Functional Disability, Not Medical Disability, To Be Considered For Compensation Under Motor Vehicles Act: Supreme Court

The Supreme Court of India on September 4, 2025 clarified that for the purpose of awarding compensation arising from a motor accident under the Motor Vehicles Act, it is the functional disability that reduces the earning capacity of the claimant which has to be assessed, and not merely the medical disability certified by a medical board.

A bench of Justices K Vinod Chandran and N V Anjaria upheld the judgment of the High Court in a case concerning appellant Anoop Maheshwari, who had suffered amputation of a leg and part of the pelvic bone following a road accident. The High Court had determined his disability to be 50 percent for the purpose of calculating loss of income on the basis of loss of earning capacity, which the Supreme Court held to be correct and within the proper parameters for assessing compensation.

The court observed that while medical disability may be certified by a medical board, it is the impact on earning capacity that must guide computation of compensation. The bench added that a medical board’s certificate can be accepted as valid evidence even without a witness being examined.

The accident in question took place on April 9, 2007 when the appellant, while riding a bike with a pillion rider, was hit by a truck driven rashly and negligently. As a result, the appellant suffered amputation of one leg and part of the pelvic bone on the same side. The court recorded that the claimant was running a business at the time of the accident and has since been fitted with a prosthetic limb to ensure his mobility.

The Motor Accident Claims Tribunal had awarded the appellant a compensation of Rs 13,23,831. On appeal, the High Court enhanced the award to Rs 23,09,600. Considering the matter further, the Supreme Court agreed with the High Court’s findings, holding that the Tribunal had relied upon surmises and conjectures in rejecting income records such as income tax returns and sales tax returns for determining loss of income.

The bench noted that the appellant had registered his business on March 6, 2006, and had produced income tax returns for the assessment years 2005–2006 and 2006–2007, relatable to financial years 2004–2005 and 2005–2006, all of which pre-dated the accident of April 2007. The Court held that there could be no basis for presuming that the claimant had anticipated an accident and therefore arranged to register a firm or file tax returns two years earlier. It was held that the rejection of these documents by the Tribunal was improper.

Accordingly, the Supreme Court assessed the income of the appellant at Rs 1,91,000. In determining loss of income, the Court approved the application of the multiplier of 18, holding that the disability at 50 percent, as found by the High Court, was correct.

The Court further held that since just compensation was being granted, there was no occasion to award compensation for loss of future prospects. The bench observed that although the claimant had suffered disability, there was no difficulty in continuing his business activities, particularly as he had been fitted with a prosthetic limb which allowed mobility and continuation of business operations.

The Court set aside the High Court’s enhancement of 40 percent in annual income on account of future prospects, holding that such enhancement was unwarranted when functional disability had already been reckoned at 50 percent for the purpose of loss of earning capacity and the claimant was able to continue his business.

On medical expenses, the Court directed that the entire amount of Rs 12,54,985 supported by invoices must be reimbursed. Additionally, it awarded Rs 10,00,000 towards future expenses for the continued use and maintenance of the prosthetic limb, as well as medical requirements associated with the disability.

After these adjustments, the Supreme Court enhanced the total compensation to Rs 48,44,790, which is to be paid by the insurance company within three months, with interest at the rate of six percent per annum from the date of the application.

Case Title: Anoop Maheshwari Vs Oriental Insurance Company Ltd & Ors

Judgment Date: September 4, 2025

Bench: Justices K Vinod Chandran and N V Anjaria