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National Insurance Co. Ltd. v. Rekhaben & Ors. (with Civil Appeal No. 3812 of 2017)

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 8867 of 2012)Decided 7 Mar 2017
Civil Appeal No. 8867 of 2012
Justice S.A. Bobde · Justice L. Nageswara Rao

Background

Two sets of claimants sought compensation under the Motor Vehicles Act after separate motor accidents: one fatal, one leaving the victim with 70% disability. In both cases, the dependents of the deceased/injured were given compassionate appointments by their employer (Gujarat Electricity Board) after the accident. The insurer argued the salary earned through these compassionate jobs should be deducted from the compensation payable by it as the insurer of the offending vehicle.

Decision Breakdown

The Supreme Court held that income from a compassionate appointment offered by the victim's own employer cannot be deducted from compensation payable by the insurer/owner of the offending vehicle, because the two are entirely unconnected sources: the employer giving compassionate employment is not the tort-feasor responsible for the accident. Relying on its earlier rulings in Helen C. Rebello, Patricia Jean Mahajan, and Vimal Kanwar, the Court distinguished a prior case (Reliance General Insurance vs. Shashi Sharma) where the compassionate benefit was tied to the same event and effectively substituted for lost pay; here, the claimants earned their compassionate salary through genuine work, not as a substitute payout. Both appeals by the insurer were dismissed.

Lesson Learnt

If a family member of an accident victim is given a job out of compassion by the victim's employer, that salary is earned through the claimant's own labour and cannot be used to reduce the compensation legally owed by the vehicle owner or insurer responsible for the accident.

Official source (sci.gov.in)View Judgment (PDF)

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