Full Deduction of Haryana Government’s “Financial Assistance to Dependants” from Motor-Accident Compensation: A Detailed Commentary on The New India Assurance Co. Ltd. v. Kamlesh & Ors. (2025 INSC 724)

1. Introduction

The Supreme Court’s decision in The New India Assurance Co. Ltd. v. Kamlesh consolidates and clarifies the law on whether pecuniary benefits received by the family of a deceased Government employee under the Haryana Compensation Assistance to the Dependents of Deceased Government Employees Rules, 2006 (“2006 Rules”) should be deducted—fully or partly—from the compensation payable under the Motor Vehicles Act, 1988 (“MV Act”) for fatal road accidents.

The appeal arose from a motor-accident claim in which the Tribunal awarded ₹37.85 lakh. The High Court enhanced loss of dependency but directed partial deduction (50 %) of the assistance receivable under the 2006 Rules, relying on a Punjab & Haryana High Court ruling. The insurer challenged the partial deduction, urging that the 2016 three-Judge Supreme Court ruling in Reliance Gen. Ins. Co. v. Shashi Sharma mandated a 100 % deduction. The claimants sought enhancement and resisted any deduction.

2. Summary of the Judgment

• Binding Precedent Re-affirmed: The Court (Justices Sudhanshu Dhulia & K. Vinod Chandran) held it was bound by the three-Judge Bench in Shashi Sharma, which directed complete deduction of benefits flowing from the 2006 Rules while computing loss of dependency.
• Conflict Resolved: Contrary views expressed in later two-Judge Bench cases (Krishna v. Tek Chand, 2024) do not overrule Shashi Sharma; under the doctrine of precedent a co-equal but numerically inferior Bench cannot depart from an earlier coordinate three-Judge decision.
• Methodology Laid Down: Tribunals must: (a) compute loss of income as per Sarla Verma/Pranay Sethi; (b) deduct in full the salary continuation payable under the 2006 Rules; and (c) award only the residual amount for loss of dependency. Conventional heads (consortium, funeral etc.) are unaffected.
• No Claw-Back of Excess Already Paid: Following its own precedent (New India v. Sunita Sharma, 2025), the Court declined to order refund of any amount already disbursed to the claimants.
• Re-calculated Compensation: On facts, the Court reduced the overall compensation to ₹7,86,119 (plus sums already received, with no refund).

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

1. Reliance Gen. Ins. Co. Ltd. v. Shashi Sharma, (2016) 9 SCC 627 – Three-Judge Bench.
   • Held that ex-gratia salary continuation under the 2006 Rules must be deducted to avoid “double benefit”.
   • Distinguished the earlier leading case Helen C. Rebello on the unique nature of salary-continuation schemes.
2. National Ins. Co. Ltd. v. Birendra, 2020 SCC OnLine SC 28 – Two-Judge Bench that followed Shashi Sharma.
3. Helen C. Rebello v. MSRTC, (1999) 1 SCC 90 – Two-Judge Bench.
   • General rule: independent pecuniary advantages (life insurance etc.) not deductible.
   • Later judgments carve out exceptions when the statutory/contractual benefit is a substitute for lost income.
4. Sebastiani Lakra & Ors. v. National Ins. Co., (2019) 17 SCC 465 – Three-Judge Bench upholding principle of non-deduction for Employee Benefit Schemes but pointedly stated it was not displacing Shashi Sharma on the 2006 Rules.
5. Krishna v. Tek Chand, SLP(C) 5044/2019 (2024) – Two-Judge Bench expressing doubt on Shashi Sharma; Court in present case declined to follow due to lower precedential strength.
6. Pranay Sethi, (2017) 16 SCC 680 – Constitution Bench reaffirming multiplier/future-prospects formula and emphasising discipline of precedent. Relied on here to resolve inter-Bench conflict.
7. Decisions on Section 53 ESI Act & bar of double remedy (Western India Plywood, Hamida Khatoon, Francis De Costa) cited but held tangential.

3.2 Court’s Legal Reasoning

(i) Principle against Double Benefit. The 2006 Rules replicate the deceased employee’s salary for a limited period (7–15 years). This payment is a substitute for the very head of damage—loss of dependency—claimed under the MV Act. Permitting undiminished MV Act compensation would lead to duplication.

(ii) Classification of Pecuniary Advantages. Following Helen C. Rebello, the Court distinguishes between (a) benefits that arise because of the accident, and (b) benefits arising from an independent contract/relationship. Salary continuation falls in category (a) vis-à-vis loss of income and is therefore deductible; life-insurance falls in category (b) and is not.

(iii) Hierarchy of Precedents. Guided by the Constitution Bench observations in Pranay Sethi, a Bench must follow an earlier decision of equal or larger strength. A later two-Judge view cannot overrule a three-Judge decision; any divergence should be referred to a larger Bench.

(iv) Methodology for Tribunals. The judgment instructs Tribunals/Higher Courts to:

1. Compute gross annual income (last drawn pay, add future prospects, deduct personal expenses, apply appropriate multiplier).
2. Ascertain the quantum payable under the 2006 Rules (salary × years specified).
3. Deduct the latter entirely from step 1.
4. Add conventional heads (consortium, funeral, loss of estate) without any deduction.

3.3 Potential Impact

• Uniformity: Ends divergent High Court practices in Haryana & neighbouring States; Tribunals must now deduct 100 % of the salary-continuation benefit.
• Clarity for Insurers & Claimants: Insurers can project liability accurately; claimants can strategise whether to pursue MV Act claims when Government assistance nearly equals lost income.
• Influence on Similar Schemes: Other States with akin compassionate-assistance rules (e.g., Punjab, Rajasthan) may see the same deductibility, unless scheme structure differs materially.
• Precedential Discipline Reinforced: The Court reiterates that co-equal Benches cannot deviate from existing precedent—vital for hierarchical consistency.
• No Retrospective Refunds: Where excess amounts have already been withdrawn by dependants, insurers cannot seek restitution unless specifically reserved, reducing post-award litigation.

4. Complex Concepts Simplified

• Loss of Dependency: Monetary support the deceased would have provided to family, calculated by multiplying annual contribution with a “multiplier” reflecting probable years of earnings left.
• Multiplier System: A table-based figure (e.g., 14 for ages 41–45) reflecting expected remaining working life and life expectancy, standardised in Sarla Verma & Pranay Sethi.
• Future Prospects: Addition (25–50 %) made to current income to capture natural growth through increments/promotions.
• Coordinate Bench/Co-equal Bench: Benches of the same numerical strength (e.g., two-Judge) of the Supreme Court. One co-equal Bench cannot overrule another; only a larger Bench may.
• Per Incuriam: A ruling rendered in ignorance of binding law or precedent; treated as non-binding.
• Double Benefit/Duplum Rule: Claimants should not receive two overlapping monetary benefits for the same head of loss.
• Section 167 MV Act Election: Where an employee’s dependants can claim under both MV Act & Employees’ Compensation Act, they must elect to pursue only one.

5. Conclusion

New India Assurance Co. v. Kamlesh re-establishes a bright-line rule: Compassionate salary-continuation granted under the Haryana 2006 Rules is fully deductible from motor-accident compensation awarded for loss of dependency. By anchoring its reasoning in precedent discipline and the principle against double recovery, the Court delivers much-needed clarity to Tribunals, insurers and litigants. The decision will curtail inconsistency, expedite claim processing, and safeguard the integrity of “just compensation” under the MV Act, while preserving non-pecuniary heads such as consortium for the bereaved family.