IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.1344 OF 2014 The New India Assurance Co. Ltd., ]

Sakinaka, Mumbai ] .. Appellant-Original Insurer Versus

1. Mrs. Dolly Satish Gandhi ] .. Respondent-Org. Applicant

2. Mr. Janeshwar V. Pujari ] .. Respondent-Org. Applicant & Opp. Party Mr. Deelip R. Mahadik with Mr. Devendra Joshi, Advocate for the Appellant-Original Insurer.

Mr. T.J. Mendon with Mr. T.R. Kale, Mr. Deepak S. Kilaje, Mr. Navin Sheth and Mr. R.S. Alange, Advocates for Respondent No.1.

Mr. Vineet B. Naik, Senior Advocate, with Mr. Sukand Kulkarni, i/by Mr. Sarthak Diwan, Advocates for M/s. HDFC Ergo General Insurance Company Ltd.

Mr. Gautam Ankhad, Senior Advocate, Amicus Curiae, with Ms. Samridhi Lodha and Ms. Minal Thakker, CORAM : A.S. CHANDURKAR, MILIND N. JADHAV & GAURI GODSE, JJ The date on which the arguments concluded : 30^TH JANUARY 2025.

The date on which the Judgment is pronounced : 28^TH MARCH 2025.

JUDGMENT : [ Per A.S. Chandurkar, J. ]

1. The question placed for consideration before this larger Bench is “Whether the amount received by a Claimant under a Mediclaim Policy or under a Medical Insurance Policy is liable to be deducted from the amount of compensation payable to a Claimant under the head “Medical Expenses” in proceedings under Section 166 of the Motor Vehicles Act, 1988 ?”

Decision leading to the Reference :

2. In First Appeal No.1344 of 2014 (The New India Assurance Co. Ltd. Vs. Mrs. Dolly Satish Gandhi and Anr.), a challenge has been raised to the judgment of the Motor Accident Claims Tribunal, Mumbai awarding monetary compensation to the claimant. One of the grounds of challenge is that the amount awarded by the Motor Accident Claims Tribunal (for short, “Tribunal”) towards medical expenses could not have been so awarded in view of the fact that the claimant had received these expenses under a Mediclaim Policy from the Insurance Company.

3. When the First Appeal was heard, amongst other decisions, the judgment in First Appeal No.657 of 2013 (The New India Assurance Vs. Dineshchandra Shantilal Shah and Ors.), decided on 19^th September 2013 taking the view that the amount received under a Mediclaim Policy by a claimant was liable to be deducted from the amount of compensation that was liable to be awarded towards medical expenses was relied upon by the Insurance Company. On the other hand, the claimant sought to rely upon the decisions in Vrajesh Navnitlal Desai Vs. K. Bagyam and Anr., 2006 ACJ 65 and Royal Sundaram Alliance Insurance Co. Ltd., Kolkata Vs. Ajit Chandrakant Rakvi and Anr., 2019(6) Mh.L.J. 386 to contend that the amount received under a Mediclaim Policy was not liable to be set-off or deducted from the amount of compensation payable under Section 166 of the Motor Vehicles Act, 1988 (for short, “M.V. Act”).

4. The learned Single Judge noticed the divergent views in Vrajesh Navnitlal Desai and Royal Sundaram Alliance Insurance Co. Ltd. (supra) on one hand and in Dineshchandra Shantilal Shah and Ors. (supra) on the other. The latter decision did not notice the earlier views on that point. Hence, by the order dated 29^th June 2020, the First Appeal was directed to be placed before the Hon’ble the Chief Justice for constituting a larger Bench to decide the said question. Accordingly, the said question has been referred to the Full Bench.

Submissions on behalf of the Insurer :

5. Mr. Vineet Naik, learned Senior Advocate representing the New India Assurance Company Limited at the outset referred to the nature of various insurance policies available along with their distinct terms and conditions. Referring to Section 124 of the Indian Contract Act, 1872, it is urged that a general insurance contract operates on the principle of “indemnity” and is thus contingent in nature. It would be enforceable only when some loss occurs and if such loss has already been compensated from another source, nothing further was required to be done under the contract of indemnity. The