In a significant ruling on motor accident compensation, the Supreme Court has held that financial assistance received by the family of a deceased government employee under Haryana’s 2006 Rules must be deducted from compensation awarded under the Motor Vehicles Act - but only to the extent it overlaps with loss of income.
The Bench of Justice Sanjay Karol and Justice Augustine George Masih delivered the judgment on February 24, 2026, allowing appeals filed by Reliance General Insurance Company Limited.
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Background of the Case
The case arose from a tragic road accident on November 2, 2009. A motorcycle driven by Ravinder Kumar, carrying two pillion riders, collided with a jeep. The accident was attributed to rash and negligent driving of the jeep. One of the pillion riders, Smt. Hom Devi - a government employee working as a Multi-Purpose Health Worker - lost her life. Two others were injured.
Her family approached the Motor Accident Claims Tribunal (MACT), Rohtak. In October 2010, the Tribunal awarded ₹8.8 lakh with 7.5% annual interest.
Unhappy with the amount, the family moved the Punjab and Haryana High Court seeking enhancement. In 2019, the High Court increased the compensation to over ₹29 lakh but directed that amounts received under the Haryana Compassionate Assistance to Dependents of Deceased Government Employees Rules, 2006 be deducted.
Later, on an application seeking clarification, the High Court modified its earlier position. It held that the entire amount received under the 2006 Rules need not be deducted, effectively increasing the payable compensation.
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Reliance General Insurance challenged this before the Supreme Court.
The Core Legal Question
The central issue before the Court was simple but important:
Should financial assistance given to the family under the 2006 Rules be deducted from compensation awarded under the Motor Vehicles Act?
The Bench noted that this question was already examined in detail in earlier judgments.
Court’s Observation on Earlier Judgments
The Supreme Court referred to its earlier decision in Reliance General Insurance v. Shashi Sharma (2016), which had clearly held that only those benefits that replace the same financial loss - such as salary or wages - can be deducted to prevent “double recovery.”
Quoting from that judgment, the Bench reiterated that:
“The amount receivable by the dependants towards the head of pay and allowances in the form of ex gratia financial assistance cannot be paid for the second time.”
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However, the Court clarified that not all benefits under the 2006 Rules are deductible. Pension, provident fund, life insurance, or other independent benefits cannot be reduced from compensation.
The Court also examined National Insurance Co. Ltd. v. Birender (2020). It clarified that the Birender case did not change the law laid down in Shashi Sharma. Instead, it only dealt with the stage at which deduction should be made - and required proof of actual receipt of benefits before adjusting the amount.
The Bench observed that both judgments “operate within the same framework” and are not contradictory.
On the High Court’s Power to ‘Clarify’
A major part of the judgment dealt with whether the High Court could substantially alter compensation while deciding a “clarification” application.
The Supreme Court made it clear that a clarification cannot change the substance of a judgment.
The Bench explained that under the Civil Procedure Code, only clerical or accidental errors can be corrected. A court cannot modify compensation or alter substantive rights under the guise of clarification.
In firm words, the Court said that any such change “would, in law, amount to a review in substance” and must satisfy strict review requirements.
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The Final Decision
Allowing the appeals, the Supreme Court set aside the High Court’s clarification order and restored its main order.
The Court directed that the amount received by the claimants under the 2006 Rules - if it represents pay and allowances - must be deducted from the enhanced compensation.
It further directed the claimants to file an affidavit before the Tribunal specifying the amount received. Based on this, the Tribunal will pass appropriate disbursal orders.
The rate of interest awarded earlier will remain unchanged.
The Court clarified that if no amount has been received under the 2006 Rules, the claimants will be entitled to the full compensation awarded in the High Court’s main order.
With this, the appeals were allowed and pending applications closed.
Case Title: Reliance General Insurance Company Limited v. Kanika & Ors.
Case No.: Civil Appeal Nos. 2506–2507 of 2026
Decision Date: February 24, 2026
