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Calculation Of Functional Disability Depends On Assessing The Victim’s Earning Capacity In The Open, Competitive Market : SC

The Hon'ble Supreme Court has given remarkable decision holding the longstanding idea that sufferer's earning capacity should be assessed in the open and competitive market only.

The facts of the case were as: In a road accident, the claimant had suffered a 100% physical disability by blindness, pelvic fractures, and a permanent loss of large intestine resulting to stoma for her life time. Also, in the same accident, her fiancé had succumbed to death resulting to loss of marriage prospects. She had to go through 19 months of unpaid leave to recover from the injuries. The testimonies and records of various medical professionals established that the Claimant was treated at multiple hospitals, including Anand Hospital (Meerut), Fortis Hospital (Noida), Kailash Hospital, Heart Institute (Noida), and Nitin Hospital (Patiala). Despite an attempt to restore continuity of her large intestine at AIIMS, the procedure failed, leaving her with a permanent stoma for the rest of her life.

In deciding the Claimant's entitlement to compensation, the MACT (Tribunal) examined the functional and physical disability the Claimant has suffered. While her Medical Certificate proved a 100% physical disability, the Insurer brought out during cross-examination that the Claimant was still employed as a Deputy Group Manager and earning a salary and she had received a minor growth in her salary since the accident.

The Tribunal noted that the Claimant was only able to work using highly specialized assistive software provided by her employer. Because assessing loss of earning capacity requires looking at employability in the open market, her functional disability was assessed at 60%. The Insurer filed FAO in the High Court contending that the claimant had a working job while the claimant also filed a FAO in the High Court to reconsider the loss of marriage prospects and the functional disability. The High Court further enhanced her functional disability to 80%. Aggrieved to this adverse order the Insurer approached the Supreme Court.

The SC observed that the calculation of functional disability depends on assessing the victim’s earning capacity in the open, competitive market, rather than on retention in a specific, highly accommodated role, hence supported the version of the MACT and the High Court. Furthermore, The Career Growth Letter from her employer, confirmed that the Claimant lost out on her normal career growth and promotional progression, including advancement to the positions of General Manager, Director, or Vice President, as a result of the accident. The record further indicates that she is able to perform her current duties only through specially created software, flexible working hours, and extreme accommodations provided by her employer as an act of corporate compassion. Hence, the SC enhanced the functional disability assessment to 100%.

Therefore, the compensation on the basis of 100% functional disability/permanent physical impairment revised and the total compensation awarded now stands to Rs. 3,77,84,297/- with interest at 7.5 per cent per annum from the date of the Claim Petition until the entire amount is realized. This amount includes a compensation of Rs. 20,00,000/- for loss of her marriage prospects, which the court held applicable to the present case only, and will not form precedent for other matters.

Legal Citation: Reliance General Insurance Company Limited v. Priyanka Das & Ors. (2026 INSC 950)

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