New India Assurance v. Dolly Gandhi
Supreme Court of India2026 INSC 498Bench: Justice Sanjay Karol and Justice Vipul M. Pancholi
The Supreme Court held that amounts received by a claimant under a Mediclaim or medical insurance policy cannot be deducted from the compensation awarded under the Motor Vehicles Act, 1988 by a Motor Accident Claims Tribunal. The Bench drew a sharp conceptual distinction between two entirely different streams of entitlement: a Mediclaim payout flows from a private contract of indemnity between the insured and the insurer, founded upon premiums paid by the insured out of his own resources, and the insurer's liability is purely contractual and limited by the terms of the policy; whereas compensation under the Motor Vehicles Act is a statutory entitlement that arises by operation of law upon the occurrence of a motor accident, is referable to the tortious liability of the offending vehicle's owner and insurer, and is calibrated to the loss of dependency, medical expenses, pain and suffering, loss of estate and other heads recognised under the statutory scheme. To allow the offending insurer to set off, against its statutory liability, sums that the victim has separately bargained and paid for through Mediclaim premiums would be to transfer to the wrongdoer the benefit of the victim's own foresight and prudence — a result repugnant to both the doctrine of collateral source and the remedial purpose of the Motor Vehicles Act. The Court accordingly affirmed the view taken by the Bombay High Court and declined to permit any such deduction.