The Supreme Court on Monday held that money received through employer provided group insurance schemes or other social security benefits cannot be deducted from compensation granted under the Motor Vehicles Act, 1988. The decision was reported by LiveLaw. A bench comprising Justices Pankaj Mithal and Prasanna B Varale delivered the ruling while hearing appeals challenging a Karnataka High Court judgment that had refused to allow the deduction of group insurance benefits from motor accident compensation awarded after a road accident death.

The appeals stemmed from two road accident cases in Karnataka in which victims died after being struck by buses driven negligently. In both instances, Motor Accident Claims Tribunals granted compensation to the victims families but reduced the amount by deducting the money received through employer provided group insurance schemes.

The Karnataka High Court later overturned these deductions. However, the transport corporation and the insurer approached the Supreme Court, arguing that such benefits should be adjusted against the compensation so that claimants do not receive double benefits from the same accident. The key question before the court was whether group insurance payouts could be deducted from compensation awarded under the Motor Vehicles Act. The Supreme Court ruled that amounts received by the dependants of the deceased under employer provided group insurance schemes or similar contractual or social security benefits cannot be treated as pecuniary advantages that can reduce compensation under the Motor Vehicles Act.

The court explained that such benefits arise from an independent contractual arrangement and have no direct connection with the statutory compensation awarded for death in a motor vehicle accident. Therefore, the principle of balancing loss and gain cannot be applied to reduce the compensation that claimants are legally entitled to receive. The court also stated that there was no reason to interfere with the Karnataka High Court decision that had set aside the deductions made by the tribunal.