The Punjab and Haryana High Court held that family pension received by the dependants of a deceased person cannot be deducted while calculating compensation for loss of dependency under the Motor Vehicles Act. The Court ruled that family pension is not a benefit arising out of the accidental death but is a service-related entitlement earned by the deceased during his lifetime, and therefore it has no direct connection with compensation payable for death caused by a motor accident. The judgment arose from an appeal filed by the claimants challenging the award passed by a Motor Accidents Claims Tribunal, which had reduced the compensation by deducting the family pension received by the widow from the notional income of the deceased.
The case concerned a claim petition filed under Section 166 of the Motor Vehicles Act for compensation arising from the death of Kehar Singh in a motor vehicle accident. The Tribunal had awarded compensation with interest but assessed the income of the deceased at a substantially reduced figure after deducting the monthly family pension received by his widow. The Tribunal treated the family pension as a pecuniary advantage accruing to the dependants and held that it ought to be deducted while computing loss of dependency. Aggrieved by this approach, the claimants approached the High Court seeking enhancement of compensation, contending that the deduction of family pension was contrary to settled legal principles.
Before the High Court, the claimants argued that family pension is payable to the dependants of a deceased employee irrespective of whether the death is natural or accidental and therefore cannot be linked to the cause of death. It was submitted that family pension flows from the years of service rendered by the deceased and is not a benefit conferred due to the accident. On this basis, the claimants contended that deducting family pension from the income of the deceased unjustly reduces the compensation payable and allows the wrongdoer or insurer to indirectly benefit from the deceased’s service-related entitlements.
The High Court accepted the submissions of the claimants and observed that the purpose of compensation under the Motor Vehicles Act is to provide just and fair recompense to the dependants for the loss suffered due to the death of the victim. The Court held that only those benefits which have a direct nexus with the accidental death can be taken into account for deduction while computing compensation. Family pension, the Court observed, does not arise as a consequence of the accident but is payable even if the employee dies a natural death. As such, it cannot be treated as a pecuniary advantage received by the dependants on account of the accident.
The Court further reasoned that permitting deduction of family pension would result in an anomalous situation where the person responsible for the accident or the insurer would gain an unintended benefit from the service conditions of the deceased. Such an approach would defeat the object of the Motor Vehicles Act, which is to ensure that victims of motor accidents and their families receive adequate and just compensation for their loss. The High Court emphasized that compensation under the Act is independent of service benefits payable to the deceased’s family and the two cannot be interlinked for the purpose of reducing liability.
After holding that the deduction of family pension was impermissible, the High Court reassessed the compensation payable to the claimants. The Court recalculated the loss of dependency by taking into account the appropriate income of the deceased without deducting the family pension. After applying the standard deductions towards personal expenses and the applicable multiplier, the Court arrived at a higher amount of compensation than that awarded by the Tribunal. The High Court also considered conventional heads of compensation, including loss of consortium and other statutory components, and enhanced the overall compensation accordingly.
The Court directed the insurer to deposit the enhanced compensation amount along with applicable interest within the stipulated period. It further directed that upon deposit, the Tribunal should disburse the amount to the claimants in accordance with the proportions already fixed. The High Court clarified that its directions were in line with established principles governing motor accident compensation and were aimed at ensuring that the dependants of the deceased are not deprived of their lawful entitlement due to an erroneous understanding of service-related benefits.
The judgment reaffirmed the principle that family pension cannot be treated as a substitute for compensation payable under the Motor Vehicles Act. By drawing a clear distinction between service benefits and accident-related compensation, the High Court underscored that dependants are entitled to receive both independently. The ruling strengthens the legal position that statutory compensation must be determined solely on the basis of loss caused by the accident and not reduced on account of benefits earned by the deceased through his service.
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