Supreme Court: While deliberating over this case, the Court had to decide whether money received as mediclaim, in terms of a mediclaim policy, is deductible from an award passed by a Motor Accident Claims Tribunal (MACT) or not. The Division Bench of Sanjay Karol* and Vipul M. Pancholi, JJ., after taking a serious note of considerable number of contrary High Court opinions on the issue, clarified that amount received as part of mediclaim/medical insurance is not deductible from compensation as calculated by the MACT adjudicating a claim for compensation under the Motor Vehicle Act, 1988 (MVA), which may also include compensation under the head of medical expenses, if claimed.
The Court observed that,
“Till such times the opposing views exist, judicial uncertainty is in play for settled precedents ensure definitive outcomes but if contrary views exist, it becomes a matter of choice to follow one and leave aside the other, and it remains no longer, a matter of law.”
Background
A met with an accident and later filed a claim before the MACT seeking compensation in which inter alia, loss of income, prospects, special diet, transportation and medical expenses have been claimed for. Simultaneously, claims set out with insurance under the claim of medical insurance for the very same medical expenses are allowed and money received.
A three-Judge Bench of Bombay High Court had to resolve conflict between New India Assurance v. Dineshchandra Shantilal Shah1 and Vrajesh Navnitlal Desai v. K. Bagyam, 2005 SCC OnLine Bom 156; Royal Sundaram Alliance Insurance Co. Ltd. v. Ajit Chandrakant Rakvi, 2019 SCC OnLine Bom 496 regarding deduction of mediclaim. The High Court vide the impugned judgment held that the amount received by a claimant by way of his own mediclaim, is not deductible when such claimant is before the jurisdictional MACT seeking compensation for injuries he has suffered because of an accident.
Aggrieved with the aforesaid decision, the appellant approached the Supreme Court questioning the correctness of such a finding.
Contentions
Counsels for the appellant argued that in Reliance General Insurance Co. Ltd. v. Shashi Sharma, (2016) 9 SCC 627, amounts received by the claimants by way of ex gratia financial assistance were held liable for deduction from compensation awarded under a corresponding head. The underlying rationale was that overlapping benefits under the same head distort the concept of just compensation. It was submitted that it has further been submitted that the distinction between statutory and contractual liability, has arisen in the context of death cases where certain pecuniary advantages have accrued to the dependents independently of the accident. In contrast, the present matter involves an injury claim where the reimbursement of medical expenses has been directly and exclusively connected to the accident. This has created a clear overlap between the loss claimed and the amount already received, making it a case where the principle against double recovery applies with full force.
Per contra, counsel for the respondent argued that distinction between statutory and contractual entitlements. Compensation under the MVA is a statutory right that arises upon proof of negligence and resulting injury. It is not contingent upon any prior contribution by the claimant. In contrast, a mediclaim policy constitutes a contract of insurance, supported by the payment of premiums and governed by agreed terms. These two entitlements operate in separate domains, and that the statutory right to compensation cannot be diminished by importing considerations arising from a contractual benefit.
The appellant’s counsel pointed out that there were contrarian views on this question, and that it needed to be settled, specifically in the context of mediclaim/medical insurance.
Court’s Assessment
Perusing the matter, the Court observed that one view states that mediclaim as a claim is independent from a claim under Section 166 MVA, and the award received need not be deducted; while the other view is that the amount received from a mediclaim is in fact deductible from the total compensation. The Court was further surprised to note several divergent views taken on the issue by multiple High Courts which included several Single Judge Benches and Division Benches.
The Court observed that judgments favouring deduction of amount received as mediclaim have applied the principle of “double benefit” since the same medical expenses would be compensated from 2 sources. On the contrary, judgments against the deduction have reasoned that the origin of the 2 methods of compensating the same is different and, therefore, it cannot be said to exclude each other. One is a statutory remedy and the other arises out of a contract.
The Court explained that “double benefit” principle governing motor accident claims is that there should be no duplication for the same head of loss in respect of the victim/claimant in a claim petition arising out of a motor vehicle accident. A claimant cannot recover compensation twice for the same injury or loss, as that would amount to unjust enrichment. The unquestionable position is that compensation must be “just compensation” which is meant to fairly make good the loss suffered, not to create a windfall. Therefore, where 2 payments in relation to the very same claim petition compensate for the same loss, one of them must ordinarily be adjusted or deducted. The primary consideration in such an analysis is whether the additional benefit is a substitute for the same loss, in which case it is liable to be deducted, or whether it is independent, or an entitlement, in which case it is not. However, the Court clarified that that certain payments cannot be deducted merely because they accrue upon death. Employment benefits such as provident funds, gratuity, and pension are not deductible, as they arise from the contract of employment and represent deferred earnings or accrued rights. They are not compensation for the accident, but entitlements earned over time.
Explaining the point of view of judgments that favoured the grant of both MACT compensation and mediclaim, the Court explained that a statutory benefit flows from the authority of law, while a contractual benefit flows from the will and agreement inter se parties. Naturally, statutory benefits are available to all persons, provided that they fulfil its prerequisites whereas a contractual benefit is limited inter se the parties.
Analysing the judgments cited by the counsels, the Court opined that the answer to the question raised in this appeal is not a matter of Sherlockian deduction. A mediclaim policy is a policy that is purchased by a person, accounting for the uncertainties of life and preparing a financial base for an unfortunate possible eventuality. In today’s time when medical expenses are skyrocketing, the ability to meet such expenses, suddenly as and when they may arise, is not something that rests with all. It is, as such, a necessary facet of preparation that people undertake. It does not specifically deal with accidental coverage only.
The Court explained that the contractual benefit of reimbursement of medical expenses as a result of mediclaim policy is, therefore, independent of any other claim. “The provisions of the MVA are only triggered in the unfortunate eventuality if a death or injury arising out of a motor vehicle accident occurs. That in itself, when it does arise, cannot eclipse the contractual benefit to which a person who has paid premiums, is entitled too.” Compensation under MVA while it recognises reimbursement of medical expenses, is distinct from the contractual benefit, though it may be with respect to the very same heads.
“If the view of the High Courts that this would amount to ‘double benefit’ is agreed to by this Court, a peculiar situation will arise. On the one end, it may save compensation from being affected by double benefit, if it can be called that, but on the other, it would denude the claimant of the benefits that arise out of them parting with their hard-earned money in the form of Mediclaim premiums. It would also amount to an undue advantage to the company granting the Mediclaim policy to the claimant if the claimant’s claim is extinguished by the award of the MACT having granted medical expenses for, they would have received the premium but would not be required to pay any amount in the event of medical bills having arisen.”
The Court explained that the guiding yardstick in mediclaim vis-à-vis MVA is different. In the former, a mediclaim policy is taken up to a certain amount and if the claim of the policy holder once found to be holding merit go beyond it, the holder has no option but to foot the bill out of pocket however in the latter, because of its beneficial nature the only guide is the broad principle of just and fair compensation.
Looking at these 2 amounts as “double benefit” may not be appropriate since one situation is only the fruit of amounts already paid in the past. Only because they appear same or similar, they cannot be termed as “double benefit”. The amount received under MVA arises from a beneficial legislation and as guided by just compensation which is intended to put the injured or the claimants in a position, as far as possible, at least monetarily, if the accident in question had not taken place. Thus, this stands on a higher pedestal, not only because it is a statutory entitlement of compensation, but also because the nature of the statute is entirely beneficial. To equate these two, would amount to pulling down the MVA or unnecessarily hyping up the mediclaim policy.
Judicial uncertainty in settled precedents and conundrum for lawyers
In considering this appeal, the Court took serious note of contrary positions of law being taken by the same High Court, whether it be by the Benches of the same strength or by the Benches of lesser strength in ignorance of pronouncements made by the Benches of higher strength. The Court stated that such judicial inconsistency and uncertainty creates difficulties for counsel and the Court for, opposing judgments may give clients hope for differing outcomes or even for a court in the future to have to examine multiple cases with differing opinions on the same point. “Till such times the opposing views exist, judicial uncertainty is in play for settled precedents ensure definitive outcomes but if contrary views exist, it becomes a matter of choice to follow one and leave aside the other, and it remains no longer, a matter of law.” Furthermore, this creates direct impact on judicial efficiency for if the law on a point is clear it is a matter of fair ease to follow settled precedents leading to a reduction in future effort thereby saving time.
Emphasising upon the role advocates and the courts, it was explained that appearing counsels must follow their duty towards the Court to bring to court’s notice judgments that aid their case and also those that do not. “It is here that the counsel’s awareness of law and grasp on facts are their greatest assets, enabling them to distinguish judgments that may seemingly be against them and still secure a favourable order.” Tens of orders and judgments are pronounced every day across a range of issues and so, the Court before which they are appearing may not be aware of the latest pronouncement. They must disclose the same to the Court ensuring consistency.
The Court also explained that the entire burden cannot be placed only on counsel. The Court itself has an independent tri-fold duty, to apply correct law even if the counsel does not cite the same, ensure consistency with precedent, and avoid per incuriam decisions.
Conclusion
With the aforesaid assessment, the Court resolved the legal stalemate by holding that amount received as mediclaim is not deductible from compensation as calculated by the MACT concerned. These two stand on a different footing as one is statutory while the other is contractual and the latter is only a sequitur of premiums having been paid in the past while the other is an entitlement as a consequence of an accident or death in a motor vehicle accident.
The Court remanded the matter to High Court for deciding the issue consistent with the Supreme Court’s opinion and the appeal was dismissed as meritless.
[New India Assurance Co. Ltd. v. Dolly Satish Gandhi, 2026 SCC OnLine SC 861, decided on 15-5-2026]
*Judgment by Justice Sanjay Karol
Advocates who appeared in this case :
Mr. C. George Thomas, AOR, Mr. Aditya Kumar, Adv., Mr. Ila Nath, Adv., For Petitioner(s)
Mr. Anand Dilip Landge, AOR, Mrs. Sangeeta Nenwani, Adv., Ms. Revati Pravin Kharde, Adv., Mr. Shreenivas Patil, Adv., Mr. Rahul Prakash Pathak, Adv., For Respondent(s)
1. (2013) 09 BOM CK 0240.
