Deduction from Compensation Amount and Liability of Insurance Company

Deduction from Compensation Amount and Liability of Insurance Company 

In case of NICL v. Mannat Johal [2019] GCtR 5945 (SC), insurance company was directed to pay interest amount from date of filing petition, in addition to compensation amount and appeal of insurance company was dismissed. Insurance company had argued that amount received by claimants should be deducted from compensation. It was held that in case under MV Act, 1988 endeavour has to be to ensure just compensation to the claimant.

The argument raised by insurance company was that allowances have also been considered in income of victim and the amount received ex gratia was not excluded from compensation. However, insurance company's appeal was dismissed and clear legal principles were laid down and neither the principal compensation amount was reduced nor any reduction in interest liability was done by Apex Court.

Ultimately, NICL had to pay interest amount from 1996 to 2018 which comes to more than Rs. 79,20,000/- which was more than the principal compensation amount itself.