In M. Paramesh v. VRL Logistics Ltd. and Another (2026 INSC 655), the Supreme Court held that compensation under Section 166 of the Motor Vehicles Act must be based on functional disability, not merely the percentage of physical disability. The appellant, a 30-year-old mason, lost his right leg above the knee in a road accident caused by a rashly driven lorry. Although the medical disability was assessed at 70%, the Court ruled that the amputation rendered him completely incapable of continuing his manual profession, resulting in 100% loss of earning capacity. Relying on Raj Kumar v. Ajay Kumar (2011), the Court corrected the High Court’s mathematical errors in computing future prospects, restored omitted compensation under conventional heads, and increased the amount for prosthetic care from ₹1 lakh to ₹2 lakhs. The total compensation was enhanced to ₹40,29,730 with 7.5% annual interest, reaffirming the principle of awarding “just compensation.”