The New India Assurance Company Ltd vs Kamalesh

2025 INSC 724 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal Nos………………of 2025 (@Special Leave Petition (C) No.12235-12236 of 2019)

New India Assurance Co. Ltd. …. Appellant Versus

Kamlesh and Others. …. Respondents With Civil Appeal Nos………………of 2025 (@Special Leave Petition (C) No.12421-12422 of 2023)

ORDER

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;

Signature Not Verified whether the same is liable to be deducted from the total Digitally signed by Jayant Kumar Arora Date: 2025.05.17 17:51:21 IST Reason: compensation. The appeal by the claimants was for 1 for brevity ‘the Rules of 2006’

Page 1 of 19 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 Others3.

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

Others4 followed in National Insurance Company Ltd. v.

Birendra5.

2 (2017) 16 SCC 680 3 FAQ No.2648 of 2016 decided on 31.07.2017 4 (2016) 9 SCC 627 5 2020 SCC OnLine SC 28

Page 2 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc.

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 Corporation6 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, 19488 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.

P. Ashokan9, National Insurance Co. Ltd. v. Hamida

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 (1999) 1 SCC 90 7 Civil Appeal No.4941 of 2022 dt.19.01.2023 8 For brevity ‘ESI Act’ 9 (1997) 7 SCC 638 10 (2009) 13 SCC 361 11 1993 SCC SUPL. (4) 100

Page 3 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. India Assurance Co. Ltd. v. Sunita Sharma 12 there should

be no refund ordered as of now.

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. Rebello6 and Shashi Sharma4 found

that Shashi Sharma4, 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. Rebello6 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 14 (2019) 17 SCC 465

Page 4 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc.

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

Page 5 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. 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 Sharma4.

9. In Shashi Sharma4, Helen C. Rebello6 and one other decision

on the same lines was referred to and distinguished. The

principle stated in Helen C. Rebello6 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

Page 6 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. 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

Page 7 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. 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. Rebello6.

While accepting the dictum in Helen C. Rebello6, Shashi

Sharma4 was specifically referred to and distinguished. Though

Shashi Sharma4 did not in principle disagree with the

propositions laid down in Helen C. Rebello6, 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 Sharma4 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 Sharma4.

11.In this context, we notice that the Constitution Bench decision

in Pranay Sethi2 wherein a conflict between two decisions of

Coordinate Benches was considered and it was so held in

paragraphs No.14, 27 and 28: -

Page 8 of 19

CA @SLP (C) No. 12235-12236 of 2019 etc.

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

Page 9 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. 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].

28. In this context, we may also refer to Sundeep Kumar Bafna v. State of Maharashtra [Sundeep Kumar Bafna v. State of Maharashtra, (2014) 16 SCC 623] which correctly lays down the principle that discipline demanded by a precedent or the disqualification or diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty. A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench. There can be no scintilla of doubt that an earlier decision of co-

equal Bench binds the Bench of same strength. Though the judgment in Rajesh case [Rajesh v. Rajbir Singh, (2013) 9 SCC 54] was delivered on a later date, it had not apprised itself of the law stated in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65] but had been guided by Santosh Devi [Santosh Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421] . We have no hesitation that it is not a binding precedent on

Page 10 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. the co-equal Bench.

(underlining by us for emphasis)

12.In the teeth of the decision of the Constitution Bench with all

the respect at our command, we cannot agree with the two

Judge Bench decision in Krishna13. Nor can we find

Sebastiani Lakra14 having clarified Shashi Sharma4 and we

are hence, bound to follow Shashi Sharma4 which has been

followed in Birendera5, another two Judge Bench and also by

this very Division Bench in Sunita Sharma12.

13.Now we come to the quantum in the appeal filed by the

claimants. The loss of dependency awarded by the High Court

is Rs.44,44,986/- reckoning the future prospects and the

multiplier applicable to a person between the age of 40 and 45

and deducting income tax and personal expenses, which are in

tune with the dictum in Pranay Sethi2. However, we have to

notice that the compensation under conventional heads has

not been restricted to Rs.70,000/- in Pranay Sethi2 but has

been restricted to Rs.40,000/- for loss of consortium,

Rs.15,000/- for funeral expenses and Rs.15,000/- for loss of

estate. Magma General Insurance Company Ltd. v. Nanu

Page 11 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. Ram @ Chuhru Ram15 and in New India Assurance

Company v. Somwati16 declared the principle that in addition

to loss of spousal consortium, loss of parental & filial

consortium also have to be considered. This does not go

against the judgment of the Constitution Bench and is in tune

with the three Judge Bench in Sebastiani Lakra14 which also

emphasise the need for ‘just compensation’.

14.In the above context we notice that here the loss of consortium

is entitled to the spouse and the three children of the deceased

which will come to Rs.1,60,000/-. This amount cannot be

reduced by any amounts received by the claimants under the

Rules of 2006. The Rules of 2006 permits the last drawn salary

of the deceased to be continued to the family of the employee

but for different periods dependent upon the age of the

deceased. If the deceased was aged 35 years, then the last

drawn pay and allowances would be payable for a period of 15

years and if the employee is between 35 years and 48 years of

age, the period would be reduced to 12 years and for an

employee who died at the age of 48 years, the payment would

be restricted to 7 years. The year-wise restriction made

15 2018 (4) RCR (Civil) 333 16 (2020) 9 SCC 644

Page 12 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. applicable in the Rules of 2006 is also on the principle of the

normal life expectancy of an employee on which principle, the

multiplier system has been introduced and affirmed in Sarla

Verma’s case.

15.Hence, the proper method would be for the Tribunal itself

considering the death of a Government employee, to whom the

Rules of 2006 is applicable, to first consider the loss of income,

quantum of compensation with reference to loss of income as

would be available from the principles enunciated in Sarla

Verma and Pranay Sethi’s case and to deduct the pay and

allowances payable under the Rules of 2006. If the

compensation for loss of income arrived at under the M.V. Act is

more, then necessarily the difference has to be paid to the

claimants.

16.In the present case, the deceased was aged 43 years and was

getting a salary of Rs.28,300/- per month which takes his

annual income to Rs.3,39,600/-. The deceased left behind his

wife and three children, thus he was earning for a family

comprised of five persons, in which context, the deduction for

personal expenses has to be 1/4 th. The High Court has

deducted the income tax to arrive at the annual income of

Page 13 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. Rs.3,25,640/- and an addition has been made for future

prospects at the rate of 30% which is in accordance with

Pranay Sethi2. The High Court has also reduced half of the

financial assistance payable computed at Rs.43,35,408/- under

the Rules of 2006. The High Court also relied on PW-4, an

employee in the District Employment Office, Fatehabad who

has deposed that the family of the deceased is entitled to a

salary of Rs.30,107/- for the month of August 2015 which in

accordance with the Rules of 2006 would be continued for 12

years coming to a total of Rs.43,35,408/-. Obviously, this is the

last drawn salary of the deceased which should have been

reckoned for the purpose of calculating the loss of income

under the M.V. Act also. Considering the fact that no deduction

for the income tax has been made in the amounts entitled to

the family of the deceased for 12 years, which would be

deducted only from monthly payments, we are of the view that

there could be no deduction made even while computing the

loss of income from the last drawn pay; for income tax.

17.Hence, the loss of income, ideally would have to be computed

in the following manner. Obviously since the amounts payable

under the Rules of 2006 is the last drawn pay in computing the

Page 14 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. loss of income under the M.V Act necessarily the future

prospects will have to be added and the multiplier applicable

would be 14 since the age of the deceased was 43. The

computation hence would be 30,107 x 12 x 14 x 130% x 3/4 =

Rs.49,31,527/- from which the amounts payable as financial

assistance under the Financial Assistance Rules of 2006 will

have to be deducted which is Rs. 43,35,408/-. The additional

loss of income payable under the M.V. Act would be Rs.

5,96,019/- to which will be added loss of consortium for the

widow and three children at Rs. 1,60,000/- and loss of estate

and funeral expenses of Rs. 30,000/-. The total compensation

would be Rs. 7,86,119/-. The compensation already paid shall

not be refunded.

18.The Appeals are disposed of on the afore said terms on the

question of law, following Shashi Sharma4.

19.Pending application(s), if any, shall stand disposed of.

……………..……………, J.

[SUDHANSHU DHULIA]

……………..……………, J.

[K. VINOD CHANDRAN] NEW DELHI;

APRIL 28, 2025.

Page 15 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. ITEM NO.51A COURT NO.12 SECTION IV-B

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 12235- 12236/2019

[Arising out of impugned final judgment and order dated 24-01-2019 in FAO No. 7415/2016 24-01-2019 in FAO No. 1583/2017 passed by the High Court of Punjab & Haryana at Chandigarh]

THE NEW INDIA ASSURANCE COMPANY LTD. Petitioner(s)

VERSUS

KAMALESH & ORS. Respondent(s) WITH SLP(C) No. 12421-12422/2023 (IV-B)

Date : 28-04-2025/17.05.2025

CORAM : HON'BLE MR. JUSTICE SUDHANSHU DHULIA HON'BLE MR. JUSTICE K. VINOD CHANDRAN

For Petitioner(s) : Dr. Meera Agarwal, AOR Mr. Ramesh Chandra Mishra, Adv.

For Respondent(s) : Mr. M. R. Shamshad, Sr. Adv.

Mr. Shashank Singh, Adv.

Ms. Savita Devi, Adv.

Mr. Gaurav Gupta, Adv.

Mr. Rohit Kumar, Adv.

Mr. Akshay Verma, AOR (Respondent in SLP (C) 12235-12236/2019) (Petitioner in SLP (C) 12421-12422/2023)

Mr. Devendra Kumar Saini, Adv.

Mr. Samar Vijay Singh, AOR Ms. Sabarni Som, Adv.

Mr. Fateh Singh, Adv.

Mr. Aman Dev Sharma, Adv.

Mr. Ayush Gupta, Adv.

Mr. Vaibhav Vikram Singh, Adv.

UPON hearing the counsel the Court made the following O R D E R

The Reasoned order is being uploaded today i.e. on 17.05.2025.

(JAYANT KUMAR ARORA) (RENU BALA GAMBHIR)

Page 16 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. ASTT. REGISTRAR-cum-PS ASSISTANT REGISTRAR

(Signed order is placed on the file)

Page 17 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. ITEM NO.51 COURT NO.12 SECTION IV-B

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 12235- 12236/2019

[Arising out of impugned final judgment and order dated 24-01-2019 in FAO No. 7415/2016 24-01-2019 in FAO No. 1583/2017 passed by the High Court of Punjab & Haryana at Chandigarh]

THE NEW INDIA ASSURANCE COMPANY LTD. Petitioner(s)

VERSUS

KAMALESH & ORS. Respondent(s) WITH SLP(C) No. 12421-12422/2023 (IV-B)

Date : 28-04-2025 These petitions were called on for hearing today.

CORAM : HON'BLE MR. JUSTICE SUDHANSHU DHULIA HON'BLE MR. JUSTICE K. VINOD CHANDRAN

For Petitioner(s) : Dr. Meera Agarwal, AOR Mr. Ramesh Chandra Mishra, Adv.

For Respondent(s) : Mr. M. R. Shamshad, Sr. Adv.

Mr. Shashank Singh, Adv.

Ms. Savita Devi, Adv.

Mr. Gaurav Gupta, Adv.

Mr. Rohit Kumar, Adv.

Mr. Akshay Verma, AOR (Respondent in SLP (C) 12235-12236/2019) (Petitioner in SLP (C) 12421-12422/2023)

Mr. Devendra Kumar Saini, Adv.

Mr. Samar Vijay Singh, AOR Ms. Sabarni Som, Adv.

Mr. Fateh Singh, Adv.

Mr. Aman Dev Sharma, Adv.

Mr. Ayush Gupta, Adv.

Mr. Vaibhav Vikram Singh, Adv.

UPON hearing the counsel the Court made the following O R D E R Leave granted.

The appeals are disposed of.

Reasons to follow.

Page 18 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc. (JAYANT KUMAR ARORA) (RENU BALA GAMBHIR) ASTT. REGISTRAR-cum-PS ASSISTANT REGISTRAR

Page 19 of 19 CA @SLP (C) No. 12235-12236 of 2019 etc.