K. Sareswara Rao vs Kakaraparthi Anjali Devi

P. Naveen Rao, J.—This appeal is filed by the owner of the passenger transport vehicle (bus), opposite party No. 1 in W.C. No. 7 of 2002, which met with an accident on 27.12.2001 aggrieved by the order of the Commissioner for Workmen''s Compensation (Commissioner of Labour), Ongole (for short ''the Commissioner''). The parties herein are referred to as arrayed in the W.C. No. 7 of 2002. Late K. Rama Rao was employed by the appellant as cleaner. He was assigned the duties of cleaner on bus bearing No. AP 27-U 1949. The bus was operating between Hyderabad and Ongole. On the night of 26.12.2001, the bus was returning to Ongole from Hyderabad. At about 4.30 a.m. on 27.12.2001, when the bus reached Maddipadu en route to Ongole, the driver drove the bus at high speed, hit a goods transport vehicle parked on the roadside in the same direction and collided with another goods transport vehicle coming from the opposite direction. In the said accident cleaner received grievous injuries which resulted in his death on the same day. Crime No. 87 of 2001 was registered in Maddipadu Police Station. No compensation was paid to the dependants of the deceased.

Wife and mother of the deceased instituted W.C. No. 7 of 2002 on the file of the Commissioner claiming compensation of Rs. 2,00,000 with interest at the rate of 12 per cent per annum. Owner of the vehicle and Oriental Insurance Co. Ltd. were arrayed as opposite party Nos. 1 and 2, respectively.

The Commissioner framed six issues for consideration. Insofar as this appeal is concerned, issue No. 6 is relevant. The issue framed reads as:

"Who are liable to pay the compensation?"

The Commissioner held that the deceased was a workman and the accident occurred during the course of employment. He determined the compensation payable as Rs. 2,07,507.

As with reference to issue No. 6, the insurance company contested the claim on the ground that the policy issued by the insurance company on the crime vehicle covers 35 passengers and one driver only and policy does not cover cleaner of the vehicle. It was contended that insofar as driver is concerned, he has filed a case in W.C. No. 11 of 2002 and the insurance company accepted its liability to indemnify the owner on the compensation awarded and accordingly paid the same and thus the insurance company has honoured its commitment as per the policy coverage. Therefore, the insurance company claimed that it is not liable to indemnify the owner of the vehicle against the deceased workman.

Accepting the contention of insurance company, the learned Commissioner fixed the liability to pay the compensation determined only on the opposite party No. 1.

Challenging the said order of the Commissioner to the extent of decision given by him on issue No. 6, this appeal is filed by the opposite party No. 1, owner of the crime vehicle.

The issue that arises for consideration is whether the Commissioner erred in discharging the respondent No. 2 from the liability to indemnify the appellant on the compensation awarded to the dependants of deceased cleaner?

Learned counsel for the appellant and respondent insurance company have confined their submissions to this issue only.

Learned counsel for the appellant, Mr. Ananda Rao, contends that in terms of the mandate given by section 147 of the Motor Vehicles Act, 1988 (for short ''the Act, 1988''), there is no requirement to cover the policy of insurance to a driver of a motor transport vehicle as coverage of the motor transport vehicle would also include, as a matter of course, driver of the vehicle. In addition to the policy of insurance to cover the passengers, owner of the vehicle paid a premium of Rs. 15 and this premium should cover any other employee other than driver and conductor of the owner, which in this case includes cleaner.

Opposing the said submission, the learned counsel for the insurance company, Mr. Kota Subba Rao, contends that as per section 147(1) of the Act, 1988 to provide cover for a driver, premium must be paid for the driver also and since only Rs. 15 was paid, driver alone is covered. Learned counsel contends that mandate of section 147 of the Act, 1988 being clear, it should be applied strictly, more particularly when liability is imposed flowing out of the contract of insurance.

Chapter XI of the 1988 Act covers the subject of ''Insurance of motor vehicles against third party risks''. Section 146(1) mandates that no motor vehicle can ply in public place unless the vehicle is covered by a valid insurance policy. Such a policy may be comprehensive or only covering third parties or liability may be limited. The mandatory requirements of such policy have been provided in section 147 of the Act.

In the case on hand, insured has taken a policy of insurance covering his passenger transport vehicle. He has paid an additional premium of Rs. 15. Against this entry, it is written as ''paid driver/conductor/workman No. 1'' The contrasting stands of insured and insurer flow out of this entry. The insured contends that the entry covers ''cleaner'' as it is not necessary to pay separate premium to driver of the vehicle, whereas the insurer contends that additional premium paid covers only driver as only one additional premium is paid as such premium has to be paid to cover the driver. In support of such contrasting stands, reliance is placed on section 147 of Motor Vehicles Act by both sides. Section 147 reads as under:

"147. Requirements of policies and limits of liability.--(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--

(a) is issued by a person who is an authorised insurer; and

(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--

(i) against any liability which may be incurred by him in respect of the death of or bodily [injury to any person, including owner of the goods or his authorised representative carried in the vehicle] (substituted by Act 54 of 1994, section 46, for ''injury to any person'', w.e.f. 14.11.1994) or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

Provided that a policy shall not be required--

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen v. Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to, any such employee--

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, or

(c) if it is a goods carriage, being carried in the vehicle, or

(ii) to cover any contractual liability."

Section 147 provides that there must be a policy of insurance against any liability to a third party caused by or arising out of the use of the vehicle in a public place, and against death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place. The proviso clarifies that the policy shall not be required to cover an employee of the insured, exception is the policy must cover a liability arising under the Workmen''s Compensation Act, 1923 in respect of the death or bodily injury to an employee who is engaged in driving the vehicle or who serves as a conductor in a public service vehicle or a representative of owner of goods who travels in the vehicle carrying goods if it is a goods carriage.

Relying on the said provisions, learned counsel for appellant submits that no separate premium is required to be paid to cover the driver of the bus and once an insurance policy on passenger transport vehicle is taken insurance coverage automatically extends to driver. It is thus contended that additional premium of Rs. 15 paid by him covered the cleaner of the vehicle. This is controverted by the learned counsel for insurance company relying on terms of insurance policy.

It is for the employer to extend coverage to other employees, such as cleaner. If he wishes to extend the coverage to other employees, he has to pay additional premium. If he wishes to extend additional coverage to driver, over and above Workmen''s Compensation Act liability, he must pay additional premium. Appellant has paid additional premium of Rs. 15 and this covers driver only. Conditions of policy, extracted hereunder, also makes this clear:

"IMT 18. Legal Liability to paid driver and/or conductor employed in connection with the operation of motor vehicle:

In consideration of the payment of an additional premium it is hereby understood and agreed that notwithstanding anything contained herein to the contrary, the company shall indemnify the insured against his legal liability as under:

The Workmen''s Compensation Act, 1923 and subsequent amendments of that Act prior to the date of this Endorsement, the Fatal Accidents Act, 1855 or at common law in respect of personal injury to any paid driver and/or conductor whilst engaged in the service of the insured in such occupation in connection with the motor vehicle and will in addition be responsible for all costs and expenses incurred with its written consent.

The premium having been calculated and paid while taking insurance of the vehicle concerned at the rate of Rs. 15 per driver and/or conductor."

(Emphasis added)

In support of their respective contentions, learned counsel have relied on plethora of decisions.

In National Insurance Co. Ltd. Vs. Prembai Patel and Others, , the question for consideration was whether the appellant insurance company was liable to pay the entire amount of compensation awarded to the claimants or the liability is restricted to that which is prescribed under the Workmen''s Compensation Act. In the said case, the policy in issue was an ''Act policy'' with coverage for ''Act liability only''. The High Court held that the legal representatives of the deceased employee approached the Motor Accidents Claims Tribunal for payment of compensation u/s 166 of the Motor Vehicles Act and hence, the liability of the insurance company is not limited. The Hon''ble Apex Court held that the said view of the High Court is not correct holding that the policy taken by the owner of the vehicle being an "Act liability policy'' the liability of the insurance company be restricted to that arising under the Workmen''s Compensation Act.

In National Insurance Company Ltd. Vs. Abdul Rashid (Md.) @ Sabdin and Another, , wherein an employee called handyman of offending vehicle owner died due to a motor vehicle accident. The insurance company opposed the liability fixed on it by the Claims Tribunal on the ground that no extra premium was paid to cover the risk of the handyman, therefore the insurance company is not liable. Gauhati High Court held that statutory liability of the insurance company mentioned in the first proviso to clause (i) sub-clause (c) to subsection (1) of section 147 of Motor Vehicles Act shall cover the risk of employees employed by the owner of the offending vehicle in the course of employment of the offending vehicle and affirmed the decision of the Claims Tribunal.

In Oriental Insurance Co. Ltd., Warangal Vs. Thudi Mallamma and others, , the issue was: what is the liability of the insurance company under the Workmen''s Compensation Act? The Claims Tribunal awarded compensation of Rs. 1,00,000 which was challenged by the insurance company contending that claims are not entertained for compensation under the Motor Vehicles Act but are entertained to seek compensation as per the formulae prescribed under the Workmen''s Compensation Act. Accepting the contention of the insurance company, this court held that the insurance company is liable to indemnify the owner of the vehicle to the extent of liability under Workmen''s Compensation Act, which was determined at Rs. 49,915 with interest at 12 per cent per annum from the date of filing of the petition and for the rest of the amount the owner of the vehicle was made liable.

In Senior Divisional Manager, New India Insurance Co., Ltd. Vs. K. Kiran and Another, , the issue for consideration by this court was: even though no extra premium was paid covering the risk of the cleaner, whether the insurance company is liable to indemnify the owner of the vehicle for the compensation awarded to the cleaner in a truck sustaining injuries when the truck met with an accident? Following the decisions in National Insurance Co. Ltd. Vs. Prembai Patel and Others, and Oriental Insurance Co. Ltd., Warangal Vs. Thudi Mallamma and others, , this court held that the insurance company is liable but that liability is restricted to the liability flowing under the Workmen''s Compensation Act and owner of vehicle has to bear the balance amount of the liability.

In Dudekula Salabee Vs. R. Siva Sankar Reddy and Another, , the issue for consideration by this court was, as a policy did not cover the liability towards driver since stipulated premium was not paid, insurance company is not liable to reimburse the liability determined by the Claims Tribunal. It was contended on behalf of the insurance company that unless premium of Rs. 15 was paid, policy would not cover the liability towards the driver. This court framed the following issue for consideration:

(a) Whether it is necessary for the owner of a vehicle to pay any extra premium to cover the liability towards a driver of a vehicle?

This court at para. 10 of the said judgment held that "...The liability arising under the Workmen''s Compensation Art, in respect of death or bodily injury towards a driver is statutory and mandatory and any basic policy would cover it. The insured would not be under obligation to pay any extra premium to cover the liability towards the driver of the vehicle". In para. 12, it was further held that "...By no stretch of imagination, it can be said that the insurer would not cover the liability towards the driver, unless the extra premium for covering the liability towards the owner-cum-driver is not paid. Therefore, the contention advanced on behalf of the appellant cannot be accepted".

In Ramashray Singh Vs. New India Assurance Co. Ltd. and Others, , an employee called a ''khalasi'' died in a motor accident. Workmen''s Compensation Commissioner awarded compensation and fixed the liability on the insurance company on the ground that though there was no specific coverage of insurance policy on a ''khalasi'' since the policy is a comprehensive policy, the insurance company was liable to indemnify the owner. The High Court reversed the decision of the Commissioner and held that in the absence of any special contract between the appellant and respondent, rights of the parties would be governed by statute which did not require the respondent to cover the liability in respect of an accident to a ''khalasi''. The matter was carried in appeal and the Hon''ble Supreme Court held as under:

"(10) ...If the concerned employee is neither a driver nor a conductor or the examiner of tickets, the insured cannot claim that the employee would come under the description of ''any person'' or ''passenger''.

(12) ...The exclusion of this clause in the proviso to section 147(1)(b) of the present Act bolsters our reasoning that employees other than the three mentioned are not covered by section 147(1)(b)."

It was further held that even assuming that ''khalasi'' is to be equated as conductor, there is need to show that appellant had paid any additional premium to cover the risk of injury to a conductor. It is held that the insurance policy only covers the person or classes of persons specified in the policy. It was further held that "A comprehensive policy merely means that the loss sustained by such person/persons will be payable up to the insured amount irrespective of the actual loss suffered".

United India Insurance Co. Ltd. Vs. Mohammadi Begum and others, , was a case of a cleaner travelling in a bus who died in an accident. On a claim made before the Claims Tribunal, compensation was awarded and liability was fixed on the insurance company, rejecting the contention of the insurance company that nonpayment of the premium for the cleaner has no relevance, since premium was paid for 35 passengers under a comprehensive policy and only one person died due to injuries and no other passenger died, the insurer was made liable. The insurance policy under consideration was covering 35 passengers plus driver and legal liability to paid driver and/or conductor and for increased third party property damage. With reference to the personal accident to driver, conductor and cleaner, no premium was paid.

In the decision of this court in New India Assurance Co. Ltd. Vs. Suraya Bee and Others, and in Dudekula Salabee Vs. R. Siva Sankar Reddy and Another, , the contention of the insurance company was accepted holding that insurance company could not be held liable to indemnify the owner of the vehicle for the compensation awarded for the death of cleaner, as policy does not cover the cleaner.

In The New India Assurance Co. Ltd. Vs. Lodya Shankar and Others, , vehicle involved was a goods vehicle, coolies travelling in the said vehicle suffered injuries due to accident. The insurance policy under issue was covering driver and the cleaner and no premium was paid to cover the risk of other employees or coolies being carried in the vehicle. It is thus held that "it is well known that contract of insurance is but a contract of indemnity, and so the insurer is liable only to the extent of the liability it undertakes". It was further held that "So, unless the owner of the vehicle pays premium to cover the risk of the coolies being transported in his lorry, the insurer cannot be made liable for payment of the compensation due to them from their owner".

This court in Gangala Raju and Others Vs. Rayavarapu Apparao and Others, , held as under:

"(5) A perusal of the policy shows that premium has been paid only for driver of the tractor. As the premium does not cover the labourers, respondent No. 3, insurance company, is not liable to pay compensation for the death of the deceased, who was, allegedly, a labourer travelling in the trailer."

The principle that is deducible from precedents cited at the Bar and other precedents is: policy of insurance is a contract between insured and insurer and obligations flowing therefrom depends upon the terms and conditions incorporated in the policy. Unless there is express coverage to class of persons, insurer is not liable to indemnify the insured. In view of the principle of law enunciated in the above precedents, the provisions of section 147(1) of the Motor Vehicles Act, 1988 and the terms of insurance policy, Exh. A4/B1, I am of the opinion that the insurance company cannot be fastened with liability to pay compensation as the owner did not pay premium to cover the cleaner and the deceased was a cleaner. I therefore see no error in the decision arrived at by the Commissioner. I see no merit in the contention of the counsel for the appellant and the appeal is dismissed. Sequel to the same, miscellaneous petitions, if any, stand closed. No costs.