Recently, the Supreme Court observed that the guidelines set by the State Legal Services Authority for determining disability compensation in motor accident claims should not be applied when assessing fair and reasonable compensation in cases where evidence of the claimant's earnings has been provided.

During the hearing, the bench held that the guidelines issued by the Legal Services Authority should be applied in cases where proof of earnings is unavailable and for resolving disputes in Lok Adalat. However, even in the absence of such evidence, these guidelines are not binding on the High Court or the Supreme Court and can be used only as a reference, the Supreme Court clarified.

Case Brief: 

In this matter, the Motor Accident Claims Tribunal (MACT) had awarded compensation to the appellant, with 63% permanent disabilities, including partial paralysis, and difficulties with movement, speech, writing, and manual tasks but the High Court later reduced the amount, relying on the guidelines issued by the Rajasthan State Legal Services Authority.

The Motor Accident Claims Tribunal (MACT) grants compensation of ₹15,51,000/-, accepting the appellant's annual earnings as ₹1,00,000/- based on their Income Tax returns. However, the High Court, relying on clause 3(d) of the guidelines issued by the Rajasthan State Legal Services Authority, reduced the compensation to ₹7,35,000/-.

Aggrieved by the High Court's decision, the appellant approached he Supreme Court.

After hearing the submissions from both parties, the bench consist of Justices J.K. Maheshwari and Justice Rajesh Bindal observed that the committed an error by reducing the justified amount of compensation based on the guidelines issued by the State Legal Services Authority. . The Court noted that the High Court had misapplied these guidelines, failing to consider that the appellant had provided proof of income.

"Having considered the submissions and looking at the findings recorded by the High Court, it is required to be observed that the guidelines issued from time to time by the State Legal Services Authority were to ordinarily apply where the proof of earning is not available and to settle such disputes in Lok Adalat. It is also required to be observed that such guidelines ought not to be made applicable for determining just and reasonable compensation in the cases where the proof of earning has been brought on record.", the court observed.

Accordingly, the appeal was allowed, and the High Court's decision to reduce the compensation was set aside. The Court restored the original award granted by the Motor Accident Claims Tribunal (MACT).

Case Title: HANS RAJ VERSUS ORIENTAL INSURANCE COMPANY LIMITED & ANR.

For the Petitioner(s):  
- Mr. H. D. Thanvi, Adv.  
- Mr. Nikhil Kumar Singh, Adv.  
- Mr. Achal Singh Bule, Adv.

-Mr. Rishi Matoliya, AOR

For the Respondent(s):
- Mr. T. Mahipal, AOR  
- Mr. Rohit Kumar Sinha, Adv.  
- Mr. Sanjay Kumar Singh, Adv.  
- Mr. Abhishek Gautam, AOR  
- Ms. Suruchi Mittal, Adv.  
- Mr. Karan Kapur, Adv.  
- Mr. Neeraj Goswami, Adv.  
- Mr. Md. Imran, Adv.