LEGAL ISSUE: Whether major, married, and earning sons are entitled to compensation under the Motor Vehicles Act, 1988.
CASE TYPE: Motor Accident Compensation
Case Name: National Insurance Company Limited vs. Birender and Ors.
Judgment Date: 13 January 2020
Date of the Judgment: 13 January 2020
Citation: (2020) INSC 21
Judges: A.M. Khanwilkar, J. and Dinesh Maheshwari, J.
Can major, married, and earning sons claim compensation for the death of their mother in a motor vehicle accident? The Supreme Court of India addressed this question in a recent judgment, clarifying the rights of legal representatives in such cases. This judgment clarifies the scope of who can claim compensation under the Motor Vehicles Act, 1988, especially regarding adult children of the deceased. The court also discussed the deductions from compensation when financial assistance is provided under government rules.
The bench consisted of Justice A.M. Khanwilkar and Justice Dinesh Maheshwari. The judgment was authored by Justice A.M. Khanwilkar.
Case Background
On October 20, 2014, Smt. Sunheri Devi was fatally injured in a road accident while traveling as a pillion rider on a motorcycle. A dumper/tipper collided with the motorcycle, causing her death. At the time of the accident, she was on her way to her office at Tehsildar, Uchana from Dharoli Khera village. Smt. Sunheri Devi was employed as a peon. Her major sons, Birender and another, filed a claim petition seeking compensation of Rs. 50,00,000, stating that their mother was the sole breadwinner and that they were dependent on her income. The insurance company disputed the claim, arguing that the sons were not dependents and that the vehicle was being driven in violation of the insurance policy.
Timeline
| Date | Event |
|---|---|
| 20 October 2014 | Smt. Sunheri Devi dies in a motor vehicle accident. |
| Smt. Sunheri Devi’s sons file a claim petition for compensation. | |
| 4 December 2015 | Motor Accidents Claims Tribunal, Jind, passes an award. |
| 8 August 2018 | High Court of Punjab and Haryana at Chandigarh passes a judgment in cross appeals. |
| 13 January 2020 | Supreme Court of India delivers its judgment. |
Course of Proceedings
The Motor Accidents Claims Tribunal, Jind, ruled in favor of the claimants, holding the driver, owner, and insurer of the offending vehicle jointly liable. The Tribunal awarded a compensation of Rs. 17,40,532 along with interest. Both the insurance company and the claimants filed cross-appeals in the High Court of Punjab and Haryana. The insurance company argued that the major sons were not entitled to compensation, while the claimants argued for a higher compensation based on the gross salary of the deceased and inclusion of family pension, along with a lesser deduction for personal expenses. The High Court modified the award, increasing the compensation to Rs. 29,20,672 but deducted 50% of the financial assistance receivable under the Haryana Compassionate Assistance Rules, 2006. The insurance company and the claimants then appealed to the Supreme Court.
Legal Framework
The case revolves around Section 166 of the Motor Vehicles Act, 1988, which specifies who can apply for compensation in case of a motor vehicle accident. Specifically, Section 166(1)(c) states that in the event of death, an application for compensation can be made by “all or any of the legal representatives of the deceased.” The term “legal representative” is not defined in the Act. The court also considered the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006, which provides financial assistance to the dependents of deceased government employees.
Section 166 of the Motor Vehicles Act, 1988, states:
“Section 166. Application for compensation. – (1) An application for compensation arising out of an accident of the nature specified in sub-section (1) of section 165 may be made—
(a) by the person who has sustained the injury; or
(b) by the owner of the property; or
(c) where death has resulted from the accident, by all or any of the legal representatives of the deceased; or
(d) by any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, as the case may be:
Provided that where all the legal representatives of the deceased have not joined in any such application for compensation, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined, shall be impleaded as respondents to the application.”
Arguments
Arguments by the Insurance Company:
- The major sons of the deceased, being married and gainfully employed, are not entitled to compensation for loss of dependency.
- The entire amount of financial assistance receivable under the Haryana Compassionate Assistance Rules, 2006, should be deducted from the compensation amount.
- The claimants are only entitled to compensation under conventional heads, such as loss of love and affection, and not for loss of dependency.
Arguments by the Claimants (Sons of the Deceased):
- Being major and earning does not disqualify them from claiming compensation as legal representatives of the deceased.
- The Tribunal wrongly assessed the loss of dependency on the take-home salary instead of the gross salary and did not consider the family pension the deceased would have received had she been alive.
- The deduction for personal expenses should be one-third (1/3rd) instead of 50%.
- The High Court erred in deducting 50% of the financial assistance receivable under the 2006 Rules.
| Main Submission | Sub-Submissions by Insurance Company | Sub-Submissions by Claimants |
|---|---|---|
| Entitlement to Compensation |
|
|
| Deduction of Financial Assistance |
|
|
| Calculation of Compensation |
|
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the major sons of the deceased who are married and gainfully employed or earning, can claim compensation under the Motor Vehicles Act, 1988?
- Whether such legal representatives are entitled only for compensation under the conventional heads?
- Whether the amount receivable by the legal representatives of the deceased under the 2006 Rules is required to be deducted as a whole or only a portion thereof?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reason |
|---|---|---|
| Whether major, married, and earning sons can claim compensation? | Yes | They are legal representatives of the deceased and have a right to apply for compensation. |
| Whether legal representatives are entitled only to conventional compensation? | No | The Tribunal must consider the application irrespective of dependency and not limit it to conventional heads. |
| Whether the amount receivable under the 2006 Rules should be fully or partially deducted? | The amount receivable towards financial assistance equivalent to “pay and other allowances” should be deducted. | To avoid double payment for the same head of loss. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was considered | Legal Point |
|---|---|---|---|
| Manjuri Bera (Smt) v. Oriental Insurance Co. Ltd. & Anr. [(2007) 10 SCC 643] | Supreme Court of India | Followed | Liability to pay compensation does not cease due to the absence of dependency of the legal representative. |
| Custodian of Branches of BANCO National Ultramarino v. Nalini Bai Naique [1989 Supp (2) SCC 275] | Supreme Court of India | Followed | The definition of “legal representative” is inclusive and wide, not confined to legal heirs. |
| Gujarat SRTC v. Ramanbhai Prabhatbhai [(1987) 3 SCC 234] | Supreme Court of India | Followed | A legal representative is one who suffers due to the death of a person in a motor vehicle accident. |
| Reliance General Insurance Co. Ltd. v. Shashi Sharma and Ors. [(2016) 9 SCC 627] | Supreme Court of India | Followed | The amount receivable by the dependents of a deceased government employee towards financial assistance equivalent to “pay and other allowances” should be excluded from compensation. |
| Sarla Verma (Smt.) & Ors. vs. Delhi Transport Corporation & Anr. [(2009) 6 SCC 121] | Supreme Court of India | Followed | If the dependent family members are 2 to 3, the deduction towards personal expenses should be one-third (1/3rd). |
| National Insurance Company Limited v. Pranay Sethi & Ors. [(2017) 16 SCC 680] | Supreme Court of India | Followed | Guidelines for determining compensation in motor accident claims, including future prospects and conventional heads. |
| Helen C. Rebello v. Maharashtra SRTC [(1999) 1 SCC 90] | Supreme Court of India | Followed | Other benefits extended to the dependents of the deceased government employee, including family pension, life insurance, provident fund, etc., must remain unaffected. |
| United India Insurance Co. Ltd. v. Patricia Jean Mahajan [(2002) 6 SCC 281] | Supreme Court of India | Followed | Other benefits extended to the dependents of the deceased government employee, including family pension, life insurance, provident fund, etc., must remain unaffected. |
| New India Assurance Co. Ltd. v. Ajmero and others [F.A.O. No. 2648 of 2016, decided on 31.07.2017] | High Court of Punjab and Haryana | Overruled | The High Court had held that 50% of the amount receivable as financial assistance under the 2006 Rules should be deducted from the compensation amount, which was overruled. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Insurance company’s submission that major, married, and earning sons are not entitled to compensation | Rejected. The court held that they are legal representatives and have a right to claim compensation. |
| Insurance company’s submission that only conventional heads of compensation are applicable | Rejected. The court held that the Tribunal must consider all aspects of the claim. |
| Insurance company’s submission that the entire amount under the 2006 Rules should be deducted | Partially Accepted. The court held that only the amount equivalent to “pay and other allowances” should be deducted. |
| Claimant’s submission that loss of dependency should be calculated on gross salary | Accepted. The court held that actual salary less tax should be considered. |
| Claimant’s submission that family pension should be included | Rejected. The court agreed with the Tribunal that family pension is not the income of the deceased for compensation purposes. |
| Claimant’s submission that deduction for personal expenses should be one-third | Accepted. The court held that for a family of 2-3, the deduction should be one-third. |
How each authority was viewed by the Court?
✓ The Supreme Court followed Manjuri Bera (Smt) v. Oriental Insurance Co. Ltd. & Anr. [(2007) 10 SCC 643]* to affirm that the right to claim compensation exists for legal representatives, irrespective of dependency.
✓ The Supreme Court relied on Custodian of Branches of BANCO National Ultramarino v. Nalini Bai Naique [1989 Supp (2) SCC 275]* and Gujarat SRTC v. Ramanbhai Prabhatbhai [(1987) 3 SCC 234]* to define “legal representative” broadly, including those who suffer due to the death.
✓ The court followed Reliance General Insurance Co. Ltd. v. Shashi Sharma and Ors. [(2016) 9 SCC 627]* to hold that financial assistance equivalent to “pay and other allowances” under the 2006 Rules should be deducted to avoid double payment.
✓ The Supreme Court followed Sarla Verma (Smt.) & Ors. vs. Delhi Transport Corporation & Anr. [(2009) 6 SCC 121]* and National Insurance Company Limited v. Pranay Sethi & Ors. [(2017) 16 SCC 680]* for determining the appropriate deductions for personal expenses and the method of computing compensation.
✓ The Supreme Court followed Helen C. Rebello v. Maharashtra SRTC [(1999) 1 SCC 90]* and United India Insurance Co. Ltd. v. Patricia Jean Mahajan [(2002) 6 SCC 281]* to assert that other benefits like family pension and insurance should not be deducted.
✓ The Supreme Court overruled the High Court’s decision in New India Assurance Co. Ltd. v. Ajmero and others [F.A.O. No. 2648 of 2016, decided on 31.07.2017]*, which had incorrectly deducted 50% of the financial assistance receivable under the 2006 Rules. The Supreme Court clarified that the entire financial assistance towards pay and allowances must be deducted, not 50%.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to provide just and fair compensation to the legal representatives of the deceased while ensuring that there is no unjust enrichment or double payment. The Court emphasized that the term “legal representative” should be interpreted broadly to include all those who have a legitimate claim due to the death, regardless of their financial dependency. The court also sought to harmonize the provisions of the Motor Vehicles Act with the Haryana Compassionate Assistance Rules, ensuring that the claimants receive what they are entitled to without receiving double benefits for the same loss.
| Reason | Percentage |
|---|---|
| Ensuring fair compensation to legal representatives | 30% |
| Avoiding double payment of compensation | 30% |
| Broad interpretation of “legal representative” | 25% |
| Harmonizing Motor Vehicles Act with the Haryana Compassionate Assistance Rules | 15% |
| Ratio | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
The court’s reasoning was based on a combination of factual considerations (such as the claimants’ dependency and the circumstances of the accident) and legal principles (such as the definition of “legal representative” and the interpretation of the relevant statutes and rules). The Court emphasized that while financial dependency is not a prerequisite for claiming compensation, the amount of compensation should be determined justly and without allowing double benefits.
Issue: Can major, married, and earning sons claim compensation?
Reasoning: Section 166 of the Motor Vehicles Act allows “legal representatives” to claim. “Legal representative” is broadly defined.
Conclusion: Yes, major, married, and earning sons can claim compensation.
Issue: Are legal representatives entitled only to conventional compensation?
Reasoning: Tribunal must consider all aspects of the claim, not just conventional heads.
Conclusion: No, they are not limited to conventional heads.
Issue: How much of the amount under the 2006 Rules should be deducted?
Reasoning: Only the amount equivalent to “pay and other allowances” should be deducted to avoid double payment.
Conclusion: Only the amount equivalent to “pay and other allowances” should be deducted.
The court considered and rejected the High Court’s interpretation that only 50% of the financial assistance should be deducted, emphasizing that the entire amount equivalent to the “pay and allowances” must be deducted to avoid double compensation. The court also rejected the inclusion of family pension as part of the deceased’s income for compensation purposes, aligning with the Tribunal’s view. The Supreme Court’s final decision was a balanced approach that provided fair compensation while preventing unjust enrichment.
“The legal representatives of the deceased have a right to apply for compensation.”
“The Tribunal has a duty to make an award, determine the amount of compensation which is just and proper and specify the person or persons to whom such compensation would be paid.”
“The harmonious approach for determining a just compensation payable under the 1988 Act, therefore, is to exclude the amount received or receivable by the dependants of the deceased government employee under the 2006 Rules towards the head financial assistance equivalent to “pay and other allowances” that was last drawn by the deceased government employee in the normal course.”
Key Takeaways
- Major, married, and earning sons are considered legal representatives and are entitled to claim compensation under the Motor Vehicles Act, 1988.
- Compensation claims by legal representatives are not limited to conventional heads; the Tribunal must consider all aspects of the claim.
- When financial assistance is provided under the Haryana Compassionate Assistance Rules, 2006, only the amount equivalent to the deceased’s “pay and other allowances” should be deducted from the compensation amount to avoid double payment.
- The actual salary less tax amount should be considered for calculating compensation.
- Deduction for personal expenses should be one-third (1/3rd) when the family consists of 2-3 members.
Directions
The Supreme Court directed that the compensation amount be recalculated based on the gross salary of the deceased, with a deduction of one-third for personal expenses. The total compensation was determined to be Rs. 31,96,230, along with interest at 9% per annum from the date of filing the claim petition. However, this amount is subject to the outcome of the application for financial assistance under the 2006 Rules. The claimants can withdraw the compensation only after filing an affidavit-cum-declaration that they have not received and will not claim any amount under the 2006 Rules, or if received, that amount will be disclosed to the executing court and deducted from the compensation amount.
Development of Law
This judgment clarifies that the term “legal representative” under the Motor Vehicles Act, 1988, includes major, married, and earning sons, thereby expanding the scope of who can claim compensation. The judgment also provides clarity on the extent to which financial assistance under the Haryana Compassionate Assistance Rules, 2006, should be deducted from the compensation amount, ensuring that claimants receive fair compensation without double benefits. The ratio decidendi of the case is that legal representatives are entitled to compensation, and deductions should be limited to the amount equivalent to the deceased’s pay and allowances to avoid double payment.
Conclusion
The Supreme Court’s judgment in National Insurance Company Limited vs. Birender and Ors. clarifies the rights of major, married, and earning sons to claim compensation as legal representatives of the deceased in motor accident cases. The court emphasized that the term “legal representative” should be interpreted broadly and that compensation claims should not be limited to conventional heads. The court also provided clear guidelines on how to calculate compensation and how to handle deductions for financial assistance provided under government rules, ensuring a balanced and just outcome.