Mediclaim benefits cannot be deducted from motor accident compensation: SC
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New Delhi, May 15 : The Supreme Court on Friday held that amounts received by accident victims under medical insurance policies cannot be deducted from compensation awarded under the Motor Vehicles Act (MVA).
A bench of Justices Sanjay Karol and Vipul M. Pancholi dismissed an appeal filed by New India Assurance Company Limited challenging a Bombay High Court ruling which had held that reimbursement of medical expenses received by a claimant through a Mediclaim policy cannot be deducted while calculating compensation in motor accident claims.
The Justice Karol-led Bench said the benefit received under a Mediclaim policy flows from premiums paid by the insured person over time and cannot reduce the statutory entitlement to "just compensation" under the MVA.
"In fine, we hold that the amount received as part of Mediclaim/medical insurance is not deductible from compensation as calculated by the concerned Tribunal," the apex court held.
It clarified that compensation under the MVA and benefits arising out of a Mediclaim policy "stand on a different footing".
"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 bench observed.
The appeal arose from a conflict of judicial opinions across various High Courts on whether claimants could receive compensation under both heads without resulting in a "double benefit".
The insurance company had argued that once medical expenses were reimbursed through a Mediclaim policy, awarding the same amount again under the MVA would amount to duplication and unjust enrichment.
Rejecting the contention, the Supreme Court observed that Mediclaim policies are independent contractual arrangements entered into by individuals after paying premiums and cannot be equated with statutory compensation payable for injuries caused in motor accidents.
"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," the apex court observed.
"In today’s time, when medical expenses are skyrocketing for a variety of reasons, the ability to meet such expenses, suddenly as and when they may arise, is not something that rests with all," it added.
The top court further said that accepting the "double benefit" argument would unfairly deprive claimants of the benefit of insurance policies for which they had paid premiums over the years.
"It would also amount to an unjust benefit to the insurer of the offending vehicle if they are not required to compensate under one of the heads of medical expenses solely on account of the fact that the claimant had received the benefit of a policy for which they had been paying premiums for years on end,” the judgment said.
The Supreme Court explained that the principle against “double benefit” applies only when two payments compensate for the same loss from the same legal source or sphere.
"The primary consideration... 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," it observed.
Drawing a distinction between statutory and contractual entitlements, the bench said compensation under the MVA is a beneficial statutory remedy triggered by a motor accident, whereas Mediclaim benefits arise from a private contract between insurer and insured.
"The distinction, put simply, is that a statutory benefit flows from the authority of law, while a contractual benefit flows from the will and agreement inter se parties," the judgment said.
The apex court also referred to earlier judgments to reiterate that benefits such as insurance proceeds, provident fund, and pension cannot ordinarily be deducted unless they have a direct nexus to the compensation claim arising from the accident itself.
In a significant observation, the Justice Karol-led Bench expressed concern over conflicting judgments delivered by various High Courts, and sometimes even by coordinate benches of the same High Court, on the issue of deduction of Mediclaim amounts.
"When such inconsistencies are left unaddressed, it leads to various problems, primary among them being that it leads to judicial inconsistency and uncertainty," it said.
The Supreme Court also reminded both the bar and the bench of their responsibility in ensuring consistency in legal precedents and avoiding conflicting judicial opinions. "It is this duty towards the court which requires them to bring to the court’s notice judgments both that aid their case and also those that do not," the apex court observed while referring to the role of lawyers.
The matter has now been remanded to the Bombay High Court for fresh determination consistent with the law laid down by the apex court.
A bench of Justices Sanjay Karol and Vipul M. Pancholi dismissed an appeal filed by New India Assurance Company Limited challenging a Bombay High Court ruling which had held that reimbursement of medical expenses received by a claimant through a Mediclaim policy cannot be deducted while calculating compensation in motor accident claims.
The Justice Karol-led Bench said the benefit received under a Mediclaim policy flows from premiums paid by the insured person over time and cannot reduce the statutory entitlement to "just compensation" under the MVA.
"In fine, we hold that the amount received as part of Mediclaim/medical insurance is not deductible from compensation as calculated by the concerned Tribunal," the apex court held.
It clarified that compensation under the MVA and benefits arising out of a Mediclaim policy "stand on a different footing".
"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 bench observed.
The appeal arose from a conflict of judicial opinions across various High Courts on whether claimants could receive compensation under both heads without resulting in a "double benefit".
The insurance company had argued that once medical expenses were reimbursed through a Mediclaim policy, awarding the same amount again under the MVA would amount to duplication and unjust enrichment.
Rejecting the contention, the Supreme Court observed that Mediclaim policies are independent contractual arrangements entered into by individuals after paying premiums and cannot be equated with statutory compensation payable for injuries caused in motor accidents.
"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," the apex court observed.
"In today’s time, when medical expenses are skyrocketing for a variety of reasons, the ability to meet such expenses, suddenly as and when they may arise, is not something that rests with all," it added.
The top court further said that accepting the "double benefit" argument would unfairly deprive claimants of the benefit of insurance policies for which they had paid premiums over the years.
"It would also amount to an unjust benefit to the insurer of the offending vehicle if they are not required to compensate under one of the heads of medical expenses solely on account of the fact that the claimant had received the benefit of a policy for which they had been paying premiums for years on end,” the judgment said.
The Supreme Court explained that the principle against “double benefit” applies only when two payments compensate for the same loss from the same legal source or sphere.
"The primary consideration... 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," it observed.
Drawing a distinction between statutory and contractual entitlements, the bench said compensation under the MVA is a beneficial statutory remedy triggered by a motor accident, whereas Mediclaim benefits arise from a private contract between insurer and insured.
"The distinction, put simply, is that a statutory benefit flows from the authority of law, while a contractual benefit flows from the will and agreement inter se parties," the judgment said.
The apex court also referred to earlier judgments to reiterate that benefits such as insurance proceeds, provident fund, and pension cannot ordinarily be deducted unless they have a direct nexus to the compensation claim arising from the accident itself.
In a significant observation, the Justice Karol-led Bench expressed concern over conflicting judgments delivered by various High Courts, and sometimes even by coordinate benches of the same High Court, on the issue of deduction of Mediclaim amounts.
"When such inconsistencies are left unaddressed, it leads to various problems, primary among them being that it leads to judicial inconsistency and uncertainty," it said.
The Supreme Court also reminded both the bar and the bench of their responsibility in ensuring consistency in legal precedents and avoiding conflicting judicial opinions. "It is this duty towards the court which requires them to bring to the court’s notice judgments both that aid their case and also those that do not," the apex court observed while referring to the role of lawyers.
The matter has now been remanded to the Bombay High Court for fresh determination consistent with the law laid down by the apex court.
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