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Judgment
P.M. Manoj, J
The appeal is preferred by the appellants who are aggrieved by the deduction of family pension from the deceased's pension while calculating his notional income, and also by the lower amounts awarded under various other heads.
The brief facts involved in this case are as follows: On 18.04.2016, the deceased, Xavier, was travelling in a car bearing registration number KL-05-AF-8178. The vehicle was being driven by the 1st respondent along the Vadakkancherry National Highway public road. When they reached the vicinity of the Mangalam bridge, the 1st respondent lost control of the vehicle due to rash and negligent driving and rammed into the bridge divider. Consequently, Xavier sustained severe head and bodily injuries, to which he succumbed.
The primary contention raised before the Tribunal was that the accident occurred solely due to the negligence of the 1st respondent driver. The 2nd respondent is the owner of the car, and the 3rd respondent is the insurer, who is liable to indemnify the 2nd respondent and pay a total compensation of ₹40 lakhs.
At the time of the accident, the deceased was 57 years old. Following his retirement as a Senior Superintendent in the Forest Department, he was working as a General Insurance Agent. The claim petition was filed by his wife and two children, who contended that he was drawing a monthly pension of ₹22,739 at the time of his death. This forms the background against which the claim of ₹40 lakhs was raised.
The 1st respondent, along with the legal representative of the deceased 2nd respondent (impleaded as the additional 4th respondent), remained ex parte. The 3rd respondent filed a written statement admitting that the vehicle was covered by a valid insurance policy at the time of the accident. However, they contended that the deceased had no regular employment or income, and argued that the compensation claimed is excessive.
The Tribunal framed issues with respect to the cause of the accident, the quantum of compensation, and the liability to pay the same. For the purpose of adjudicating these issues, documents marked as Exts.A1 to A8 were taken on record.
In light of the FIR (Ext.A1) and the final report (Ext.A2), and in the absence of any contradictory evidence, the Tribunal concluded that the 1st respondent was rash and negligent at the time of the accident. Since the insurance policy was admitted, the 3rd respondent was held liable to indemnify the 4th respondent, who is the owner of the vehicle. The Tribunal also concluded that the death occurred due to the injuries sustained in the accident, that the claimants are the legal heirs of the deceased, and that there is no record to show that they have any independent source of income. Upon considering these various factors, the Tribunal concluded that the legal heirs are entitled to a compensation of ₹17,12,975/-.
However, this appeal is preferred primarily on the ground that the Tribunal committed a grave error in computing the monthly income of the deceased. To fix the monthly income, the Tribunal primarily considered the pay/leave salary slip (Ext.A7), which showed that the deceased drew a total salary of ₹53,080/- in a pay scale starting at ₹52,800/-. However, going by Ext.A5, it appears that the deceased retired from service with effect from 30.11.2014, and his pension was sanctioned with effect from 01.12.2014, under which he was receiving average emoluments for pension at the rate of ₹23,760/-. The 1st appellant herein was designated as the nominee for the family pension. Page 9 of the pension book indicates that the 1st claimant was receiving a family pension at the rate of ₹11,484/-, which was subsequently revised to ₹22,402/- with effect from 28.11.2014.
Over and above this, it was contended before the Tribunal that the deceased was employed as an insurance advisor under Reliance General Insurance. However, no records were produced to show that he had received any income from the said institution. To assess the monthly income, and in light of the contentions raised by the counsel for the claimants relying on Sujatha v. Oriental Insurance Co. [2017 (5) KHC 568] and Sarala Verma v. Delhi Transport Corporation [2010 (2) KLT 802 (SC)], the Tribunal calculated the monthly income derived from the pension. It deducted the family pension from the retirement pension (i.e., ₹23,760 -₹11,484 = ₹12,276/-). However, the Tribunal committed a mathematical error: instead of using the net amount of ₹12,276/- as the base pension income, it erroneously adopted ₹22,402/-, which is actually the revised family pension evident from page 9 of Ext.A5. To this, an amount of ₹12,000/- was added as notional income as a dint of his post-retirement labour. Thereby, the Tribunal concluded that ₹18,562/- was the monthly amount derivable by the wife and children after his death.
The primary contention raised by the learned counsel for the appellants is that the Tribunal committed a fundamental error of law by deducting the family pension from the personal pension of the deceased employee. It is contended that this specific issue was considered elaborately by the Apex Court in Helen C. Rebello v. Maharashtra State Road Transport Corporation [(1999) 1 SCC 90], especially in paragraph 35, which is reproduced as follows:
“Broadly, we may examine the receipt of the provident fund which is a deferred payment out of the contribution made by an employee during the tenure of his service. Such employee or his heirs are entitled to receive this amount irrespective of the accidental death. This amount is secured, is certain to be received, while the amount under the Motor Vehicles Act is uncertain and is receivable only on the happening of the event viz., accident which may not take place at all. Similarly., family pension is also earned by an employee for the benefit of his family in the form of his contribution in the service in terms of the service conditions receivable by the heirs after his death. The heirs receive family pension even otherwise than the accidental death. No co-relation between the two. Similarly, life insurance policy is received either by the insured or the heirs of the insured on account of the contract with the insurer, for which insured contributes in the form of premium. It is receivable even by the insured, if he lives till maturity after paying all the premiums, in the case of death insurer indemnifies to pay the sum to the heirs, again in terms of the contracts for the premium paid. Again, this amount is receivable by the claimant not on account of any accidental death but otherwise on insured's death. Death is only a step or contingency in terms of the contract, to receive the amount. Similarly any cash, bank balance, shares, fixed deposits, etc. though are all a pecuniary advantage receivable by the heirs on account of one's death but all these have no co-relation with the amount receivable under a statute occasioned only on account of accidental death. How could such an amount come within the periphery of the Motor Vehicles Act to be termed as 'pecuniary advantage' liable for deduction. When we seek the principle of loss and gain, it has to be on similar and same plane having nexus inter so between them and not to which, there is no semblance of any co-relation. The insured (deceased) contributes his own money for which he receives the amount has no co-relation to the compensation computed as against torfeasor for his negligence on account of accident. As aforesaid, the amount receivable as compensation under the Act is on account of the injury of death without making any contribution towards it, then how can fruits of an amount received through contributions of the insured be deducted out of the amount receivable under the Motor Vehicles Act. The amount under this Act, he receives without any contribution. As we have said the compensation payable under the Motor Vehicles Act is statutory while the amount received under the life insurance policy is contractual.”
From a close reading of the said paragraph containing the findings entered by the Apex Court—which were arrived at after discussing various legal principles at length and examining the divergent views expressed by other High Courts—it can be safely presumed that there is no correlation between the amounts payable under the Motor Vehicles Act consequent to the death of a person in a motor vehicle accident and the amount received as family pension, which is a statutory right. This is evident from the explicit observations made by the Court:
"Similarly, family pension is also earned by an employee for the benefit of his family in the form of his contribution in the service in terms of the service conditions receivable by the heirs after his death. The heirs receive family pension even otherwise than the accidental death. There is no correlation between the two."
This principle has been consistently followed by the Apex Court in subsequent judgments, most notably in Hanumantharaju B (Dead) by LRs. v. M. Akram Pasha [2025 SCC OnLine SC 1106]. Paragraph 16 of the said judgment reads as follows:
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“It is also now well settled that the amount of compensation is to be calculated on the basis of last drawn salary of the injured / deceased in respect of salaried persons and pension and such retirement benefits enjoyed cannot be deducted for computing the income, these being statutory rights receivable by the employee or his legal heirs irrespective of any unforeseen incident of accidents, fatal injuries etc. and such pensionary benefit is not directly relatable to the motor accident. Hence, pensionary benefit could not have been treated as "pecuniary advantage" liable to be deducted for the purpose of computation of compensation within the scope of Motor Vehicles Act, 1988.”
Thus, it is evident that the Apex Court has consistently held that pensionary benefits cannot be treated as a pecuniary advantage liable to be deducted for the purpose of computing compensation. This view was recently reaffirmed in Kirosata Devi v. Ram Ji Lal [2025 KHC 7723].
Furthermore, the principle laid down in Helen C. Rebello (supra) was followed by a three-Judge Bench of the Supreme Court in Sarla Devi v. Reliance General Insurance Co. Ltd. [2026 KHC OnLine 6421], which referred to and relied upon Reliance General Insurance Co. Ltd. v. Shashi Sharma and Others [(2016) 9 SCC 627], wherein Helen C. Rebello supra was also discussed.
The learned counsel for the appellants further contended that no distinction can be drawn regarding the deduction of family pension in respect of a government employee who dies after retirement versus one who dies in harness. In both scenarios, the family pension is statutorily payable to the surviving spouse.
Per contra, the learned counsel for the respondent contended that in the present case, the deceased was a pensioner who expired post-retirement. The Tribunal deducted the family pension from the retirement pension drawn by the deceased, and added only the difference to the notional income to fix the multiplicand, as this alone represents the actual financial loss suffered by the family on account of the pensioner's demise.
It was further contended that if the family pension is not deducted from the personal pension of the deceased, it will result in duplication of payments, leading to a windfall of compensation, a consequence the Supreme Court has repeatedly cautioned against. Family pension is inherently a component of the retirement pension scheme and must be construed as a part thereof, rather than as a separate entitlement independent of the principles governing pensionary benefits. As such, the procedure adopted by the Tribunal for computing the compensation toward loss of dependency is correct and does not call for any interference.
Conversely, in the cases relied upon by the appellants where the family pension was not deducted, the deceased individuals were still actively in service when they met with the fatal accidents. In those circumstances, it was rightly held that family pension is not a component to be subtracted from the monthly salary of the deceased while computing the compensation for loss of dependency. Although the learned counsel for the appellants has cited various decisions as discussed above, the subtle distinction lies in the fact that the majority of those decisions pertain to employees who died in motor accidents while still in active service.
The learned counsel for the respondent further contended that the amount of ₹1 lakh awarded by the Tribunal towards pain and suffering is excessive and ought not to exceed ₹10,000/-. Conversely, it was noted that the Tribunal granted only ₹40,000/-for the loss of consortium, whereas it should have been ₹1,20,000/-(calculated at ₹40,000/- x 3 claimants).
In reply, the learned counsel for the appellants contended that the only decision of the Supreme Court which has taken a contrary view is Viswajith Singh (supra). However, a reference to the same would reveal that this decision does not consider or refer to any of the landmark Supreme Court rulings relied upon by the appellants, wherein it has been consistently held that family pension cannot be deducted while fixing the quantum of compensation for a person who died in a motor accident.
Furthermore, the Division Bench decision relied upon by the respondent—namely Sujatha P. (supra)—does not pointedly deal with the specific issue of whether family pension is deductible. That decision largely centres around its own peculiar facts and fails to refer to the settled precedents of the Supreme Court, which have consistently held that family pension is not liable to be deducted while computing compensation consequent to the death of a pensioner.
The learned counsel for the appellants also countered the respondent's reliance on the judgment in M.A.C.A. No. 120/2020 dated 14.07.2025. It was submitted that although that judgment contains references to earlier decisions of the Supreme Court— including Helen C. Rebello (supra), Vimal Kanwar v. Kishore Dan [2013 (2) KLT 748 (SC)], Sebastiani Lakra v. National Insurance Company Ltd. [(2019) 17 SCC 465], and the judgment dated 08.04.2025 in Pramod Kumar Tiwari v. Premlal Gautam [SLP(C) No. 26620 of 2023] dealing with what amounts are deductible—a bare perusal of the said judgment reveals that none of these binding precedents were analytically discussed or legally distinguished. Instead, the said judgment proceeds purely on its specific facts without analysing the established position of law in depth.
Therefore, it is contended that an analysis of the entire body of case law on this point clearly indicates that family pension cannot be deducted from the income of the deceased. This inference is drawn because the legal heirs would have received the family pension even otherwise, independent of the accidental death, and because there is no correlation between family pension and the compensation payable under the Motor Vehicles Act.
I have heard Sri. Mathew John for the appellants and Sri. V.P.K. Panicker for the 2nd respondent.
Upon analysing the rival contentions raised before this Court, the primary question that arises for consideration is whether the family pension granted to a surviving spouse upon the death of a retired employee is liable to be deducted from the personal pension or income of the deceased for the purpose of computing the multiplicand.
It is a well-settled principle that compensation awarded by a Tribunal is a civil remedy meant to mitigate the loss caused by the tortfeasor. The statutory duty of the insurance company is to indemnify the insured and compensate the victim on behalf of the tortfeasor. To determine the loss of dependency and arrive at the appropriate multiplicand, the normal procedure adopted is to consider the last drawn salary of the deceased, which, in the case of a retired employee, is equated to their personal pension.
Before entering into a discussion regarding the deductibility of family pension, the nature and concept of family pension must be examined. In the context of the present case, where the accident occurred within the State and the deceased was a service pensioner, his family pension is governed primarily by the provisions of Rule 90, Part III of the Kerala Service Rules (KSR). Rule 90(6) of Part III defines the categories of relatives who constitute a "family", while Rule 90(7) prescribes the admissibility of the family pension. Sub-clause (a) of Rule 90(7) mandates that in the case of a widow or widower, the family pension is payable until their death or remarriage, whichever is earlier, provided the surviving spouse does not have another living husband or wife at the time of the employee's demise.
This statutory framework itself establishes that family pension is a matter of right vested in the surviving spouse, contingent purely upon their marital status. Consequently, it can be safely inferred that family pension is a right earned by the employee through past service for the future sustenance of the family, and it does not accrue as a bounty, charity, or as an alternative compensation for the accidental death of the spouse.
Keeping in view the aforementioned principles and following the decision of the Apex Court in Helen C. Rebello supra, it is well established that while the compensation payable under the Motor Vehicles Act is statutory, the amount receivable under an insurance policy is contractual. Consequently, the amount receivable by a claimant under a life insurance policy, or any other amount on contractual obligation of the deceased is not deductible from the compensation computed under the Motor Vehicles Act.
The Court further clarified that the principles governing financial loss or gain must correlate directly to the injury caused in the accident. A pecuniary advantage that has no correlation to the accidental death cannot be factored into the compensation computation. Any amount received or receivable, which would have accrued to the claimant even otherwise independent of the accidental death, cannot be construed as a pecuniary advantage liable for deduction.
In other words, the family pension earned by an employee is for the benefit of their family by virtue of their service contributions and service conditions, to be received by the heirs after their death. Since the heirs would receive the family pension even in a non-accidental death scenario, there is no correlation between the two. This principle has been consistently followed in Vimal Kanwar supra, Sarala Devi supra, Chandramouli, and Kirosata Devi supra. The only distinction is that while the deceased was an active employee in the other cases, Kirosata Devi specifically dealt with the case of a retired employee.
On a meticulous examination of these judgments, it is evident that benefits arising out of contractual agreements—such as LIC policies or health insurance etc—as well as statutory benefits accrued through the employment of the deceased (including family pension), cannot be deducted from the income or personal pension of the deceased to arrive at the multiplicand. Furthermore, the requirement to award "just compensation" without creating a windfall for the claimants is not violated merely by excluding the family pension, as the surviving spouse is otherwise legally entitled to it. To balance these equities, the principle envisaged in National Insurance Co.Ltd. V. Pranay Sethi and others [2017 (4) KLT 662(SC)] provides for a standard deduction towards the personal and living expenses of the deceased at 1/3rd in case of a deceased married and dependent family members is 2 to 3, 1/4th in case of a deceased married and dependent family members is 4 to 6, 1/5th in case of a deceased married and dependent family members exceed 6, ½ in case of a deceased unmarried and dependent family members are parents, and 1/3rd in case of a deceased unmarried and dependent family members exceed are parents and non-earning sisters or brothers. In the present case, the deduction is fixed at 1/3rd. Under standard guidelines, a pensioner or person with fixed income aged between 50 and 60 years receives a 15% addition to their base income to account for future prospects.
On the basis of the above findings, I am of the considered opinion that the Tribunal completely erred in deducting the family pension from the monthly personal pension of the deceased. Furthermore, the Tribunal committed a factual error by taking the monthly pension as ₹22,402/-, which is actually the revised family pension. Instead, the Tribunal ought to have taken the actual personal pension of the deceased, which was ₹23,760/-.
Hence, the income for determining the loss of dependency is calculated by adding the post-retirement income to the monthly pension drawn by the deceased, totalling ₹35,760/- (₹23,760 + ₹12,000). Adding 15% towards future prospects brings the gross monthly income to ₹41,124/- (₹35,760 + ₹5,364). After deducting 1/3rd towards personal expenses, the net monthly income for calculating dependency comes to ₹27,416/- (₹41,124 – ₹13,708). The compensation under this head is computed as follows: Rs.27,416 x 9 x 12 = Rs.29,60,928/-
As rightly contended by the learned counsel for the respondent, the amount of ₹1 lakh awarded by the Tribunal towards pain and suffering is erroneous. As per Pranay Sethi supra, an amount ranging between ₹5,000/- and ₹15,000/- can only be awarded under this conventional head. Accordingly, the compensation under this head is reduced to ₹10,000/-.
Similarly, towards the loss of consortium, and in accordance with the mandate in Pranay Sethi supra, a sum of ₹40,000/- is awardable to each dependent, subject to a 10% escalation every three years. Therefore, the total compensation under this head is calculated as ₹48,000/- × 3, which equals ₹1,44,000/-. The impugned award is modified as follows:
Sl. No. | Head of Claim | Amount claimed (in ₹) | Amount awarded by Tribunal (in ₹) | Modified amount in Appeal (in ₹) |
| 1 | Loss of earnings | …….. | ………….. | ………. |
| 2 | Transport to hospi-tal | 30,000 | 5,000 | 5,000 No modification |
| 3 | Medical Expenses/ Extra nourishment | 50,000 1000 | ………. ……….. | ………. ……….. |
| 4 | Damage to clothing | 2,000 | 1,000 | 1,000 No modification |
| 5 | Pain and Sufferings | 1,50,000 | 1,00,000 | 10,000 (reduced as per Pranay Sethi) |
| 6 | Funeral expenses | 50,000 | 15,000 | 15,000 No modification |
| 7 | Loss of consortium | 2,00,000 | 40,000 | 1,44,000 (Rs.48,000 x3) |
| 8 | Compensation for loss of love and af-fection | 3,00,000 | ………. | ………… |
| 9 | Compensation for loss of dependency | 30,00,000 | 15,36,975 | 29,60,928 (27416x12x9) |
| X12x910 | Loss of estate | 5,00,000 | 15,000 | 15,000 No modification |
| Total | 40,00,000 | 17,12,975 | 31,50,928 |
In the result, the impugned award is set aside and the appeal is allowed in part by fixing the amount of compensation as ₹31,50,928/- (Rupees Thirty-one lakh fifty thousand nine hundred and twenty eight only) with interest at the rate of 8% per annum from the date of the petition till the date of realisation and proportionate costs. The insurer is directed to deposit the aforesaid amount before the Tribunal within a period of two months from the date of receipt of a certified copy of this judgment. Upon deposit of the amount, the Tribunal shall disburse the same to the claimants in accordance with the apportionment percentage ordered by the Tribunal, after making deductions, if any.