“Loss of One’s Leg Does Not Always Mean 100% Loss of Livelihood”: Supreme Court on Functional Disability in Injury Claims

“It is not as if the appellant was vending fruit on his foot… Functional disability must be assessed in relation to earning capacity, not merely inability to carry on a chosen vocation.” - Supreme Court of India issued an important decision refining the principles governing assessment of compensation for permanent disability. The Court clarified that compensation for functional disability should not be based solely on a person’s inability to continue in their previous job, but rather on the actual impact of the disability on overall earning capacity. This pronouncement was made while modifying the compensation awarded to a fruit vendor whose right leg was amputated following a traffic accident caused by a rashly driven truck.

The appellant, Sunil Kumar Khushwaha, a self-employed fruit vendor, suffered grave injuries when a truck hit him while he was walking, leading to the amputation of his right leg from the knee. His treatment involved shifting between several hospitals including one in Delhi. Despite submitting income tax returns showing a modest but consistent income of ₹1,56,996 per year, the Motor Accident Claims Tribunal (MACT) awarded compensation largely limited to medical expenses, offering no award for loss of future income due to disability.

The Tribunal granted ₹7,09,273, out of which ₹5,00,949 was for medical bills, ₹19,624 for income loss during treatment, ₹13,700 for travel, and ₹1,75,000 for pain and suffering. The High Court upheld this award while relying on Raj Kumar v. Ajay Kumar & Anr. [(2011) 1 SCC 343], which emphasized the need to assess functional disability based on the impact on earning capacity, not just physical impairment.
Functional Disability
The Supreme Court focused its attention on the appellant’s plea for 100% compensation under the head of loss of earning capacity. Counsel for the appellant contended that the amputation rendered him entirely incapable of pursuing his previous occupation as a fruit vendor. However, the Court firmly rejected this oversimplified view.

Justice K. Vinod Chandran, delivering the judgment, observed: “We are not satisfied that a functional disability of 100% can be assessed only because he cannot carry on the vocation which he was carrying on earlier.”

Referring to the evidence placed before the Court, including the appellant’s income tax returns and the testimony of CW-2, the Court highlighted that: “It is not as if the appellant was vending fruit on his foot, especially when it is seen that he was filing an Income Tax Return. It is also evident from the deposition of CW-2 that the injured was having a shop in Bazar Samiti.”

In doing so, the Court drew a critical distinction between physical disability and functional disability. The former refers to the percentage loss of bodily function as certified by a medical board—in this case, 50% due to amputation. But functional disability, the Court clarified, must be measured against the actual reduction in the person’s capacity to earn a livelihood.

The Supreme Court relied again on its ruling in Raj Kumar, where it had accepted that a self-employed businessman with an amputated leg could continue to earn albeit with assistance, leading to a 60% functional disability. On this basis, the present Court declared: “Hence, in the present case, functional disability can be assessed at 60%.”

Enhanced Compensation
Recognizing that the injury had a significant but not absolute impact on the appellant’s earning capacity, the Court sought to fairly balance the loss suffered with the appellant’s residual capacity to earn. It held that the injured, though unable to work as before, could operate his business by hiring assistance.

Moreover, the Court reassessed the conveyance costs, noting that the appellant had been shifted across cities for treatment, including to Delhi. Accordingly, the conveyance costs were enhanced from ₹13,700 to ₹50,000.
The Court also found the compensation for pain and suffering inadequate. Taking into account the trauma of leg amputation and the arduous treatment process, it awarded a rounded sum of ₹2,00,000 for this head.

Additionally, for attendant charges and special diet, the Court awarded ₹15,000 per month for six months, recognizing the recovery period and dependency needs of the appellant.

Final Award and Directions of the Court
The Court, through a detailed tabulation of revised heads of damages, arrived at a total compensation of ₹32,34,353. This was a significant enhancement from the initial award of ₹7,09,273 by the Tribunal. The revised compensation included: “Loss of income calculated as ₹1,56,996 x 140% x 18 x 60%, i.e., ₹23,73,780.”

This formula applied the standard multiplier method with 140% enhancement for self-employed persons and 60% functional disability for a person aged under 40, for a multiplier of 18.

The Court directed: “The said amount shall be paid, deducting whatever amount has been paid as of now, with interest as directed by the Tribunal, running from the date of filing of the claim petition, within a period of two months.”
Furthermore, it instructed the appellant to furnish bank details for the direct transfer of the compensation amount.

This judgment is a vital exposition of how courts must approach the calculation of functional disability in personal injury compensation claims. By distinguishing between incapacity to perform a specific job and overall reduction in earning potential, the Supreme Court ensured that compensation awards are grounded in practical economic realities rather than simplistic equations. It reaffirmed that disability law requires a nuanced, fact-sensitive, and vocationally contextual approach.

Date of Decision: May 7, 2025