Ex-Gratia Death Relief is Deductible from Motor Accident Compensation, unlike Statutory Dues or GIS Benefits

On August 20, 2023, Lakshmi Narayan Behera, an Assistant Commandant, died in a motor vehicle accident when an offending truck hit his motorcycle from behind

The Motor Accident Claims Tribunal (MACT) awarded the legal heirs (Respondents 1–3) compensation of ₹1,29,07,059 with 6% interest

The insurer appealed, challenging the quantum on two primary grounds: first, that the Tribunal failed to deduct various service benefits (GIS, ex-gratia, family pension, etc.) received by the claimants; and second, that it failed to deduct income tax from the deceased’s gross salary while calculating "loss of dependency"

1. Whether amounts received by claimants under heads like Group Insurance Scheme (GIS), Unutilized Earned Leave Salary (UELS), and family pension are deductible from the compensation amount

2. Whether income tax must be deducted from the gross salary of the deceased for calculating the loss of dependency

3. Which tax regime (Old vs. New) should be applied to ensure "just compensation" for the claimants

The court applied Section 173 of the Motor Vehicles Act, 1988 regarding appeals

It adhered to the settled principle that "just compensation" is a beneficial provision, requiring courts to adopt calculations most favorable to the claimants

Order XLI Rule 27 of the CPC was applied to admit additional evidence regarding financial benefits received

The court followed the established precedent that statutory terminal benefits (like GIS and UELS) are legal entitlements and not "pecuniary advantages" deductible from motor accident claims

The Court admitted new evidence (Ext. 13) showing payments made to the widow

It rejected the insurer's plea to deduct GIS, UELS, and family pension, reasoning these are independent legal entitlements of the service and not benefits resulting directly from the tortious act

However, the Court agreed that the Tribunal erred by not deducting income tax and by failing to subtract the ₹2,33,102 received as "ex-gratia death relief," which the claimants conceded

Comparing the Old and New Tax Regimes for the Assessment Year 2024-25, the Court found the New Regime more beneficial to the claimants (tax of ₹76,312 vs. ₹1,44,824) and applied it to determine the net annual income

The Court recalculated the loss of dependency using a 30% addition for future prospects and a 13 multiplier

The Court held that while income tax and ex-gratia death relief must be deducted, benefits like GIS and pension are not deductible

The Appellant was directed to deposit the modified amount with 6% interest from the date of filing (September 30, 2023) within eight weeks