Supreme Court: State guidelines on disability compensation aren’t binding on High Court or MACT
The Supreme Court stated that the guidelines from the State Legal Services Authority for calculating disability compensation in motor accident claims should not be used when there is proof of earnings. The Court mentioned that these guidelines can be applied only when there is no evidence of earnings, particularly in cases settled in Lok Adalat. Even without earning evidence, the Legal Services Authority’s guidelines are not mandatory for the High Court or the Supreme Court; they can be used only for reference.
In this case, the appellant had 63% permanent disabilities, affecting their movement, speech, writing, and manual tasks. The Motor Accident Claim Tribunal (MACT) had awarded the appellant ₹15,51,000 based on an annual earning of ₹1,00,000, as shown in their income tax returns. However, the High Court reduced this amount to ₹7,35,000 by relying on the guidelines from the Rajasthan State Legal Services Authority.
Dissatisfied with the High Court’s decision, the appellant appealed to the Supreme Court. Justices J.K. Maheshwari and Sanjay Karol noted that the High Court made a mistake by lowering the compensation based on these guidelines, ignoring the appellant’s proof of income.
The Court clarified that the guidelines from the State Legal Services Authority should typically be applied only when there is no proof of earnings and for settling disputes in Lok Adalat. The Court emphasized that these guidelines should not determine fair compensation when earnings are documented.
Thus, the Court ruled that any guidelines from State Legal Services Authorities should only serve as a reference when income proof is lacking, and they are not binding on the High Court or MACT. Courts have the freedom to set compensation amounts based on the evidence presented. If evidence of earnings is absent, the guidelines may be used for guidance only. The appeal was granted, overturning the High Court’s reduced compensation and reinstating the MACT’s original award.
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