Premier Insurance Company Ltd. vs C. Thomas and Others

This appeal coming on for hearing on Friday, the 12th March, 1982 before the Honorable Mr. Justice Mohan, and upon persuing the petition of

appeal, the order of the Lower Court, and the material papers in the case, and upon hearing the arrangements of Mr. Sanjay Mohan, Advocate for

the Appellant, and of Mr. K. Chandru, for M/s. Row and Reddy, Advocates for the First Respondent, and the respondents 2 to 5 having been

given up, the court made the following order :

This appeal raises a very important question of law as to the Jurisdiction of the Commissioner under the Workmen''s Compensation Act, 1923

to direct compensation to be awarded against the insurer. There are number of authorities for and against. Holding that the Commissioner has no

jurisdiction, there are rulings (1) Sudhir Kumar v. Hori 59 F.J.R. 165 and (2) R.B. Moondra and Co. Vs. Mst. Bhanwari and Another, . On the

contrary, by importing the principle set out under Ss. 95 and 96 read along with S. 110-AA of the Motor Vehicles Act, the rulings in (1) United

India Fire and General Insurance Co. Ltd. Vs. Kamalakshi and Others, , (2) Bibhuti Bhusan Mukherjee Vs. Smt. Dinamani Dei and Others, , Shri

Ram Mining Co. v. Asst. Commissioner for Work. Comp. 57 F.J.R. 132 (4) Khwajabai v. Gulabkhan Jamalkhan Pathan 55 F.J.R. 105 and (5)

Krishan Lal v. Munshi Ram 55 F.J.R. 292 hold that the Commissioner has every jurisdiction. May be I can follow either of the ruling depending

upon the view I take. But having regard to the fact that this question is likely regard to the fact that this question is likely to recur again and again, it

is better the matter is decided by a Bench. Therefore, I direct the papers to be placed before My Lord the Chief Justice for posting the same

before a Bench.

Within one month from this day, the appellant will pay a sum of Rs. 3,000/- to the respondent-workmen. This of course, will be without

prejudice to the rights of the parties.

Pursuant to the order, dated 12th March, 1982 and made herein, this appeal coming on for hearing before this Court on Tuesday, 19th July,

1982, Wednesday, 20th July, 1982, and upon hearing the arguments of Mr. Sanjay Mohan, Advocate, for the Appellant and for of Mr. K.

Chandru for M/s. Row & Reddy, Advocate for the first respondent and the respondents 2 to 5 having been given up, and having stood over for

consideration till this day, the court made the following order :

(Order of Court made by the Honorable The Chief Justice)

This appeal by the Premier Insurance Company Ltd., is against the order of the Additional Commissioner for Workmen''s Compensation,

Madurai, awarding compensation against the insurance company and employers in a claim filed by the petitioner-first respondent, C. Thomas,

under the Workmen''s Compensation Act, hereinafter referred to as the Compensation Act. The appeal first came to be heard by a single Judge

who referred it to a Division Bench. That is how it is before us.

The first respondent (claimant) was employed by one Mariammal Isaiah to work as cleaner-cum-conductor on the lorry owned by her bearing

registration No MDK 1159. While working on the lorry the first respondent met with an accident on 26th June, 1968, when the said lorry was hit

by another lorry bearing registration No MDT 7153 and he sustained injures in the course of his employment, as a result of which his left high bone

was crushed and his thigh up to the hip was amputated, in the Government Headquarters Hospital, Nagercoil. The first respondent filed a claim

application under the Workmen''s Compensation Act alleging that as a result of the amputation he lost 90 percent of his working capacity as per

Schedule II of the said Act and claimed a sum of Rs. 8,820/- as compensation. In the said proceedings he also impleaded the appellant, the vehicle

on which he was working was insured with the appellant company. In the course of the said proceedings the original owner of the lorry died and in

her place her heirs, respondents 2 to 5 were substituted as opposite party Nos. 1 and 3 to 5.

I will not be necessary to refer to the defence of the employer or her substituted heirs as they have not preferred any appeal, nor those grounds

urged by the appellant. The appellant and other opposite party resisted the claim on various grounds. Suffice it to mention that the main defence of

the appellant was that the insurance company could not be made a party before the Commissioner for Workmen''s Compensation under the

Workmen''s Compensation Act and no decree could be passed against the insurance company and nothing was recoverable from the appellant-

insurance company either by the owner or the employee and this is the only ground urged before us in this appeal.

All the contentions raised by the employer and the insurance company were rejected by the Additional Commissioner for Workmen''s

Compensation, who held that the accident took place in the course of employment and the insurance company was also liable to pay

compensation. He, therefore, awarded a sum of Rs. 6,720/- as compensation together with Rs. 30/- as costs, which was directed to be paid

within 30 days of the receipt of the order.

Mr. Sanjay Mohan, learned counsel appearing on behalf of the appellant, has urged the following points in support of the appeal :

The Workmen''s Compensation Act being a separate code on the one hand, as compared to the Motor Vehicles Act, one cannot rely on Ss. 95

and 96 of the Motor Vehicles Act in respect of a claim under the Compensation Act.

In the absence of a similar provision like Ss. 95 and 96 of the Motor Vehicles Act in the Compensation Act, one cannot import these provisions

while deciding a case under the Compensation Act.

The Compensation Act itself provides a contingency for the insurance company to be made a party and for an order passed against it by the

Commissioner. It is only when that contingency arises that the Commissioner can get jurisdiction to deal with the insurance company under S. 14 of

the Compensation Act, in as much as the Compensation Act only contemplates a claim between an employer and an employee.

All these three submissions of the learned counsel can be taken up together as the main thrust of the arguments is that the Compensation Act is

an act dealing with a claim by an employee against an employer and a third party such as the insurance company can be made a party only in the

contingency as referred to in S. 14 of the Compensation Act, and the provisions of Ss. 95 and 96 of the Motor Vehicles Act (herein after referred

to as M.V. Act) cannot be taken into account except under the circumstances mentioned under S. 14 of the Compensation Act. Mr. Mohan has

referred to certain provisions of the Compensation Act in support of his submission. He has first referred to the preamble to say that the Act

provides of payment by certain classes of employers to their workmen of compensation for injury by accident. Those provisions may be briefly

referred to.

The definition of ""employer"" under S. 2(e) is an inclusive definition and reads as follows :

Employer includes any body of persons whether incorporated or not any managing agent of an employer and the legal representative of a

deceased employer, and, when the services of a workmen are temporarily lent or let on hire to another person by the person with whom the

workmen has entered into a contract of service or apprenticeship, means such other person while the workmen is working for him"".

Section 2(f) defines ""managing agent"" as one who is appointed for carrying on such other person''s trade or business, but does not include an

individual manager subordinate to the employer.

Section 3 provides for payment of compensation according to the provisions of Chapter II in which that Section occurs, where personal injury

is caused to a workmen by accident arising out of and in the course of his employment. There is no dispute before us that injury was caused to the

employee by accident which occurred in the course of his employment and the employer''s liability was there to pay compensation, as held by the

trial Court.

Section 4 deals with the amount of compensation payable for different kinds of injuries and disabilities :

Section 4-A lays down that the compensation is to be paid as soon as it falls due and also provides for payment of penalty by the employer if it

is not paid within a month when it fell due.

Section 10 provides that no claim for compensation shall be entertained by the Commissioner unless notice of the accident has been given as

soon as practicable, after the happening thereof, as provided in that Section to the employer.

Section 10-A gives the Commissioner suo motu power to require from employers, statements regarding fatal accidents when he gets

information about them from any source.

Section 12 is in two parts. Sub-section (1) deals with the liability of the principal to pay compensation to the workman employed in the

execution by or under the contractor of the whole or any part of any work which is ordinarily part of the trade or business of the principal where

the workman choose to claim from the principal, where the workman chooses to claim from the principal instead of the contractor. Sub-section (2)

deals with the right of the principal employer to be indemnified for compensation paid by him from the contractor, or from any other person from

whom the workman could have received compensation for injury caused in the course of employment, which us to be determined by the

Commissioner.

Section 13 deals with the remedy of an employer to recover compensation paid by him from strangers in respect of any injury caused under

circumstances creating a legal liability of some person other than the person by whom the compensation was paid to pay damages in respect

thereof.

Section 14, Clause (1) on which special emphasis has been laid by Mr. Sanjay Mohan, reads as follows :

Where any employer has entered into a contract with any insurers in respect of any liability under this Act to any workman, then in the event of the

employer becoming insolvent or making a composition or scheme of arrangement with his creditors or, if the employer us a company, in the event

of the company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding

anything in any law for the time being in force relating to insolvency or the winding up of companies, be transferred to and vest in the workman, and

upon any such transfer the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so

however that the insurers shall not be under any greater liability to the workman than they would have been under the employer"".

This Section deals with the liability of the insurer in case of the insolvency of the employer where the employer has entered into a contract with

any insurer in respect of his liability under the Act to any workman. This liability to the insurer comes into play only when the employer becomes

insolvent, or if the employer us a Company it is under winding up. Mr. Mohan has urged that the injured workmen or his dependents in case the

workmen is dead, has no right to proceed against the insurance company except under the circumstances mentioned in this Section, that is, in case

of the insolvency of the employer. We shall deal with this Section in greater detail later.

Few more Sections referred by Mr. Mohan need be mentioned before the import of his contention can be judged. Section 14-A lays down

that the compensation shall be a first charge on that part of the assets transferred by an employer.

Section 19 gives the Commissioner exclusive jurisdiction to decide and settle all questions as to the liability of any person to pay compensation

and bars the jurisdiction of the Civil Court to settle, decide or deal with any question covered under the Act and required to be settled, decided or

dealt with by the Commissioner. He has referred to this section in support of his submission that the Commissioner has overriding jurisdiction in this

matter and to emphasis that even the jurisdiction of the civil Court in respect of a claim, which can be entertained by the Commissioner, has been

barred.

Section 22-A deals with the power of the power of the Commissioner to ask for additional amount of deposit in cases of fatal accidents.

Section 23 is procedural and lays done that the Commissioner will have power''s of civil Court for taking evidence of oath, etc.

Learned counsel has also relied on Form ""F"" of the forms framed under the Act and prescribed under Rule 20. In this Form mention is only

made about a claim being made by an employee against an employer or his contractor.

The submission of the learned Counsel is that the power of the Commissioner under the Compensation Act is confined to an adjudication of a

claim between an employer and an employer in respect of a claim arising out of an accident and not against others. A claim against an insurance

company could be made only made only under circumstances mentioned in S. 14, which is not the position in the instant case. It is true that the

workmen''s Compensation Act of 1923 makes provisions for payment of compensation to workman by the employer when such an accident took

place in the course of his employment. But some of the provisions of the Act referred to by the learned counsel for the appellant would indicate

that the Act does not lay down that save employer and employee no other party could be brought within the purview of the claim to be decided by

the Commissioner. On the other hand, persons other than the employer and employee could be brought before the Commissioner under the Act

and a claim for and against them can be considered is inherent in some of the provisions of the Act, as contained therein. For example, S. 12(2)

reads as follows :

Where the principal is liable to pay compensation under this section, he shall be entitled to be indemnified by the contractor, or any other person

from whom the workman could have recovered compensation and where a contractor who is himself a principal is liable to pay compensation or

to indemnify a principal under this section he shall be entitled to be indemnified by any person standing to him in the relation of a contractor from

whom the workman could have recovered compensation and all question as to the right to and the amount of any such indemnity shall in default of

agreement, be settled by the Commissioner.

Section 13 also is to be same effect, which reads as follows :

Where a workman has recovered compensation in respect of any injuries cause under circumstances creating a legal liability of some person other

than the person by whom the compensation was paid to pay damages in respect thereof, the person by whom the compensation was paid and any

person who has been called on to pay an indemnity under S. 12 shall be entitled to be indemnified by the person so liable to pay damages as

aforesaid.

Section 19, which gives the Commissioner jurisdiction to decide and settle all questions as to the liability of ""any person"" to pay compensation

and bars the jurisdiction of the civil court, is also not in restrictive terms as urged by Mr. Mohan, the relevant portion of which may be quoted :

If any question arises in any proceedings under this Act as to the liability of any parson to pay compensation, the question shall, be in default of

agreement, be settled by a Commissioner"" and does not restrict the decision of the matter between an employer and an employee.

It is amply clear from a reference to the aforesaid provisions that the Act is not as restrictive as Mr. Mohan wants us to interpret, that the

Commissioner can only look into the claim for compensation between a workman and his employer, as defined under the Act, and no other so as

to stand as a bar and shuts out the insurance company completely except under circumstances mentioned under S. 14.

Coming to the provisions of S. 14(1), which has been quoted already and on which great reliance has been placed by Mr. Mohan, suffice it to

mention that in 1923 when the Workmen''s Compensation Act was passed, there was no scheme for compulsory insurance of motor vehicles in

existence, with which we are concerned in the instant case. Section 14 provides that in the case of the insolvency of the employer the insurer will

stand in the shoes of the employer having the same rights and remedies and will be subject to the same liabilities of the employer limited to the

liability undertaken under the terms of the insurance policy. In other words, the insolvency of the employer will not affect the claim of the employee

to the extent covered by the insurance policy.

If the matter had stood at that and the provisions of the Compensation Act were as they were and Chapter VIII, dealing with compulsory

insurance of the Motor Vehicles not incorporated by subsequent amendment in the Motor Vehicles Act, Mr. Mohan was right in his submission

that the the insurance company could not have been ordinarily brought as a party except under the circumstances mentioned under S. 15 But far-

reaching changes have been brought in by the incorporation of Chapter VIII in the Motor Vehicles Act having an important bearing of the

Workmen''s Compensation Act as well, so far as persons employed on motor vehicles are concerned and where accident takes places in the

course of employment. This Chapter consists consists of S. 93 to III-A. The scheme of that Chapter provides for compulsory insurance of motor

vehicles for covering risk of third parties in respect of motor vehicles plying in public places. It also provides for establishment of Claims Tribunals

and lays down the procedures for speedy disposal of claims.

It is the admitted position before us that the vehicle in question of the employer was insured in pursuance of the compulsory scheme of

insurance, as provided by S. 94(1) of the M.V. Act. The question for consideration is as to whether, in view of Ss. 95 and 96, the insurer could be

brought before the Commissioner for Workmen''s Compensation under the Compensation Act so as to indemnify the employer in respect of the

claim awarded against him. Section 94(1) lays down that all vehicles which are to be used in public places should be insured so that if a third party

suffers any damage due to the use of the said vehicle in a public place, he would be able to get damages from the insurance company and its

recoverability will not depend upon the financial condition of the owner or driver of the vehicle.

Section 95 deals with the requirement of the policy and the limits of liability. The insurance required under this Section is to be in respect of a

vehicle which is being which is being used and while driving which the accident may occur. Clause (b) of sub-(1) if that Section, with the first

proviso which is relevant, may usefully be reproduced :

95(1) In order to comply with the requirement of this Chapter, a policy of insurance must be a policy which -

(a) x x x x

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

(1) against any liability which may incurred by him in respect of the death of or bodily injury to any propriety of a third party caused by or arisings

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 arisings 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''s Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to any such employee.

The proviso to this sub-section makes the liability to be covered by the insurance policy in respect of death or bodily injury arising in the course

of the employment of the employee co-terminus with the liability arising under the Workmen''s Compensation Act, 1923, in respect thereof.

Therefore, what is to be covered under the insurance police in respect of death or injury to an employee under this Act is the same as under the

Workmen''s Compensation Act. Thus, while providing for compulsory insurance of a motor vehicle, the question of covering the risk of an

employee where the accident took place in the course of his employment, the legislature had definitely in mind the Compensation Act and made it a

basis to cover the claim.

Section 96 is to be following effect :

Duty of insurers to satisfy judgment against person insured in respect of their party risks :

(1) If, after a certificate of insurance has been issued under sub-S. (4) of S. 95 in favour of the person by whom a policy has been effected,

judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-S. (1) of S. 95 (being a liability covered

by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or

cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the

benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability,

together with any amount payable in respect of costs and any and payable in respect of interest on that sum by virtue of any enactment relating to

interest on judgment.

This section, therefore, makes the insurer statutorily liable as a judgment-debtor in respect of the liability of the insured to the extent covered by

the policy. It is important to note that this liability has been statutorily cast notwithstanding the fact that the insurer is entitled to cancel or avoid the

policy under sub-Clause (5) of the Section, and that sub-section has no impact on the liability incurred to a third party.

The only other provision which now needs to be noticed is S. 110-AA, which reads as follows :

Option regarding claims for compensation in certain cases :

Notwithstanding anything contained in the Workmen''s Compensation Act. 1923 (8 of 1923), where the death of or bodily injury to any person

gives rises to a claim for compensation under this Act and also under the Workmen''s Compensation Act, 1923 (8 of 1923) the person entitled to

compensation may claim such compensation under either of those Acts but not under both.

This Section makes it abundantly clear that a claim against the insurance company could be agitated by a workman not only before the Motor

Accident Claims Tribunal under M.V. Act, as urged by Mr. Sanjay Mohan, but surely it could also be made before the Commissioner under

Workmen''s Compensation Act, but not under both, at the option of claimant.

It is a settled principle of interpretation of statue that a competent Legislature, while amending one statute by necessary incorporation, could

bring out changes in an another statute also, which it was competent to enact. Therefore, it is too late in the day for Mr. Mohan to contend that no

aid could be taken of the provisions of Ss. 95 and 96 of the M.V. Act for making the insurance company (the appellant) a party before the

Commissioner under the Compensation Act. It is equally settled law that the deeming provision of a statute, such as contained in the M.V. Act

must have its full play, and in view of the enabling provision contained in M.V. Act, the insurer under the M.V. Act could not only be impleaded in

a claim under the Compensation Act but also held liable. Therefore, all the three contention of Mr. Sanjay Mohan cannot be accepted and have to

be rejected.

The view taken gains support from the Bench decisions of the High Courts of Gujarat, Punjab Haryana, Kerala, Karnataka and Bombay. They

are - The Northern India Motor Owners Insurance Co. Ltd. v. Magan Shaneji Solanki and other Ind.Cas. 72 Gujarat; Krishna Lal v. Munshi Ram

and another 52 F.J.R. 292 - Punjab and Haryana); Oriental Fire and General Insurance Co. Ltd. v. G. Gopalakrishna Pillai and another 1978 37

F.L.R. 277 ; United India Fire and General Insurance Co. Ltd. v. Kamalakshi (supra); Hindustan Ideal Insurance Co. Ltd. v. Pappu Poojary and

others 44 F.J.R. 63 ; Shri Ram Mining Co. v. Assistant Commissioner for Workmen''s Compensation and other (supra) and Iqubal Shamsuddin

Ansari v. Gazi Salauddin Ansari and another 1980 4 F.L.R. 400 .

We may now briefly refer to the cases referred to by Mr. Sanjay Mohan, learned Counsel appearing for the appellant. The cases reported in

G. Subba Rao and other v. Andhra Pradesh Road Transport Corporation and others 42 F.J.R. 135 principally deals with the question whether the

Road Transport Corporation having a factory and engaged in transport of passenger, will come within the purview of ""factory worker"" so as to be

covered by the Employee''s State Insurance Scheme or not. It was held in that case that they will not be covered. This case has nothing to do with

the question with which we are concerned in the instant case.

In R. B. Moondra and Co. v. Mat. Bhauwari and another (supra) it was held that compensation could not be awarded against the insurance

company as the case did not fall under S. 14 of the Workmen''s Compensation Act. This case has not taken into consideration the, provisions of

Ss. 95, 96 and 110-AA of the Motor Vehicles Act and we respectfully differ from the decision of the Learned Judged. For the same reason we

do not agree with the decisions of two single Judges of the Allahabad High Court in The Original Fire and General Insurance Co. Ltd. v. Govind

Singh and others 1972 ACJ 137 and Sudhir Kumar v. Hori and another (supra).

The last case referred to by the learned counsel on behalf of the appellant is a decision of a Single Judge of this Court in the case of Charag

Chemical Industries by Partner N. Rajagopal v. R. G. Ganesan (1982) I MLJ 53. In this case one G. Karunanidhi, who was an employee in a

factory of Charag Chemical Industries, met with an accident and he has realized a sum of Rs. 10,000/- from the New India Assurance Company

with which the company had insured its factory worker and thereafter filed a claim under the Workmen''s Compensation Act. His application for

impleading the insurance company as a party in the case was rejected. Thereafter, Compensation was awarded against the employer, against

which an appeal was taken to this Court by the employer. In that case the employer had insured G. Karunanidhi under the Janata Personal

Accident Insurance Policy with New India Assurance Company and had paid Premium thereunder. There was no insurance under any compulsory

scheme insurance such as under the Motor Vehicles Act. It was in those circumstances that Ratnam, J., has held that the insurance company could

not be made a party in a claim under the Workmen''s Compensation Act. The prayer for adding the insurance company having been rejected

earlier, and no appeal or revision having been taken against that order to this Court, the question of the insurance company being made a party oar

not did not necessarily arise for consideration in an appeal against final order of the Commissioner under the Compensation Act in respect of a

factory worker and the said decision also is not a decision, as already observed dealing with the injuries sustained by an employee such as driver

or conduct, etc. of a motor vehicle compulsorily insurable under the Motor Vehicles Act, claiming Compensation before Commissioner.

In the result the appeal fails and is dismissed. But in the circumstances of the case we will make no order as to costs.