Compassionate Appointment, Ex-Gratia Payment To Deceased's Wife Does Not Disentitle Her From Compensation Under Motor Vehicles Act: Bombay High Court

Justice Shivkumar Dige dismissed Reliance General Insurance’s appeal against compensation awarded by the Motor Accident Claim Tribunal to the family of an Assistant Technician in a telecom company, who died in a motor accident.

“giving service to the wife of deceased in place of her deceased-husband on compassionate basis, cannot be a ground to deny her compensation, which she is entitled under provisions of the Motor Vehicles Act, 1988 (for short ‘M.V. Act’)…The void which occurred in the life of that lady due to death of her husband cannot be filled by giving service on compassionate basis”, the court held.

The insurance company (appellant) contended that the wife of deceased has taken service in place of her husband on compassionate grounds and received ex-gratia amount of Rs. 6,50,000/- from the company. Hence, she is not entitled to compensation.

It further submitted that the salary of the deceased was about Rs. 30,000/- per month, and after deducting taxes and allowances it would be about Rs. 20,000/-. However, the tribunal wrongly considered Rs. 25,000/- while calculating compensation. The tribunal wrongly awarded 30 percent of his salary as future prospects, it contended.

The family of the deceased (claimants) submitted that the deceased had a salary was Rs. 30,491/- per month. The tribunal, after deduction of taxes, rightly considered it as Rs. 25,000/- per month for the purpose of calculating compensation as only the tax is supposed to be deducted, not other allowances. Further, he was 40-year-old at the time of accident hence the future prospects are correctly awarded by the tribunal.

The court observed that compassionate appointment is a policy decision of the company, but the void which occurred in her life due to her husband's death cannot be filled by giving service on compassionate bases. Thus, court held that a compassionate appointment cannot become an embargo to get compensation under the Motor Vehicles Act.

The court said that ex-gratia amount is different from compensation as it is voluntary whereas compensation is mandatory on the basis of liability or contractual liability. Therefore, the court rejected the contention that if ex-gratia amount is granted then not entitled for compensation.

“The ex-gratia, means by ‘favour’. It is an payment, made to an individual by an organization, government or insurer for damages or claims but is does not require the admittance of liability by the party making the payment…the ex-gratia amount is different from the compensation awarded under the M.V. Act. The ex-gratia payment is voluntary, whereas compensation under M.V. Act is mandatory on the basis of liability or contractual liability”

The court did not find any infirmity in the salary considered by the tribunal for the purpose of calculating compensation. The court reiterated that, the salary of the deceased should be considered after deducting Income and Professional taxes, which the tribunal rightly did.

The court further held that the tribunal has rightly awarded 30 percent of salary as future prospects considering the age of the deceased as per the Supreme Court guidelines in National Insurance Co. Ltd. v. Pranay Sethi & Ors.

Case no. – First Appeal No.180 Of 2023

Case Title – Reliance General Insurance Co. Ltd. v. Manjula Kabiraj Das and Ors.