The Supreme Court of India, in a significant ruling on the calculation of motor accident compensation, has held that financial assistance received by the dependents of a deceased government employee under compassionate assistance rules must be deducted from the compensation awarded under the Motor Vehicles Act (MVA) to avoid “double recovery” for the same financial loss.
A Bench comprising Justice Sanjay Karol and Justice Augustine George Masih set aside orders from the Punjab and Haryana High Court that had reversed an earlier decision to deduct such benefits. The Court also clarified that High Courts cannot make substantive changes to compensation amounts under the guise of “clarification” applications.
Background of the Case
The case originated from a fatal accident on November 2, 2009, when a motorcycle carrying Ravinder Kumar and two pillion riders, including the deceased Smt. Hom Devi, collided with a rashly driven jeep. Smt. Hom Devi, who was employed as an MPHW in a Public Health Centre drawing a salary of Rs. 21,805 per month, passed away.
The Motor Accidents Claims Tribunal, Rohtak, initially awarded Rs. 8,80,000 with 7.5% interest. On appeal for enhancement, the Punjab and Haryana High Court increased the compensation to Rs. 29,09,240 but ordered that amounts received under the Haryana Compassionate Assistance to Dependents of Deceased Government Employees Rules, 2006 (2006 Rules) must be deducted.
However, through a subsequent “Clarification Order” in January 2023, the High Court reversed this position, holding that the entire amount under the 2006 Rules would not be deductible. Reliance General Insurance Company Limited challenged this reversal before the Supreme Court.
Legal Issue: The Rule Against Double Recovery
The primary question before the Supreme Court was whether benefits under the 2006 Rules should be offset against MVA compensation. The Court relied heavily on the three-judge bench decision in Reliance General Insurance v. Shashi Sharma (2016).
The Court observed that only benefits directly replacing the “loss of income” are deductible. As stated in the judgment:
“The amount receivable by the dependants/claimants towards the head of ‘pay and allowances’ in the form of ex gratia financial assistance, therefore, cannot be paid for the second time to the claimants… This is not to say that the amount or payment receivable… is the total entitlement under the head of ‘loss of income’.”
The Court clarified that while “pay and allowances” covered by the 2006 Rules are deductible, other benefits like family pension, life insurance, and provident fund remain unaffected and cannot be deducted, as per the principles in Helen C. Rebello and Patricia Jean Mahajan.
Consistency Between Precedents
The respondents argued that a later decision in National Insurance Company Ltd. v. Birender (2020) was inconsistent with Shashi Sharma. However, the Supreme Court rejected this, noting that both decisions operate within the same framework.
The Court explained:
- Shashi Sharma defines what is deductible (substantive rule).
- Birender clarifies when and how deductions should be made (procedural safeguards), specifically that deductions should not be made based on speculation but after actual receipt or eligibility is established.
Limits of “Clarification” Powers
The Supreme Court also addressed the High Court’s use of “clarification” applications to alter compensation amounts. It noted that the MVA does not provide an independent mechanism for “clarification.” Such powers must be located within Sections 151 and 152 of the Code of Civil Procedure (CPC).
The Court held:
“The High Court… cannot, for example, alter findings on negligence, modify the quantum of compensation, redistribute liability, or otherwise affect substantive rights under the guise of clarification. Any such exercise would, in law, amount to a review in substance and must satisfy the strict requirements of review under Order XLVII CPC.”
Final Decision
The Supreme Court allowed the appeals, set aside the High Court’s review and clarification orders, and restored the original “Main Order” which directed the deduction of the 2006 Rules benefits.
The Court directed the claimants to file an affidavit before the Tribunal indicating the sum received under the 2006 Rules. If no amount was received or is receivable, the claimants remain entitled to the full amount awarded by the High Court’s main order.
| Case Title | Reliance General Insurance Company Limited v. Kanika & Ors. |
| Case Number | Civil Appeal Nos. 2506-2507 of 2026 |
