Supreme Court bars deduction of group insurance from compensation under Motor Vehicles Act

The court declared that the principle of balancing loss and gain cannot be invoked to diminish the statutory entitlement of the claimants to just compensation under the Motor Vehicles Act.

New Delhi: The Supreme Court on Monday declared that the principle of balancing loss and gain cannot be invoked to diminish the statutory entitlement of the claimants to just compensation under the Motor Vehicles Act.

"The amounts received by the dependants of the deceased under employer-provided group insurance or other contractual or social security benefits cannot be treated as “pecuniary advantages” liable to be deducted from compensation awarded under the MV Act," a bench of Justices Pankaj Mithal and Prasanna B Varale said.

The court pointed out, 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 court here dismissed appeals filed by the Managing Director, KSRTC against the Karnataka High Court's judgments which set aside the orders by the MACT Bengaluru to reduce the compensation in view of group insurance sums received by the family of the deceased.

In case of death of P Visweswar, the tribunal assessed compensation at Rs 69,07,710 and deducted Rs 35,48,000 (group insurance amount) and granted Rs 33,59,710 with 6 per cent interest per annum. The deceased was aged 34 and was employed as a team manager at Accenture, Bengaluru.

He was earning Rs 70,000 per month. On July 30, 2018, he was riding a motorcycle, which was hit by a KSRTC bus being driven in rash and negligent manner, resulting in his death.

Another matter was related to death of Celestine Dsouza, aged 47. She was employed with M/s Cox and King Ltd, as Assistant Manager and was earning Rs 47,000 per month.

On January 20, 2015, her Honda Activa was hit from behind by a KSRTC bus, being driven in a rash and negligent manner. She fell on the ground and the bus ran over her leading to her death.

In her case, the tribunal assessed compensation as Rs 63,04,878 but it deducted Rs 10,00,000, as received by the claimants under an employee Group Insurance Scheme provided by the employer.

The High Court, in both the cases, set aside the tribunal's orders and directed for payment of compensation without any deductions.

The apex court found no ground to interfere with the High Court's judgments.

The bench relied upon Sebastiani Lakra vs National Insurance Co Ltd (2019), which stated that deductions cannot be allowed from the amount of compensation either on account of insurance, or on account of pensionary benefits or gratuity or grant of employment to a kin of the deceased.