The Supreme Court of India has held that financial assistance received under the Haryana Compassionate Assistance to Dependents of Deceased Government Employees Rules, 2006 must be deducted from compensation awarded under the Motor Vehicles Act (MVA), to the extent that such assistance substitutes loss of income.
The Court further ruled that a High Court cannot substantially alter the quantum of compensation under the guise of a clarification application.
The judgment was delivered by a Bench comprising Justices Sanjay Karol and Augustine George Masih in Reliance General Insurance Company Limited v. Kanika & Ors., allowing appeals filed by Reliance General Insurance Company Limited against orders of the Punjab and Haryana High Court.
The case arose out of a motor accident dated November 2, 2009, in which a government employee, Smt. Hom Devi, lost her life. Her dependents approached the Motor Accidents Claims Tribunal (MACT), Rohtak, which awarded compensation of ₹8.8 lakh with interest at 7.5% per annum. Dissatisfied with the quantum, the claimants sought enhancement before the High Court.
By its main order dated September 18, 2019, the High Court enhanced the compensation to ₹29.09 lakh. However, it directed that the amount received by the family under the 2006 Rules be deducted from the total compensation to avoid duplication of benefits. Subsequently, on an application styled as one for clarification, the High Court modified its earlier position and held that the entire amount received under the 2006 Rules would not be deductible, thereby increasing the payable compensation. This modification was challenged before the Supreme Court.
The principal issue before the Court was whether amounts received under the 2006 Rules are liable to be deducted from compensation awarded under the MVA. The Bench relied on the three-judge Bench decision in Reliance General Insurance Co. Ltd. v. Shashi Sharma (2016), which authoritatively settled the law on the subject.
In Shashi Sharma, the Court had held that only those benefits which directly substitute the same head of loss—particularly pay and allowances last drawn—can be deducted from MVA compensation. Other benefits such as family pension, life insurance, provident fund and unrelated allowances cannot be deducted, as they are not compensation for the same pecuniary loss. The objective, the Court reiterated, is to prevent double recovery for the same loss.
The claimants argued that the subsequent judgment in National Insurance Company Ltd. v. Birender & Ors. (2020) diluted the principle laid down in Shashi Sharma. The Supreme Court rejected this contention, clarifying that the two judgments operate harmoniously. While Shashi Sharma defines what is deductible, Birender explains when and how such deductions should be made—emphasising that deductions cannot be based on assumptions and must be supported by evidence of actual receipt or entitlement.
The Court then examined whether the High Court was justified in altering its earlier judgment while dealing with a clarification application. It held that under Sections 151 and 152 of the Code of Civil Procedure, courts may correct clerical or accidental errors, but cannot modify substantive findings or alter the quantum of compensation. Any such change would amount to a review and must satisfy the strict requirements under Order XLVII CPC.
By reversing its earlier direction on deduction and effectively enhancing the compensation payable, the High Court had altered substantive rights, which was impermissible in a clarification proceeding. Accordingly, the Supreme Court set aside the clarification order and restored the High Court’s main order.
The Court directed the claimants to file an affidavit before the Tribunal indicating the amount received, if any, under the 2006 Rules. The Tribunal was directed to adjust the compensation accordingly and ensure release of the balance amount within six weeks. It was clarified that if no amount had been received or was receivable under the 2006 Rules, the claimants would be entitled to the full enhanced compensation. The rate of interest as awarded by the Tribunal was left undisturbed.
The ruling reinforces the principle that compensation under the Motor Vehicles Act must remain just and equitable, without resulting in double recovery, and underscores the limited scope of a court’s power to modify final judgments under the label of clarification.
Case Details
Case Title: RELIANCE GENERAL INSURANCE COMPANY LIMITED Versus KANIKA & ORS.
Citation: JURISHOUR-88-SC-2026
Case No.: CIVIL APPEAL NOS.2506-2507 OF 2026
Date: 24/02/2026
Read More: JURISHOUR | TAX LAW DAILY BULLETIN : FEBRUARY 24, 2026
