A) ABSTRACT / HEADNOTE

New India Assurance Co. Ltd. v. Smt. Sunita Sharma and Ors., [2025] 4 S.C.R. 603 : 2025 INSC 469, examines the proper manner of dealing with amounts payable to dependents under the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 (for brevity, Rules of 2006) when computing compensation under the Motor Vehicles Act, 1988. The central issue was whether and to what extent sums receivable under the Rules of 2006 must be deducted from awards made by Claims Tribunals under the Motor Vehicles Act.

The High Court below deducted only fifty per cent of the amounts payable under the Rules of 2006. This Court considered the binding three-Judge Bench decision in Reliance General Insurance Co. Ltd. v. Shashi Sharma, (2016) 9 SCC 627, and the subsequent pronouncement in National Insurance Co. Ltd. v. Birender (2020 SCC Online SC 28), which require that amounts equivalent to pay and allowances or ex-gratia financial assistance under similar compassionate-assistance rules be excluded from the heads of loss of income awarded under the Motor Vehicles Act, while other heads such as future prospects, escalation, and statutory benefits (pension, PF, life insurance) remain separately claimable.

The Supreme Court allowed the insurer’s appeal, set aside the High Court’s order insofar as it deducted only fifty per cent of the Rules of 2006 payment, and directed that the full compensatory amount under the Rules of 2006 be taken into account for deduction — but ordered that no recovery be effected if such amounts have already been paid to the claimants.

Keywords: Compassionate Assistance, Rules of 2006, Motor Vehicles Act, 1988, deduction of ex-gratia, loss of income.

B) CASE DETAILS

i) Judgement Cause Title
New India Assurance Co. Ltd. v. Smt. Sunita Sharma and Ors.

ii) Case Number
Civil Appeal No. 5093 of 2025.

iii) Judgement Date
08 April 2025.

iv) Court
Supreme Court of India.

v) Quorum
Hon’ble Mr. Justice Sudhanshu Dhulia and Hon’ble Mr. Justice K. Vinod Chandran 

vi) Author
K. Vinod Chandran, J.

vii) Citation
[2025] 4 S.C.R. 603 : 2025 INSC 469.

viii) Legal Provisions Involved
Motor Vehicles Act, 1988; Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 (hereafter Rules of 2006).

ix) Judgments overruled by the Case 
None expressly overruled; the judgment enforces the precedential weight of Reliance General Insurance Co. Ltd. v. Shashi Sharma and National Insurance Co. Ltd. v. Birender against a contrary High Court view.

x) Related Law Subjects
Motor/Tort Law; Compensation Law; Administrative Rules governing Government Employees; Public Law (Article 141 – precedent).

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arose from a claim petition under the Motor Vehicles Act, 1988 seeking compensation for death resulting from a motor accident. Parallel to the claim under the statutory compensation regime, the deceased was a government servant whose dependents were entitled to financial assistance under the Rules of 2006. The central tension concerned double recovery: whether amounts payable under the Rules of 2006 essentially ex-gratia assistance equivalent to pay and allowances ought to be deducted from the compensation awarded under the Motor Vehicles Act so that claimants do not receive duplicative compensation for the same head of loss.

The High Court, while hearing the appeal from the Claims Tribunal, observed precedents but deducted only fifty per cent of the Rules of 2006 amount from the motor-accident award. The insurer contested this approach and obtained special leave, urging the Supreme Court to give effect to binding authority which limits duplication by excluding amounts equivalent to pay and allowances received under compassionate-assistance rules from the loss of income head under the Motor Vehicles Act, while preserving other compensatory heads.

The Supreme Court heard submissions and, after considering the three-Judge Bench ruling in Shashi Sharma and the subsequent Birender decision, found the High Court erred in following a contrary High Court judgment (Kamla Devi) and in not giving full effect to binding Supreme Court precedent. The Court therefore corrected the approach directing full deduction of the Rules of 2006 amount from the relevant heads of motor-accident compensation, but protecting respondents who had already received such sums from any recovery demand.

D) FACTS OF THE CASE

The deceased was a government employee who died in circumstances giving rise to a claim under the Motor Vehicles Act. The dependents pursued compensation before the Claims Tribunal under the Motor Vehicles Act, 1988, and separately were eligible to apply for compassionate financial assistance under the Rules of 2006.

The Claims Tribunal awarded compensation; on appeal the High Court reduced the amount by deducting fifty per cent of the compensation receivable under the Rules of 2006. The Insurer challenged that approach on the ground that Supreme Court precedent mandates deduction of the full amount receivable under the compassion rules to avoid double recovery for pay and allowances received by the dependents, relying prominently on the three-Judge Bench decision in Reliance General Insurance Co. Ltd. v. Shashi Sharma and on the subsequent decision in National Insurance Co. Ltd. v. Birender.

The High Court, however, accepted and followed a contrary High Court Bench decision in Kamla Devi v. Sahib Singh, causing the insurer to obtain special leave to appeal to this Court. During proceedings before the Supreme Court, the respondents did not appear; the insurer undertook not to press recovery from claimants who had already been paid the amounts. The Court examined the competing authorities and legal principles concerning overlap between statutory compensation and administrative ex-gratia assistance.

E) LEGAL ISSUES RAISED

1. Whether amounts receivable under the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 must be deducted in full from the compensation awarded under the Motor Vehicles Act, 1988 to avoid double recovery?

2. Whether the High Court was bound by the three-Judge Bench decision in Reliance General Insurance Co. Ltd. v. Shashi Sharma and subsequent Supreme Court rulings when adjudicating deduction of compassionate-assistance amounts?

3. Whether retrospective recovery may be ordered from dependents who have already received amounts under the Rules of 2006?

F) PETITIONER/ APPELLANT’S ARGUMENTS

The counsel for the appellant-insurer submitted that the High Court erred in deducting only fifty per cent of the Rules of 2006 payment. Reliance was placed on the binding precedent of the three-Judge Bench in Reliance General Insurance Co. Ltd. v. Shashi Sharma, which directs exclusion of amounts received under compassionate assistance only to the extent they correspond to pay and allowances included within the motor-accident award and preserved other heads.

The insurer argued that partial deduction is inconsistent with the settled doctrine against double recovery and urged the Court to set aside the High Court order and direct full deduction of the amounts receivable under the Rules of 2006 from the compensatory award under the Motor Vehicles Act. The appellant further relied on National Insurance Co. Ltd. v. Birender which applied similar protective measures and procedural directions in the event the compassionate-assistance application succeeded. The insurer undertook that it would not seek refund from claimants who had already received payments.

G) RESPONDENT’S ARGUMENTS

The respondents did not appear before this Court. At the High Court stage they had obtained award with only fifty per cent deduction; the legal position advanced below favored limiting the deduction on equitable or contextual grounds (following Kamla Devi). No oral contest was presented before this Court; the record shows the insurer’s counsel recorded an undertaking that no refund would be sought from respondents if payment had already been made.

H) RELATED LEGAL PROVISIONS 

i. Motor Vehicles Act, 1988 — provisions governing claims for compensation in fatal accidents and principles for determining just compensation.

ii. Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 — Rule 5(1) (financial assistance equivalent to pay and allowances) and related sub-rules granting family pension, life insurance, provident fund benefits.

iii. Doctrine against double recovery and Article 141 (binding precedent) — Supreme Court’s dictum in Shashi Sharma and subsequent application in Birender.

I) JUDGEMENT

The Court allowed the appellant’s appeal insofar as the High Court had limited the deduction to fifty per cent of the Rules of 2006 compensation. The majority reasoning rested on the precedent established by the three-Judge Bench in Reliance General Insurance Co. Ltd. v. Shashi Sharma, which holds that amounts received by dependents under compassionate-assistance rules equivalent to pay and allowances must be excluded when awarding compensation under the Motor Vehicles Act to prevent double recovery in respect of the same head.

The Court emphasized that compassionate assistance under Rule 5(1) is not an additional head of loss of income but essentially compensatory for pay and allowances; therefore, where the Claims Tribunal includes pay and allowances within the loss-of-income computation, the identical sum cannot be awarded twice. The Court clarified, following Shashi Sharma, that heads such as future prospects, escalation, statutory benefits (family pension, PF, life insurance) are not covered by Rule 5(1) and thus remain claimable under the Motor Vehicles Act. The Court also relied on the Birender decision which provided procedural safeguards: when compassionate-assistance applications are pending, awards may be made subject to subsequent adjustment and an affidavit-cum-declaration mechanism to prevent unjust enrichment.

Applying these principles, the Supreme Court held the High Court’s selective fifty per cent deduction was inconsistent with binding precedent and Article 141. The appeal was allowed to the extent described, with the protective non-recovery direction for respondents who had already obtained and spent the amounts. The Court observed with concern that the High Court, despite noticing the Supreme Court’s decision, preferred a contrary High Court Bench’s view in Kamla Devi, thereby violating binding precedent. Finally, the Court disposed of pending applications and clarified that its order should be applied consistently in similar cases.

a. RATIO DECIDENDI

The binding principle (ratio) is that amounts receivable under compassionate assistance rules equivalent to pay and allowances (e.g., Rule 5(1) of the Rules of 2006) must be deducted from the compensatory award under the Motor Vehicles Act to avoid duplication; other heads of compensation (future prospects, escalation, statutory benefits) are not covered by such rules and are payable in addition. This follows the three-Judge Bench ruling in Reliance General Insurance Co. Ltd. v. Shashi Sharma and the subsequent application in Birender, which together fix the legal architecture for adjustment and the mechanism to avoid unjust enrichment while protecting legitimate claims beyond mere pay and allowances. The instant judgment enforces that precedent as binding on all lower courts, and rejects any inconsistent High Court decisions.

b. OBITER DICTA 

The Court expressed surprise at the High Court’s deviation from Supreme Court precedent and reiterated the constitutional force of Article 141 to ensure uniformity of law. The Court also, by way of observation, endorsed procedural fairness — permitting awards subject to adjustment if compassionate-assistance applications later succeed, and directing safeguards (affidavits/declarations) to prevent double recovery and to enable recovery only where legally permissible. The direction that no recovery shall be made from respondents who have already been paid is a pragmatic remedial observation balancing legal correctness with equity.

c. GUIDELINES

i. When a claimant under the Motor Vehicles Act is also eligible for compassionate-assistance under government rules, the Claims Tribunal must ascertain amounts receivable under the relevant administrative rules and deduct sums equivalent to pay and allowances from the compensation awarded under the Motor Vehicles Act to avoid double recovery.

ii. Heads such as future income escalation, prospective benefits, family pension, provident fund, life insurance are not to be deducted as they fall outside the limited compass of Rule 5(1) assistance.

iii. If the administrative application for compassionate assistance is pending, awards under the Motor Vehicles Act may be made subject to adjustment once the administrative grant is adjudicated; claimants may be required to file an affidavit-cum-declaration before withdrawing compensation, disclosing receipt or entitlement to compassionate assistance.

iv. Courts below must follow Supreme Court precedent; conflicting High Court decisions cannot be preferred over binding Supreme Court benches under Article 141.

J) CONCLUSION & COMMENTS

The decision reaffirms the established principle against double recovery and buttresses uniform application of precedent. It clarifies the precise interplay between statutory motor-accident compensation and administrative compassionate assistance: deduct amounts equivalent to pay and allowances received under Rules of 2006, preserve other independent heads of compensation, and apply procedural measures to ensure adjustments occur fairly. The Court’s non-recovery direction for those already paid balances legal rectitude with equitable protection of vulnerable dependents. The judgment strengthens predictability in claim adjudication and underscores lower courts’ duty to adhere to Supreme Court authority. Practitioners should structure pleadings and relief to disclose pending administrative claims and be ready to furnish affidavits to facilitate lawful adjustment.

K) REFERENCES

a. Important Cases Referred

1. Reliance General Insurance Co. Ltd. v. Shashi Sharma, (2016) 9 SCC 627.
2. National Insurance Company Limited v. Birender, 2020 SCC Online SC 28.
3. Helen C. Rebello v. Maharashtra SRTC, (1999) 1 SCC 90.
4. United India Insurance Co. Ltd. v. Patricia Jean Mahanan, (2002) 6 SCC 281.
5. New India Assurance Co. Ltd. v. Smt. Sunita Sharma and Ors., [2025] 4 S.C.R. 603 : 2025 INSC 469 (this judgment).

b. Important Statutes Referred

1. Motor Vehicles Act, 1988.
2. Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006.