There can be a departure from the Schedule of Employees’ Compensation Act, 1923 in deciding functional disability: Supreme Court

Supreme court: In a Special Leave Petition filed by the appellant against the reduction of the disability as per the Employees’ Compensation Act, 1923, the division bench of Sudhanshu Dhulia and K. Vinod Chandran*, JJ., while allowing the appeal, relied on Oriental Insurance Co. Ltd v. Mohd. Nasir, (2009) 6 SCC 280 wherein the Court had pointed out that Motor Vehicles Act created a legal fiction insofar as permitting reference to Schedule I of the Workmen’s Compensation Act, 1923, and held that it is not as if there can never be a departure from the Schedule in deciding the functional disability, which it has been recognised would in certain cases have a corelation with the physical disability.

BACKGROUND

The appellant was an employee engaged to operate a forging machine. One day, a part of the machine fell on his hand and while he was removing the band of the handle lock, his right hand was caught in the machine. He was admitted to a hospital and remained there for around eighteen days; he underwent surgery and lost one phalanx of the little finger, two phalanges of the ring finger, three phalanges of the middle finger and two and a half phalanges of the index finger.

The loss of phalanges of each of the fingers are specifically noticed in the Schedule to the Act wherein the loss of earning capacity also has been determined, totalling which, loss of earning capacity occasioned to the employee is determined. The High Court found that the disability is only to the extent of 34%. Many decisions with respect to functional disability were referred to and they were distinguished on the ground that those were with respect to motor accident claims whereas in the present case, the loss has been statutorily determined.

ISSUES

(I) Whether the High Court erred in mechanically applying the percentages listed in Schedule I without evaluating actual functional disability.

(II) Whether the appellant’s loss of earning capacity, considering the nature of his work and the injuries sustained, justified a higher disability.

(III) Whether compensation ought to be computed based solely on the statutory percentage or should also consider actual functional loss.

DECISION & ANALYSIS

The Supreme Court relied on its previous judgement in the case of Oriental Insurance Co. (supra) wherein in was held that both the Workmen’s Compensation Act, 1923 and the Motor Vehicles Act, 1988 are beneficial legislations aimed at providing expeditious relief to the victims of accidents; in the former to employees and in the latter to third parties. It was further held in Oriental Insurance (supra) that the statutes deserve liberal construction, tand that when injuries are specified in Schedule I and the mode and manner for calculating the amount of compensation is also stipulated, the same would be applicable.

After noticing Explanation 1 to Section 4 of the 1923 Act, the Supreme Court further held that ‘it is also beyond any doubt or dispute that while determining the amount of loss of earning capacity, the Tribunal or the High Court must record reasons for arriving at their conclusion.’).

In the present case, appellant’s four fingers of the same hand were affected. The Court first noticed that there is no loss assessment for amputation of two and a half phalanges of the index finger as per the Schedule, which in any event has to be taken as a whole loss for which the disability is 14%. Hence, in any event, the disability even as determined by the Schedule to the 1923 Act would be 37% aggregating the total loss.

The disability as determined by the statute is for the specific loss of a phalanx or a finger and in the event of more than one such loss it cannot be said that a mere aggregation would determine the actual loss. The Court pointed out that the appellant’s working hand has been seriously mutilated by the loss of one or more phalanges of four fingers. Though a 100% disability could not be assessed as the mutilation of the one hand which is also the operational hand, the right hand, the Court was thus inclined to determine the loss at 50%.

Consequently, the Appeal was allowed.