The Bombay High Court has ruled that compensation awarded for medical expenses under the Motor Vehicles Act cannot be reduced by the amount received through a mediclaim policy.

A full bench comprising Justices A S Chandurkar, Milind Jadhav, and Gauri Godse delivered the judgment on March 28, stating that mediclaim benefits arise from a contractual agreement between the claimant and the insurance company.

"We hold that any deduction of amounts received under a Mediclaim policy by a claimant is impermissible," the bench observed.

The matter was referred to the full bench due to differing opinions expressed by various single and division benches on the issue.

Citing Supreme Court precedents, the bench emphasized that the Motor Accident Claims Tribunal is not only empowered but also obligated to grant just compensation. The court clarified that insurance proceeds result from a contract between the insured and the insurance provider. Since the claimant has paid the premium, the benefit must accrue to them, either upon policy maturity or upon death, irrespective of the cause of death.

"A tortfeasor (offender) cannot exploit the financial prudence of the deceased in making insurance investments. This principle is well-established in law," the court affirmed.

The ruling came in response to an appeal filed by New India Assurance Co Ltd challenging the Motor Accident Claims Tribunal's decision to award compensation beyond medical expenses. The insurance company contended that since medical expenses were covered under the mediclaim policy, allowing additional compensation would amount to double recovery.

Advocate Gautam Ankhad, appointed as amicus curiae, argued that provisions of the Motor Vehicles Act regarding medical expenses should be interpreted in favor of the victim, as the Act serves a welfare function. He further contended that since the insurer had received premiums, there was no loss to the company.

Permitting deductions from medical expenses, he argued, would unjustly enrich the insurer at the claimant’s expense.