Court Rules That Mediclaim Benefits Cannot Reduce Statutory Compensation Under Motor Vehicles Act
The Bombay High Court has ruled that amounts received under a medical insurance or mediclaim policy cannot be deducted from the compensation awarded under the Motor Vehicles Act (MV Act). The decision was rendered in the case New India Assurance Co. Ltd v Dolly Gandhi.
A three-judge bench comprising Justices AS Chandurkar, Milind Jadhav, and Gauri Godse clarified that compensation under the MV Act is statutory, whereas mediclaim payouts are contractual. Therefore, they should not be linked in a way that reduces a claimant’s rightful compensation.
“Any amount received by a claimant under a mediclaim policy or medical insurance policy is not liable to be deducted from the compensation payable under the head ‘medical expenses’ in proceedings under Section 166 of the MV Act,” the Court stated.
Background of the Case
The ruling arose from a dispute between New India Assurance Company and Dolly Satish Gandhi, who had been awarded compensation by the Motor Accident Claims Tribunal (MACT) in Mumbai for medical expenses incurred due to an accident.
The insurance company challenged this decision, arguing that the compensation should be reduced since the claimant had already been reimbursed for medical expenses under her mediclaim policy. The insurer contended that allowing both payments would result in “double compensation” and unjust enrichment.
However, the claimant’s counsel argued that medical insurance is a private contract between the insured and the insurer, independent of the statutory compensation owed under the MV Act. The Court agreed with this view, citing Supreme Court precedents that prevent deductions from statutory compensation based on contractual insurance payouts.
Key Legal Observations
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The Court emphasized that the purpose of compensation under the MV Act is to restore the claimant to their pre-accident financial position.
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It held that an insurance payout is a contractual obligation and should not benefit the wrongdoer or their insurer.
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Section 168 of the MV Act, which mandates “just compensation,” does not permit deductions for mediclaim payouts.
The matter has now been referred back to the single-judge bench for further consideration.
Legal Representation
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For the insurer (New India Assurance Co.): Advocates Deelip R Mahadik and Devendra Joshi
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For the claimant (Dolly Satish Gandhi): Advocates TJ Mendon, TR Kale, Deepak S Kilaje, Navin Sheth, and RS Alange
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For HDFC Ergo General Insurance Co.: Senior Advocate Vineet B Naik, with advocate Sukand Kulkarni instructed by Sarthak Diwan
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Amicus Curiae: Senior Advocate Gautam Ankhad, assisted by advocates Lodha and Minal Thakker
This ruling reaffirms that statutory compensation for accident victims cannot be reduced due to private insurance arrangements, ensuring fair and just relief under the MV Act.
