Sangita and Others vs Ganesh and Another

A.M. Sapre, J.—This is an appeal filed by the claimants u/s 30 of the Workmen''s Compensation Act (for short called ''the Act'') against an award dated 10.4.2003 passed by the Commissioner, Workmen''s Compensation (Labour Court, Indore) in W.C.F. No. 20 of 2001. By the impugned award, the Commissioner partly allowed the application made by the claimants u/s 10 of the Act and awarded a total compensation of Rs. 3,25,365 for the death of one Prakash. However, while passing an award, the Commissioner fastened the entire liability on R1/NA1, i.e., owner/employer of the deceased and exonerated R2/NA2, i.e., insurance company from the liability. In other words, the application was allowed only against the NA1/R1 but was dismissed as against the insurance company, NA2/R2. It is against this partial dismissal as against the insurance company, the claimants have filed this appeal u/s 30 ibid. So far as R1/NA1 is concerned, though he has suffered the award but has not chosen to challenge the same by filing any appeal. In this view of the matter, the impugned award insofar as it relates to fastening upon the liability on the R1/NA1, i.e., employer owner of the offending vehicle is concerned, has become final qua him. The only question, therefore, that remains to be considered in this appeal is whether the Commissioner, Workmen''s Compensation was justified in exonerating the insurance company, NA2/R2, from the liability?

Facts in brief are these:

Prakash, aged around 25 years was employed as driver of Tempo bearing No. CPU 635. This Tempo was insured with R2 (NA2). On 17.3.2001 when Prakash was going from a place called Vijay Nagar to a place called Lasudia in Indore town in this Tempo, it met with an accident. It is in this accident, Tempo in question was damaged extensively so also Prakash who sustained injuries. He, however, later succumbed to the injuries. The legal representatives then filed an application before the Commissioner, Workmen''s Compensation u/s 10 of the Act out of which this appeal arises seeking compensation for his (Prakash) death. It was alleged that Prakash died during the course of employment as also death occurred arising out of the employment. It was alleged that he was getting Rs. 3,000 by way of monthly salary from his employment and hence applying the proper factor as defined in the Act, the compensation should be determined by passing an award in claimant''s favour and against both, i.e., employer of deceased (Prakash), NA1/R1, as also the insurance company, NA2/R2, jointly and severally. The case was contested only by R2, i.e., insurance company whereas R1 (NA1) remained ex parte. The claimant filed copy of policy (cover note) in support of their case. As observed supra by impugned award, the Commissioner allowed the application and awarded compensation. It was held that the deceased was earning Rs. 3,000 per month by way of salary. It was also held that since driver''s risk was not covered in the policy in question and hence, insurance company was not liable to indemnify the risk of driver. In this view of the matter, the insurance company was exonerated from liability. It is this award, which is impugned in this appeal. This appeal was admitted for final hearing on following two substantial questions of law:

(1) Whether Commissioner for Workmen''s Compensation committed an error of law in exonerating the insurance company on the ground that the deceased was not holding a valid driving licence?

(2) Whether the Commissioner, Workmen''s Compensation has further erred in law that the driver of the vehicle was not covered under the policy issued by respondent?

Heard Mr. Sameer Verma, Advocate for the appellants and Mr. V.P. Khare, Advocate for respondent No. 2.

Having heard learned Counsel for the parties and having perused the record of the case, we are inclined to allow the appeal.

The issue relating to liability of the insurance company arising under Workmen''s Compensation Act in a case of vehicular accident resulting in causing bodily injury or death to any employee while in the employment remains No. longer res integra. It is settled by the decision of Apex Court in the case of National Insurance Co. Ltd. Vs. Prembai Patel and Others, . It is in this case, their Lordships interpreted the provisions of Section 147(2) of the Motor Vehicles Act and laid down the principles which determined the liability of insurance company qua employee who died in the accident.

(12) .The effect of this proviso is that if an insurance policy covers the liability under the Workmen''s Compensation Act in respect of death of or bodily injury to any such employee as is described in Sub-clauses (a) or (b) or (c) of proviso (i) to Section 147(1)(b), it will be a valid policy and would comply with the requirements of Chapter XI of the Act....

(13) The insurance policy being in the nature of a contract, it is permissible for an owner to take such a policy where-under the entire liability in respect of the death of or bodily injury to any such employee as is described in Sub-clauses (a) or (b) or (c) of proviso (i) to Section 147(1)(b) may be fastened upon the insurance company and insurance company may become liable to satisfy the entire award. However, for this purpose the owner must take a policy of that particular kind for which he may be required to pay an additional premium and the policy must clearly show that the liability of the insurance company in case of death of or bodily injury to the aforesaid kind of employees is not restricted to that provided under Workmen''s Compensation Act and is either more or unlimited depending upon the quantum of premium paid and the terms of the policy.

(15)...However, where the policy mentions ''a policy for Act liability'' or Act liability'', the liability of the insurance company qua the employees as aforesaid would not be unlimited but would be limited to that arising under Workmen''s Compensation Act.

(16) The High Court, in the impugned judgment, had held that if the legal representatives of the deceased employee approach Motor Accidents Claims Tribunal for payment of compensation to them by moving a petition u/s 166 of the Act, the liability of insurance company is not limited to the extent provided under the Workmen''s Compensation Act and on its basis directed the appellant insurance company to pay the entire amount of compensation to the claimants. As shown above, insurance policy taken by the owner contained a clause that it was a policy for ''Act liability'' only...

Applying the aforesaid principle of law to the facts of these cases, it is clear from the cover note (at page 58 of trial court record) that it refers to Act only'' in the column relating to accessories. We are, therefore, of the opinion that reference of the words Act only'' in the policy in the absence of any other mention can be construed to mean that liability of employer under the Workmen''s Compensation Act alone was covered by the policy, though limited to under the Workmen''s Compensation Act. Since, the cover note did not show that any additional premium was paid by the insured to cover the unlimited liability arising out of accident and hence having regard to the nature of the policy issued by the insurance company and having regard to the reference of the words, they cannot deny their liability in toto. In other words, the insurance company was liable to suffer the liability arising out of the accident in question in relation to the employee (deceased) to the extent and limited to under the Workmen''s Compensation Act.

In our view, therefore, the Commissioner was not right in exonerating the insurance company from the liability in question in toto when admittedly the policy was in force and the accident in question did occur while the deceased was in the employment. In these circumstances, the case under the Workmen''s Compensation Act against the insurance company was made out. We also notice that there is nothing on record to show that driver of vehicle had No. licence. In the first place, he remained ex parte. Secondly, No. evidence was adduced by the insurance company on this issue. Thirdly, owner-insured was also not examined as witness of company. In these circumstances, there was No. occasion for the Commissioner to have come to a conclusion for want of proper pleading and evidence that driver had No. licence. The burden being on the insurance company, it failed to discharge this burden. In this view of the matter, we answer the question No. 1 in appellants'' favour and reverse the finding on this issue in appellants'' favour. As a necessary consequence, the award in question should have been passed jointly and severally against both, i.e., employer as also against the insurance company rather than only against the employer, i.e., NA1.

Accordingly and in view of foregoing discussion, the appeal succeeds and is allowed. Impugned award of the Commissioner insofar as it relates to quantum of compensation and interest which is to be paid to the claimants (appellants herein) is concerned, the same is affirmed. However, the liability of insurance company, R2, to satisfy the award impugned in this appeal is concerned, the same would be restricted as against them, i.e., insurance company to that arising under the Workmen''s Compensation Act whereas owner of Tempo, respondent No. 1, would be liable to satisfy the remaining portion of the award. Parties now can quantify their liability under the Workmen''s Compensation Act before the Commissioner by filing an application for recovery of the awarded amount. In the event of any dispute in regard to quantification, the Commissioner, Workmen''s Compensation shall determine the amount of quantification if the occasion arises and in the event, if either party disputes the quantum claimed by the claimants. The impugned award is, accordingly, modified to this extent as indicated hereinabove. No. costs.