The New India Assurance Company Ltd. v. Kamalesh
Background
The claimants were the legal heirs of a Haryana government employee who died in a motor accident. The Motor Accident Claims Tribunal awarded compensation, and both the Insurance Company and the claimants appealed to the High Court: the insurer arguing that financial assistance the family received under the Haryana Compensation Assistance to Dependents of Deceased Government Employees Rules, 2006 should be substantially deducted from the compensation, and the claimants seeking enhancement.
Decision Breakdown
The Supreme Court held that where a family receives continued "last drawn pay" style financial assistance under such state compassionate schemes for a fixed number of years, that assistance addresses the same loss, the deceased's income, as the "loss of dependency" head under the Motor Vehicles Act, so allowing both in full would amount to double recovery. Following its own three-judge bench precedent in Reliance General Insurance v. Shashi Sharma, the Court held that the compassionate assistance amount must be deducted from the loss-of-income component, and only the difference (if the MV Act computation is higher) is payable. However, it clarified that "conventional heads" like loss of consortium, funeral expenses and loss of estate are not connected to loss of income and cannot be reduced on this basis. The Court recalculated the compensation accordingly and directed no refund of amounts already paid.
Lesson Learnt
When a deceased government employee's family receives compassionate financial assistance covering lost salary, that amount is set off against the "loss of income" portion of motor accident compensation to avoid double payment, but non-income heads like consortium and funeral expenses remain payable in full regardless.