The Supreme Court of India has clarified that compensation received by the family of a deceased employee under an employer-provided group insurance scheme cannot be deducted from the statutory compensation payable under the Motor Vehicles Act.
A bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale dismissed appeals filed by the Karnataka State Road Transport Corporation (KSRTC) and an insurer challenging compensation awards granted by the Karnataka High Court.
The Court held that benefits arising from contractual arrangements such as insurance schemes or employment-related benefits cannot be treated as “pecuniary advantages” for deduction while calculating compensation under the Motor Vehicles Act, 1988.
Background of the Case
The Supreme Court was dealing with two separate motor accident compensation appeals.
Read also:- Maternity Leave for Adoptive Mothers: Supreme Court Questions 3-Month Child Age Restriction
In the first case, a 34-year-old employee working as a team manager at Accenture died in a road accident in 2018 after a KSRTC bus allegedly driven negligently collided with his motorcycle near Chittoor. His family sought compensation before the Motor Accident Claims Tribunal (MACT).
The Tribunal assessed compensation at ₹69.07 lakh but deducted around ₹35.48 lakh received under the employer’s group insurance policy, awarding only ₹33.59 lakh.
In the second case, a 47-year-old assistant manager with Cox & Kings Ltd. died in a 2015 accident in Bengaluru when a bus hit her scooter from behind. The Tribunal similarly deducted ₹10 lakh received under group insurance before awarding compensation.
In both matters, the Karnataka High Court removed these deductions and enhanced the compensation amounts.
Read also:- J&K High Court Upholds Eviction Appeal Rule, Says ‘Symbolic Possession’ Enough to File Appeal
Before the Supreme Court, the transport corporation and insurer argued that the claimants had already received financial benefits under employer-provided group insurance schemes.
They contended that allowing full compensation under the Motor Vehicles Act without deducting these amounts would result in double benefit to the claimants.
The respondents, however, argued that insurance benefits are contractual in nature and independent of statutory compensation for motor accidents. They also maintained that the accidents occurred solely due to negligent driving of the buses.
The Supreme Court examined earlier precedents including Helen C. Rebello v. Maharashtra State Road Transport Corporation and United India Insurance Co. Ltd. v. Patricia Jean Mahajan.
The Court observed that only benefits directly linked to the accident and arising from the same source may be deducted while calculating compensation.
Read also:- Rajasthan HC Finds Possible Personal Interest in PIL, and Issues ₹25 Lakh Cost Notice
However, contractual benefits such as insurance, gratuity, pension or employment benefits cannot be treated as pecuniary advantages connected to the accident.
The bench noted that such payments arise from independent contractual arrangements between the deceased and the employer and therefore lack a direct nexus with statutory compensation.
The Supreme Court upheld the approach adopted by the Karnataka High Court and ruled that the deductions made by the Motor Accident Claims Tribunal were incorrect.
Accordingly, the Court dismissed the appeals and affirmed the compensation awards granted by the High Court. It directed the appellants to deposit the awarded compensation within six weeks if it had not already been paid.
Case Title: The Managing Director, KSRTC v. P. Chandramouli & Ors.
