Supreme Court Upholds 100% Disability for Injured Laborer in Compensation Case: Indra Bai vs. Oriental Insurance Company Ltd. (2023) INSC 624 (17 July 2023)

LEGAL ISSUE: Determination of “total disablement” under the Employee’s Compensation Act, 1923.

CASE TYPE: Employee Compensation Law

Case Name: Indra Bai vs. Oriental Insurance Company Ltd.

[Judgment Date]: 17 July 2023

Date of the Judgment: 17 July 2023
Citation: (2023) INSC 624
Judges: J.B. Pardiwala, J. and Manoj Misra, J.

Can a person who has lost the use of their hand, and is declared unfit for labor, be considered totally disabled even if the medical assessment of physical disability is less than 100%? The Supreme Court of India recently addressed this question in a case concerning a loading and unloading laborer who suffered a severe hand injury. This judgment clarifies how “total disablement” should be interpreted under the Employee’s Compensation Act, 1923, focusing on the functional impact of an injury rather than just the percentage of physical impairment. The judgment was delivered by a two-judge bench comprising Justice J.B. Pardiwala and Justice Manoj Misra, with the opinion authored by Justice Manoj Misra.

Case Background

The appellant, Indra Bai, was employed as a loading and unloading laborer with M/s. Simplex Concrete Company. On October 3, 2002, while loading poles onto a truck, a chain pulley broke, causing the poles to fall on her left arm. This resulted in a compound fracture and nerve damage, rendering her left hand ineffective. The appellant claimed that due to the injury, she suffered permanent total disablement. She sought compensation from her employer, who directed her to the insurance company, Oriental Insurance Company Ltd., with whom they were insured. When no compensation was provided, she filed a petition with the Workmen’s Compensation Commissioner (now known as the Employee’s Compensation Commissioner).

The employer did not dispute the facts and claimed the benefit of the insurance cover. The insurance company, while acknowledging the insurance, raised defenses to avoid liability. The appellant presented evidence, including a medical certificate from the District Medical Board stating 50% disability and unfitness for labor work. The Commissioner assessed her disability as total, awarding compensation accordingly. However, the High Court reduced the compensation by assessing the disability at 40%.

Timeline

Course of Proceedings

The Workmen’s Compensation Commissioner/Labour Court, Jabalpur, initially awarded compensation to the appellant, assessing her disability as 100% based on the medical evidence and the nature of her work. The Oriental Insurance Company Ltd. appealed this order to the High Court of Madhya Pradesh at Jabalpur. The High Court partly allowed the appeal, reducing the compensation by assessing the permanent disability at 40%, relying on the medical board’s assessment of 50% disability and the fact that she could use her right hand. The High Court also relied on the decisions of the Supreme Court in National Insurance Co. Ltd. v. Mubasir Ahmed and Another [(2007) 2 SCC 349] and Oriental Insurance Company Ltd. v. Mohd. Nasir and Another [(2009) 6 SCC 280]. Aggrieved by the High Court’s decision, the appellant filed a Special Leave Petition before the Supreme Court of India.

Legal Framework

The case revolves around the interpretation of “total disablement” under the Employee’s Compensation Act, 1923.

Section 4(1)(b) of the Employee’s Compensation Act, 1923, states:

“4. Amount of compensation .- (1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely: –
(b) Where permanent total disablement results from the injury an amount equal to sixty per cent of the monthly wages of the injured employee multiplied by the relevant factor; Or an amount of one lakh and forty thousand rupees, whichever is more;”

Section 2(1)(l) of the Employee’s Compensation Act, 1923, defines “total disablement” as:

“”total disablement” means such disablement, whether of a temporary or permanent nature, as incapacitates a workman for all work which he was capable of performing at the time of the accident resulting in such disablement:
Provided that permanent total disablement shall be deemed to result from every injury specified in Part I of Schedule I or from any combination of injuries specified in Part II thereof where the aggregate percentage of the loss of earning capacity, as specified in the said Part II against those injuries, amounts to one hundred per cent or more;”

The Supreme Court emphasized that the definition of “total disablement” focuses on the functional capacity of the worker, not just the physical disability percentage.

Arguments

Submissions of the Appellant:

• The appellant argued that the High Court should not have interfered with the Commissioner’s finding on the extent of disability, as it was a question of fact and not a substantial question of law.
• The appellant contended that the High Court erred in assessing the permanent disability as 40% instead of 100%. They argued that total disablement should be judged based on the incapacity to perform the work the person was capable of at the time of the accident.
• The appellant highlighted that as a loading and unloading laborer, the use of both hands is essential. The evidence showed that her left hand was rendered useless, making her unfit for labor work.
• The appellant relied on the decisions in Chanappa Nagappa Muchalagoda v. Divisional Manager, New India Insurance Co. Ltd. [(2020) 1 SCC 796] and Golla Rajanna and Others v. Divisional Manager and Another [(2017) 1 SCC 45] to support their claim that functional disability should be the basis for determining total disablement.

Submissions of the Respondents:

The respondents did not appear before the Supreme Court despite being served with notice. The High Court, in its judgment, had considered the medical board’s assessment of 50% disability and the fact that the appellant could use her right hand. It also relied on the decisions of the Supreme Court in National Insurance Co. Ltd. v. Mubasir Ahmed and Another [(2007) 2 SCC 349] and Oriental Insurance Company Ltd. v. Mohd. Nasir and Another [(2009) 6 SCC 280] to conclude that the loss of earning capacity is not a substitute for the percentage of physical disablement.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court was justified in interfering with the Commissioner’s finding of 100% disability, given that the appellant was declared unfit for labor work due to the loss of function in her left hand.

The Court also considered a sub-issue as to whether the functional disability and not just the physical disability is the determining factor in assessing whether the claimant has incurred total disablement.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Judgment

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

How each authority was viewed by the Court?

The Supreme Court relied on Pratap Narain Singh Deo v. Srinivas Sabata and Another [(1976) 1 SCC 289]* to emphasize that if a workman is rendered unfit for their previous job due to an injury, it amounts to total disablement. The Court also followed Chanappa Nagappa Muchalagoda v. Divisional Manager, New India Insurance Co. Ltd. [(2020) 1 SCC 796]* and Golla Rajanna and Others v. Divisional Manager and Another [(2017) 1 SCC 45]* to highlight that functional disability, not just physical disability, is the determining factor in assessing total disablement. The Court held that the High Court wrongly applied National Insurance Co. Ltd. v. Mubasir Ahmed and Another [(2007) 2 SCC 349]* and distinguished Oriental Insurance Company Ltd. v. Mohd. Nasir and Another [(2009) 6 SCC 280]*.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the functional impact of the injury on the appellant’s ability to perform her previous job. The Court emphasized that the definition of “total disablement” under the Employee’s Compensation Act, 1923, focuses on the functional capacity of the worker, not just the percentage of physical impairment. The fact that the appellant’s left hand was rendered useless, and she was declared unfit for labor work, weighed heavily in the Court’s decision. The Court also considered the nature of her job as a loading and unloading laborer, which requires the use of both hands.

Fact:Law Ratio

The court’s reasoning was guided by the principle that compensation should reflect the actual loss of earning capacity due to the injury. The court noted that the High Court erred by focusing on the percentage of physical disability rather than the practical impact of the injury on the appellant’s ability to earn a living.

“It is the functional disability and not just the physical disability which is the determining factor in assessing whether the claimant (i.e., workman) has incurred total disablement.”

“Thus, if the disablement incurred in an accident incapacitates a workman for all work which he was capable of performing at the time of the accident resulting in such disablement, the disablement would be taken as total for the purposes of award of compensation under section 4 (1)(b) of the Act regardless of the injury sustained being not one as specified in Part I of Schedule I of the Act.”

“In such circumstances, when the Board had certified that the appellant was rendered unfit for labour, there was no perversity in the decision of the Commissioner in awarding compensation by treating the disability as total on account of her functional disability.”

Logical Reasoning:

Key Takeaways

• The Supreme Court clarified that “total disablement” under the Employee’s Compensation Act, 1923, should be assessed based on the functional impact of an injury on a worker’s ability to perform their previous job, not just the percentage of physical disability.
• If a worker is rendered unfit for their previous job due to an injury, it can be considered total disablement, even if the medical assessment of physical disability is less than 100%.
• The judgment emphasizes the importance of considering the nature of the worker’s job and the practical implications of the injury on their ability to earn a living.

Directions

The Supreme Court set aside the judgment of the High Court and restored the order of the Commissioner, directing that the appellant be compensated based on 100% disability.

Development of Law

The ratio decidendi of the case is that the term “total disablement” under Section 2(1)(l) of the Employee’s Compensation Act, 1923, must be interpreted to mean such disablement that incapacitates a workman for all work which he was capable of performing at the time of the accident, and it is the functional disability and not just the physical disability which is the determining factor in assessing whether the claimant has incurred total disablement. This clarifies the position of law that functional disability, not just physical disability, is the determining factor in assessing total disablement.

Conclusion

The Supreme Court’s decision in Indra Bai vs. Oriental Insurance Company Ltd. reinforces the principle that compensation for workplace injuries should be based on the functional impact of the injury on the worker’s ability to earn a living. It clarifies that a worker can be considered totally disabled if they are unable to perform their previous job due to an injury, even if the medical assessment of physical disability is less than 100%. This judgment protects the rights of workers who have suffered significant functional impairments due to workplace accidents.