M/S.SUNNY JACOB JEWELLERS AND WEDDING CENTRE vs. THE COMMISSIONER OF INCOME TAX

MACA NO. 107 OF 2019 : 4 : 6. Soliciting enhancement of the quantum of compensation, the petitioner has come up in appeal. 7. According to the petitioner, he was aged 34 years at the time of the accident and was working as Assistant Manager (Sales), Malabar Gold and Diamonds, Ernakulam. He produced Ext.A-17 Form -16 certificate of deduction of tax at source by the employer to prove his income from the salary as Rs.3,06,000/- ( Rs.25,500/- per month) for the assessment year 2016-17, the year of accident. He has also produced Ext.A-15 disability certificate, wherein the Medical Board has assessed the permanent disability of the petitioner as 40%. 8. The Tribunal accepted the percentage of disability as 40% for computing compensation for disability. The Tribunal also observed that the petitioner is a permanent earning person paying income tax. However, only notional income was taken into account in

MACA NO. 107 OF 2019 : 5 : order to assess compensation for permanent disability. 9. According to Adv.P.B.Krishnan, the learned counsel appearing for the petitioner, the Tribunal, after having accepted the income of the petitioner as shown in Ext.A-17, ought not to have taken the notional income as Rs.9,000/- per month for the purpose of calculating the compensation for permanent disability. Usually, the notional income is taken into account for the purpose of calculation of compensation for permanent disability, when there is no other evidence as regards the income of the victim. The petitioner has produced Ext.A-17 Form- 16 certificate of deduction of tax at source issued by the employer, which shows his monthly income as Rs.25,500/-. The Tribunal also found that the petitioner is a permanent earning person paying income tax. In such circumstances, when there is evidence regarding the income, the Tribunal should have accepted Ext.A-17 and

MACA NO. 107 OF 2019 : 6 : ought not to have taken a notional income for assessing the compensation for permanent disability. Accordingly, the income of the petitioner has to be taken as it appears in Ext.A-17 for assessing the compensation for permanent disability. 10. The accident has resulted in the loss of vision of the petitioner. The Medical Board has assessed the disability of the petitioner as 40%. It is contended by the petitioner that due to disability and disfiguration he has lost his promotion and avenues. Taking note of the disability suffered by the petitioner, particularly, with regard to his vision, I am of the view that the petitioner is entitled for adding 40% of his income towards future prospects and the income of the petitioner, after adding 40% would come to Rs.35,700/-, for the purpose of calculating the compensation for permanent disability. 11. The learned senior counsel for the insurance

MACA NO. 107 OF 2019 : 7 : company submits that there is no evidence to show that the petitioner has suffered any loss of income after the accident. It is contended that though 40% is the permanent disability of the petitioner as assessed by the Medical Board, the same cannot be taken as his functional disability. 12. Adv.Krishnan would contend that due to the accident, his promotion opportunities as well as chance of getting better employment is lost and therefore, his disability for assessing compensation is much more than 40%. 13. The Hon'ble Supreme Court, in Raj Kumar v. Ajay Kumar and another [2010 KHC 5021: 2011 (1) KLT 620:(2011) 1 SCC 343], considered in detail the correlation between the permanent disability suffered in an accident and the loss of earning capacity of the victim resulting therefrom. The Court held as under:

MACA NO. 107 OF 2019 : 8 : “8. 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 on his earning capacity. The Tribunal should not mechanically apply the percentage of permanent disability as the percentage of economic loss or loss of earning capacity. In most of the cases, the percentage of economic loss, that is, percentage of loss of earning capacity, arising from a permanent disability will be different from the percentage of permanent disability. Some Tribunals 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 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. What requires to be assessed by the Tribunal is the effect of the permanently

MACA NO. 107 OF 2019 : 9 : 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 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 percentage of loss of earning capacity as a result of the permanent disability, is approximately the same as the percentage of permanent disability in which case, of course, the Tribunal will adopt the said percentage for determination of compensation.....” “9. Therefore, the Tribunal has to first decide whether there is any permanent disability and if so the extent of such permanent disability. This means that the tribunal should consider and decide with reference to the evidence: (i) whether the disablement is permanent or temporary; (ii) if the disablement is permanent, whether it is permanent total disablement or permanent partial disablement, (iii) if the disablement percentage is expressed with reference to any specific limb, then the effect of

MACA NO. 107 OF 2019 : 10 : such disablement of the limb on the functioning of the entire body, that is the permanent disability suffered by the person. If the Tribunal concludes that there is no permanent disability then there is no question of proceeding further and determining the loss of future earning capacity. But if the Tribunal concludes that there is permanent disability then it will proceed to ascertain its extent. After the Tribunal ascertains the actual extent of permanent disability of the claimant based on the medical evidence, it has to determine whether such permanent disability has affected or will affect his earning capacity. 10. Ascertainment of the effect of the permanent disability on the actual earning capacity involves three steps. The Tribunal 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). The second step is to ascertain his avocation, profession and nature of work before the accident, as also his age. The third step is to find out whether (i) the claimant

MACA NO. 107 OF 2019 : 11 : 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, 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..” The said yardstick in determining the extent of permanent disability for assessment of loss of earning capacity has been reaffirmed by the Hon'ble Supreme Court in Pappu Deo Yadav v. Naresh Kumar and others [AIR 2020 SC 4424] and reiterated in Jithendran v. New India Assurance Co. Ltd. And another [2021 KHC 6653: 2021 (4) KLJ 646: AIR 2021 SC 5382]. 14. I find force in the submission made by the learned senior counsel for the insurance company regarding functional disability and taking note of the

MACA NO. 107 OF 2019 : 12 : fact that there is no loss of income for the petitioner after the accident, I take the percentage of functional disability of the petitioner as 20%. In the light of the above facts, the compensation for permanent disability is re-worked as, Rs.13,70,880/- [35,700x12x16x20/100]. Since the Tribunal has already awarded an amount of Rs.6,91,200/-, the petitioner is entitled for an additional amount of Rs.6,79,680/- [13,70,880-6,91,200]. 15. Towards bystanders expenses, the Tribunal has awarded an amount of Rs.6,750/- (250x27 days, one person). I find that the petitioner is entitled for an amount of Rs.10,800/- (400x27 days), taking note of the rate of wages prevalent in the year 2016 and accordingly, the petitioner is entitled for an enhanced amount of Rs.4,050/- (10,800 – 6,750) under the said head. 16. The Tribunal has awarded an amount of

MACA NO. 107 OF 2019 : 13 : Rs.15,000/- towards compensation for loss of amenities and conveniences. Taking into account the disability suffered by the petitioner, as evident from Ext.A-15 disability certificate, I am of the view that an amount of Rs.50,000/- will be a just and reasonable compensation under the said head and accordingly, the petitioner is entitled for an additional amount of Rs.35,000/- (50,000- 15,000). 17. The compensation awarded by the Tribunal under the other heads is just and reasonable. 18. In the result, the petitioner is entitled for an enhanced amount of Rs.7,18,730/- [6,79,680 + 4,050 + 35,000] (Rupees seven lakhs eighteen thousand seven hundred and thirty only). 19. The rate of interest awarded is 9% per annum. Taking note of the rate of interest prevalent, the petitioner will be entitled only for 7.5% interest per

MACA NO. 107 OF 2019 : 14 : annum for the enhanced amount of Rs.7,18,730/-. The 3rd respondent insurance company shall deposit the enhanced compensation with interest as aforesaid and with proportionate costs before the Tribunal, within a period of two months from the date of receipt of a copy of this judgment. Appeal is disposed of. Sd/- MURALI PURUSHOTHAMAN JUDGE SB