Holding

Compensation for loss of future earnings must be computed on the basis of at least 90% loss of earning capacity, not the 50% disability fixed under Schedule 1 of the Workmen's Compensation Act, 1923.

Summary

Mohan Soni, a cart puller, lost his left leg below the knee in a motor vehicle accident and claimed compensation under section 166 of the Motor Vehicles Act, 1988. The Motor Accident Claims Tribunal awarded Rs.2,03,400, fixing his disability at 50% based on Schedule 1 of the Workmen's Compensation Act, 1923, and the High Court later increased his monthly income but retained the 50% disability, raising the total to Rs.2,58,000. The Supreme Court held that disability must be assessed in relation to the nature of the claimant's work, and for a cart puller the loss of a leg essentially eliminates earning capacity, warranting a loss of at least 90% (up to 100%). Consequently, the Court increased the compensation for loss of future earnings to Rs.3,56,400, added Rs.45,000 for pain, suffering and medical expenses, and ordered interest at 9% per annum, bringing the total to Rs.4,01,400. The appeal was allowed.

Issues considered

What is the appropriate method for assessing disability percentage and loss of earning capacity in motor accident compensation cases?
Whether the 50% disability fixed by the Tribunal and High Court, based on Schedule 1 of the Workmen's Compensation Act, 1923, is applicable to a cart puller who lost a leg?
Whether the claimant's age and potential for alternative livelihood affect the quantum of compensation?

Legislation cited

Subjects

Motor accident compensationDisability assessmentLoss of earning capacityMotor Vehicles ActWorkmen's Compensation ActUnorganized sectorFuture earningsLegal protection for disabled

Judgment

[2012] 2 S.C.R. 921

MOHAN SONI A
v.
RAM AVTAR TOMAR AND QRS.
(Civil Appeal No. 237 of 2012)

JANUARY 10, 2012
B
[AFTAB ALAM AND R.M. LODHA, JJ.)
'·
Motor Vehicles Act, 1988 - s: 166 - Compensation claim
- On basis of physical disability suffered in an accident and
loss of earning capacity as a result thereof- Appellant, .a cart C
puller, suffered physical disability in an accident - One of his
legs was amputated - Compensation awarded by Tribunal -
On appeal, compensation amount enh'anced by High Court
- Whether the amount of compensation aw_arded was justified
- Held: On facts, both the Tribunal and the High Court were · D
in e"nr in pegging dowri the disability of appellant to 50% with
reference to Schedule 1 of the Wor.kmen's Compensation Ai;t,
1923 - In the context of loss of future earning, any pliysfCal
disability resulting from an accident has to be judged w/th
reference to the nature of work being per(ormed by tf]e person : E
suffering the disability - At the time of the accident, the age
of appellant was 55 years - At that age it would be impqssible
for him to find any job - The party advocating for a lower
amount of compensation must plead and show that the victim
enjoyed some legal protection (as in the case of persons F
covered by The Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act,
1995) or in case of the vast multitude who earn their livelihood
in the UfJorganized sector by leading cogent evidence that the
victim had in fact changed his vocation or the means of his G
livelihood and by virtue of such change he was deriving a
. certain income - Loss of earning capacity of the appellant
may be as high as 100% but in no case it would be less than
90% - Compensation for Joss of appellant's future earnings
computed on that basis.
921 H
922 SUPREME COURT REPORTS [2012] 2 S.C.R.

A The appellant used to earn his livelihood as a cart
Jiuller. While carrying som·e goods on a four-wheel cart,·
he was hit by a tanker. In the accident, the left leg of the
appellant was crushed. He was admitted to a hospital
where 'he had to undergo two surgeries and in the end
B his left leg was amputated below the knee. He filed
application before the Motor Accident Claims Tribunal,
clahning compensation for the injuries s·uffered by him
under section 166 of the Motor Vehicles Act, 1988.
Though the disabled-person identity card given to the
c ·. appellant s.howed his disability as 60%, the Tribunal, with
\reference to Schedule 1 of the Workmen's Compensation
Act, 1923, held that the appellant's disability could not be
·,reckoned above 50%. ·Having ·held that that the
appellant's age at the time of the accident was 55 years,
0 'the Tribunal applied the multiplier of 11 and on the basis
of the findings that thll appellant's monthly income was
Rs.2,400/- and the extent of his disability was 50%, fixed
the amount of Rs.1,58,400/- as compensation for loss of
future earnings-: In addition to this, the Tribunal gave to
E . the appellant Rs.30,0001- for mental and physical 1lgony
due ·to permanent disability and a further sum of
Rs.15,0001- for medical expenses and special diet.
·Accordingly, the Tribunal, by its award held the appellant
entitled to receive a total sum of Rs.2,03,400/· as

I
compensation along with interest at the rate of 9% per
F annum from the date of filing of the claim petition till the
date of payment. Against the award of the Tribunal, the
appellant preferred an appeal before the High Court. The
High Court raised the amount of the monthly income of
the appellant from Rs.2,400/- to Rs.3,000/· and, thereby, ·
G arrived at a sum of Rs.1,98,000/- as compensation for the
loss of future earnings. The total compensation amount
was, thus, raised from Rs.2,0J,400/· to Rs.2,58,000/· •
In the instant appeal, the appellant made grievance
H
MOHAN SONI v. RAM AVTAR TOMAR AND ORS. 923

that the amount of compensation awarded to him by the A
·· Tribunal and the High Court was low.

Allowing the appeal the Court

HELD:1.1. Both the Tribunal and the High Court were
in error in pegging down the disability of the appellant to 9,
50% with reference to Schedule 1 of the Workmen's
Compensation Act, 1923. In the context of loss of future
earning, any physical disability resulting from an
accident has to be judged with reference to the nature of
work being performed by the person suffering the C
disability. This is the basic premise and once that is
grasped, it clearly follows that the same injury or loss may
affect two different persons in different ways. The loss of
one of the legs either to the marginal farmer or the cycle-
rickshaw-puller would be the end of the road insofar as D
their earning capacity is concerned. But in case of a
person engaged in some kind of desk work in an office,
the loss of a leg may not have the same effect. The loss
of a leg (or for that matter the loss of any limb) to anyone
is bound to have very traumatic effects on one's E
personal, family or social life but the loss of one of the
legs to a person working in the office would not interfere
with his work/earning capacity in the same degree as in
the case of a marginal farmer or a cycle-rickshaw-puller.
[Para 7] [927-D-H; 928-A] F
1.2. It is extremely difficult to uphold the decision of
the High Court and the Tribunal based on the finding that
the loss of the appellant's earning capacity as a result of
the amputation of his left leg was only 50%. The appellant
used to earn his livelihood as a cart puller. The Tribunal G
has found. that at the time of the accident his age was 55
years. At that age it would be impossible for the appellant
to find any job. From the trend of cross-examination it
appears that an attempt was made to suggest that •
(

notwithstanding the loss of one leg the appellant could H
924 SUPREME COURT REPORTS [2012] 2 S.C.R.

A still do some work sitting down such as selling
vegetables. It is all very well to theoretically talk about a
cart puller changing his work and becoming a vegetable
vendor. But the computation of compensation payable to.
a victim of motor accident who suffered some serious
B permanent disability resulting from the loss of a limb etc.
should not take into account such indeterminate factors.
Any scaling down of the compensation should require
something more tangible than a hypothetical conjecture
that notwithstanding the disability, the victim could make
c 1up for the loss of income by changing his vocation or by
adopting another means of livelihood. The party
advocating for a lower amount of compensation for that
reason must plead and show before the Tribunal that the
victim enjoyed some legal protection (as in the case of
· persons covered by The Persons with Disabilities (Equal
0
Opportunities, Protection of Rights and Full Participation)
Act, 1995) or in case of the vast multitude who earn their
livelihood in the unorganized sector by leading cogent
evidence that the victim had in fact changed his vocation.
E or the means of his livelihood and by virtue of such
; change he was deriving a certain income. The loss of
earning capacity of the appellant may be as high as 100%
but in no case it would be less than 90%. It is accordingly
held that the compensation for the loss of appellant's
future earnings must be computed on that basis. On
F calculation on that basis, the amount of compensation
would come to Rs.3,56,400/- and after addition of a sum
of Rs.30,000/- and Rs.15,000/- the total amount would be
Rs.4,01,400/-. The additional compensation amount
, would carry interest at the rate of 9ro per annum from the
G · date of filing of the claim petition till the date of payment.
[Para 10) [930-E-H; 931-A-F] . .

K. Janardhan v: United India Insurance Company
Limited and another (2008) 8 SCC 518: 2008 (8) SCR 157;
H Pratap Narain Singh Deo v. Srinivas Sabata (1976) 1 SCC
MOHAN SONI v. RAM AVTAR TOMAR AND ORS. 925

·· 289: 1976 (2) SCR 872; Raj Kumar v. Ajay Kumar and A
another (2011) 1 sec 343: 2010 (13) SCR 179 - relied on.

Case Law Reference:
2008 (8) SCR 157 relied on Para 8
8
1976 (2) SCR 872 relied on Para 8

2010 (13) SCR 179 relied on Para 9
,#.~··

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 237
of 2012. c
From the Judgment & Order dated 01.04.2009 of the High
Court of Judicature at Jabalpur, Madhya Pradesh Bench at
Gwalior in Misc. Appeal No. 844 of 2004.

Anish Kumar Gupta, RD. Gupta for the Appellant. D

The Judgment of the Court was delivered by

AFTAB ALAM, J. 1. Leave granted.

2. The appellant, victim of a motor vehicle accident has E
come to this Court making grievance about the low amount of
compensation awarded to him by the Tribunal and the High
Court.

3. The appellant used to earn his livelihood as a cart puller. F
On December 17, 2003, at about 3.00 P.M. he was carrying
some goods on a four-wheel cart when he was hit by a tanker
which was being driven in a rash and negligent manner. In the
accident, the left leg of the appellant was crushed. The X-Ray
report showed multiple fractures in the left leg. He was admitted G
to a hospital where he had to undergo two surgeries between
December 17, 2003 and January 3, 2004 and in the end his
left leg was amputated below the knee. He filed an application
(Claim Case No.16/2004) before the Second Additional Motor
Accident Claims Tribunal, Gwalior, (M.P.), claiming H
926 SUPREME COURT REPORTS [2012'.] 2 S.C.R.

.compensation for the injuries suffered by him under section 166
.. of the Motor Vehicles Act, 1988. It was stated by him before
the Tribunal that at the time of accident his age was 50 years
and his monthly income, as a cart puller, was Rs.3,,300/-. As a
result of the amputation of his leg, he was no longer in a position
to walk without support and he was, therefore, rendered
incapable of doing any work and to earn his livelihood.

4. The Tribunal found and held that the accident took place
as a result of the negligent and rash driving by the tanker driver.
It further held that at the time of the accident the age of the
C appellant was 55 years and his monthly income was Rs.2,400/
- and not Rs.3,300/- as claimed by him. Coming to the extent
of disability, the Tribunal referred to the disabled-person identity
card given to the appellant (Exhibit P.27) in which his disability
was shown as 60%. The Tribunal also observed that when the
O: claimant appeared in court, it was evident that his left leg was
amputated below the knee. Though the appellant's disabled-
person card showed his disability as 60%, the Tribunal, with
reference to Schedule 1 of the Workmen's Compensation Act,
1923, held that the appellant's disability could not be reckoned
E above 50%.

5. Having held that that the appellant's age at the time of
the accident was 55 years, the Tribunal applied the multiplier
of 11 and on the basis of the findings that the appellant's
F monthly income was Rs.2,400/- and the extent of llis disability
was 50%, fixed the amount of Rs.1,58,400/- as compensation
for loss of future earnings. In addition to this, the Tribunal gave
to the appellant Rs.30,000/- for mental and physical agony due
to permanent disability and a further sum of Rs.15,000/- for
G medical expenses and special diet. Accordingly, the Tribunal,
by its award dated July 31, 2004 held the appellant entitled to
receive a total sum of Rs.2,03,400/- as compem;ation along
with interest at the rate of 9% per annum from the date of filing
of the claim petition on January 9, 2004 till the date of payment.

H 6. Against the award of the Tribunal, the appellant
.MOHAN SONI v. RAM AVTAR TOMAR AND ORS. 927
[AFTAB ALAM, J.)

preferred an appeal (Miscellaneous Appeal No.844 of 2004} A
· before the Madhya Pradesh High Court, Gwalior Bench. In the
High Court, the case was referred to Lok Adalat where the
Insurance Company agreed for enhancement of the amount of
compens.ation by Rs.50,000/-. It, however, appears that the
matter could not be settled in'the Lok Adalat and the appeal B
came to be finally heard and disposed of by the High Court on
merits. The High Court by its judgment and order dated April
· 1, 2009 simply raised the amount of the monthly income of the
appellant from Rs.2,400/- to Rs.3,000/- and, thereby, arrived at
a sum of Rs.1,98,000/c as compensation for the loss of future c
earnings. The total compensation amount was, thus, raised
from Rs.2,03,400/- to Rs.2,58,000/- (practically what was
offered by the Insurance Company before the Lok Adalat on
which no settlement was arrived at between the parties!} .

7. On ~earing counsel for the parties and on going through D
the materials on record, we are of the.view that both the Tribunal
and the High Court were in error in pegging down the disability
of the appellant to 50% with reference to Schedule 1 of the
-.... Workmen's Compensation Act, 1923. In the _context of loss of
· •future earning, any physical disability resulting from an accident E
has to,be judged with reference to the nature of work being
perforrried by the person su(fering the disability. This is the
basic premise and once that is grasped, it clearly follows that
the same injury or loss may affect two different persons in
· different ways. Take the case of a marginal farmer who does F
his cultivation work himself and ploughs his land with his own
·-- two hands; or the puller.of a cycle-rickshaw, one of the main
means of transport in hundreds of small towns all over_ the
country. The loss of one of the legs either to the marginal farmer 1 ·
or the cycle-rickshaw-puller would be the end of the road insofar G
as their earning capacity is concerned. But in case of a person
engaged in some kind of desk work in an office, the loss of a
.. leg may not have the same effect. The loss of a leg (or for that
··-. matter the loss of any limb} to anyone is bound to have very
traumatic effects on one's personal, family or social life but the H
. '928 SUPREME COURT REPORTS [2012) 2 S.C.R.

A loss of one of the legs to a person working in the offiice would
not interfere with his work/earning capacity in the sarrie degree ·
as in the case of a marginal farmer or a cycle-rickshaw-puller.

8. The question of loss of earning capacity resulting from
amputation of one the legs in the case of a tanker driver was
8
considered by this Court in K. Janardhan v. United India
Insurance Company Limited and another, (2008) 8 SCC 518.
In that case, a tanker driver suffered serious injuries in a motor
. accident and as a result, his right leg was amputated upto the
·knee joint. He made a claim under the Workmen's
C Compensation Act, 1923. The Commissioner for Workmen's
Compensation held that disability suffered by him as a result
of the loss of the leg was 100% and awarded compensation
to him on that basis. In appeal, the High Court, like in the
present case, referred to the Schedule to the Workmen's
D Compensation Act, 1923 and held that the loss of a leg on
amputation amounted to reduction in the earning capacity by
60% and, accordingly, reduced the compensation awarded to
the tanker driver. This Court set aside the High Court judgment
and held that the tanker driver had s,uffered 100% disability and
E incapacity in earning his keep as a tanker driver as his right
leg was amputated from the knee and, accordingly, restored
the order passed by the Commissioner of Workmen's
Compensation. In K. Janardhan this Court also referred to and
relied upon an earlier decision of the Court in Pratap Narain
F .Singh Deo v. Srinivas Sabata (1976) 1 SCC 289, in which a
carpenter who suffered an amputation of his left arm from the
elbow was held to have suffered complete loss of his earning
capacity.

G 9. In a more recent decision in Raj Kumar v. Ajay Kumar
and another, (2011) 1 sec 343, this Court considemd in great
detail the correlation between the physical disability suffered
in an accident and the loss of earning capacity resulting from
it. In paragraphs 10, 11 and 13 of the judgment in f.1aj Kumar,
·this Court made the following observations:
H
MOHAN SONI v. RAM AVTAR TOMAR AND ORS. 929
[AFTAB ALAM, J.]

"10. Where the claimant suffers a permanent disability as A
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 on his
earning capacity. The Tribunal should not mechanically
apply the percentage of permanent disability as the B
percentage of economic loss or loss of earning capacity.
In most of the cases, the percentage of economic loss,
that is, the percentage of loss of earning capacity, arising
from a permanent disability will be different from the
percentage of permanent disability. Some Tribunals c
wrongly assume that in all cases, a particular extent
(percentage) of permanent disability would result in a
corresponding loss of earning capacity, and consequently,
if the evidence produced show 45% as the permanent
disability, will hold that there is 45% loss of future earning 0
capacity. In most of the cases, equating the extent
(percentage) of loss of earning capacity to the extent
(percentage) of permanent disability will result in award
of either too low or too high a compensation.

11. What requires to be assessed by the Tribunal is the E
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 terms of money, to arrive at the future loss
of earnings (by applying the standard multiplier method F
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 G
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
H
\I

930 j SUPREME COURT REPORTS [2012) 2 S.C.R.

A Co. Ltd. (2010) 10.SCC.254 and Yadava Kumar v.'
National Insurance Co. Ltd. (2010) 10 SCC 341). ,
. . I
13. Ascertainment of the effecit of the permanent disability
'on the actual earning capacity-involves three steps. The -.:4·' t
Tribunal has to first ascertain what activities the claimant
B
could cany on in spite of the permanent disability and what
- he could-not do as a result of the permanent disability (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
c 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 cany on the -:::;-
activities and functions, which he was earlier carrying on,
D . I • 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)o earn or can continue to
earn his livelihood."
E
10. In light of the aforesaid decisions, we find it extremely
difficult to uphold the decision of the High Court and the Tribunal
based on the finding that the loss of the appellant's earning
. capacity as a result of the amputation of his left leg was only
F· 5,0%. It is noted abpve ·that the appellant used to. earn his
livelihood as a cart puller. The Tribunal has found that at the time
of the accident his age was 55 years. At that age it would be
impossible for the appellant to find any job. From the trend of
cross:examination it appears that an attempt was made to
·-~
G suggest that.notwithstanding the loss of one leg the appellant
could still do some work sitting down such as selling
· vegetables. It is all very well to theoretically talk about a cart
puller changing his work and becoming a vegetable vendor. But
the computation of compensation payable to a victim of motor
accident who suffered some serious permanent disability .
H "
MOHAN SONI v. RAM AVTAR TOMAR AND ORS. 931
[AFTAB ALAM, J.]

resulting from the loss of a limb etc. should not take into account A
such indeterminate factors. Any scaling down of the
compensation should require something more tangible than a
hypothetical conjecture that notwithstanding the disability, the
victim could make up for the loss of income by changing his
vocation or by adopting another means of livelihood. The party B
advocating for a lower amount of compensation for that reason
must plead and show before the Tribunal that the victim enjoyed
some legal protection (as in the case of persons covered by
The Persons with Disabilities (Equal Opportunities, Protection
of Rights and Full Participation) Act, 1995) or in case of the c
vast multitude who earn their livelihood in the unorganized sector
by leading cogent evidence that the victim had in fact changed
his vocation or the means of his livelihood and by virtue of such
change he was deriving a certain income. The loss of earning
capacity of the appellant, according to us, may be as high as D
100% but in no case it would be less than 90%. We,
accordingly, find and hold that the compensation for the loss
of appellant's future earnings must be computed on that basis.
On ca!culation on that basis, the amount of compensatio.n would
come to Rs.3,56,400/- and after addition of a sum of
Rs.30,000/- and Rs.15,000/- the total amount would be E
Rs.4,01,400/-. The additional compensation amount would
carry interest at the rate of 9% per annum from the date of filing
of the claim petition till the date of payment. The additional
amount of compensation along with interest should be paid to
the appellant without delay and not later than three months from F
today.

11. In the result, the appeal is allowed to the extent
indicated above.
G
. B.B.B. Appeal allowed.