The Supreme Court has held that the amounts received by the dependants of a deceased under an employer-provided group insurance scheme or other benefits arising from a contractual relationship (like insurance, pension, or gratuity) cannot be treated as “pecuniary advantages” and are not liable to be deducted from the compensation awarded under the Motor Vehicles Act, 1988.
Such benefits arise out of an independent contractual relationship and lack the requisite nexus with the statutory compensation payable for death in a motor vehicle accident. The principle of balancing loss and gain cannot therefore be invoked to diminish the statutory entitlement of the claimants to just compensation, added the Court.
The Division Bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale addressed the appellant’s contention regarding procedural lapses, specifically the non-joinder of the driver as a party. It observed that the Motor Vehicles Act, 1988 is a beneficial provision aimed at enhancing social justice. Therefore, the rigours of procedure should not be allowed to defeat its purpose, especially since the trial in such cases is summary in nature.
The Bench noted that for an amount to be deductible, it must have a nexus or correlation with the accidental death. It observed that amounts received from sources like life insurance are based on a contract between the insured and the insurer and are not dependent on the death occurring in a motor vehicle accident.
The Bench emphasized the distinction between statutory compensation under the Motor Vehicles Act and benefits arising from contractual relations. It observed that compensation under the Act is a statutory entitlement for injury or death, received without any contribution from the victim. In contrast, benefits like insurance, pension, or gratuity are earned by the deceased through contractual arrangements made during their lifetime. These amounts cannot be considered an outcome or result of the death in the accident, even if they are received by the dependants after the death.
Further, the Bench addressed the appellant’s argument that a claimant should not gain twice from the same accident. It clarified that the principle of not allowing a claimant to gain twice applies only when the compensation from both sources arises from the same transaction (the accident) and is received without the claimant’s contribution. The Bench clarified that benefits from an insurance policy, which involves contributions, are distinct from statutory compensation.
Briefly, the deceased was riding his motorcycle when a KSRTC bus, driven in a rash and negligent manner, came onto the wrong side of the road and collided with him. The deceased sustained grievous injuries and subsequently passed away. At the time of the accident, the deceased was 34 years old, employed as a team manager at Accenture in Bangalore, and earned Rs. 70,000 per month.
His claimants therefore filed a petition under Section 166 of the Motor Vehicles Act, 1988, seeking Rs. 1 Crore as compensation. The Motor Accidents Claims Tribunal (MACT) held the bus driver was negligent and assessed the total compensation at Rs. 69.07 Lakhs. However, the Tribunal deducted Rs. 35.48 Lakhs which was received from a group insurance scheme, and awarded Rs. 33.59 Lakhs. On appeal, the High Court of Karnataka set aside the deduction and awarded the full compensation of Rs. 69.07 Lakhs.
Appearances:
AORs Narendra Kumar and Viresh B. Saharya, along with Advocates T S Shanthi and Sneha Kachhap Irine, for the Appellant
AORs Prakash Ranjan Nayak and Rohit Sharma, along with Advocates C.B. Gururaj, Naveen Chandrashekar, Pragya Smriti, Ilashri Gaur, Jatin Lalwani, and Nikhil Purohit, for the Respondent
