Sunday, 14 May 2017

Whether income received by claimant from compassionate appointment can be deducted from compensation received from accident claim?

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

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

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.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8867 OF 2012
NATIONAL INSURANCE CO. LTD. REKHABEN & ORS.
Dated:MARCH 07, 2017


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.

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
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

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

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,

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

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.

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
1
(2008) 11 SCC 366

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
2
(1999) 1 SCC 90

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
3
(2002) 6 SCC 281

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
4
(2013) 7 SCC 476

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
5
(2016) 9 SCC 627

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

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

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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