Case Law Details
Divisional Manager Vs Harapriya Behera & Others (Orissa High Court)
Family Pension and Insurance Benefits Cannot Be Deducted From Motor Accident Compensation; Motor Accident Award Modified Because Tribunal Incorrectly Calculated Salary and Tax Liability; Ex-Gratia Death Relief Deductible From Compensation Because Claimants Admitted Receipt, Rules High Court; New Tax Regime Applied for Compensation Calculation Because It Was More Beneficial to Claimants.
The Orissa High Court considered an appeal filed under Section 173(1) of the Motor Vehicles Act challenging the judgment of the 2nd Motor Accident Claims Tribunal, Berhampur, directing the insurer to pay compensation of Rs.1,29,07,059 along with 6% interest to the legal representatives of a deceased Assistant Commandant who died in a motor vehicle accident on 20.08.2023. The deceased was travelling on a motorcycle when a truck allegedly driven rashly and negligently hit him from behind near Sangram Dhaba on NH-16, resulting in his death. A police case was registered and charge sheet was filed against the truck driver.
Before the Tribunal, the claimants sought compensation of Rs.1.45 crore. The insurer contested the claim alleging violation of policy conditions, while the owner of the offending vehicle did not participate in the proceedings. The Tribunal, after considering evidence led by the claimants, directed the insurer to pay compensation.
In appeal, the insurer challenged the quantum of compensation and sought deduction of various amounts received by the claimants, including sums under Group Insurance Scheme (GIS), GIS refund, GIS obsequies assistance, ex-gratia death relief, family pension, and unutilized earned leave salary (UELS). The insurer also sought deduction of income tax paid by the deceased while computing loss of dependency. During appeal proceedings, the insurer filed an application for admission of additional evidence in the form of a letter issued by the employer detailing payments made to the deceased’s wife. The High Court admitted the document as additional evidence after noting that the claimants did not dispute receipt of such amounts.
The Court observed that the Tribunal had failed to deduct the income tax payable by the deceased while calculating loss of dependency. It also found that the Tribunal incorrectly averaged salary for three months, despite evidence showing that the deceased had drawn a gross monthly salary of Rs.95,140 for June and July 2023. Accordingly, the High Court recalculated the compensation using monthly salary of Rs.95,140.
The Court further examined whether income tax liability should be computed under the old tax regime or the new tax regime for Assessment Year 2024-25. Comparing both systems, the Court held that the new tax regime was more beneficial because tax liability under the new regime was approximately Rs.76,312 compared to Rs.1,44,824 under the old regime. The Court therefore adopted the new regime while calculating net annual income of the deceased.
After deducting income tax, the Court calculated annual income at Rs.10,65,368 and added 30% towards future prospects, taking the amount to Rs.13,84,978. Since the deceased had three dependents, one-third was deducted towards personal expenses, leaving annual loss of dependency at Rs.9,23,319. Applying multiplier 13, the Court computed total loss of dependency at Rs.1,20,03,147. Adding Rs.70,000 towards non-pecuniary heads including loss of estate, consortium, and funeral expenses, total compensation was calculated at Rs.1,20,73,147. Since the claimants admitted receipt of Rs.2,33,102 towards ex-gratia death relief, that amount was deducted, resulting in modified compensation of Rs.1,18,40,045.
The High Court rejected the insurer’s plea for deduction of amounts received under UELS, GIS sum assured, GIS refund, GIS obsequies assistance, and family pension. The Court held that these were legal entitlements of the claimants and could not be deducted from compensation determined under the Motor Vehicles Act. According to the Court, compensation under the Act is computed based on loss of dependency and conventional heads, whereas insurance, pension, and leave salary benefits are separate legal entitlements arising independently.
Accordingly, the appeal was partly allowed. The compensation was reduced from Rs.1,29,07,059 to Rs.1,18,40,045 with simple interest at 6% per annum from 30.09.2023 till realization. The insurer was directed to deposit the modified compensation within eight weeks, and the amount was ordered to be disbursed proportionately to the claimants.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. The impugned judgment dated 30.08.2025 passed by th e 2nd M.A.C.T.(SD), Berhampur, Ganjam (hereinafter referred to as “the Tribunal”) in M.A.C. Case No. 88 of 2024 (228/2023-GDC), is under challenge in this appeal U/S. 173(1) of the Motor Vehicles Act, 1988 (In short, “the Act”).
1.1.By the impugned judgment, the appellant, who was OP No.2 in the proceeding before the learned Tribunal has been directed to pay Rs.1,29,07,059/- only to the claimants-Respondent Nos.1 to 3 (R-1 to 3), who are the petitioners in the said proceeding together with Simple Interest (SI) @ 6% per annum w.e.f. the date of filing of claim application from 30.09.2023 till its actual realization.
2. Briefly stated, on 20.08.2023 at about 8.00PM, one Lakshmi Narayan Behera, an Assistant Commandant by profession (hereinafter referred to as “the deceased”) while coming to duty from his village Chhatrapur on his motorcycle bearing Regd. No. OR-07K-7148, met with an accident near Sangram Dhaba on NH-16 with one Truck (Ashok Leyland Ltd.) bearing Regd. No. AP-39UC-3249 (hereinafter referred to as “the offending vehicle”), which dashed him from behind by moving rashly and negligently resulting in death of the deceased. The accident was reported to the Police resulting in registration of Ganjam P.S. Case No. 225 of 2023 with ultimate consequence of submission of charge sheet against the driver of the offending vehicle. The claimants-cum- R-1 to 3 being the legal representatives of the deceased approached the learned Tribunal in an application U/S.166 of the Act for grant of compensation of Rs.1.45 Crores on account of death of the deceased in the motor vehicular accident by impleading the owner as OP No.1 and the Insurance Company as OP No.2 (hereinafter referred to as “the insurer”) of the offending vehicle. Accordingly, the claim was registered vide MAC Case No.88 of 2024 (228/2023-GDC).
2.1. In response to the notice of the claim, the owner of the offending vehicle-cum-R-4(OP1), neither filed any written statement nor participated in the hearing of the claim proceeding despite due service of notice of the claim, however, the insurer of the offending vehicle being arrayed as OP2 (appellant herein) contested the claim by filing written statement denying all the allegations made against it and inter alia disowning its liability to pay compensation to the claimants for violation of conditions of the policy.
3. On the inter se pleadings between the parties, the learned Tribunal struck as many as five issues and allowed the parties to lead evidence and accordingly, the claimants examined three witnesses vide PWs.1 to 3 and proved 12 documents under Ext.1 to 12 in support of their claim as against no evidence whatsoever adduced by the insurer. After appreciating the evidence on record upon hearing the parties, the learned Tribunal passed the impugned judgment directing the insurer to pay the compensation amount as indicated supra.
4. Being aggrieved with the impugned judgment, the insurer has preferred this appeal and during the pendency of the appeal, the appellant-insurer has preferred an application praying for acceptance of the letter dated 01.05.2024 of the employer containing information regarding payment made to the deceased as additional evidence in I.A. No. 355 of 2026 which was simultaneously taken up along with the present appeal.
5. Heard, Mr. Bijoy Dasmohapatra, learned counsel for the appellant and Mr. Pradeep Kumar Mishra, learned counsel for R-1 to 3, but none appeared for R-4 despite being duly noticed as notice was delivered to R-4 on 12.01.2026.
6. After having considered the rival submissions upon perusal of record, the insurer primarily challenges the quantum of compensation for not deducting the amount received by the claimants under various schemes; such as Rs.6,00,000/- towards GIS, Rs.30,000/- towards GIS refund, Rs.10,000/- towards GIS for obsequies, Rs.2,33,102/- towards ex-gratia death relief, Rs.48,000/- per month towards Family Pension and grant of Rs.1,32,000/- by the impugned judgment towards loss of consortium. Reverting back to the application for additional evidence, it appears that Mr. Pradeep Kumar Mishra, learned counsel for the respondents-claimants, however, has not disputed about the grant to the wife of the deceased-cum-claimant-R-1 a sum of Rs.8,96,684/- under Unutilized Earned Leave Salary (UELS) of the deceased, Rs.6,00,000/- towards GIS sum assured, Rs.30,000/- towards GIS refund, Rs.10,000/- towards GIS obsequies and Rs.2,33,102/-towards death relief, but the learned counsel for the claimants-respondents strongly refuted the claim of the appellant for deduction of the aforesaid amount under UELS, GIS sum assured, GIS refund, GIS obsequies from the compensation amount awarded to the claimants while not disputing the deduction of Rs.2,33,102/-received towards ex-gratia death relief from it. It is no more res integra that additional evidence can be adduced at the appellate stage, but subject to satisfaction of its requirements as provided under Order-XLI Rule 27 of the Code of Civil Procedure 1908(CPC). It is undisputed that for the ends of justice, such additional evidence can be adduced. In this case, there is no dispute about the sanction/grant of funds as indicated above, but the only challenge of the claimants is that such amount cannot be deducted from the compensation amount except the death relief received by them and, therefore, there is no dispute with regard to grant of the amounts to the wife of the deceased. In the aforesaid situation, when it is not disputed by the claimants about deduction of Rs.2,33,102/- of the compensation amount, it would be considered just and proper to admit additional evidence produced in the form of a Letter vide letter No.1168/D dated 01.05.2024 issued by Deputy Commandant, OSAP, 8th Battalion, Chatrapur to one Hemanta Kumar Rath indicating therein the payment received by the wife of the deceased. Accordingly, the aforesaid letter is marked as Ext. 13 without objection and office is requested to keep the Ext. 13 in the LCR.
7. Additionally, Mr. Bijoy Dasmohapatra, learned counsel for the appellant also assails the impugned award for not deducting the income tax paid by the deceased while computing the amount under the head “loss of dependency”. In reply Mr. Pradeep Kumar Mishra, learned counsel for R-1 to 3, however, does not dispute about computation of “loss of dependency” by ignoring the income tax paid by the deceased and he produces a calculation sheet towards the deduction of income tax of the deceased for the assessment year 2024-25. On a careful perusal of the impugned judgment, it is found that the learned Tribunal has computed the “loss of dependency” by ignoring to deduct the income tax paid by the deceased and amount received towards ex-gratia death benefit and thereby, it has erred in calculating the “loss of dependency”. Reverting back to the record, it appears that the deceased was working as Assistant Commandant in the office of Commandant, OSAP, 8th Battalion, Chatrapur and had drawn gross salary of Rs.95,140/- with net pay of Rs.71,501/- in the month of July, 2023, but he died on 20.08.2023, however, the learned Tribunal has taken into account the average of the monthly salary of the deceased for the month of May, June and July which is not correct, since the evidence clearly discloses that the deceased had drawn salary for the month of June and July @ Rs.95,140/- and, therefore, the gross monthly income of the deceased is taken at Rs.95,140/-. It is not in dispute that in computing the compensation, the learned Tribunal has ignored to deduct the income tax paid by the deceased and, therefore, the amount so paid by the deceased towards income tax has to be deducted in calculating the “loss of dependency” for the claimants. Admittedly, the learned counsel for the claimants-respondents has proposed to follow the old tax regime by producing a calculation sheet for deduction of income tax of the deceased for the financial year 2023-24 with assessment year 2024-25 which according to him is as follows:-
Annually
For income upto Rs.2,50,000/-: Nil,
For income Rs.2,50,001/- to Rs.5,00,000/-: 5%,
For income Rs.5,00,001/- to Rs.10,00,000/-: 10%,
which is incorrect since it should have been 20% &
For income above Rs.10,00,000/-: 30%
8. This Court, however, compared the aforesaid old tax slab as advanced by the learned counsel for the claimants with the tax slab of new regime as prevailing then for the assessment year 202425 in alternative, to know which one would be more beneficial to the deceased, since the computation of compensation for the victims of motor vehicular accident is a beneficial provision of law and this Court cannot close its eyes to the provision of law which would be more beneficial to the claimants, however, the tax payable in new regime would be more beneficial than the old regime for the deceased inasmuch as he had to pay tax around Rs.1,44,824/- in old regime as compared to tax payable around Rs.76,312/- in new regime with same salary @Rs.95,140/- per month for 12 months.
9. The aforesaid calculation is based on comparative assessment of the income tax payable by the deceased basing on the old tax regime vis-à-vis new tax regime and in the old tax regime, the income tax for the deceased has to be calculated on his annual income at Rs.95,140/- x 12 = Rs.11,41,680/- and after deducting the standard deduction of Rs.50,000/-together with the Professional Tax of Rs.2,500/-, the net taxable income of the deceased in this case would be Rs.11,41,680/- – Rs.52,500/- = Rs.10,89,180/-. In the old tax regime, nil tax was payable for the income up to Rs.2,50,000/- and thereafter, income tax on Rs.2,50,000/- up to Rs.5,00,000/- would be around 5% of Rs.2,50,000/- = Rs.12,500; the income tax on income on Rs.5,00,001/- to Rs.10,00,000/- would be 20% of Rs.5,00,000/-= Rs.1,00,000/-; and the income tax on the income of the deceased on Rs.10,00,001/- to Rs.10,89,180/- would be Rs.89,180/- x 30%= Rs.26,754/- and, therefore, the tax required to be paid on the normal annual income of the deceased for the assessment year 2024-25 in old regime would be Rs.1,39,254/- (Rs.12,500/+Rs.26,754/+Rs.1,00,000/) + Rs.5570/- (4% of Rs.1,39,254/- towards Health and Education Cess) = Total Rs.1,44,824/-. In new regime, the net taxable salary of the deceased would be Rs.11,41,680/-– (minus) Rs.50,000/- =Rs.10,91,680/-by taking the same monthly salary of the deceased @ Rs.95,140/-. Since the exemption limit in new regime is Rs.3,00,000/-, income tax would be calculated on the income on Rs.3,00,000/- to Rs.6,00,000/- at 5% of Rs.3,00,000/- which would be Rs.15,000/-; the income tax on Rs.6,00,001/- to Rs.9,00,000/- at 10% of Rs.3,00,000 which would be Rs.30,000/- and the income tax of the deceased for Rs.9,00,001/- to Rs.10,89,180/-would be 15% of Rs.1,89,180/- = Rs.28,377/- and, therefore, the net tax payable by the deceased in new tax regime would come around Rs.73,377/- (Rs.28,377/-+ Rs.45,000/-) + Rs.2,935/- (4% of Rs.73,377/-towards Health and Education Cess) = Rs.76,312/-. In the aforesaid facts and situation, the annual income of the deceased less income tax would be taken at Rs.95,140/- x 12 = Rs.11,41,680/- – Rs.76,312/- = Rs.10,65,368/-. As the deceased was within the age group of 46 to 50, an addition of 30% is required to be added towards future prospect of the deceased and therefore, the net amount by adding 30% towards future prospect, it would come around Rs.10,65,368/- + Rs.3,19,610/- (30% of Rs.10,65,368/-) = Rs,13,84,978/-, but the deceased was having three dependents and thereby, by deducting 1/3rd of the aforesaid amount towards personal and living expenses of the deceased, the net annual loss of dependency for the claimants would be calculated at Rs,13,84,978/- x 2/3rd = Rs.9,23,319/-. Applying 13 multiplier to the aforesaid amount, the net “loss of dependency” for the claimants would come around Rs.9,23,319/- x 13 = Rs.1,20,03,147/- and adding a sum of Rs.70,000/- to it towards the non-pecuniary head of loss of estate, loss of consortium and funeral expenses, the amount of compensation for the claimants would be calculated at Rs.1,20,03,147/- + Rs.70,000/- = Rs.1,20,73,147/-, but since it is admitted for the claimants that they have received ex-gratia death benefit of Rs.2,33,102/, the same needs to be deducted from the final amount as calculated above and therefore, the net compensation amount to which the claimants are entitled to would come around Rs.1,20,73,147/- – Rs.2,33,102/- = Rs.1,18,40,045/-.
10. It is not out of place to mention that the appellant claims for deduction of amount sanctioned and received by the wife of the deceased towards UELS, GIS sum assured, GIS refund, GIS obsequies and family pension from the final compensation amount, but it is considered that such amounts being the legal entitlement of the claimants, the same are not liable to be deducted from the final compensation so determined, inasmuch as the amount of compensation is determined by computing the loss of dependency and adding to it, the reasonable conventional figure under non-pecuniary head of loss of estate, loss of consortium and funeral expenses, whereas the amount sanctioned under UELS is the legal and legitimate entitlement of the deceased, so also the amount paid under group insurance scheme. In the aforesaid facts and circumstance, the challenge of the appellant to the impugned judgment for deduction of the aforesaid amount cannot be considered to be legal and the said plea is, therefore, rejected. Thus, the claimants are now entitled to modified compensation of Rs.1,18,40,045/- together with simple interest @ 6% per annum w.e.f. the date of filing of claim application from 30.09.2023 till its actual realization.
11. In the result, the appeal stands allowed in part on contest against R1 to 3, but ex-parte against owner-cum-R4, however, there is no order as to costs. Accordingly, the impugned judgment is modified to the extent indicated above and the appellant is hereby directed to pay modified compensation amount of Rs.1,18,40,045/-( One Crore Eighteen Lakhs Forty Thousand Forty Five Rupees) only together with simple interest @ 6% per annum w.e.f. the date of filing of claim application from 30.09.2023 till its actual realization to the claimants within eight weeks hence. On deposit of aforesaid modified compensation amount, the same shall be disbursed to the claimants proportionately in terms of the impugned judgment and the statutory deposit together with accrued interest thereon be refunded back on proof of deposit of the modified compensation amount before the learned Tribunal.
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