SRI NAGARAJAPPAversusDIVISIONAL MANAGER, ORIENTAL INSURANCE CO. LTD.

                          (2011] 6 S.C.R. 70


A                        SRI NAGARAJAPPA
                                    v.
      DIVISIONAL MANAGER, ORIENTAL INSURANCE CO.
                              LTD.
                (Civil Appeal No.3203 of 2011)
8                           APRIL 11, 2011
       [G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]

         Motor Vehicles Act, 1988 - s.166 - Compensation -
C Adequacy of- Due to motor accident, appellant-claimant, who
    was working as a coolie, suffered from gross deformity of his
    left upper limb - Doctor assessed permanent residual
    physical disability of the appellant's upper limb at 68% and
    his whole body at 22-23% - Tribunal took the income of
D   appellant to be Rs.3,0001- p.m., his disability at 20%, and his
    age as 55 years (for which it adopted a multiplier of 11) and
    accordingly calculated loss of future income to be
    Rs. 79,2001- and total compensation to be Rs.1, 70,2001- -
    High Court, however, took the age of the appellant to be 50
E   years and adopting a multiplier of 13, calculated loss of future
    income at Rs.93,0001- and enhanced total compensation to
    Rs.2,22,6001- - Held: Total compensation awarded by the
    High Court was inadequate considering the nature of injuries
    suffered by the appellant and the consequent adverse effect
F   it had on the performance of his avocation - Appellant is a
    manual labourer, for which he requires the use of both his
    hands but the accident left him with one useless hand - This
    disability is bound to affect the quality of his work and also
    his ability to find work - Hence, while computing loss of future
G   income in respect of the appellant, disability should be taken
    to be 68% and not 20%, as was done by the Tribunal and the
    High Court - Amount towards loss of future income enhanced
    to Rs.3, 18,2401- - Total compensation raised to Rs.4, 77,6401
    - (rounded off to Rs.4, 77, 0001-) to be paid at an interest of 6%
    from the date of claim petition till realization.
H                                  70
  NAGARAJAPPAv. DIVISIONAL MANAGER, ORIENTAL             71
                 INS. CO. LTD.

     The appellant was working as a coolie. He met with        A
a motor accident and sustained multiple injuries. He filed
claim petition under Section 166 of the Motor Vehicles
Act, 1988 claiming compensation of Rs.5 lacs showing
monthly in;:ome of Rs.4500/- p.m. The Tribunal found that
the appellant had sustained injuries of compound fracture      9
of ulnar styloid process of the left hand and subluxation
of the left. wrist and that the doctors assessed· disability
at' 23% ·of the whole body and accordingly awarded
Rs.20,000/- for loss of amenities, Rs.30,000/- for pain and
suffering, Rs.30,000/- for medical expenses and                c.
conveyance and Rs.2,000/- for future medical treatment.

     For loss l)f income during the period of treatment, _the
Tribunal found that due to the nature of the disability, the
appellant was unable to work as a coolie or do other
manual work; that since appellant was an indoor patient D
for 55 days the Tribunal presumed that he was .unable to
work for 3 months and further, though the appellant
claimed to be earning Rs.4,500/- p.m., it was not
supported by documentary evidence. Hence, the Tribunal
presumed his income to be Rs.3000/- p.m. and awarded E
Rs.9,000/- for loss of income during the period of
treatment. For computation of loss of future income due
to disability, the Tribunal took into consideration that
disability of the whole body of the appellant had been
assessed at 23%, however, his right hand was still free F
to work and thus, It assessed disability at 20%. Taking
the age of the appellant to be around 55 years at the time
of the accident, the Tribunal adopted a multiplier of 1~.
Accordingly, loss of future income was calculated to be
Rs.79,200/- (Rs.3000/- X 12 X 11 X 20/100) and the total· G
compensation at Rs.1,70,200/-.
     On appeal, the High Court enhanced compensation
for pain and suffering, medical expenses, future medical
expenses, Joss of amenities and loss of future income as
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    72       SUPREME COURT REPORTS           [2011] 6 S.C.R.


A against the amount awarded by the Tribunal. For loss of
  future Income, the High Court took the age of the
  appellant to be 50 years and adopted a multiplier of 13,
  Income as Rs.3000/· p.m. and disability @ 20%.
  Accordingly, loss of future Income was calculated at Rs.
B 93,6001·. Compensation was thus enhanced to
  Rs.2,22,600/-. Still dissatisfied, the appellant filed the
  instant appeal praying for further enhancement of
  compensation.
         Allowing the appeal, the Court
c
        HELD:1. Rs.2,22,600/· awarded by the High Court is
    inadequate considering the nature of injuries suffered by
    the appellant and the consequent adverse effect it has on
    the performance of his avocation. [Para 7) [77·FJ
D
       2.1. Where the claimant suffers a permanent disability
  as a result of injuries, the assessment of compensation
  under the head of loss of future earnings, would depend
  upon the effect and impact of such permanent disability
E on his earning capacity. What requires to be assessed by
  the Tribunal is the effect of the permanent disability on
  the earning capacity of the injured; and after assessing
  the loss of earning capacity in terms of a percentage of
  the income, it has to be quantified in terns of money, to
  arrive at the future loss of earnings (by applying the
F standard multiplier method used to determine loss of
  dependency). [Para 8] [78·B·E]
      2.2. Ascertainment of the effect of the permanent
  disability on the actual earning capacity involves three
G steps. The Tribuhal has to first ascertain what activities
  the claimant could carry on in spite of the permanent
  disability and what he could not do as a result of the
  permanent ability (this is also relevant for awarding
  compensation under the head of loss of amenities of life).
H
                                                                •
  NAGARAJAPPA v. DIVISIONAL MANAGER, ORIENTAL           73
                  INS. CO. LTO.

The second step is to ascertain his avocation, profession A
and nature of work before the accident, as also his age~ ·
The third step is to find out whether (i) the claimant is
totally disabled from earning any kind of livelihood, or (ii)
whether in spite of the permanent disability, the claimant
could still effectively carry on the activities and functfons, B
which he was earlier carrying on, or (iii) whether he was
prevented or restricted from discharging his previous
activities and functions, but could carry on some other
or lesser scale of activities and functions so that he
continues to earn or can continue to earn his livelihood. c
For example, if the left hand of a claimant is amputated,
the permanent physical or functional disablement may be
assessed around 60%. If the claimant was a driver or a
carpenter, the actual loss of earning capacity may
virtually be hundred percent, if he is neither able to drive 0 .
or do carpentry. On the other hand, if the claimant was a
clerk in government service, the loss of his left hand may
not result in loss of employment and he may still be
continued as a cl,rk as he could perform his clerical
functions; and ·in that event the l,oss of earning capacity E
will not be 100% as in the case of a driver or carpenter,
nor 60% which is the actual physical disability, but far
less. In fact, there may not be any need to award any
compensation under the head of "loss of future
earnings", if the claimant continues in government.
service, though he may be awarded compensation under F
the head of loss of amenities as a consequence of losing
his hand. Sometimes the inju.red claimant may be
continued in service, but may not be found suitable for
discharging the duties attached to the post or job which
he was earlier holding, on account of his disability, and G
may therefore be shifted to some other suitable but lesser
post with lesser emoluments, in which case there should .
be a limited award under the head of loss of future .
earning capacity, taking note of the reduced earning
capacity. [Para 8) [78-H; 79-A-H; 80-A-B]                      H
    74       SUPREME COURT REPORTS            [2011] 6 S.C.R.·

A        Raj Kumar v. Ajay Kumar & Anr. (2011) 1 SCC 343:
    2010(13) SCR 179 - relied on.

       3.1. In the Instant case, on perusal of the doctor's
  evidence with respect to the nature of injuries suffered
  by the appellant, the appellant was found, Inter alla, to be
8
  suffering from the following disabilities as a result of the
  accident- "gross deformity of the left forearm, wrist and
  hand, wasting and weakness of the muscles of the left
  upper limb and shortening of the left upper limb by 1 c.m."
C As a result, the doctor stated that the appellant could not
  work as a coolie and could not also do any other manual
  work. The doctor assessed permanent residual physical
  disability of the upper llmb at 68% and 22-23% of the
  whole body. [Para 10] [80-E-G]

D      3.2. The appellant is working as a manual labourer,
  for which he requires the use of both his hands. The fact
  that the accident has left him with one useless hand will
  severely affect his ability to perform his work as a coolie •
  or any other manual work, and this has also been certified
E by the doctor. Thus, while awarding compensation it has
  to be kept in mind that the appellant is to do manual work
  for the rest of his life without full use of his left hand, and
  this is bound to affect the quality of his work and also his
  ability to find work considering his disability. Hence,
F while computing loss of future income, disability should
  be taken to be 68% and not 20%, as was done by the
  Tribunal and the High Court. The appellant Is severely
  hampered and perhaps forever handicapped from
  performing his occupation as a coolie. Thus, loss of
G future income would amount to Rs.3,18,240/- (Rs.3000 X
  12 X 13 X 68/100). The amount awarded for loss of
  amenities is also enhanced to Rs.40,000/-, as against
  Rs.30,000/- awarded by the High Court. The amount
  awarded for future medical expenses is enhanced to
H Rs.30,000/·, as against Rs.10,000/- awarded by the High
  NAGARAJAPPA v. DIVISIONAL MANAGER, ORIENTAL               75
                  INS. CO. LTD.
Court. The amount awarded under the remaining heads               A
by the High Court are appropriate and are sustained.
Accordingly, total compensation payable to the appellant
amounts to Rs.4,77,640/·, whlcfl Is rounded off to
Rs.4,77,000/-. The same shall be payable at an interest of
6% from the date of claim petition till realization. [Paras       B
11, 12, 14, 15] [80-G-H; 81·A·E-H; 82-A·B]
                     Case Law Reference:
    2010(13) SCR 179          relied on        Para 8, 11
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
                                                                  c
3203 of 2011.

    From the Judgment & Order dated 16.10.2009 of the High
Court of Karnataka at Bangalore in MFA No. 201 of 2007.
                                                                  D
    V. N. Raghupathy for the Appellant
    Neeraj Sachdeva for the Respondent.
    The Judgment of the Court was delivered by
                                                                  E
    GANGULY, J. 1. Leave granted.
      2. On 13.08.2004 at about 6 p.m., the appellant was
crossing the road carefully when a BMTC bus (bearing
registration No.KA-05-B-5245) came in a rash and negligent        F
manner and dashed against the appellant whereupon he was
admitted in hospital for treatment as he had sustained multiple
injuries.
     3. The appellant filed a claim petition under Section 166
of the Motor Vehicles Act, 1988 claiming compensation of G
Rs.5,00,000/-. The appellant was working as a coolie and
claimed that he was earning a monthly income of Rs.4,500/-
p.m.

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    76       SUPREME COURT REPORTS              [2011] 6 S.C.R.


A       4. The Tribunal concluded that the accident occurred for
   the rash and negligent driving of the bus driver as a result of
  which the appellant had sustained injuries in the, accident. On
   perusal of evidence it was found that the appellant had
   sustained injuries of compound fracture of ulnar styloid process '
B of the left hand and subluxation of the left wrist. The doctor
  assessed disability at 23% of the whole body. Therefore, it
  awarded Rs.20,000/- for loss of amenities, Rs.30,000/- for pain
  and suffering, Rs.30,000/- for medical expenses and
  conveyance and Rs.2,000/- for futur..., medical treatment. For
c loss of income during the period of treatment, the Tribunal found
  that due to the nature of the disability the appellant was unable
  to work as a coolie or do other manual work. It also added that
  only the left hand was injured, so the right hand was free to work.
  The appellant was an indoor patient for 55 days. Thus, the
0 Tribunal presumed that the appellant was unable to work for 3
  months. Further, though the appellant claimed to be earning ·
  Rs.4,500/- p.m., it was not supported by documentary evidence.
  Hence, the Tribunal presumed his income to be Rs.3000/- p.m.
  and awarded Rs.9,000/- for loss of income during the period
  of treatment. For computation of loss of future income due to
E disability, the Tribunal took into consideration that disability of
  the whole body of the appellant had been assessed at 23%,
  however, his right hand was still free to work. Thus, it assessed
  disability at 20%. Medical evidence showed that the appellant
  was around 55 years at the time of the accident, for which a
F multiplier of 11 was adopted. Accordingly, loss of future income
  was calculated to be Rs.79,200/- (Rs.3000 X 12 X 11 X 20/
  100). The Tribunal fastened liability on the insurance company.
  Thus, total compensation was Rs.1, 70,200/- payable to the
  appellant jointly and severally, with interest@ 6% from date of
G the claim petition till realization.
       5. On appeal, the High Court enhanced compensation for
  pain and suffering, medical expenses, future medical expenses,
  loss of amenities and loss of future income as against the
H amount awarded by the Tribunal. For loss of future income, the
  NAGARAJAPPA v. DIVISIONAL MANAGER, ORIENTAL · 77
     INS. CO. LTD. [ASOK KUMAR GANGULY, J.]
High Court concluded that from material on record, the age of A
the claimant was between 45 to 55 years. Thus, it took 50 years
as the safe age and adopted a multiplier of 13, income was
taken as Rs.3000/- p.m. and disability@ 20%. Accordingly, loss
of future income was calculated at Rs.93,600/- (Rs.3000 X 12
X 13 X 20/100). Compensation was thus enhanced and B
awarded as follows:

    Pain and suffering                         -Rs.40,000/-

    Medical expenses, nourishment, attendant
                                                                   c
    Charges and othor incidental expenses -Rs.40,000/-

    Loss of incomP. during treatment           -Rs.9,000/-
    Loss of future income                      -Rs.93,600/-
                                                                   D
    Loss of amenities                          -Rs.30,000/-
    Future medical expenses                     -Rs.10,000/-
    TOTAL                                      -Rs.2,22,600/-
                                                                   E
     6. Being still aggrieved by the compensation awarded, the
appellant approached this Court by filing an Special Leave
Petition praying for further enhancement o! compensation.
     7. Having gone through the records, we are of the opinion
that Rs.2,22,600/- awarded by the High Court is inadequate         F
considering the nature of injuries suffered by the appellant and
the consequent adverse effect it has on the performance of his
avocation.
     8. In reaching our decision, we are drawn to, if we may so, G
a very well-considered judgment of this Court in Raj Kumar v.
Ajay Kumar & Anr. [(2011) 1 SCC 343), wherein the Bench,
comprising of Hon'ble Raveendran and Gokhale, JJ., has
propounded the law on compensation in motor accidents claims
                                                                 H -
    78        SUPREME COURT REPORTS                [2011) 6 S.C.R.


A cases resulting in disability in a comprehensive manner. The
  relevant portions of the judgment are extracted below:

         "10. Where the claimant suffers a permanent disability as
         a result of injuries, the assessment of compensation under
         the head of loss of future earnings, would depend upon the
B
         effect and impact of such permanent disability on his
         earning capacity. The Tribunal should not mechanically
         apply the percentage of permanent disability as the
         percenta.ge of economic loss or loss of earning capacity.
         In most of the cases, the percentage of economic loss, that
c        is, the percentage of loss of earning capacity, arising from
         a permanent disability will be different from the percentage
         of permanent disability. ... ... "
         11. What requires to be assessed by the Tribunal is the
D        effect of the permanent disability on the earning capacity
         of the injured; and after assessing the loss of earning
         capacity in terms of a percentage of the income, it has to
         be quantified in terns of money, to arrive at the future loss
         of earnings (by applying the standard multiplier method
E        used to determine loss of dependency). We may however
         note that in some cases, on appreciation of evidence and
         assessment, the Tribunal may find that the percentage of
         loss of earning capacity as a result of the permanent
         disability, is approximately the same as the percentage of
F        permanent disability in which case, of course, the Tribunal
         will adopt the said percentage for determination of
         compensation (See for example, the decisions of this
         Court in 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].
G
         12.xxx                       )()()(            XXX·

         13. Ascertainment of the effect of the permanent disability
         on the actual earning capacity involves three steps. The
H
NAGARAJAPPA v. DIVISIONAL MANAGER, ORIENTAL                   79
   INS. CO. LTD. [ASOK KUMAR GANGULY, J.]

 Tribunal has to first ascertain what activities the claimant A
  could carry on in spite of the permanent disability and what
  he could not do as a result of the permanent ability (this is
  also relevant for awarding compensation under the head
  of loss of amenities of life). The second step is to ascertain
  his avocation, profession and nature of work before the B
 accident, as also his age. The third step is to find out
 whether (i) the claimant is totally disabled from earning any
 kind of livelihood, or (ii) whether in spite of the permanent
 disability, the claimant could still effectively carry on the
 activities and functions, which he was earlier carrying on, c
 or (iii) whether he was prevented or restricted from
 discharging his previous activities and functions, but could
 carry on some other or lesser scale of activities and
 functions so that he continues to earn or can continue to .
 earn his livelihood.                                            D
   14. For example, if the left hand of a claimant is amputated,
  the permanent physical or functional disablement may be
  assessed around 60%. If the claimant was a driver or a
  carpenter, the actual loss of earning capacity may virtually
  be hundred percent, if he is neither able to drive or do          E
  carpentry. On the other hand, if the claimant was a clerk
  in government service, the loss of his left hand may not
  result in loss of employment and he may still be continued
 as a clerk as he could perform his clerical functions; and
  in that event the loss of earning capacity will not be 100%       F
 as in the case of a driver or carpenter, nor 60% which is
 the actual physical disability, but far less. In fact, there may
 not be any need to award any compensation under the
 head of "loss offuture earnings", if the claimant continues
 in government service, though he may be awarded                    G
 compensation under the head of loss of amenities as a
 consequence of losing his hand. Sometimes the injured
 claimant may be continued in service, but may not be found
 suitable for discharging the duties attached to the post or
 job which he was earlier holding, on account of his                H
    80       SUPREME COURT REPORTS                 [2011] 6 S.C.R.

A        disability, and may therefore be shifted to some other
         suitable but lesser post with lesser emoluments, in which
         case there should be a limited award under the head of
         loss of future earning capacity, taking note of the reduced
         earning capacity.
B
         15.xxx                       xxx                xxx
         16....... Sections 168 and 169 of the Act make it evident
         that the Tribunal does not function as a neutral umpire as
         in a civil suit, but as an active explorer and seeker of truth
C        who is required to "hold an enquiry into the claim" for
         determining the "just compensation". The Tribunal should
         therefore take an active role to ascertain the true and
         correct position so that it can assess the "just
         compensation". While dealing with personal injury cases,
D        the Tribunal should preferably equip itself with a Medical
          Dictionary and a Handbook for evaluation of permanent
         physical impairment...·
      9. We are in complete agreement with the
E abovementioned judgment.
        10. On perusal of the doctor's evidence with respect to the
  nature of injuries suffered by the appellant, the appellant was
  found, inter alia, to be suffering from the following disabilities
  as a result of the accident- "gross deformity of the left forearm,
F wrist and hand, wasting and weakness of the muscles of the
  left upper limb and shortening of the left upper limb by 1 c.m."
  As a result, the doctor stated that the appellant could not work
  as a coolie and could not also do any other manual work. The
  doctor assessed permanent residual physical disability of the
G upper limb at 68% and 22-23% of the whole body.
       11. The appellant is working as a manual labourer, for
  which he requires the use of both his hands. The fact that the
  accident has left him with one useless hand will severely affect
H his ability to perform his work as a coolie or any other manual
   NAGARAJAPPA v. DIVISIONAL MANAGER, ORIENTAL                     81
      INS. CO. LTD. [ASOK KUMAR GANGULY, J.]
 work, and this has also been certified by the doctor. Thus, while      A
awarding compensation it has to be kept in mind that the
 appellant is to do manual work for the rest of his life without full
 use of his left hand, and this is bound to affect the quality of his
 work and also his ability to find work considering his disability.
 Hence, while computing loss of future income, disability should        B
 be taken to be 68% and not 20%, as was done by the Tribunal
and the High Court. Our view is supported from the ratio in Raj
·Kumar (supra) and from the fact that the appellant is severely
 hampered and perhaps forever handicapped from performing
 his occupation as a coolie.                                            c
     12. Thus, loss of future income will amount to Rs.3, 18,240/
- (Rs.3000 X 12 X 13 X 68/100). We also enhance the amount
awarded for loss of amenities to Rs.40,000/-, as against
Rs.30,000/- awarded by the High Court. We also enhance the
amount awarded for future medical expenses to Rs.30,000/-, D ·
as against Rs.10,000/- awarded by the High Court. We are
satisfied by the amount awarded under the remaining heads
awarded by the High Court and sustain the same.
     13. The break-up of compensation is as follows:                    E
     Loss of future income                         - Rs.3, 18,240/-
     Loss of amenities                             - Rs.40,000/-
     Pain and suffering                            - Rs.40,000/-        F
     Future medical expenses                       - Rs.30,000/-
     Medical expenses, nourishment, attendant
     Charges and other incidental expenses -Rs.40,000/-                 G
     Loss of income during treatment               -Rs.9,000/-
     TOTAL                                         ·Rs.4,77,240/-

     14. Accordingly, total compensation payable to the                 H
    82       SUPREME COURT REPORTS                 [2011] 6 S.C.R.


A appellant amounts to Rs.4,77,640/-, which we round off to
  Rs.4,77,000/-. The same shall be payable at an interest of 6%
  from the date of claim petition till realization. We direct the
  respondent to calculate the amount and deposit the same by
  way of bank or demand draft in the Motor Accident Claims
B Tribunal, Bangalore and the Presiding Officer of the Tribunal will
  deposit the same in the bank account of the appellant. If there
  is no such bank account one shall be opened in a nationalized
  bank and the demand draft will be deposited there.

         15. Accordingly, the appeal is allowed.
c
         16. No order as to costs.

    B.B.B.                                         Appeal allowed.