The Supreme Court has ruled that when determining compensation under the Motor Vehicles Act (MV Act) for the death of a government employee, Tribunals must deduct the financial assistance payable under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006 (the “2006 Rules”) from the total compensation assessed for loss of income, to avoid double benefits.
A Bench comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran delivered the ruling in New India Assurance Co. Ltd. vs Kamlesh & Others, arising from a motor accident claim where the deceased was a Haryana Government employee.
Background
The deceased, a government employee, died in a road accident. His legal heirs filed a claim under the MV Act before the Motor Accident Claims Tribunal (MACT), which awarded compensation of ₹37,85,800. The New India Assurance Company challenged the award on the ground that the Tribunal had not appropriately deducted the compensation already being paid under the 2006 Rules.
The High Court, upon appeal, enhanced the compensation to ₹45,14,986 using the multiplier method in line with National Insurance Co. Ltd. v. Pranay Sethi (2017). From this, it deducted ₹21,67,704, representing half of the financial assistance computed under the 2006 Rules. Both the insurer and the claimants approached the Supreme Court— the insurer arguing for 100% deduction, and the claimants seeking further enhancement.
Arguments of the Parties
Dr. Meera Agarwal, counsel for the insurer, relied on the Supreme Court’s three-judge bench ruling in Reliance General Insurance Co. Ltd. v. Shashi Sharma (2016) and National Insurance Co. Ltd. v. Birendra (2020), asserting that full deduction of the government assistance was necessary to avoid duplication.
Senior Advocate M.R. Shamshad, appearing for the claimants, cited Helen C. Rebello v. Maharashtra State Road Transport Corporation (1999), where the Court had held that benefits such as life insurance were not deductible. He argued that government assistance was likewise a separate benefit and not a substitute for compensation under the MV Act.
Supreme Court’s Analysis
The Court rejected the claimant’s argument, holding that Shashi Sharma remains the binding precedent in cases involving the 2006 Rules. It distinguished the general principle in Helen C. Rebello, which excluded life insurance and provident fund benefits from deduction, by noting that the 2006 Rules specifically replicate the deceased employee’s salary and allowances, thereby directly overlapping with the MV Act’s loss of income calculation.
The Court emphasized:
“Whether the claimants would be legitimately entitled for the loss of pay and wages… when the very same benefits… is made available to them under the Rules of 2006 was the question posed. It was answered in the negative since the receipt of both would result in a double benefit.”
The Court also referenced Sebastiani Lakra v. National Insurance Co. Ltd. (2019), noting that even though this three-judge bench accepted Helen C. Rebello, it had specifically distinguished Shashi Sharma without disagreeing with it. Therefore, the binding principle remained that benefits received under the 2006 Rules are deductible.
Further, citing the Constitution Bench ruling in Pranay Sethi, the Court reiterated that when coordinate benches differ, the earlier view prevails unless referred to a larger bench.
Determination of Compensation
The deceased, aged 43 at the time of death, earned a monthly salary of ₹30,107. Applying a multiplier of 14 (as per Sarla Verma), and factoring in a 30% increase for future prospects and a 25% deduction for personal expenses, the Court calculated the loss of income at ₹49,31,527. Since the financial assistance under the 2006 Rules amounted to ₹43,35,408, this was deducted from the total.
The Court then added:
- ₹1,60,000 for loss of consortium (₹40,000 each for the widow and three children)
- ₹30,000 for loss of estate and funeral expenses
This brought the final compensation to ₹7,86,119. The Court clarified that any amount already paid to the claimants shall not be refunded.
Conclusion and Directions
The Supreme Court affirmed that Tribunals must first calculate compensation for loss of income using MV Act principles, including Sarla Verma and Pranay Sethi, and only thereafter deduct amounts received under the 2006 Rules. If the MV Act compensation exceeds the financial assistance, the differential amount is payable to the claimants.
The Court observed:
“The proper method would be for the Tribunal itself… to first consider the loss of income… and to deduct the pay and allowances payable under the Rules of 2006. If the compensation for loss of income arrived at under the M.V. Act is more, then necessarily the difference has to be paid to the claimants.”
Case Title: New India Assurance Co. Ltd. vs Kamlesh & Others
