Ramachandrappa vs. The Manager, Royal Sundaram Alliance Insurance Company Ltd. [(2011) 13 SCC 236]

Saumya Mishra, 3rd Year student at Hidayatullah National Law University, Raipur

Introduction

As the country’s economy develops, workers in manufacturing and services get more involved, and some face hazardous work, potentially causing serious injuries. Therefore, we have statutory legislation that provides benefits and compensation to prevent these injuries and ensure their livelihood.

The term “disablement” has been defined under the Employees Compensation Act.[1] Disablement is the medical term for an injury brought on by an accident that prevents an employee from working. To put it another way, an accident renders a person unable to work or move. [2] The objective of the act is to make employers responsible for compensating employees for accidents that happen while they are working for that “organization” or “factory.”[3]

The case Ramachanrappa v. Manager, Royal Sundaram sets out the factor for determining the amount of compensation to be given in comparison to the percentage of the bodily injury sustained by the victim.[4]

Facts

Petitioner: Sri Ramachandrappa

Respondents: 1. The Manager, Royal Sundaram

                       2. Alliance Insurance Company Limited 

Civil Appeal No.: 6481 of 2011

The facts are stated below:

1. “The petitioner was employed as Coolie and had monthly wages of Rs.  4500/-. He met with an accident while driving a motorcycle and got grievously hurt.
2. It was put forth by the petitioner that even after his medical treatment, he became unfit to work and earn a livelihood since his right hand became completely disabled;
3. The appellant requested Rs. 5,50,000 in compensation for the same under Section 166 of the Motor Vehicles Act[5];
4. The Tribunal awarded compensation of Rs. 1,13,900 with an interest rate of 6% per year from the date of the petition until the date of deposit. The appellant then filed an appeal before the High Court of Karnataka, and the court increased the compensation to Rs. 1,33,900, with interest of 6% per year from the filing date of the petition until the date of realization.”[6]

Issue Raised

The issue before the court was that:

1. Whether the amount of compensation granted was fair and;
2. What should be the basis for granting compensation?

Legal Provisions Involved

Under Employees Compensation Act:

Section 3: As per section 3(1) of the Act an employer is liable to pay compensation to an employee under the following circumstances:

1. “In case any sort of mental, physical or bodily injury is injury caused to employees i.e., personal injury takes place;
2. The accident that occurred out of or in the course of employment;
3. The injury caused is such that it leads to death, permanent or temporary disablement, or say partial or total disablement of employees;
4. The injury is caused out of employee-employer relationship.”[7]

Exception- “The section also provides when the employee is not liable for compensation even after sustaining injuries:

1. in regards to any injury that does not render the employee completely or partially disabled for a time longer than three days;
2. in regards to any injury, not including death or permanent total disability, resulting from an accident that is primarily due to: (i) the employee being under the influence of alcohol or drugs at the time thereof, (ii) the employee wilfully disobeying an instruction explicitly given, or to a rule specifically established for the intent of ensuring the health and safety of workers.”[8]

Judgment and Ration Decidendi

Ration Decidendi

The Court looked into the following reasonings:

1. Disability refers to a loss or impairment of earning potential. Compensation is granted if physical efficiency is significantly diminished, you are unable to perform work at the same ease, or heavy work is impossible. Disability compensation is categorized based on type, such as temporary, permanent, partial, or whole. The amount of compensation may differ on a case-by-case basis.[9]
2. Compensation should be based on the loss suffered, pain, and incapacity to enjoy life and earn money. Assessing the inability to make a living requires considering future earnings losses. Compensation for pain, suffering, and loss of enjoyment of life cannot supersede it, as they pertain to a person’s diminished ability to make money and their pain, suffering, and quality of life.[10]

Therefore, the impact of the victim’s permanent disability on his or her ability to earn a living must be evaluated by the Tribunal, and after doing so, the impairment of earning capacity must be quantified in monetary terms to determine the future loss of earnings.[11]

But in the same cases, if the proportion of lost earning capability due to the permanent disability is almost equal to the percentage of permanent disability, the Tribunal will naturally use the aforementioned percentage to determine compensation:

(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 such disablement of the limb on the functioning of the entire body, that is, the permanent disability suffered by the person.”[12]

Judgment

It was held that “Due to the physical injuries sustained in the accident, the appellant was permanently partially disabled. Because the evaluation of compensation according to the loss of earning ability is estimated on the lower side, the Tribunal’s valuation is erroneous. According to the doctor’s testimony, the claimant’s injury prevents him or her from working as a Coolie or doing any manual labor. Additionally, the claimant had to stay in the hospital and get lengthy medical care. The Tribunal’s award is insufficient, and it would be in the interests of justice to provide the appellant an additional sum of “2,00,000/- (Rupees Two Lakhs)” as compensation.”[13]

Critical Analysis

The judgment given by the apex court is quite reasonable and fair, in my opinion. As per the Employees Compensation Act, in the event of an accident or injury stemming from or related to employment that results in a person’s death or permanent disability, the employee and/or their dependents will be compensated.

 There are different types of disablements:

1. Temporary Disablement: It means not being able to work normally like before disablement for a temporary time period;

It is further divided into two subheads:

1. Temporary Partial Disablement: It temporarily limits the workers’ ability to make money from any work that they could previously complete successfully before the mishap;
2. Temporary Total Disablement: A worker who is temporarily totally disabled is unable to perform every task that he or she is capable of.[14]
3. Permanent Disablement: The disablement that lasts for an indefinite/permanent period, caused by an accident in the workplace.

It is also further divided into:

1. Permanent Total Disablement: If a worker sustains an injury listed in Part I of Schedule I of the aforementioned act or another set of injuries listed in Part 2 of Schedule I, which together would lead to an impairment of earning capacity of 100%;
2. Permanent Partial Disablement: When the earning capacity of a worker is reduced and he cannot work like before such an injury. Every injury listed in Part II Schedule I is deemed a permanent partial disability since it is permanent. (Part I, Schedule I, 48 injuries, such as loss of thumb 30%, loss of four fingers of one hand 50%, etc.)[15]

Section 4 of the Employee Compensation Act:

As per this section, the compensation amount differs as per different situations:

1. Death of Employer: A half of the deceased’s monthly salary is awarded as compensation;
2. Permanent Disablement: If an injury results in total and permanent disability, the employee is entitled to compensation equal to the greater of 60 percent of their monthly salary times their applicable employee factor, or Rs. 120,000;
3. Permanent Total Disablement: Pro-rata is used to determine the amount of compensation in this case. Some cases are also determined by the medical professional’s qualified assessment;
4. Temporary Disablement: In both partial and permanent temporary circumstances, the granted compensation is a half-monthly payout, or 25% of the monthly wages, on the sixteenth day of the disability. [16]

The compensation is often determined by the claimant’s loss of earnings or earning potential.

If the extent of disability before the court has been established, then the loss of earning capacity will be determined before granting compensation.

In a recent judgment given by the Supreme Court, “The victim was a laborer who lost the grip of her arm due to damages to her nerves when a pole fell on her left arm and she lost her grip due. The MP high court assessed the liability as 40%. Setting aside the High Court Order, the Supreme Court held that it should be considered as total disablement as the claimant cannot do the work which she was earlier doing.”[17]

To put it in simple words by the court, the “functional disability” is the determining factor for the amount of compensation, not the physical disability.

The bench also observed that “If the disablement incurred in an accident incapacitates a workman for all work which he was capable of performing at the time of the accident resulting in such disablement, the disablement would be taken as total for awarding compensation under Section 4(1)(b) of the act regardless of the injury sustained not being one as specified in Part I of Schedule I of the Act.”[18]

Conclusion

We can conclude that the amount of compensation should be based on the worker’s inability to function to earn a livelihood. If only the physical disability is considered then the loss sustained by the victim cannot be reimbursed, whether it is higher or lower. The notion that the percentage of loss should be equal to the percentage of compensation has been overruled by the courts in various cases. In the case of Channappa Nagappa Muchalagoda[19], functional disability was said to be considered even though the percentage loss of a body part was lower as compared to the amount of compensation since it impaired the worker’s capacity to work. Therefore, functional disability should be the factor determining the amount of compensation.

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[1]Employee Compensation Act, 1923, Acts of Parliament, 1923 (India).

[2]Disablement: Classification of Disablement, SRD LAW NOTES, (Aug, 10, 2003), https://www.srdlawnotes.com/2017/11/disablement-classification-of.html#:~:text=The%20expression%20%22disablement%22%20means%20loss,capacity%20is%20technically%20called%20disablement.

[3]Types of disablement in workmen compensation act, THE KEEP IT SIMPLE, (Aug, 10, 2023),  https://www.thekeepitsimple.com/types-of-disablement-in-workmen-compensation-act/

[4]Ramachandrappa v. Royal Sundaram Alliance Insurance Co. Ltd., (2011) 13 SCC 236

[5]The Motor Vehicles Act, 1988, § 166, Act of Parliament, 1988 (India)

[6]Supra note 4

[7]Employee Compensation Act, 1923, § 3, Acts of Parliament, 1923 (India).

[8]Employee Compensation Act, 1923, § 3, Acts of Parliament, 1923 (India).

[9]Ramachandrappa v. Royal Sundaram Alliance Insurance Co. Ltd., (2011) 13 SCC 236

[10]Ramesh Chandra Vs. Randhir Singh (1990) 3 SCC 723

[11]Supra note 9

[12]Yadava Kumar v. National Insurance Co. Ltd., (2010) 10 SCC 341

[13]Supra note 4

[14]Types of disability under workmen compensation act 1923, STUDOCU, (Aug, 11, 2023), https://www.studocu.com/in/document/university-of-mumbai/llb-case-study-list/types-of-disabilitiy-under-workmen-compensation-act-1923/44581028

[15]Id.

[16]Employee Compensation Act, 1923, § 4, Acts of Parliament, 1923 (India).

[17]Indra Bai v Oriental Insurance Company Ltd, 2023 LiveLaw (SC) 543

[18]Id.

[19]Chanappa Nagappa Muchalagoda v. New India Insurance Co. Ltd., (2020) 1 SCC 796