Supreme Court Enhances Compensation for Lorry Cleaner Injured in Road Accident: T.J. Parameshwarappa vs. The Branch Manager, New India Assurance Co. Ltd. (2022)

Date of the Judgment: 18th November 2022

Citation: Not Available

Judges: B.R. Gavai J. and B.V. Nagarathna J.

Can a High Court reduce compensation awarded by a Motor Accident Claims Tribunal (MACT) based on its own assessment of disability? The Supreme Court of India recently addressed this question in a case involving a lorry cleaner who sustained severe injuries in a road accident. This judgment clarifies the principles for assessing compensation, particularly concerning permanent disability and loss of earning capacity. The Supreme Court bench, comprising Justices B.R. Gavai and B.V. Nagarathna, delivered the judgment, with Justice Nagarathna authoring the opinion.

Case Background

On May 15, 2015, at approximately 3:35 PM, the appellant, T.J. Parameshwarappa, was working as a cleaner in a tanker lorry traveling from Kidlike to Hassan. Near the RTO office in Chitradurga, the driver of the tanker lorry drove rashly and negligently, colliding with another lorry. As a result, Parameshwarappa sustained severe injuries, including comminuted fractures of both tibia bones. He was hospitalized and underwent multiple surgeries, leading to permanent disability.

Parameshwarappa, who was earning Rs. 18,000 per month, claimed that his injuries rendered him unable to work as a cleaner. He sought compensation of Rs. 20 lakhs for his injuries and financial losses.

Timeline:

Course of Proceedings

The Motor Accidents Claims Tribunal (MACT) initially awarded Parameshwarappa Rs. 21,08,400 as compensation. However, the High Court of Karnataka reduced this amount to Rs. 7,37,604, citing that the original award was on the higher side. Both the insurer and the claimant filed appeals before the High Court, resulting in the reduced compensation. Aggrieved by this reduction, Parameshwarappa appealed to the Supreme Court.

Legal Framework

The Supreme Court referred to the principles laid down in Raj Kumar vs. Ajay Kumar and Another (2011) 1 SCC 343, which outlines the general principles for compensation in injury cases. The court emphasized that compensation should aim to restore the claimant to their pre-accident position as much as possible. The judgment also discusses the various heads under which compensation can be awarded, including:

• Pecuniary damages (special damages):
  • Expenses for treatment, hospitalization, medicines, etc.
  • Loss of earnings, including loss during treatment and loss of future earnings due to permanent disability.
  • Future medical expenses.
• Non-pecuniary damages (general damages):
  • Damages for pain, suffering, and trauma.
  • Loss of amenities and/or loss of prospects of marriage.
  • Loss of expectation of life.

The court also discussed the concept of permanent disability, distinguishing between partial and total permanent disability, and clarified that the percentage of permanent disability does not automatically equate to the percentage of loss of earning capacity.

Arguments

Appellant’s Arguments:

• The appellant argued that the High Court erred in reducing the assessment of permanent physical disability from 54% to 20%.
• It was contended that the appellant was earning Rs. 18,000 per month as a cleaner, but the High Court assessed his notional income at Rs. 9,000 per month, which is too low.
• The appellant submitted that due to fractures in both legs, he is unable to perform his duties as a cleaner, and the disability should be assessed at 54% as assessed by the doctor.

Respondent’s Arguments:

• The respondent (insurer) supported the High Court’s judgment and argued that the appeals should be dismissed for lack of merit.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court was justified in reducing the compensation awarded by the Tribunal, particularly concerning the assessment of permanent disability and loss of earning capacity?

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:

Judgment

How each authority was viewed by the Court:

• The Court relied heavily on Raj Kumar vs. Ajay Kumar and Another [(2011) 1 SCC 343]* for the principles of assessing compensation, particularly the distinction between permanent disability and loss of earning capacity.
• The Court cited C.K. Subramania Iyer v. T. Kunhikuttan Nair [(1969) 3 SCC 64]*, R.D. Hattangadi v. Pest Control (India) (P) Ltd. [(1995) 1 SCC 551]* and Baker v. Willoughby [1970 AC 467]* to emphasize that compensation should cover the physical injury and the resultant loss of ability to lead a full life.
• The Court used Arvind Kumar Mishra v. New India Assurance Co. Ltd. [(2010) 10 SCC 254]* and Yadava Kumar v. National Insurance Co. Ltd. [(2010) 10 SCC 341]* to illustrate that the percentage of loss of earning capacity can sometimes be equal to the percentage of permanent disability.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to provide just and adequate compensation to the injured appellant, considering the severity of his injuries and their impact on his earning capacity. The court emphasized that the assessment of permanent disability should not be merely a mechanical application of a percentage but should consider the individual’s specific circumstances and the effect of the disability on their ability to earn a livelihood. The Court also noted that the High Court had erred in reducing the compensation without proper justification. The Court also considered the fact that the appellant had undergone two surgeries and would likely need future medical treatment.

The court considered the appellant’s medical condition, the nature of his work, and the impact of his injuries on his ability to earn a livelihood. The court also noted that the High Court had reduced the compensation without adequate justification.

The Supreme Court’s reasoning was based on a step-by-step analysis of the evidence and the legal principles involved. The court considered the medical evidence, the appellant’s testimony, and the relevant case law. The court also considered the fact that the appellant had undergone two surgeries and would likely need future medical treatment.

The court rejected the High Court’s assessment of disability and the reduction in compensation, stating that it was not in line with the principles of just and adequate compensation. The court also clarified that the percentage of permanent disability does not automatically equate to the percentage of loss of earning capacity. The court emphasized that the assessment of compensation should be based on a holistic consideration of all the relevant factors.

The court stated, “The Tribunal should not mechanically apply the percentage of permanent disability as the percentage of economic loss or loss of earning capacity.” The court also noted, “What requires to be assessed by the Tribunal is the effect of the permanent disability on the earning capacity of the injured.” Finally, the court observed, “The percentage of permanent disability with reference to the whole body of a person, cannot be assumed to be the percentage of loss of earning capacity.”

Key Takeaways

• The percentage of permanent disability does not automatically equate to the percentage of loss of earning capacity.
• Compensation should be assessed based on the individual’s specific circumstances and the impact of the disability on their ability to earn a livelihood.
• High Courts should not reduce compensation awarded by the Tribunal without proper justification.
• The assessment of compensation should be based on a holistic consideration of all relevant factors, including medical evidence, the nature of work, and the impact of injuries on earning capacity.
• The principles laid down in Raj Kumar vs. Ajay Kumar continue to be the guiding principles for assessing compensation in motor accident cases.

Directions

The Supreme Court directed that the enhanced compensation amount of Rs. 11,67,405, along with interest at 6% per annum from the date of filing of the claim petition, should be deposited within six weeks. The Tribunal was instructed to deposit Rs. 3,00,000 in a nationalized bank for five years, with the appellant entitled to draw periodical interest. The remaining amount was to be paid to the appellant.

Development of Law

The ratio decidendi of this case is that the assessment of compensation for permanent disability should not be a mechanical application of a percentage but should consider the individual’s specific circumstances and the impact of the disability on their earning capacity. This case reinforces the principles laid down in Raj Kumar vs. Ajay Kumar and clarifies that the percentage of permanent disability does not automatically equate to the percentage of loss of earning capacity. This judgment does not introduce a change in the previous position of law but reinforces the existing principles.

Conclusion

The Supreme Court allowed the appeals in part, enhancing the compensation awarded to the appellant from Rs. 7,37,604 to Rs. 11,67,405. The court emphasized that compensation should be just and adequate, considering the impact of the injuries on the individual’s life and earning capacity. This judgment reinforces the importance of a holistic approach in assessing compensation in motor accident cases.