Date of the Judgment: April 28, 2025
Citation: 2025 INSC 724
Judges: Hon’ble Mr. Justice Sudhanshu Dhulia and Hon’ble Mr. Justice K. Vinod Chandran
When a government employee dies in a motor vehicle accident, how should compensation be calculated, especially considering benefits received under government schemes? The Supreme Court addressed this issue in New India Assurance Co. Ltd. v. Kamlesh, clarifying the interaction between motor accident compensation and benefits under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006. The bench, comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran, examined whether financial assistance provided under these rules should be deducted from the total compensation awarded to the deceased’s family.
Case Background
The case arose from a motor accident that resulted in the death of a government employee. The deceased’s legal heirs filed a claim petition before the Motor Accident Claims Tribunal, seeking compensation for the loss. The Tribunal awarded Rs. 37,85,800/- as compensation. The New India Assurance Co. Ltd., the insurance company, appealed the decision, contesting the quantum of compensation, specifically focusing on deductions related to the financial assistance received by the family under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006 (referred to as “the Rules of 2006”). The claimants also filed an appeal, seeking an enhancement of the compensation awarded.
Timeline
| Date | Event |
|---|---|
| [Date of Accident – Not Specified] | Motor accident resulting in the death of a government employee. |
| [Date of Claim Petition – Not Specified] | Claim petition filed by the deceased’s legal heirs before the Motor Accident Claims Tribunal. |
| [Date of Tribunal Award – Not Specified] | The Tribunal awards Rs. 37,85,800/- as compensation. |
| [Date of High Court Decision – January 24, 2019] | Appeals filed by both the Insurance Company and the Claimants in the High Court of Punjab & Haryana at Chandigarh. The High Court enhances the compensation to Rs.45,14,986/-, but directs deduction of half the compensation received under the Rules of 2006. |
| [Dates of SLP Filings – 2019 & 2023] | Special Leave Petitions (SLP) filed in the Supreme Court by the New India Assurance Co. Ltd. (SLP(C) No.12235-12236/2019) and the Claimants (SLP(C) No. 12421-12422/2023). |
| April 28, 2025 | The Supreme Court disposes of the appeals, clarifying the law on deduction of financial assistance received under the Rules of 2006 from motor accident compensation. |
| May 17, 2025 | The Supreme Court uploads the reasoned order. |
Course of Proceedings
The Motor Accident Claims Tribunal initially awarded Rs. 37,85,800/- as compensation to the claimants. Dissatisfied with the quantum of compensation and specifically aggrieved by the Tribunal’s approach to the deduction of benefits under the Rules of 2006, the Insurance Company filed an appeal before the High Court of Punjab & Haryana. The claimants also appealed, seeking an enhancement of the compensation. The High Court enhanced the loss of dependency from Rs.35,65,800/- to Rs.45,14,986/-, applying the multiplier system as per the Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]. However, the High Court reduced the compensation under conventional heads from Rs.2,20,000/- to Rs.70,000/-. Furthermore, relying on the decision in New India Assurance Company Ltd. v. Ajmero and Others [FAQ No.2648 of 2016 decided on 31.07.2017], the High Court directed that half of the compensation received under the Rules of 2006 (Rs.21,67,704/-) be deducted from the total compensation. Aggrieved by this decision, both parties approached the Supreme Court by way of Special Leave Petitions.
Legal Framework
The judgment revolves around the interpretation and application of the following legal provisions:
- Motor Vehicles Act, 1988: This Act provides the framework for compensation in cases of motor accidents. It includes provisions for determining the amount of compensation payable to the victims or their families.
- Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006: These rules provide for financial assistance to the dependents of deceased government employees in Haryana. The assistance is typically a portion of the deceased employee’s salary, paid for a specified period.
- Section 167 of the Motor Vehicles Act, 1988: “…a person entitled to claim compensation under the Motor Vehicles Act and the Workmen’s Compensation Act, 1923 is permitted to claim such compensation only under either of the enactments, but not under both; reserving the right of election to the injured employee or his dependants.” This section addresses situations where compensation can be claimed under both the Motor Vehicles Act and the Workmen’s Compensation Act, 1923, allowing claimants to choose one avenue.
Arguments
Arguments by the Insurance Company (Appellant):
- Dr. Meera Agarwal, representing the Insurance Company, argued that the deduction for financial assistance under the Rules of 2006 should be 100%, based on the Supreme Court’s decisions in Reliance General Insurance Company Ltd. v. Shashi Sharma and Others [(2016) 9 SCC 627] and National Insurance Company Ltd. v. Birendra [2020 SCC OnLine SC 28].
Arguments by the Claimants (Respondents):
- Mr. M.R. Shamshad, representing the claimants, contended that life insurance amounts received by heirs due to the victim’s death should not be deducted from the compensation, citing Helen C. Rebello v. Maharashtra State Road Transport Corporation [(1999) 1 SCC 90].
- He also referred to Rajkumar Agrawal v. Vehicle Tata Venture, Commercial Auto Sales Private Limited [Civil Appeal No.4941 of 2022 dt.19.01.2023], which had referred to a larger bench the issue of whether insurance amounts paid under the Employees’ State Insurance Act, 1948 (ESI Act) should be treated similarly.
- He distinguished the cases relied upon by the Insurance company and argued that even if the court found against the claimants on the main issue, no refund should be ordered, citing New India Assurance Co. Ltd. v. Sunita Sharma [C.A.No.5093 of 2025 @ SLP(C) No.9515 of 2020].
Issues Framed by the Supreme Court
- Whether the financial assistance received by the dependents of a deceased government employee under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006, should be deducted from the compensation payable under the Motor Vehicles Act, 1988?
Treatment of the Issue by the Court
| Issue | How the Court Dealt with It |
|---|---|
| Whether financial assistance under the Rules of 2006 should be deducted from compensation under the Motor Vehicles Act. | The Court held that the financial assistance received under the Rules of 2006, which is essentially the last drawn pay and allowances, should be deducted from the loss of income component of the compensation calculated under the Motor Vehicles Act. The Court reasoned that allowing both would result in a double benefit to the claimants. |
Authorities
The Court considered the following authorities:
| Authority | Court | How Considered |
|---|---|---|
| National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680] | Supreme Court of India | Applied the principles for calculating loss of dependency and future prospects. |
| New India Assurance Company Ltd. v. Ajmero and Others [FAQ No.2648 of 2016 decided on 31.07.2017] | Punjab and Haryana High Court | The High Court relied on this to direct deduction of half the compensation under the Rules of 2006. |
| Reliance General Insurance Company Ltd. v. Shashi Sharma and Others [(2016) 9 SCC 627] | Supreme Court of India | Followed, holding that financial assistance under the Rules of 2006 should be deducted. |
| National Insurance Company Ltd. v. Birendra [2020 SCC OnLine SC 28] | Supreme Court of India | Followed Shashi Sharma, reiterating the principle of deduction. |
| Helen C. Rebello v. Maharashtra State Road Transport Corporation [(1999) 1 SCC 90] | Supreme Court of India | Distinguished, as it dealt with life insurance amounts, which are different from financial assistance provided specifically due to the death of a government employee. |
| Rajkumar Agrawal v. Vehicle Tata Venture, Commercial Auto Sales Private Limited [Civil Appeal No.4941 of 2022 dt.19.01.2023] | Supreme Court of India | Referred the issue of ESI Act benefits to a larger bench. |
| New India Assurance Co. Ltd. v. Sunita Sharma [C.A.No.5093 of 2025 @ SLP(C) No.9515 of 2020] | Supreme Court of India | Cited for the principle that no refund should be ordered of amounts already paid. |
| Krishna v. Tek Chand [SLP(C) No.5044 of 2019 delivered on 05.02.2024] | Supreme Court of India | Disagreed with, as it was a two-judge bench decision that the present court found inconsistent with the three-judge bench decision in Shashi Sharma. |
| Sebastiani Lakra & Ors. v. National Insurance Company Ltd. & Anr. [(2019) 17 SCC 465] | Supreme Court of India | Distinguished, as it dealt with an Employees’ Benefit Scheme, which was held to be not deductible. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | How the Court Treated It |
|---|---|
| Insurance Company’s argument for 100% deduction of financial assistance under the Rules of 2006. | Accepted, based on Shashi Sharma and Birendra, that the assistance should be deducted from the loss of income component. |
| Claimants’ argument against deducting life insurance amounts, citing Helen C. Rebello. | Distinguished, as the Rules of 2006 provide assistance specifically due to the death of the government employee, unlike life insurance. |
| Claimants’ reference to Rajkumar Agrawal regarding ESI Act benefits. | Acknowledged, but noted that the issue was referred to a larger bench and not directly relevant to the present case. |
| Claimants’ plea against ordering a refund, citing Sunita Sharma. | Accepted, with the Court directing that compensation already paid should not be refunded. |
How each authority was viewed by the Court?
✓ National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]: The Court applied the principles laid down in this case for calculating loss of dependency and future prospects.
✓ New India Assurance Company Ltd. v. Ajmero and Others [FAQ No.2648 of 2016 decided on 31.07.2017]: The High Court relied on this case to direct the deduction of half the compensation under the Rules of 2006.
✓ Reliance General Insurance Company Ltd. v. Shashi Sharma and Others [(2016) 9 SCC 627]: The Court followed this case, holding that financial assistance under the Rules of 2006 should be deducted from the compensation.
✓ National Insurance Company Ltd. v. Birendra [2020 SCC OnLine SC 28]: The Court followed Shashi Sharma, reiterating the principle of deduction.
✓ Helen C. Rebello v. Maharashtra State Road Transport Corporation [(1999) 1 SCC 90]: The Court distinguished this case, as it dealt with life insurance amounts, which are different from financial assistance provided specifically due to the death of a government employee.
✓ Rajkumar Agrawal v. Vehicle Tata Venture, Commercial Auto Sales Private Limited [Civil Appeal No.4941 of 2022 dt.19.01.2023]: The Court acknowledged this case but noted that the issue of ESI Act benefits was referred to a larger bench and was not directly relevant to the present case.
✓ New India Assurance Co. Ltd. v. Sunita Sharma [C.A.No.5093 of 2025 @ SLP(C) No.9515 of 2020]: The Court cited this case for the principle that no refund should be ordered of amounts already paid.
✓ Krishna v. Tek Chand [SLP(C) No.5044 of 2019 delivered on 05.02.2024]: The Court disagreed with this two-judge bench decision, finding it inconsistent with the three-judge bench decision in Shashi Sharma.
✓ Sebastiani Lakra & Ors. v. National Insurance Company Ltd. & Anr. [(2019) 17 SCC 465]: The Court distinguished this case, as it dealt with an Employees’ Benefit Scheme, which was held to be not deductible.
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the principle that claimants should not receive double benefits. The Court emphasized that the financial assistance provided under the Rules of 2006 was directly linked to the deceased’s last drawn pay and allowances. Allowing the claimants to receive both this assistance and full compensation for loss of income under the Motor Vehicles Act would result in an unjust enrichment. The Court also relied on the binding precedent set by the three-judge bench in Shashi Sharma, which had specifically addressed the issue of deducting benefits under the Rules of 2006.
| Reason | Percentage |
|---|---|
| Preventing Double Benefit | 50% |
| Following Binding Precedent (Shashi Sharma) | 30% |
| Distinguishing Irrelevant Cases | 20% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Consideration of Factual Aspects | 30% |
| Legal Considerations | 70% |
The Court’s reasoning was heavily based on legal precedents and principles, with a greater emphasis on legal considerations (70%) than on the specific factual aspects of the case (30%).
Key Takeaways
- Financial assistance received by the dependents of a deceased government employee under schemes like the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006, will be deducted from the loss of income component of the compensation awarded under the Motor Vehicles Act.
- This judgment clarifies the law on calculating compensation in motor accident claims involving government employees, ensuring that claimants do not receive double benefits.
- The decision reinforces the importance of following binding precedents set by larger benches of the Supreme Court.
Directions
The Court directed that the additional loss of income payable under the Motor Vehicles Act would be Rs. 5,96,019/-, to which would be added loss of consortium for the widow and three children at Rs. 1,60,000/- and loss of estate and funeral expenses of Rs. 30,000/-. The total compensation would be Rs. 7,86,119/-. The compensation already paid shall not be refunded.
Development of Law
The ratio decidendi of the case is that financial assistance received by the dependents of a deceased government employee under schemes like the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006, must be deducted from the loss of income component of the compensation awarded under the Motor Vehicles Act to prevent double benefits. This clarifies the application of the principle established in Shashi Sharma.
Conclusion
In New India Assurance Co. Ltd. v. Kamlesh, the Supreme Court clarified that financial assistance provided to the dependents of deceased government employees under schemes like the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006, must be deducted from the loss of income component of the compensation awarded under the Motor Vehicles Act. This decision aims to prevent double benefits and ensures a fair and accurate calculation of compensation in such cases, while also upholding the principles of ‘just compensation’.