Anr. [(2013) 15 SCC 45] wherein it was held that the Second Schedule as enacted in 1994 had become redundant due to changed scenarios including the present cost of living and current rate of inflation.

Arguments

Appellant’s Submissions:

• The Appellant argued that the High Court erred in reducing his monthly income from Rs. 8,500 to Rs. 5,000. He submitted that he had produced his employer as a witness who had certified that he was earning Rs. 8,500 per month.
• He contended that despite having a 75% permanent disability, his ability to earn was reduced by 100% as he could no longer drive or do any work.
• The Appellant also argued that the compensation awarded by the High Court was inadequate, especially considering his medical expenses, pain and suffering, and loss of future income.

Respondent’s Submissions:

• The Respondents did not specifically raise any contentions on the quantum of compensation awarded by the High Court.
• The Respondents primarily relied on the findings of the lower courts that the accident was caused due to the negligence of Respondent No. 1.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court did not specifically frame issues in a separate section of the judgment. However, the main issues that the court addressed were:

• Whether the High Court was correct in reducing the monthly income of the Appellant from Rs. 8,500 to Rs. 5,000.
• Whether the compensation awarded by the High Court was adequate, considering the permanent disability suffered by the Appellant and the loss of his livelihood.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court relied on the following authorities:

Cases:

• Yadav Kumar v. The Divisional Manager, National Insurance Company Ltd. [(2010) 10 SCC 341] – This case was cited to define the concept of “just compensation” as requiring fair and equitable principles and a reasonable approach. The Supreme Court of India emphasized that compensation should not be a bonanza but should be fair and reasonable.
• Sarla Verma and Ors. v. Delhi Transport Corporation and Ors. [(2009) 6 SCC 121] – This case was used to determine the appropriate multiplier for calculating loss of future income based on the age of the claimant. The Supreme Court of India followed the multiplier method laid down in this case.
• Raj Kumar v. Ajay Kumar [(2011) 1 SCC 343] – This case was cited to establish that the assessment of compensation for loss of future earnings should depend on the impact of the permanent disability on the earning capacity of the claimant. The Supreme Court of India used this principle to calculate the loss of future income.
• Puttamma and Ors. v. K.L. Narayana Reddy and Anr. [(2013) 15 SCC 45] – This case was cited to highlight that the Second Schedule as enacted in 1994 had become redundant due to changed scenarios including the present cost of living and current rate of inflation. The Supreme Court of India used this principle to enhance the compensation for special diet and nutrition.

Legal Provisions:

• The Motor Vehicles Act – This Act provides the legal framework for compensation in motor accident cases. The Supreme Court of India used the principles of just compensation under this Act.

[TABLE] of Authorities

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Yadav Kumar v. The Divisional Manager, National Insurance Company Ltd. [(2010) 10 SCC 341] to define “just compensation” as requiring fair and equitable principles, emphasizing that compensation should be reasonable and not a bonanza.
• The Court followed the multiplier method laid down in Sarla Verma and Ors. v. Delhi Transport Corporation and Ors. [(2009) 6 SCC 121] to calculate the loss of future income, using the multiplier of 17 based on the Appellant’s age.
• The Court applied the principle from Raj Kumar v. Ajay Kumar [(2011) 1 SCC 343], stating that compensation for loss of future earnings should be based on the impact of the permanent disability on the claimant’s earning capacity. The Court considered that the Appellant’s earning capacity was reduced by 75% due to his disability.
• The Court also considered Puttamma and Ors. v. K.L. Narayana Reddy and Anr. [(2013) 15 SCC 45], to enhance the compensation for special diet and nutrition, highlighting the changed scenarios including the present cost of living and current rate of inflation.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring that the Appellant received “just compensation” for the severe injuries and permanent disability he suffered due to the motor accident. The court emphasized the need to restore the aggrieved person to the position they were in before the accident, as far as possible. The following points weighed heavily in the mind of the Court:

• Severity of Injuries: The Court noted that the Appellant had sustained multiple fractures, undergone several surgeries, and had steel rods and artificial material inserted into his body. The injuries resulted in a 75% permanent disability, severely impacting his mobility and ability to work.
• Loss of Livelihood: The Court recognized that the Appellant, who was a driver, had lost his employment and livelihood due to the accident. This loss of income was a significant factor in determining the compensation.
• Proof of Income: The Court accepted the Appellant’s evidence of his monthly income of Rs. 8,500, based on the testimony and certificate provided by his employer. The Court rejected the High Court’s reduction of this income.
• Need for Adequate Compensation: The Court found the compensation awarded by the High Court to be inadequate, particularly considering the medical expenses, pain and suffering, and loss of future income. The Court sought to enhance the compensation to provide adequate support for the Appellant’s losses.
• Application of Legal Principles: The Court applied established legal principles, including the multiplier method for calculating loss of future income and the principle that compensation should be based on the impact of the disability on the claimant’s earning capacity.
• Inflation and Cost of Living: The Court considered the inflationary trends and increased costs of living while enhancing the compensation for special diet and nutrition.
• Pain and Suffering: The Court recognized the lifelong pain and suffering endured by the Appellant and his family due to the permanent disability. The Court enhanced the compensation for pain and suffering to reflect this aspect.

[TABLE] of Sentiment Analysis of Reasons

Fact:Law Ratio Table

Logical Reasoning:

Key Takeaways

• Accurate Income Assessment: Courts must accept credible evidence of income, such as employer testimony and certificates. Reduction of income without proper justification is not permissible.
• Impact of Disability: Compensation for loss of future income should be based on the actual impact of the disability on the claimant’s earning capacity, not just the percentage of disability.
• Multiplier Method: The multiplier method laid down in Sarla Verma should be followed to calculate loss of future income.
• Just Compensation: The goal of compensation is to restore the injured party to their pre-accident position as much as possible, including both pecuniary and non-pecuniary losses.
• Inflationary Trends: Courts should consider inflationary trends and increased costs of living when awarding compensation, especially for medical expenses and special diet.
• Comprehensive Compensation: Compensation should be awarded under various heads, including loss of future income, medical expenses, attendance and conveyance charges, special diet, loss of amenities, and pain and suffering.

Directions

The Supreme Court directed that the total compensation of Rs. 20,29,000, along with simple interest at 9% per annum from the date of the application before the MACT (11.10.2010) until the date of payment, should be paid to the Appellant within twelve weeks from the date of the judgment. Both the Respondents were held jointly and severally liable for the same.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that in motor accident claims involving permanent disability, the courts must ensure that the compensation awarded is “just” and adequately addresses the claimant’s loss of income, medical expenses, pain and suffering, and other related losses. The court also clarified that the multiplier method should be followed while calculating loss of future income and that the impact of the permanent disability on the earning capacity of the injured must be considered. The court also held that the Second Schedule as enacted in 1994 had become redundant due to changed scenarios including the present cost of living and current rate of inflation.

This judgment reinforces the principles laid down in previous cases such as Yadav Kumar, Sarla Verma, and Raj Kumar and also takes into consideration the changed scenario as laid down in Puttamma. It clarifies the approach that courts should adopt in assessing compensation in motor accident cases, particularly those involving severe and permanent disabilities.

Conclusion

The Supreme Court allowed the appeal filed by Anant, enhancing the compensation awarded to him to Rs. 20,29,000. The court emphasized the need for a fair and equitable approach in determining “just compensation” in motor accident cases, particularly those involving severe and permanent disabilities. The judgment reinforces the principles of adequate compensation for loss of income, medical expenses, and pain and suffering, ensuring that victims of motor accidents receive the necessary support to rebuild their lives.