Landmark Supreme Court Ruling: Functional Disability Takes Precedence in MV Act Compensation

In a significant and empathetic ruling, the Supreme Court of India has unequivocally clarified that compensation awarded under the Motor Vehicles Act (MV Act) for accident victims should primarily consider 'functional disability' rather than solely relying on 'medical disability'. This landmark decision aims to ensure that victims receive fair compensation that truly reflects their loss of earning capacity and quality of life, rather than just the medical impairment certificate.

A bench comprising Justice CT Ravikumar and Justice Sudhanshu Dhulia emphasized that the purpose of awarding compensation is to provide restitution for the loss suffered by the victim due to the accident.

This loss extends beyond mere physical injury; it encompasses the inability to perform daily activities, pursue one's profession, and generally live life as before the accident. The court underscored that a medical certificate, while crucial for establishing the injury, does not fully capture the profound impact on a person's ability to earn a livelihood or participate in society.

The judgment highlights a critical distinction: medical disability refers to the physical or mental impairment certified by a medical professional, often expressed as a percentage of physical impairment.

Functional disability, on the other hand, assesses how that medical impairment translates into a reduction of the individual's capacity to perform their pre-accident work or engage in economically productive activities. For instance, a person might have a 30% medical disability in their leg, but if their profession heavily relies on mobility, their functional disability could be much higher, leading to a complete loss of their earning potential in that field.

This judicial stance corrects a prevalent issue where courts sometimes relied too heavily on the medical percentage, leading to inadequate compensation for victims whose functional capabilities were severely hampered despite a lower medical disability percentage.

The Supreme Court's ruling ensures a more holistic and human-centric approach, focusing on the real-world impact of injuries on an individual's life and economic prospects.

The bench further elaborated that the Motor Vehicles Act is a piece of social welfare legislation. Its interpretation must, therefore, be liberal and pragmatic, aimed at achieving its underlying objective of providing succor to accident victims and their families.

This perspective mandates that the focus remains on compensating the 'loss of earning capacity' which is directly linked to functional disability, rather than a mere assessment of physical impairment.

This decision is expected to have far-reaching implications, setting a clear precedent for all future motor accident claims across the country.

It empowers claimants to argue for compensation based on how their lives and livelihoods have been fundamentally altered, providing a much-needed layer of protection and justice for those grappling with the devastating aftermath of road accidents. It reinforces the principle that justice must not only be done but must also be seen to be done, especially for the vulnerable.