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M.V. ACT – WORKMEN’S COMPENSATION ACT= whether the appellant/insurance company was liable to pay the entire amount of compensation awarded to the claimants or its liability was restricted to that which was prescribed under the Workmen’s Compensation Act. = the liability to pay compensation in respect of death or bodily injury to an employee should not be restricted to that under the Workmen’s Compensation Act but should be more or unlimited. However, the determination would depend whether a policy has been taken by the vehicle owner by making payment of extra premium and whether the policy also contains a clause to that effect.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8725 OF 2012

 

RAMCHANDRA ..Appellant
Versus
REGIONAL MANAGER
UNITED INDIA INSURANCE CO. LTD. ..Respondent

 
J U D G M E N T

GYAN SUDHA MISRA, J.

The judgment and order dated 17.4.2007 passed by the High Court
of Karnataka at Bangalore in M.F.A.No. 6711/2004 (MV) is the subject
matter of challenge in this appeal whereby the learned single Judge of the
High Court was pleased to allow the appeal preferred by the respondent
No.1- United India Insurance Company Ltd. through its Regional Manager
holding therein that the liability of the respondent No.1-United India
Insurance Company Ltd. (shortly referred to as ‘the Insurance Company’) to
pay compensation is restricted to one under the Workmen’s Compensation Act,
1923 and the amount to which the respondent No.1 herein will be liable to
pay is Rs.32091/- (Rupees Thirty Two Thousand and Ninety One Only) and
the balance amount will have to be borne by the insured -owner of the
vehicle who had been impleaded by the appellant/claimant as respondent No.
2 herein but was allowed to be deleted by this Court from the array of
parties at the risk of the appellant/claimant herein. The High Court
vide its impugned order was thus pleased to hold that the liability of the
insurance company/respondent No.1 is restricted to the one under the
Workmen’s Compensation Act, 1923 only and hence was not liable to pay any
compensation under the Motor Vehicles Act, 1988.
2. The substantial question of law in this appeal therefore is
confined to determination of the question as to whether the learned single
Judge of the High Court could have passed the impugned order holding
therein that when the labourer/employee is injured during the course of
employment due to negligence of the driver of the vehicle which caused the
accident, then whether the compensation could be limited to the amount
admissible under the Workmen’s Compensation Act or compensation would also
be payable under the Motor Vehicles Act ?
The appellant/claimant has raised this question relying specially on the
ratio of the judgment of this Court in Suresh Chandra vs. State of U.P. &
Anr. reported in 1996 ACJ 1 wherein this Hon’ble Court has held that when
the labourer sustains injuries during the course of his employment due
to negligence of the driver which met with an accident and the claim is
made under the Motor Vehicles Act, the compensation could not be limited to
the amount admissible under the Workmen’s Compensation Act.
3. Relevant factual details giving rise to the aforesaid question
in this appeal disclose that the appellant/claimant filed a claim
petition claiming compensation for the injuries sustained by him in a road
traffic accident which took place on 10.9.1996 about 4.00 p.m. when the
claimant was travelling in a Swaraj Mazda Matator bearing registration No.
KA-01-2337 as a cleaner. According to the case of the claimant, the
driver of the vehicle drove the same in a rash and negligent manner and
when the said vehicle came near Doddabande Crossing, the vehicle dashed
against the lorry bearing registration No. TN-28B-8397 which was parked
on the road as a result of which the appellant who was travelling on the
said vehicle as a cleaner sustained grievous injuries. The injured was,
therefore, taken for the first aid treatment at Penukonda Government
Hospital and was later shifted to Victoria Hospital, Bangalore as an
inpatient. The 2nd respondent in this appeal was Mr. S. Sathyamurthy who
admittedly is the owner of the vehicle Swaraj Mazda and the said
vehicle was insured with the 1st respondent herein the United India
Insurance Company Ltd. Hence, the claimant laid claim against both the
respondents before the Motor Accident Claims Tribunal and Court of Small
Causes at Bangalore wherein he urged that the respondents are liable to
pay just and adequate compensation.
4. The respondent No.1- insurance company appeared and filed
objections contending therein that the vehicle was being driven without a
valid and effective driving license in contravention of the provisions of
the Act due to which the insurance company was not required to pay any
compensation. It was further contended by the insurance company that the
vehicle in question is a passenger carrying vehicle and the policy of
insurance issued was only an act coverage in which the claimant appellant
was proceeding as a cleaner. Hence the policy of insurance issued by
the respondent does not cover the risk of the cleaner as per Section
147 of the Motor Vehicles Act since the policy of insurance covering the
accident vehicle being an act of coverage does not cover the risk of the
cleaner; hence the respondent insurance company was not liable to pay
compensation. The respondent -insurance company, therefore, sought
dismissal of the claim petition.
5. The respondent No.2/the owner of the vehicle herein although
was served with the notice, he failed to appear before the tribunal and
hence the matter proceeded only against the respondent – insurance company.

6. The Motor Accident Claims Tribunal on a scrutiny and analysis
of the evidence led by the contesting parties, was pleased to record a
finding that the appellant/claimant was travelling in the Matadar van and
the accident took place due to rash and negligent driving of the said van
by its driver due to which the appellant herein sustained grievous
injuries. On the basis of the evidence it was further recorded that the
appellant sustained fracture of right shaft femur. He was an inpatient at
Victoria Hospital for a period of one and a half month wherein his leg was
operated and rod was fixed to the fractured bone, head injury was
sutured and treated conservatively. After discharge, he also had to
undergo follow up treatment by visiting the hospital for a period of one
year once in 15 days a month as advised by the doctors. The tribunal
on an assessment of the injury sustained by the claimant and the expenses
incurred on the treatment was pleased to hold that the claimant was
entitled to a sum of Rs.1,42,800/- towards compensation.
7. Since the quantum of compensation is not under challenge in
this appeal, it is inessential to go into the details of the nature of
injury and the amount awarded to the claimant. In addition, the plea of
the insurance company that the driver was not holding a valid license had
also been rejected by the tribunal which finding is not under challenge
and hence it is equally inessential to deal with this aspect.
8. The principal ground of challenge at the instance of the
respondent-insurance company was that the appellant was travelling in a
matador van as a cleaner; hence his remedy was to claim compensation
under the Workmen’s Compensation Act and the tribunal had no jurisdiction
to entertain the claim filed by the cleaner.
9. However, the tribunal referred to the law laid down by the full
Bench of the Karnataka High Court in the case of Karnataka State Road
Transport Corporation and Ors. Vs. R. Maheshwari and Ors. reported in ILR
2003 Kar 3562, wherein it was held that the insurer shall be liable to
indemnify the person or classes of persons specified in the policy in
respect of any liability which the policy purports to cover even in
proceedings under the Motor Vehicles Act without such liability having
been first determined or adjudged under the Workmen’s Compensation Act. In
view of the ratio of this decision, the tribunal was pleased to hold that
the respondent-insurance company being the insurer was liable to pay
compensation. The claim petition consequently was allowed in part
awarding compensation of Rs. 1,42,800/- together with costs and interest at
6 per cent per annum from the date of filing of claim petition till the
date of payment against the respondent – insurance company and respondent-
insured/owner of the vehicle jointly and severally. However, the
respondent-insurance company being the insurer of the offending vehicle,
it was ordered to pay the entire compensation awarded.
10. The respondent-insurance company assailed the judgment and
order of the tribunal by filing a first appeal bearing MFA No.6711/2004 in
the High Court of Karnataka at Bangalore wherein the learned single Judge
recorded that the only grievance of the appellant-insurance company was
that while allowing the claim petition, the first respondent/claimant had
put the entire burden on the appellant to satisfy the amount of Rs.
1,42,800/- which was awarded to the claimant. The counsel representing the
insurance company submitted before the High Court that it was not in
dispute that the claimant was travelling as a cleaner in the matador van in
question and, therefore, the liability of the appellant ought to have
been restricted under the Workmen’s Compensation Act. As such, the order
of the tribunal could not be sustained in law to the extent of liability
over and above the liability under the Workmen’s Compensation Act.
11. The learned single Judge of the High Court almost summarily allowed
the appeal as he was of the view that the claimant having been a cleaner in
the matador van insured with the appellant herein, the liability could not
have been over and above the liability under the Workmen’s Compensation
Act. The learned single Judge in support of his view relied upon the
judgment and order reported in the case of National Insurance Company Ltd.
Vs. Lagamanna & Ors. reported in 2007 ACJ 50. The learned single Judge
recorded that the Division Bench in the said decision had held that when
no cover premium is paid to cover larger liability, the liability of the
insurance company will be restricted to the one under the Workmen’s
Compensation Act. It was, therefore, held that in the light of such
settled position of law, the tribunal could not have put the entire
liability on the appellant. The learned single Judge, therefore, directed
that the liability of the insurance company was restricted to one under
the Workmen’s Compensation Act which would be Rs.32,091/- and the balance
will have to be shouldered by the insured/owner of the vehicle. It was
further ordered that the rate of interest will be as per order of the
Motor Accident Claims Tribunal. The appeal was allowed to this extent but
a further direction was given that if excess amount had been deposited, the
same will be refunded to the insurance company.
12. Since, the insured/owner of the vehicle had never appeared either
before the tribunal or the High Court, the claimant-appellant felt
aggrieved and has, therefore, come up in appeal before this court assailing
the judgment and order of the High Court wherein the directions recorded
hereinabove is under challenge.
13. Learned counsel for the appellant/claimant in substance contended
that the High Court ought not to have passed the impugned order in view of
the ratio of the judgment and order passed by this Court in Suresh Chandra
vs. State of U.P. & Anr. reported in 1996 ACJ 1 wherein this Hon’ble
Court has held that when the labourers sustain injuries during the
course of his employment due to the negligence of the driver and the claim
is made under the Motor Vehicles Act, the compensation could not be
limited to the amount admissible under the Workmen’s Compensation Act.
Therefore, it was submitted that the impugned order is liable to be set
aside by this Court. The counsel had further submitted that the tribunal
was justified and rightly directed the respondent-insurance company to
pay the compensation together with costs and interest at 6 per cent per
annum from the date of petition to the date of payment and the first
respondent/insurance company being the insurer of the vehicle was rightly
directed to pay the entire compensation. The learned single Judge was
thus in error in allowing the appeal of the respondent insurance company
in part which is fit to be struck down as illegal and invalid.
14. Learned counsel representing the insurance company repelled the
arguments advanced by the counsel for the claimant/appellant and
essentially submitted that the liability of the insurance company to pay
compensation to the claimant cleaner who was injured during the course of
employment due to negligence of the driver would not be entitled to claim
compensation under the Motor Vehicles Act but his compensation would be
limited to the amount admissible under the Workmen’s Compensation Act.
Learned counsel while elaborating his submission however yielded to the
extent that although the insurance company may be held liable to pay
compensation under the Motor Vehicles Act beyond what is admissible under
Workmen’s Compensation Act, the same would be payable provided the
insured/owner of the vehicle had paid higher premium to cover the liability
of its employees and only then the insurance company would be liable to
pay the compensation to the employees over and above the liability
under the Workmen’s Compensation Act. In absence of payment of cover
premium, the liability of insurance company will be restricted only to the
one which is payable under the Workmen’s Compensation Act. It was,
therefore, submitted that the High Court was correct in allowing the
appeal of the insurance company by restricting its liability to Rs.
32,091/- only and rightly ordered refund of the amount by the
claimant/appellant which has been assailed by the claimant herein.
15. In support of his submission, counsel for the insurance company has
invited the attention of this Court to the case of National Insurance
Company vs. Prembai Patel & Ors., reported in (2005) 6 SCC 172. In this
matter, the claim petition had been filed by the respondent/claimant 3 to 6
claiming compensation for the death of one Sunder Singh who was an
employee of the insured/owner of the vehicle who died in the accident in
course of his employment and a claim petition was filed claiming
compensation under the Motor Vehicles Act. The main question which arose
for consideration in the said appeal was whether the appellant/insurance
company was liable to pay the entire amount of compensation awarded to the
claimants or its liability was restricted to that which was prescribed
under the Workmen’s Compensation Act. The learned Judges in this matter
observed as under:

“The insurance policy being in the nature of a contract, it is
permissible for an owner to take such a policy wherein 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 the proviso
1 to Section 147 (1)(b) of the Motor Vehicles Act may be fastened upon the
insurance company and the 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 additional
premium and the policy must clearly show that the liability of the
insurance company in case of death of or bodily injury in the aforesaid
kind of employee is not restricted to that provided under the Workmen’s
Compensation Act and is either more or unlimited depending upon the quantum
of premium paid and the terms of the policy.”
The learned Judges in this ruling held that this interpretation is in
consonance with the view expressed by a Constitution Bench in New India
Assurance Company Ltd. vs. C.M. Jaya & Ors., reported in (2002) 2 SCC 278
wherein while interpreting the provisions of Section 95 (2) of the Motor
Vehicles Act 1939, the Court held as under in para 10 of the report :-

“……………………The liability could be statutory or contractual. A statutory
liability cannot be more than what is required under the statute itself.
However, there is nothing in Section 95 of the Act prohibiting the
parties from contracting to create unlimited or higher liability to cover
wider risk. In such an event, the insurer is bound by the terms of the
contract as specified in the policy in regard to unlimited or higher
liability as the case may be. In the absence of such a term or clause in
the policy, pursuant to the contract of insurance, a limited statutory
liability cannot be expanded to make it unlimited or higher. If it is
so done, it amounts to rewriting the statute or the contract of insurance
which is not permissible.”
Several other authorities were also relied upon which were rendered in
New India Assurance Co. Ltd. vs. Shanti Bai & Ors. (1995) 2 SCC 539 and
Amrit Lal Sood vs. Kaushalya Devi Thapar & Ors., (1998) 3 SCC 744 wherein
it was held that in case of insurance policy not taking any higher
liability by accepting a higher premium, the liability of the insurance
company is neither unlimited nor higher than the statutory liability fixed
under Section 95 (2) of the Motor Vehicles Act 1939. It was further laid
down that it is open to the insured to make payment of additional higher
premium and get higher risk covered in respect of 3rd party also. But in
the absence of any such clause in the insurance policy, the liability of
the insurer cannot be unlimited in respect of 3rd party and it is limited
only to the statutory liability.
16. The learned Judges therefore held that in case the owner of the
vehicle wants the liability of the insurance company in respect of death
of or bodily injury to any such employee as is described in clauses (a) or
(b) or (c) of proviso (i) to Section 147 (1) (b), the same should not be
restricted to that under the Workmen’s Compensation Act but should be more
or unlimited, but he must take such a policy by making payment of extra
premium and the policy should also contain a clause to that effect.
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 the Workmen’s Compensation Act. The learned Judges were, therefore,
pleased to hold that the liability of the insurance company to satisfy
the award would be restricted to that arising under the Workmen’s
Compensation Act and the owner of the vehicle was held liable to satisfy
the remaining portion of the award.
17. A perusal of the aforesaid judgment and order of this Court thus
indicate that this Court has clearly held that the liability to pay
compensation in respect of death or bodily injury to an employee should
not be restricted to that under the Workmen’s Compensation Act but should
be more or unlimited. However, the determination would depend whether a
policy has been taken by the vehicle owner by making payment of extra
premium and whether the policy also contains a clause to that effect.
18. Thus in so far as the view of the High Court is concerned to the
extent that the compensation would be restricted to be paid only to the
extent which is payable under the Workmen’s Compensation Act by making a
sweeping generalisation, the same is clearly contrary to the view taken by
this Court even in the judgment and order on which reliance has been placed
by the counsel for the respondent-insurance company as it is sufficiently
clear and unambiguously laid down which is recorded hereinbefore that the
compensation payable to the employee cannot be restricted merely under
the Workmen’s Compensation Act and it can be expanded provided the
contractual document which is the policy of insurance incorporates such
clause regarding the premium to be paid taking into account the nature of
the policy.
19. In the light of the aforesaid legal position, it is clear that the
High Court was not correct in holding that the claimant/appellant was not
entitled to any compensation over and above the liability under the
Workmen’s Compensation Act and hence the direction issued by the High Court
that the appellant/insurance company, respondent herein, will be liable to
pay only Rs. 32091/- and the balance will have to be shouldered by the
insured/owner of the vehicle is fit to be struck down as invalid as the
High Court had failed to examine the nature and clauses of the policy which
was not produced even before the Tribunal.
20. The claimant/appellant is surely entitled to the amount of
compensation over and above the Workmen’s Compensation Act in view of the
ratio of the decisions referred to hereinbefore. The rider no doubt
is that the statutory liability cannot be more than what is required under
the statute under Section 95 of the Motor Vehicles Act which cannot bind
the parties or prohibit them from contracting or creating unlimited or
higher liability to cover wider risk and the insured is bound by the
terms of the contract specified in the policy in regard to unlimited or
higher liability as the case may be. Thus, it is although correct that
limited statutory liability cannot be extended to make it unlimited or
higher, it is also manifestly clear that insofar as the entitlement of the
claimant/deceased cleaner of the vehicle is concerned, the same cannot be
restricted to the compensation under the Workmen’s Compensation Act and is
entitled to compensation even under the Motor Vehicles Act which will
depend upon the terms and conditions of the policy of insurance.
21. From this legal position it is also equally clear that in the instant
matter insofar as the entitlement of the claimant to the compensation under
the Motor Vehicle Act is concerned, the right of the claimant is not
affected. However, the respondent/insurance company had filed an appeal
in the High Court contending that the order of the Tribunal could not be
sustained in law to the extent of liability over and above the liability
under the Workmen’s Compensation Act and on this point the contention of
the appellant/company has been accepted by the High Court overlooking the
more important fact that the Respondent insurer company had neither
produced the policy of insurance before the High Court nor led any evidence
to establish that as per terms and conditions of policy extra premium had
not been paid.
22. The question, therefore, is whether the amount of compensation could
rightly be apportioned between the insurer/insurance company and the
insured/owner of the vehicle. However, the owner of the vehicle had not
appeared before the tribunal but the insurance company allowed the matter
to be proceeded before the tribunal and when the respondent/insurance
company filed an appeal in the High Court, the insured/owner of the
vehicle once again failed to appear but the Respondent- Insurance Company
did not pursue for his appearance. The High Court, however, further
overlooked that the apportionment of the amount of compensation between
the owner of the vehicle and the insurance company was an inter se
dispute between insurance company and the insured/owner of the vehicle and,
therefore, the order due to non-appearance of the insured/owner of the
vehicle could not have been passed to the detriment of the claimant as the
claimant in any case is entitled to the amount of compensation determined
by the tribunal. If the insurance company acquiesced with the situation
and allowed the proceeding to continue even in absence of the
insured/owner of the vehicle who has been held liable to pay the amount
even though the insured might have been liable to pay higher premium, the
consequence of the same obviously will have to be borne by the insurance
company and the claimant cannot be made to suffer.
23. Hence, at the stage of appeal before the High Court, we find no
legal justification for the High Court to leave it open to the insurance
company to realize the amount of compensation beyond Rs.32,091/- from the
insured/owner as the plea of the respondent/insurance company althrough
was that the claimant is not entitled to any compensation beyond the
extent of liability under the Workmen’s Compensation Act and the
respondent/insurance company had not taken the alternative plea either
before the tribunal or the High Court that in case the claimant is held
entitled to compensation beyond the extent of liability under the
Workmen’s Compensation Act, the same was not payable as no extra premium
was paid by the insured/owner under the policy of insurance. The insurance
company had failed to raise any plea before the courts below i.e. either
the Motor Accident Claims Tribunal or the High Court and it did not even
contend that in case the claimant is entitled to any compensation beyond
what was payable under the Workmen’s Compensation Act, it is the insured
owner who was liable to pay as it had no contractual liability since the
insured/owner of the vehicle had not paid any extra premium. Thus, this
plea was never put to test or gone into by the Motor Accident Claims
Tribunal since the insurance company neither took this plea nor adduced any
evidence to that effect so as to give a cause to the High Court to accept
this plea of the insurance company straight away at the appellate stage.
24. Consequently, the High Court’s view impliedly holding that the
claimant/appellant was not entitled to any compensation under the Motor
Vehicles Act beyond the entitlement under the Workmen’s Compensation Act so
as to leave it open to the Respondent/Insurance Company to realise it from
the owner of the vehicle at the belated stage of appeal before the High
Court when the respondent/insurance company had failed even to urge the
alternative plea regarding non-payment of extra premium by the owner of the
vehicle and had even reconciled to the fact that the owner of the vehicle
had failed to appear in spite of service of notice, is not fit to be
sustained.
25. At this stage, we deem it appropriate to take note of an important
step which the insurance company generally fail to take and that is related
to non appearance of the owner of the vehicle in spite of service of
notice. The insurance companies although contend before the Motor Accident
Claims Tribunal and even at the appeal stage that it is the owner of the
vehicle which is liable to bear a part or the entire liability of making
the payment of compensation to the claimant in view of the nature of
policy, or even due to invalid licence by the driver of the owner of the
vehicle, the insurance company fails to lead any evidence to establish as
to how the owner and not the insurance company is liable to pay the
compensation and even submits to non appearance of the owner of the vehicle
whose appearance is vital in view of inter se contest between the owner of
the vehicle and the insurance company. In absence of the owner of the
vehicle, when the Motor Accident Claims Tribunal or the High Court leaves
it open to the insurance company subsequently to realise the amount from
the owner of the vehicle by instituting a fresh proceeding in view of the
ratio of the case of General Manager, Kerala State Road Transport
Corporation, Trivandrum Vs. Sussama Thomas, (1994) 2 SCC 176, it gives rise
to a fresh proceeding between the owner and the insurance company putting
unnecessary burden on the Motor Accident Claims Tribunal to try the issue
all over again. In fact, if the insurance company were to succeed in
establishing by leading cogent evidence at the initial stage itself before
the Tribunal that it is the owner of the vehicle which is liable to pay
even if the evidence is ex parte in nature, it would at least facilitate
the issue in the subsequent proceeding when the insurer initiates
proceeding for realising the amount from the owner/insured. But in absence
of such evidence, the insurer/companies are a loser and enures advantage to
the owner who happens to gain by choosing not to appear. The Insurance
Companies would fair better if they were to address this issue before the
Tribunal itself instead of becoming wiser at the stage of appeal. What is
wished to be emphasized is that if the owner chooses not to appear before
the Tribunal although his appearance is necessary in a given case, the
insurance company would do well instead of acquiescing with their absence
to their detriment giving an upper edge to the owner at their own peril.
26. In the instant matter, we have noted that the High Court although had
granted liberty to the insurance company to realise the amount from the
owner of the vehicle, it failed to record expressly that the respondent
insurance company shall pay the amount to the appellant/claimant determined
by the Motor Accident Claims Tribunal although impliedly the High Court has
not denied the amount to the claimant/appellant. But in absence of a
categorical direction to the respondent/insurance company to pay the entire
amount to the appellant as determined by the Motor Accident Claims
Tribunal, the appellant is bound to confront impediments in realizing the
amount. Hence, the direction of the High Court is clarified to the extent
by recording that the respondent/insurance company shall pay the balance
amount also beyond Rs.32,091/- along with interest to the Claimant
expeditiously but not later than a period of six weeks from the date of
receipt of this order.
27. We are , thus, pleased to hold that the judgment and order of the
High Court which impliedly held that the employee/claimant is entitled to
compensation only under the Workmens’ Compensation Act and not under the
Motor Vehicle’s Act stands set aside and the liberty granted to the
Respondent/Insurance Company to realise the amount from the owner without a
corresponding direction to the Respondent/Insurance company to pay the
amount to the Claimant/Appellant making the appellant liable to realise it
from the owner of the vehicle stands modified as indicated hereinbefore.
The appeal accordingly is allowed but we refrain from making any order as
to costs.
………………………………..J
(G.S. Singhvi)

 

………………………………..J
(Gyan Sudha Misra)
New Delhi,
August 2, 2013
———————–
23

 

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