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Insurance money not deductible from compensation, rules SC

The Life Insurance Corporation of India's payment on an insured person's death in a motor accident is not deductible from the compensation awarded to his dependants under the Motor Vehicles Act, 1939.

The ruling comes from a Supreme Court division bench, comprising Justices K Venkataswami and A P Misra.

The judgement assumes importance as the high courts have expressed divergent views on the question.

The order is on an appeal made after the death of a 40-year-old boat builder, Rebello, in a road accident on April 12, 1973. He was travelling in a Maharashtra State Road Transport Corporation bus from Kolhapur to Satara.

A civil judge in Satara awarded Rs 400,000 as compensation to Rebello's dependants. However, relying on a Bombay high court judgement that the amount collected as insurance money had to be deducted from compensation, he cut down the amount to Rs 75,000 -- Rebello's wife had already received Rs 325,000 from the LIC.

The SC noted that while the Bombay and Orissa high courts had held the insurance was deductible from compensation, the Gujarat, Punjab, Haryana, Delhi and Patna courts had taken a contrary view.

''Why should the plaintiff be left worse off than if he had never been insured?'' the judges asked.

They said the interpretation to deduct LIC money from compensation would benefit the wrongdoer, and result in loss to the victim as his dependants would have received compensation even if he hadn't paid premium.

UNI

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