New India Assurance Co. Ltd. v. Kamlesh & Ors.

1. Leave granted.

2. The claimants are the legal heirs of the deceased who succumbed to the injuries sustained in a motor accident. In the claim petition before the Motor Accident Claims Tribunal, they were awarded a compensation of Rs.37,85,800/-. The Insurance Company filed an appeal, restricted to the quantum, especially on the deduction to be allowed with respect to the financial assistance under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006[1]; whether the same is liable to be deducted from the total compensation. The appeal by the claimants was for 1 for brevity ‘the Rules of 2006’ CA @SLP (C) No. 12235-12236 of 2019 etc. enhancement of compensation.

3. The loss of dependency granted by the Tribunal at Rs.35,65,800/- was enhanced to Rs.45,14,986/- employing the multiplier system for calculating loss of dependency as has been declared by a Constitution Bench decision in National Company Limited v. Pranay Sethi and Other[2]. However, under conventional heads, the award of Rs.2,20,000/- granted by the Tribunal was reduced to Rs.70,000/-. The total compensation was determined at Rs.45,14,986/- out of which half of the compensation under the Rules of 2006 was directed to be deducted i.e. Rs.21,67,704/- on the basis of the decision of the Punjab and Haryana High Court in New India Assurance Company Ltd. v. Ajmero and Others[3].

4. Dr.Meera Agarwal, learned Counsel for the Insurance Company submits that the deduction as per the Rules of 2006 has to be 100% as has been held by a decision of this Court in Reliance General Insurance Company Ltd. v. Shashi Sharma and Others[4] followed in National Insurance Company Ltd. v. Birendra[5].

5. Mr. M.R. Shamshad, learned Senior Counsel appearing for the claimant would however point out that a two Judge Bench of this Court in Helen C. Rebello v. Maharashtra State Road Transport Corporation[6] held that life insurance amounts received by heirs on account of the victim's death was not deductible from the compensation for death in motor accidents. A Coordinate Bench in Rajkumar Agrawal v. Vehicle Tata Venture, Commercial Auto Sales Private Limite[7] considering whether the insurance amounts paid under the Employees' State Insurance Act, 1948[8] is a similar benefit, as the compensation which is claimed in a case where there is a motor accident, has referred the issue to a larger Bench. The reference was made since in Western India Plywood Ltd. v.

Khatoon & Others10 and Regional Director, E.S.I Corpn. and Anr. v. Francis De Costa and Anr.11, there was no authoritative pronouncement on the subject issue. It is also pointed out that even if the issue is found against the claimants, following the decision of this very bench in New

6. In addition to the aforesaid decisions, we have also been apprised of a decision of another Coordinate Bench in Krishna v. Tek Chand13. The two Judge Bench having considered the decision in Helen C. Rebello[6] and Shashi Sharma[4] found that Shashi Sharma[4], a three Judge Bench decision was distinguished by another three Judge Bench in Sebastiani Lakra & Ors. v. National Insurance Company Ltd. & Anr.14

7. Helen C. Rebello[6] was a case in which the life insurance amount received by heirs, on account of victim's death was held to be not deductible from the compensation for death in a motor accident. The common law principle of adjusting the pecuniary advantages coming from whatever source, by reason of death, was interpreted as referring to pecuniary advantage on account of accidental death and not coming out of other forms of death. Provident fund, family pension, cash balance, shares, fixed deposits etc. cannot be termed as pecuniary advantages for the purposes of Motor Vehicles Act, especially taking into account the beneficial character of the legislation. 12 C.A.No.5093 of 2025 @ SLP(C) No.9515 of 2020 13 SLP(C) No.5044 of 2019 delivered on 05.02.2024

8. Rajkumar Agrawal (supra) referred the question as to whether a motor accident claim would lie with respect to an injured employee, in view of the bar contemplated under Section 53 of the ESI Act; not very relevant in the instant case. Western India Plywood Ltd. 9 held that the bar under Section 53 of the ESI Act acted against receiving or recovery of compensation or damages under any other law and is equally applicable to relief under another statute and to a claim in torts. A suit for damages on account of an employment injury was held barred. In Hamida Khatoon10, the applicability of the bar under Section 53 was held to apply even against receiving the compensation under the M.V. Act. In the two Judge Bench decision of Francis De Costa11, the two Judges differed on the question whether the accident suffered by an employee on the public road, while he was on his way to join duty, is one arising out of and in the course of employment. The observation made in so far as a remedy under the M.V. Act is inconsequential, in so far as the issue itself was referred to a three Judge Bench. The larger Bench answered the reference in (1996) 6 SCC 1, against the employee, holding that the injury caused to an employee in an accident while he was travelling to his place of employment would not be covered, unless the accident had at least a causal connection with the work he was doing at the factory. The reference of the specific question need not detain us in the present case where there is an authoritative finding by a three Judge Bench with regard to the Rules of 2006 as is seen from Shashi Sharma[4].

9. In Shashi Sharma[4], Helen C. Rebello[6] and one other decision on the same lines was referred to and distinguished. The principle stated in Helen C. Rebello[6] that any pecuniary advantage “due to the dependents of the deceased” which has no direct nexus with the accident, injury or death, would not be deductible from the compensation amount payable under the M.V. Act, was affirmed. However, the compensation claimed under the M.V. Act takes in the component of loss of income which has a direct reference to the “pay and wages” which otherwise would have been earned by the deceased employee, if he had survived the injury caused to him due to the motor accident. Looking at the Rules of 2006, it was held to be a compassionate assistance by way of ex-gratia financial assistance to the deceased government employee who dies in harness and it would be unfathomable if the dependents can still be permitted to claim the same amount as a possible or likely loss of income suffered by them; thus maintaining a claim for compensation of loss of dependency in the context of loss of income, again under the M.V. Act. Whether the claimants would be legitimately entitled for the loss of pay and wages, which in effect is the compensation assessed as loss of income by reason of the death of an employee, when the very same benefits of pay and wages is made available to them under the Rules of 2006 was the question posed. It was answered in the negative since the receipt of both would result in a double benefit. Reference was also made to Section 167 of the M.V. Act wherein a person entitled to claim under the M.V. Act and the Workmen’s Compensation Act, 1923 is permitted to claim such compensation only under either of the enactments, but not under both; reserving the right of election to the injured employee or his dependants.

10. We cannot but notice that the three Judge Bench in Sebastiani Lakra14 was again concerned with 'just compensation' and held that amount/advantages accruing to the claimants as a result of some contract or act which the deceased performed in his life time; like on account of insurance, bank deposits, shares, debentures, pensionary benefits, gratuity or grant of employment to a kin of the deceased, which cannot be said to be the outcome or result of death of deceased in a motor vehicle accident, even though these amounts would go into the hands of the claimants after the death of the deceased. Therein an Employees’ Benefit Scheme was held to be not deductible in terms of the judgment in Helen C. Rebello[6]. While accepting the dictum in Helen C. Rebello[6], Shashi Sharma[4] was specifically referred to and distinguished. Though Shashi Sharma[4] did not in principle disagree with the propositions laid down in Helen C. Rebello[6], it all the same permitted deduction of the amounts received under the Rules of 2006 under the head of pay and other allowances. The Coordinate Bench in Sebastiani Lakra14, also did not differ from the principles laid down in Shashi Sharma[4] with specific reference to the Rules of 2006. In any event in Sebastiani Lakra14, a three Judge Bench could not have differed from the dictum of a coordinate Bench in Shashi Sharma[4].

11. In this context, we notice that the Constitution Bench decision in Pranay Sethi[2] wherein a conflict between two decisions of Coordinate Benches was considered and it was so held in paragraphs No.14, 27 and 28: -

14. The aforesaid analysis in Santosh Devi [Santosh Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421 may prima facie show that the two-Judge Bench has distinguished the observation made in Sarla Verma case [Sarla Verma v. DTC, (2009) 6 SCC 121] but on a studied scrutiny, it becomes clear that it has really expressed a different view than what has been laid down in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121]. If we permit ourselves to say so, the different view has been expressed in a distinctive tone, for the two-Judge Bench had stated that it was extremely difficult to fathom any rationale for the observations made in para 24 of the judgment in Sarla Verma case [Sarla Verma v. DTC, (2009) 6 SCC 121] in respect of self-employed or a person on fixed salary without provision for annual increment, etc. This is a clear disagreement with the earlier view, and we have no hesitation in saying that it is absolutely impermissible keeping in view the concept of binding precedents.

27. We are compelled to state here that in Munna Lal Jain [Munna Lal Jain v. Vipin Kumar Sharma, (2015) 6 SCC 347], the three-Judge Bench should have been guided by the principle stated in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65] which has concurred with the view expressed in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121] or in case of disagreement, it should have been well advised to refer the case to a larger Bench. We say so, as we have already expressed the opinion that the dicta laid down in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65] being earlier in point of time would be a binding precedent and not the decision in Rajesh [Rajesh v. Rajbir Singh, (2013) 9 SCC 54].