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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO. 8867 OF 2012

NATIONAL INSURANCE CO. LTD.                             .....APPELLANT

VERSUS

REKHABEN & ORS.                           ....RESPONDENTS

WITH

CIVIL APPEAL NO.3812    OF 2017  (arising out of SLP(C) NO. 26882 OF 2013)

NATIONAL INSURANCE CO. LTD.                              .....APPELLANT

VERSUS

RAMRAJSINH BHAGWANSINH ZALA & ORS.              ....RESPONDENTS

J U D G M E N T  

S. A. BOBDE, J.

Civil Appeal No. 8867 of 2012

1. The  appellant–Insurance  Company  has  preferred  this  appeal

against  the  impugned  judgment  and  order  dated  28/29.03.2012

passed by the High Court  of Gujarat at Ahmedabad in First Appeal

No.736 of 2012, whereby the High Court partly allowed the appeal   

of  the  claimants  to  the extent  of  enhancing the sum awarded  by   

the  Motor  Accident  Claims  Tribunal  in  MACP  No.1239  of  1999   

dated 10.12.2010.  

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2. The deceased, Girddharbhai Pansuriya @ Girish, an employee of

Gujarat Electricity Board was travelling from Wankaner to Mendarda

village, when his motorcycle was hit by a matador bearing registration

no. GJ.1.T.T. 9761 insured by the appellant-National Insurance Co. Ltd.

The matador, moving at a high speed on the opposite side of the road,

dashed against the vehicle of the deceased from the front resulting in

the fatality.

The  wife  of  the  deceased  was  given  employment  by  the

employer  of  the  deceased  with  a  regular  salary  on  grounds  of

compassionate appointment.

3. The claimants viz., the wife, one minor child and the parents of

the deceased, filed a claim petition before the Motor Accident Claims

Tribunal (for short,  the 'Tribunal').  On the date of the accident, the

deceased was working as Store Keeper with Gujarat Electricity Board.

The Tribunal awarded an amount of Rs.2,22,372/- with interest at the

rate of 9% per annum as compensation after deducting the amount of

Rs.7,000/- per month from the salary of the deceased as this amount

of Rs.7,000/- per month after deduction was received by respondent

no.1  as  salary  from  the  employment  which  was  given  to  her  on

compassionate  ground  by  the  employer  due  to  the  death  of  her

husband. Being aggrieved, the claimants preferred an appeal before

the High Court. The High Court allowed said appeal and enhanced the

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compensation  to  Rs.14,90,000/-  along  with  interest  at  the  rate  of

7.5% per annum on the enhanced amount.  

4. The High Court refused to deduct the amount received by the

widow  as  salary  on  account  of  compassionate  appointment  in  the

Gujarat Electricity Board granted to her by the employer due to her

husband's death. Being aggrieved, the appellant preferred this appeal

against  the  impugned  judgment  and  order  dated  28/29.03.2012,

passed by the High Court in First Appeal No.736 of 2012.

Civil Appeal No.3812 of 2017 @ SLP (C) No. 26882/2013

Leave Granted.

5. The  appellant–Insurance  Company  has  preferred  this  appeal

against the impugned judgment and order dated 15.02.2013 passed

by the High Court of Gujarat at Ahmedabad in First Appeal No.1398 of

2002, whereby the High Court dismissed the appeal and affirmed the

award passed by the Motor Accident Claims Tribunal in MACP No.193 of

1994 dated 05.11.2001.

6. The  injured,  Ramrajsinh,  an  employee  of  Gujarat  Electricity

Board,  was  travelling  in  a  matador  van  bearing  registration  no.

GJ.3.T.9537  in  the  course  of  his  employment.  A  truck  bearing  no.

GJ.3.T.906 insured by the appellant–National Insurance Co. Ltd came

from the opposite side of the road and collided with the van. As a

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result of the collision, the victim was seriously injured and suffered

70% permanent disability of his entire body. He was found unfit for

further continuation in the job.

The wife of the injured was given employment by the employer

of  the  injured  in  the  same  post  on  grounds  of  compassionate

appointment.

7. The claimant viz. the wife of the injured filed an application for

compensation before the Motor Accident Claims Tribunal at Bhuj (for

short, the ‘Tribunal’) from the opponents for the injuries sustained by

her husband. By an award dated 05.11.2011, the Tribunal allowed the

application  for  compensation  and  awarded  total  compensation  of

Rs.8,95,000/-  with  interest  at  the  rate  of  9%  per  annum  to  the

claimant. Being aggrieved, the appellant challenged the said award by

filing an appeal before the High Court under Section 173 of the Motor

Vehicles Act, 1988, inter alia, on the ground that since the wife of the

injured had been given appointment on compassionate grounds, the

Tribunal should have taken into consideration the income receivable by

the  wife  from  such  appointment  for  calculating  the  pecuniary  loss

suffered by the victim.                     

The  High  Court  while  affirming  the  award  of  the  Tribunal,

dismissed  the  appeal.  Being  aggrieved,  the  appellant–Insurance

Company preferred this appeal against the impugned judgment and

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order  dated  15.02.2013,  passed  by  the  High  Court  in  First  Appeal

No.1398 of 2012.  

8. In  both  these  appeals,  the  appellant  has  challenged  the

impugned judgments and orders passed by the High Court holding that

while  granting  compensation  to  the  claimants  in  respect  of  fatal

accidents under the Statute, the amount receivable by the claimants

from  compassionate  appointment  given  to  them  by  the  employer,

should  not  be  deducted.  In  other  words,  compensation  should  be

granted  irrespective  of  the  income  received  from  compassionate

appointment.

9. The main contention of the appellant in these appeals is that the

amount of salary received by the claimants being appointed by the

employers  of  the  deceased  on  compassionate  grounds  must  be

reduced  from  the  award  of  compensation  made  in  favour  of  the

claimants.  Thus, the only issue before us in these appeals is whether

the income of the claimants from compassionate employment is liable

to  be  deducted  from  the  compensation  amount  awarded  by  the

Tribunal under the Statute.  

10. The payment  of  compensation may be claimed under  Section

163A of the Motor Vehicles Act, 1988 (for short, the 'Act'). The liability

to pay the amount of compensation under Section 163A of the Act, is

imposed on the owner of the motor vehicle or the authorized insurer,

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in the case of death or permanent disablement due to accident arising

out of the use of motor vehicle. It is payable to the legal heirs or the

victim, as the case may be. In other cases, an award may be made in

respect of the claim arising out of the accident under Section 168 of

the Act. The Tribunal may make an award determining the amount of

compensation “which appears to it to be just”, specifying the person or

persons to whom compensation shall be paid and in making the award,

the Tribunal shall specify the amount which shall be paid by the insurer

or owner or driver of the vehicle involved in the accident or by all or

any of them, as the case may be.  

11. In these cases, compensation is claimed against the tort feasor

who  may  be  the  driver  or  owner  of  the  vehicle  or  the  insurer. In

respect of an accident in which the tort feasor is found to be liable, the

owner or the driver of the vehicle or the insurer, as the case may be,

may alone be held responsible for the payment of such compensation

since the accident has resulted in the injury or death which gives rise

to the claim of the claimants. No other party is involved in it.  And

certainly not the employer who may offer compassionate appointment

to the dependants of the injured/ deceased.

12. While  awarding  compensation,  amongst  other  things,  the

Tribunal takes into account the income of the deceased and calculates

the  loss  of  such  income  after  making  permissible  deductions  to

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compensate the injured claimant for the loss of earning capacity in

case of an injury, and to compensate the claimants dependent on him

in case of death. Thus, the income of the deceased or the injured,

which the claimants have lost due to the inability of the deceased or

the injured to earn or to provide for them is a relevant factor which is

always  taken  into  consideration.  The  salary  or  the  income  of  the

claimant  in  case  of  death  is  generally  not  a  relevant  factor  in

determining  compensation  primarily  because  the  law  takes  no

cognizance of the claimant's situation.  Though in case of an injury, the

income of the claimant who is injured is relevant.   In other words,

compensation is awarded on the basis of the entire loss of income of

the deceased or in a case of injury, for the loss of income due to the

injury.   What  needs  to  be  considered  is  whether  compassionate

appointment offered to the dependants of the deceased or the injured,

by the employer of the deceased/ injured, who is not the tort feasor,

can be deducted from the compensation receivable by him on account

of the accident from the tort feasor.  Certainly, it cannot be that the

one liable to compensate the claimants for the loss of income due to

the accident, can have his liability reduced by the amount which the

claimants earn as a result of compassionate appointment offered by

another viz. the employer.  

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13. The submission on behalf of the appellant in these cases is that

the salary of  the claimants receivable on account of  compassionate

appointment  must  be  deducted  from the compensation  awarded  to

them. Reliance is placed in this regard on the judgment of this Court in

the case of  Bhakra Beas Management Board vs. Kanta Aggarwal and

Ors1. in which compensation was claimed against the employer of the

deceased who was also the owner of the offending vehicle i.e. the tort

feasor. The tort feasor offered employment on compassionate grounds

to the widow of the deceased – i.e.  the claimant.  In the facts and

circumstances of the case, this Court took the view that the salary

which flowed from the compassionate appointment offered by the tort

feasor, was liable to be deducted from the compensation which was

payable by the same employer in his capacity as the owner of the

offending vehicle. We find this decision as being of no assistance to the

appellant in the cases before us. In the present cases, the owner of

the  offending  vehicle  is  not  the  employer  who  offered  the

compassionate appointment. As observed earlier, it is difficult to see

how the owner can contend that the compensation which he is liable to

pay for causing the death or disability should be reduced because of

compassionate  employment  offered  by  another.  In  any  case,  it  is

difficult  to  determine  how much  the  person  offered  compassionate

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appointment would earn over the period of employment which is not

certain, and deduct that amount from the compensation.

14. At this juncture, it would be apposite to refer to some of the

decisions  rendered  by this  Court.  In  case  of  Helen  C.  Rebello  and

others  vs. Maharashtra  State  Road  Transport  Corporation  and

another2, the insurance company had claimed that the amount which

was received by the claimant on account of life insurance was liable to

be deducted from the compensation which is payable to the claimants.

This contention was rejected by this Court in the following words:  

“36. As  we have observed,  the whole  scheme of  the Act,  in

relation to the payment of compensation to the claimant, is a

beneficial  legislation.  The intention of  the legislature is  made

more clear by the change of language from what was in the

Fatal  Accidents Act,  1855 and what is  brought under Section

110-B of the 1939 Act. This is also visible through the provision

of  Section  168(1)  under  the  Motor  Vehicles  Act,  1988  and

Section 92-A of  the 1939 Act which fixes the liability  on the

owner of the vehicle even on no fault. It provides that where the

death  or  permanent  disablement  of  any  person  has  resulted

from an accident in spite of no fault of the owner of the vehicle,

an  amount  of  compensation  fixed  therein  is  payable  to  the

claimant  by such owner of  the vehicle.  Section 92-B ensures

that  the  claim  for  compensation  under  Section  92-A  is  in

addition  to  any other  right  to  claim compensation  in  respect

whereof (sic thereof) under any other provision of this Act or of

any other law for the time being in force. This clearly indicates

the intention of the legislature which is conferring larger benefit

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on the claimant. Interpretation of such beneficial legislation is

also well settled. Whenever there be two possible interpretations

in  such statute,  then  the  one which  subserves  the  object  of

legislation, viz., benefit to the subject should be accepted. In

the present case, two interpretations have been given of this

statute,  evidenced  by  two  distinct  sets  of  decisions  of  the

various High Courts. We have no hesitation to conclude that the

set of decisions, which applied the principle of no deduction of

the life insurance amount, should be accepted and the other set,

which  interpreted  to  deduct,  is  to  be  rejected.  For  all  these

considerations,  we have no hesitation to hold that such High

Courts  were  wrong in  deducting  the amount  paid  or  payable

under the life insurance by giving a restricted meaning to the

provisions  of  the  Motor  Vehicles  Act  basing  mostly  on  the

language of English statutes and not taking into consideration

the  changed  language  and  intents  of  the  legislature  under

various provisions of the Motor Vehicles Act, 1939.

37. Accordingly, we  set  aside  the  impugned judgment  dated

9-9-1985  and  restore  the  judgment  of  the  Tribunal  dated

29-9-1980 and hold that the amount received by the claimant

on the life insurance of the deceased is not deductible from the

compensation  computed  under  the  Motor  Vehicles  Act.  The

respondent  concerned shall  make the payment  accordingly, if

not already paid in terms thereof.”

Similarly, in the case of  United India Insurance Co. Ltd. & Ors.

vs. Patricia Jean Mahajan & Ors.3 , this Court held that the amount

received  by  the  claimants  on  account  of  social  security  from  an

employer must have a nexus or relation with the accidental injury or

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death, in order to be deductible from the amount of compensation.

Hence, this Court refused to deduct the said amount from the amount

of compensation receivable on account of the motor accident.   

The facts of the case in Vimal Kanwar & Ors. vs. Kishore Dan &

Ors4. are similar to the facts of the cases in hand. The contention in

the said case was that the amount of salary receivable by the claimant

appointed on compassionate ground was deductible from the amount

of  compensation  which  the  claimant  was  entitled  to  receive  under

Section 168 of the Motor Vehicles Act, 1988. This Court rejected the

said contention and observed as follows:  

“21. “Compassionate appointment” can be one of the conditions

of service of an employee, if a scheme to that effect is framed by

the employer. In case, the employee dies in harness i.e. while in

service  leaving  behind the  dependants,  one of  the dependants

may  request  for  compassionate  appointment  to  maintain  the

family of the deceased employee who dies in harness. This cannot

be stated to be an advantage receivable by the heirs on account

of one’s death and have no correlation with the amount receivable

under  a  statute  occasioned  on  account  of  accidental  death.

Compassionate appointment may have nexus with the death of an

employee while in service but it is not necessary that it should

have a correlation with the accidental death. An employee dies in

harness even in normal course, due to illness and to maintain the

family of the deceased one of the dependants may be entitled for

compassionate  appointment  but  that  cannot  be  termed  as

“pecuniary  advantage”  that  comes  under  the  periphery  of  the

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Motor Vehicles Act and any amount received on such appointment

is  not  liable  for  deduction  for  determination  of  compensation

under the Motor Vehicles Act.”

15. In the case of Reliance General Insurance Company Limited vs.

Shashi  Sharma &  Ors5.,  this  Court  permitted  the  deduction  of  the

amount  receivable  by  the  claimant  under  the  scheme of  the  2006

Rules  framed  by  the  State  of  Haryana  which  provided  a  grant  of

compassionate assistance by way of ex gratia financial assistance on

compassionate grounds to the members of the family of a deceased

government employee who died while in service/missing government

employee.

16. The financial assistance was a sum equal to the pay and other

allowances  that  were  last  drawn by  the  deceased  employee  in  the

normal  course without  raising a specific  claim for  periods  up to  15

years from the date of the death of the employee if the employee had

not attained the age of 35 years, and lesser periods of 12 years and 7

years depending on the age of the employee at the time of death.  The

family was eligible to receive family pension only after the period of

financial  assistance  was  completed.  The  Court  held  that  ex  gratia

financial assistance was liable to be deducted on the ground that the

claimant was eligible to it on account of the same event in which the

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compensation was claimed under the Motor Vehicles Act, 1988, i.e. the

death of the employee.

17. This case seems to superficially support the case of the appellant

Insurance Company before us.  However, on a deeper consideration, it

does not.  In Reliance General  Insurance (supra), the family of the

deceased employee became entitled to financial assistance of a sum

equal to the pay and other allowances that were last drawn by the

deceased for a certain period after his death, even without raising a

specific claim. In other words the family became entitled to the pay &

allowances that the deceased would have received if he would have

not died, for a certain period of time.  This financial scheme resulted in

paying the family the same pay and allowances for a certain period

and thus in effect clearly offseting the loss of income on account of the

death of the deceased.  Thus, the amount of financial assistance had

to be excluded from the loss of income, as to that extent there was no

loss of income, and the compensation receivable by the family had to

be reduced from the amount receivable under the Motor Vehicles Act.

18. In the present cases, the claimants were offered compassionate

employment. The claimants were not offered any sum of money equal

to the income of the deceased.  In fact, they were not offered any sum

of money at all.  They were offered employment and the money they

receive  in  the  form  of  their  salary,  would  be  earned  from  such

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employment.    The loss of income in such cases cannot be said to be

set off because the claimants would be earning their living. Therefore,

we are of  the view that the amount earned by the claimants from

compassionate appointments cannot be deducted from the quantum of

compensation receivable by them under the Act.

19.  In the cases before us, compensation is claimed from the owner

of the offending vehicle who is different from the employer who has

offered employment on compassionate grounds to the dependants of

the deceased/injured. The source from which compensation on account

of  the  accident  is  claimed  and  the  source  from  which  the

compassionate employment  is  offered,  are completely  separate and

there  is  no  co-relation  between  these  two  sources.  Since  the  tort

feasor has not offered the compassionate appointment, we are of the

view  that  an  amount  which  a  claimant  earns  by  his  labour  or  by

offering his services, whether by reason of compassionate appointment

or otherwise is not liable to be deducted from the compensation which

the claimant is entitled to receive from a tort feasor under the Act. In

such a situation, we are of the view that the financial benefit of the  

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compassionate employment is not liable to be deducted at all from the

compensation amount which is liable to be paid either by the owner/

the driver of the offending vehicle or the insurer.  

Hence, we find no merit in these appeals and they are dismissed

accordingly.  

….………………………………..J. [S.A. BOBDE]

….………………………………..J.  [L. NAGESWARA RAO]

NEW DELHI  

MARCH 07, 2017

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