Supreme Court On Deducting Compassionate Assistance from Motor Accident Compensation

The Supreme Court of India addressed the method of calculating compensation under the Motor Vehicles Act, 1988, in conjunction with the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006., in addressing the question wheather the financial assistance provided under the Haryana Rules should be treated when determining compensation under the Motor Vehicles Act.

The appeal arose because the High Court had deducted only 50% of the compensation received under the Haryana Rules from the compensation awarded under the Motor Vehicles Act, despite the appellant-insurance company pointing to the Supreme Court's ruling in Reliance General Insurance Co. Ltd. v. Shashi Sharma which held a different view. The insurance company argued that the High Court's partial deduction was incorrect.

**The Supreme Court reaffirmed the doctrine laid down in Shashi Sharma (supra), to the effect that the monetary aid equal to the salary and other allowances last received by the expired government employee under the Haryana Rules cannot be paid again while calculating compensation under the Motor Vehicles Act. But the Court made it clear that this exclusion is only for the financial aid in the amount of the last pay drawn and allowances and that claims for loss of future escalation of income and other benefits can still be made under the Motor Vehicles Act. **

The Court also reiterated that the other entitlements like family pension, Life Insurance, and Provident Fund drawn under the Haryana Rules should not be subtracted from the compensation under the Motor Vehicles Act as per Helen C. Rebello v. Maharashtra SRTC and United India Insurance Co.Ltd. V. Patricia Jean Mahanan.

The Court also cited National Insurance Company Limited vs. Birender and Others as far as adjusting the compensation was concerned. Significantly, the Court was aghast and displeased by the High Court ignoring a binding Supreme Court decision and labeling it as a contravention of Article 141 of the Indian Constitution. Finally, the Supreme Court granted the appeal, reversing the High Court's order to the extent of the 50% deduction but making it clear that no recovery of the excess already paid will be effected from the claimants.

Concluding the matter, the Supreme Court allowed the appeal, setting aside the impugned judgment of the High Court to the extent it had deducted only 50% of the compensation payable under the Rules of 2006. However, considering that the claimants might have already received the amounts as per the High Court's order, the Supreme Court clarified that no recovery of the excess amount paid shall be made from the respondents.

Importantly, the Court expressed its surprise and disapproval that the High Court had disregarded a binding judgment of the Supreme Court and instead followed its own contrary decision, explicitly stating that this was a per-se violation of Article 141 of the Constitution of India.

Coram: Justice Sudhanshu Dhulia and Justice K. Vinod Chandran
Date of Judgment: 08-04-2025