SIB GENERAL INSURANCE CO LTD v. KANCHAN BASNET & ORS

1. This appeal has been filed by Insurance Company assailing the award dated 13th September 2023 passed by the Motor Accidents Claims Tribunal (‘MACT/Tribunal’), Tis Hazari Courts, New Delhi, in MACT No. 647/2018, whereby compensation of Rs. 13,24,638/- along with interest @8% per annum was awarded for an an accident which occurred on 04th June 2017, resulting in serious injuries to the claimant.

2. Mr. Sameer Nandwani, counsel for Insurance Company, challenges the award on the ground of determination of functional disability at 15%, as also the future loss of income which has been granted. Further, interest rate awarded at 8% has also been challenged.

3. On perusal of the Award, it is noted that the claimant had suffered 15% permanent physical impairment with relation to her left lower limb, which had compromised her earning capacity for the future.

4. The claimant used to run a boutique and, therefore, the functional disability was taken at 15% and applied to the annual income in order to calculate the loss of future earnings.

5. Reliance in this regard can be placed on Raj Kumar v. Ajay Kumar (2011) 1 SCC 343, the Supreme Court held that the Tribunal must assess not merely the extent of permanent disability but its actual impact on the claimant’s earning capacity, which may differ from the medical percentage of disability. This requires evaluating the claimant’s pre-accident vocation, the functions affected, and whether livelihood can still be earned despite the disability. The Court emphasised that disability and loss of earning capacity are distinct concepts, except in cases where evidence shows they coincide. Relevant paragraphs are extracted as under:

6. Considering the vocation of claimant, the Court does not find anything amiss in assessing the functional disability at 15%. The claimant was admittedly running a boutique, which required prolonged standing, movement, interaction with customers, supervision of tailoring and day-to-day management of the establishment. Applying the triple test enunciated in Raj Kumar v. Ajay Kumar (supra), it cannot be said that the claimant became wholly incapable of carrying on her avocation; equally, it cannot be ignored that the permanent disability would impede the efficient discharge of the functions. The disability, therefore, has a direct bearing on her earning capacity, though not to the extent of rendering her completely unemployable.

7. Further, as regards the contention that no compensation towards future loss of income should be awarded on the ground that injured's income subsequently increased, as reflected in the ITRs, the same cannot be accepted. Such an increase in income cannot, by itself, be a ground to deny compensation towards loss of future earning capacity. The disability suffered by the claimant would inevitably affect her ability to efficiently carry on her work of running the boutique and could render her less competitive in the long run. Even if there is no immediate loss of income, considering the disability incurred, almost certainly there would be a loss of earning in the future.

8. Moreover, the grant of future prospects, therefore, also cannot be questioned, considering it has been a standardized parameter enunciated by the Supreme Court in Sarla Verma v. DTC, (2009) 6 SCC 121. National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 and, therefore, has been rightly granted at 25% considering the claimant was 44 years of age at the time of the accident