Supreme Court Redetermines Motor-Accident Compensation, Fixes Loss of Earning Capacity at Rs.7.5 Lakh

A bench of Justices S.V.N. Bhatti and K.V. Viswanathan heard appeals arising from the Madurai Bench of the Madras High Court challenging the quantum of compensation awarded to a grievously injured pedestrian in a motor-accident claim and questions on application of multiplier and assessment of loss of future income.

The Court allowed the civil appeals in part and redetermined the total compensation at Rs.12,09,017 with interest at 7.5% per annum, directing the insurer to deposit the balance within six weeks. The Court held that the High Court was correct in refusing to apply the multiplier in an abstract manner but found unsustainable the High Court’s arbitrary fixation of Rs.3,000 per percentage of disability without discussion. The Court emphasised that the nature of the head injuries and the claimant’s avocation as a mason required a reasonable lump-sum award for loss of earning capacity and therefore fixed loss of future earnings at Rs.7,50,000. The Court, in its reasoning, observed: "We have perused the evidence of PW-2, and we take note of the fact that PW-2 is not the signatory of the disability certificate relied on by the first appellant. The facts established from the series of exhibits filed by the first appellant are that the first appellant admittedly suffered serious head injuries, viz., underwent more than one operation. From the nature of the head injuries, it cannot be held that the first appellant would have returned to complete normalcy and is entitled to loss of income only at Rs.100/- per day. ... This approach, having regard to the view taken in National Insurance Company Limited (supra), needs interference. To that extent, the High Court may be right in not applying multiplier in an abstract manner. Simultaneously, determining Rs.3,000/- per percentage as a loss of future income is unsustainable. ... By taking note of the admitted circumstances, the age of the first appellant, even assuming as 50 years, as contended by the Insurance Company, the compensation for loss of income and also loss for future earnings can be determined at Rs.7,50,000/." The Court recorded that "the appeals have been disposed of without due representation on behalf of the first appellant" and therefore proceeded to re-determine compensation on the record.

Background The dispute arose from an accident dated 10.10.2011 in which the deceased claimant, T. Rajamoni, then working as a mason, suffered grievous head and clavicle injuries when an autorickshaw allegedly driven rashly struck him. The Motor Accidents Claim Tribunal awarded Rs.21,35,000 with interest, applying a daily income of Rs.450, a multiplier and assessing 70% disability. The insurer challenged quantum before the Madras High Court, which declined to apply the multiplier and instead awarded Rs.3,000 per percentage of disability, arriving at Rs.2,10,000 for loss of income and reducing the total to Rs.6,69,017, while enhancing pain and suffering to Rs.50,000. The insurer and the claimant both filed appeals to the Supreme Court; the first appellant died on 14.01.2024 and his legal representatives prosecuted the appeals.

On contest, counsel for the appellant submitted that the claimant’s multiple skull fractures, repeated operations and his self-employment as a mason made the Tribunal’s finding on future loss sustainable and that the High Court erred in substituting a Rs.3,000 per percentage figure without basis. Counsel for the respondent insurer urged that the disability was not proved by a competent authority’s certificate and that the award of future loss required careful scrutiny. The Supreme Court examined the evidence including medical records and the testimony of PW-2, noted that PW-2 had not signed the disability certificate relied upon, and held that while the multiplier could not be applied mechanically in all cases it was also unsustainable to fix per-percentage loss without reasoning. Applying precedents including National Insurance Co. v. Pranay Sethi and New India Assurance Co. v. Urmila Shukla, the Court fixed a lump-sum Rs.7,50,000 for loss of earning capacity and reworked the heads to a total of Rs.12,09,017 with interest @7.5% from the date of the claim petition until payment, directing credit for amounts already paid. The Court directed the insurer to deposit the balance with the Tribunal within six weeks and allowed the appeals in part, recording no order as to costs.

Case Details: Case No.: Civil Appeal Nos. of 2025 (S.L.P.(C) Nos. 20702-03 of 2021) Case Title: T. Rajamoni s/o Thason dead through LRs. v. The Manager, Oriental Insurance Company Limited and others Appearances: For the Petitioner(s): Mr. T.R.B. Sivakumar, Advocate For the Respondent(s): Ms. Ankita Chaudhary, Advocate