The New Asiatic Insurance Co. Ltd. vs Kulwanti Devi and Another

K.V. Gopalakrishnan Nair, J.—This is an appeal u/s 33 of the Workmen's Compensation Act against the order of the Commissioner

directing payment of a compensation of Rs. 1500/- by the non-applicants to the applicant. The Appellant namely, the New Asiatic Insurance Co.,

was non-applicant No. 2 before the Commissioner. The first Respondent in the appeal, Sh. Kulwanti Devi, was the applicant before the

Commissioner. The second Respondent, Satish Chandra Sethi, was non-applicant No. 1 before the Commissioner.

Ram Lal, husband of Respondent No. 1 was employed as a cleaner in truck No. J and K 2028 which is alleged to be owned by Satish

Chandra, the second Respondent. The truck met with an accident which resulted in the death of Ramlal. His widow Sh. Kulwanti Devi thereupon

applied for compensation under the provisions of the Workmen's Compensation Act against the employer, Satish Chandra (Respondent 2), and

against the New Asiatic Insurance Co., the Appellant. The Insurance Company was impleaded on the ground that the truck in which the deceased

husband of the applicant (first Respondent) was employed was insured with it. The employer did not raise any serious contention to the payment of

compensation, but the Insurance Company denied its liability to pay compensation. The Commissioner found that the applicant (first Respondent)

was entitled to a sum of Rs. 1500/- as compensation and directed that it should be paid to her with costs by the employer (second Respondent),

and by the Insurance Company, Appellant. The Insurance Company has preferred this appeal against this order in so far as it is affected by it.'

The contention of the Appellant company is that no order ought to have been passed by the Commissioner against it. It is urged that the order

was not warranted by any provision of the Workmen's Compensation Act. The only provision in the Act fastening liability upon an insurer is

Section 16. It is common ground that the provisions of that section are not attracted to this case. It follows that Section 16, has no application

here. And there is no other provision under which the Appellant can be made liable under that Act.

The learned Counsel for 'the Respondents have not been able to show that the contention of the Appellant is in any way unsustainable under the

provisions of the Workmen's Compensation Act. Indeed, it appears to be clear that under that Act the Appellant (Insurance Company) could not

be made liable for payment of the compensation due to the widow of the deceased employee from the employer. If the question in this appeal is to

be decided according to the provisions of the Workmen's Compensation Act, it has to be held that the Appellant ought not to have been made

liable for payment of compensation to the first Respondent as the widow of the deceased employee.

But the learned Counsel for the employer (Second Respondent) has urged that u/s 96(1) of the Motor Vehicles Act the Appellant (Insurance

Company) has to be rendered liable and that the order passed by the Commissioner against the Appellant company has therefore to be upheld.

We do not consider that this contention is well-founded. Section 96(1) runs as follows:

'If, after a certificate of insurance or a cover note has been issued under Sub-section (4) of Section 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-section (1) of Section

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 hereunder, as if he were the judgment-debtor, in

respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any

enactment relating to interest on judgments.

It is apparent that this is only a declaratory provision. It deems an insurer to be a judgment-debtor when a decree is passed against an insured

under certain circumstances rendering him liable to a third party. It does not contemplate the passing of a decree against the insurer himself.

Furthermore, 'the liability of the Insurance Company which Section 96(1) declares is based on the terms and conditions of the contract of

insurance between the insured person on one hand and the insurance company on the other. In the present case we do not Know what the terms

and conditions of the contract of insurance are. It, however, appears that Ramlal, the deceased husband of Kulwanti Devi (first Respondent) was

the person in whose name the certificate of insurance was issued. But there is nothing on record to show that the policy of insurance also covered

the death of Ramlal himself.

The mere circumstance that Satish Chandra the employer was the real owner of the truck (J and K 2028) is not by itself sufficient for holding that

the Insurance Company is liable to pay compensation in respect of the death of Ramlal in whose name the certificate of insurance was granted. It

seems that the policy of insurance had set down Ramlal as the person who owned the truck in question. The question would then arise whether the

notion of Ramlal being a 'benamidar' in respect of that truck whose real owner was Satish Chandra can be imported into a contract of insurance

which on the face of it shows Ramlal to be the owner of the truck. These considerations which may properly arise in a case where the liability is

sought to be enforced against an Insurance Company have not been noticed by the Commissioner. Nor have the learned Counsel for the

Respondents attempted to clear any of these points. It is, therefore, neither proper nor possible in these proceedings to hold the Appellant

(Insurance Company) liable to pay the compensation of Rs. 1500/ - to Kulwanti Devi, widow of Ramlal, as the Commissioner has sought to do.

It is also worthy of note that even if the policy of insurance covered the death of Ramlal, Section 96(1) of the Motor Vehicles Act did not entitle

Kulwanti Devi to implead the Insurance Co. in an application under the Workmen's Compensation Act as a person liable to pay compensation to

her. Even the Insurance Company was not entitled to get itself impleaded as a party to the proceedings, except perhaps on the ground that it came

within the purview of Sub-section (2) of that section. It is nobody's case that the Insurance Company came within the provisions of Section 96(2).

In the circumstances, it appears that even the impleading of the Insurance Company in the application before the Commissioner was not quite

justified; much less justified was the passing of an order against the Insurance Company directing it to pay compensation to the widow of the

deceased employee.

Even in a typical case of a third party risk covered by a policy of insurance taken in accordance with the provisions of Chapter VIII of the Indian

Motor Vehicles Act (Act IV of 1939) which corresponds to Part VIII of our Motor Vehicles Act, it has been held to be proper not to pass a

decree for damages against the insurer-company u/s 96(1) of the Motor Vehicles Act, although it was on record as a party Defendant along with

the owner of the insured vehicle in the action for damages brought by the injured passenger. (Vide The Proprietor Andhra Trading Co. v. K.

Muthuswamy AIR 1956 Mad 464).

It follows from the foregoing that neither under the provisions of the Workmen's Compensation Act nor u/s 96(1) of the Motor Vehicles Act

could an order be passed against the Insurance Company in a case like the present making it liable to pay compensation to Kulwanti Devi. The

primary liability for payment of the compensation is upon Satish Chandra who is admittedly the employer. Kulwanti Devi could not properly get an

order for compensation against the Insurance Company in the proceedings before the Commissioner. She could primarily look only to her

deceased husband's employer for payment of compensation. If the Insurance Company is liable to pay the amount u/s 96(1) of the Motor Vehicles

Act, that liability can be enforced in appropriate separate proceedings taken for the purpose.

We, therefore, leave open the question of the liability of the Insurance Company u/s 96(1) of the Motor Vehicles Act to Satish Chandra Sethi,

the second Respondent in this appeal, or to Kulwanti Devi, the first Respondent herein. Subject to this, we set aside the order of the

Commissioner in so far as it renders the Appellant, Insurance Company, liable to pay a sum of Rs. 1500/ - as compensation to Kulwanti Devi. The

order of the Commissioner will stand in so far as it directs the employer, Satish Chandra Sethi (second Respondent) to pay a sum of Rs. 1500/- as

compensation to Sh. Kulwanti Devi (first Respondent).

In the circumstances of the case, we make no order as to costs.

J.N. Wazir, C.J.

I agree.