Compensation Under MV Act To Exclude Pay And Allowances Received As Compassionate Assistance By Depe

SC Clarifies: No Double Benefit in Motor Accident Claims for Govt. Employees’ Families

 

In a significant ruling, the Supreme Court in New India Assurance Co. Ltd vs Sunita Sharma & Others [Civil Appeal @ SUP (C) No. 9515 of 2020] clarified that while awarding compensation under the Motor Vehicles Act, 1988, the financial assistance received by the dependents of a deceased government employee under the Haryana Compassionate Assistance Rules, 2006 — specifically the component equivalent to pay and allowances — must be fully excluded.

 

Background:

 

The case stemmed from a motor accident claim. The High Court had awarded compensation to the victim’s family but deducted only 50% of the ex-gratia assistance they had received under the 2006 Rules. The insurance company challenged this, pointing out that the High Court failed to follow established Supreme Court precedent.

 

Arguments:

 

The insurance company argued that the High Court disregarded the binding judgment in Reliance General Insurance Co. Ltd. v. Shashi Sharma (2016) and instead relied on a conflicting High Court verdict. It emphasized that ignoring Supreme Court rulings violated Article 141 of the Constitution, which makes apex court judgments binding on all courts.

 

The company also cited National Insurance Co. Ltd. v. Birender (2020), where the Supreme Court had reinforced the same principle — financial aid under the 2006 Rules should be excluded when calculating compensation under the MV Act.

 

Supreme Court’s Observations:

 

A Bench of Justices Sudhanshu Dhulia and K. Vinod Chandran ruled in favor of the insurer, stating that:

 

The pay and allowances component received by dependents under Rule 5(1) of the 2006 Rules should be entirely excluded from the compensation awarded under the MV Act.

 

However, benefits such as pension, provident fund, life insurance, and future escalation of income are not to be deducted.

 

 

The Court reaffirmed that compensation must be just — not excessive — and cannot include duplicate benefits.

 

Final Verdict:

 

The Supreme Court set aside the High Court’s partial deduction, directing that the entire amount equivalent to pay and allowances received under the 2006 Rules must be excluded. However, it showed a degree of empathy by stating that no recovery shall be made from the claimants if the amount had already been disbursed.

 

In a strong word of caution, the Court criticized the High Court for disregarding binding precedent, calling it “per se a violation of Article 141.”

 

All pending applications were disposed of accordingly.


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