Supreme Court: Benefits Received By Deceased’s Dependants From Employer Can’t Be Deducted From Motor Accident Compensation

The Apex Court rendered such findings while dealing with the appeals challenging the judgment of the Karnataka High Court modifying the Motor Accident Claims Tribunal’s order.

The Division Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale held, “In view of the foregoing discussion, and in light of the settled principles laid down by this Court in Helen C. Rebello(Supra), United India Insurance Co. Ltd. (supra) and Sebastiani Lakra (Supra), It is clear that 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 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.”

AOR Narendra Kumar represented the Appellant while Advocate C.B. Gururaj represented the Respondent.

Factual Background

In the year 2018, the deceased P. Visweswar met with an accident while riding a motorcycle. A bus allegedly being driven negligently dashed against his motorcycle. The deceased sustained grievous injuries and subsequently succumbed to the same. The claimants filed a Claim petition under Section 166 of the Motor Vehicles Act, 1988, before the MACT, Bengaluru, claiming Rs 1 crore as compensation. The claimants averred that the deceased was aged about 34 years at the time of the accident and was employed as a team manager at Accenture, earning Rs 70,000 per month. The Tribunal held that the bus driver was negligent and assessed compensation at Rs 69,07,710 while deducting Rs 35,48,000 as group insurance amount. The High Court, in appeal, set aside the deductions made by the tribunal under the employee group insurance and granted a compensation of Rs 69,07,710 to the claimants. The appellants/KSRTC thus preferred the appeals before the Apex Court challenging the said order.

In another appeal, the deceased met with an accident as she fell from her motorcycle after being hit by a bus allegedly being driven in a rash and negligent manner. The deceased fell on the ground, and the bus ran over her, leading to her death. The legal representatives of the deceased filed a claim petition claiming Rs 75 lakh as compensation. It was averred that the deceased was aged about 47 years at the time of the accident and was employed with M/s Cox and King Ltd., as Assistant Manager earning Rs 47,000 per month. The Tribunal deducted an amount Rs 10 lakh which was received by the claimants under an employee Group Insurance Scheme provided by the employer. In appeal, the High Court fixed the compensation at Rs 59,95,944 without any deductions under the employee group insurance. Aggrieved by the same, the insurance company appealed to the Apex Court.

Issue

The issue before the Bench was whether the compensation receivable by the claimant through the security of the Group Insurance Scheme provided by the employer securing for the employee without his (employee) contribution arising from the same incident, i.e. motor accident, should be allowed to be deducted or not.

Reasoning

The appellants had pointed out certain procedural lapses, particularly the non-addition of the driver as a party. Dealing with this aspect, the Bench referred to the judgment in Rajo Devi & Anr. Etc. Vs Manjeet Kaur & Ors (2025), wherein it has been observed that the provision of providing compensation to the injured/dependants in accident cases under Motor Vehicles Act, 1988 is a beneficial provision to enhance social justice. The Bench thus stated, “In view of the proposition laid down in above the tribunal and the High court rightly discarded procedural objection of appellant.”

The Bench next dealt with the issue of deductions made under the employee group insurance. The Bench referred to the judgment in Sebastiani Lakra vs National Insurance Co.Ltd (2019) wherein it has been reaffirmed 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. It was observed therein that the advantage which accrues to the estate of the deceased or to his dependants as a result of some contract or act which the deceased performed in his lifetime cannot be said to be the outcome or result of the death of the deceased even though these amounts may go into the hands of the dependants only after his death.

The Bench thus reaffirmed the view that 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 Motor Vehicles Act.

Thus, finding no grounds to interfere with the approach adopted by the High Court in both matters in setting aside the deductions made by the Tribunal towards the group insurance amounts and in reassessing the compensation payable to the claimants, the Bench dismissed the appeals.

Cause Title: The Managing Director, KSRTC v. P. Chandramouli (Neutral Citation: 2026 INSC 241)

Appearance

Appellant: AOR Narendra Kumar, Advocates T S Shanthi, Sneha Kachhap Irine, AOR Viresh B. Saharya

Respondent: Advcoates C.B. Gururaj, Naveen Chandrashekar, Pragya Smriti, AOR Prakash Ranjan Nayak, Advocate Ilashri Gaur, AOR Rohit Sharma, Advocates Jatin Lalwani, Nikhil Purohit

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