Motor Vehicles Act: Functional Disability Must Reflect Real-World Loss of Earning Capacity, Not Just Medical Assessment, Says SC

The Supreme Court has held that compensation under the Motor Vehicles Act must be assessed on the basis of an injured person's actual loss of earning capacity and ability to perform everyday activities, and not merely on the percentage of physical disability certified by a medical board.

A Bench of Justices S V Bhatti and N V Anjaria said that where an injury results in a total loss of working capacity, the functional disability of the claimant may be assessed at 100%, even if the medical board has certified a lower percentage of physical disability.

Court made the observations while dealing with appeals filed by Sunil Kumar and Sreejith K S, who suffered permanent disabilities in the same road accident. It enhanced their compensation after reassessing their functional disability and applying the multiplier method to calculate attendant charges.

Functional disability different from physical disability

Court said the percentage of physical disability certified by a medical board cannot, by itself, determine the extent of loss suffered by an injured claimant. What has to be considered is the actual impact of the injuries on the person's ability to work and lead an independent life, Court emphasised.

In Sunil Kumar's case, the medical board had assessed his permanent physical disability at 75.5%. However, Court found that the functional effect of his injuries was much more severe.

Sunil Kumar, who was 43 years old at the time of the accident and was engaged in trading bakery items, required an attendant and a bystander throughout his life. Court also noted that he had suffered a higher-grade psychiatric disability and would not be able to perform work independently.

"Even though the medical board certified the medical disability to be 75.5%, the functional effect can be said to be debilitating for the appellant to the extent of 100%," the Bench said.

It added that a person who remains dependent on another and requires an attendant throughout life can be considered to be suffering from 100% functional disability.

Court accordingly held that Sunil Kumar had suffered a total loss of working capacity and reassessed his functional disability at 100%.

How should attendant charges be calculated for permanently disabled claimants?

Court also held that attendant charges for a permanently disabled claimant should be calculated using the multiplier method rather than by fixing a monthly amount.

It said the multiplier method takes into account factors such as inflation, interest rates and the claimant's life expectancy. This ensures that compensation awarded for lifelong dependency remains adequate and sustainable.

Applying this approach, Court enhanced Sunil Kumar's total compensation to Rs 77,84,394, with interest at 6.5% per annum.

In Sreejith K S's case, the medical board had assessed his permanent disability at 62%. Sreejith was 22 years old at the time of the accident and was also engaged in trading bakery items.

Court noted that his injuries were serious, resulted in permanent disability and effectively affected his ability to earn in the open competitive market. It also took into account his loss of marriage prospects, observing that he was an energetic and able-bodied young man before the accident.

Court accordingly determined his compensation at Rs 69,60,880, with interest at 6.5% per annum.

What was the accident and how did the cases reach Supreme Court?

The accident took place on October 22, 2016, at about 7.40 am. Sunil Kumar was travelling as a pillion rider while Sreejith was driving a scooter on the Thrissur-Kodara public road in Kerala.

When they reached near the Paliyekkara toll plaza, another scooter, allegedly being driven rashly and negligently, collided with their scooter, causing injuries to both.

The Motor Accident Claims Tribunal, Irinjalakuda had awarded Rs 19,91,954 to Sunil Kumar and Rs 16,03,400 to Sreejith.

The Kerala high court subsequently enhanced the compensation to Rs 36,22,644 in Sunil Kumar's case and Rs 27,70,664 in Sreejith's case, with interest.

Sunil Kumar and Sreejith challenged the common judgment of the Kerala High Court dated January 6, 2026, before the Supreme Court.

Court has now directed the insurance company to deposit the additional compensation awarded in both cases, along with interest, within six weeks.

Case Title: Sunil Kumar (Totally Disabled Rep by Wife) Vs IFFCO Tokio General Insurance Company Ltd

Bench: Justices S V N Bhatti and N V Anjaria

Date of Judgment: October 15, 2026