Madras High Court
The United India Insurance Company Ltd vs Mahendran .. 1St on 4 July, 2008
Author: M.Venugopal
Bench: M.Venugopal
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 04/07/2008 CORAM THE HONOURABLE MR.JUSTICE M.VENUGOPAL C.M.A.No.157 of 2004 The United India Insurance Company Ltd., Kovilpatti Branch through its Branch Manager. .. Appellant/2nd Respondent Vs 1.Mahendran .. 1st Respondent/Petitioner 2.S.P.Natarajan .. 2nd Respondent/1st Respondent Prayer Appeal filed under Section 30 of the Workmen's Compensation Act, against the award dated 13.07.2004 passed in W.C.No.115 of 2002 by the Workmen's Compensation Commissioner (Deputy Commissioner of Labour), Tirunelveli-2. !For Appellant ... Mr.G.Prabhu Rajadurai ^For Respondents... Mr.Sri Balaji for R.1 Mr.R.Vijayakumar for R.2 :JUDGMENT
This Civil Miscellaneous Appeal is filed by the appellant/second respondent United India Insurance Company through its Branch Manager, dissatisfied with the award dated 13.07.2004 passed in W.C.No.115 of 2002 by the Workmen's Compensation Commissioner (Deputy Commissioner of Labour), Tirunelveli
- 2/Tribunal.
2. The first respondent/petitioner has filed a claim petition before the Tribunal claiming a compensation of Rs.4,93,520/- (Rupees Four Lakhs Ninety Three Thousand Five Hundred and Twenty only) along with interest from the date of filing of the petition till date of realisation etc, and the Workmen's Compensation Commissioner namely, the Deputy Commissioner of Laboutr, Tirunelveli - 2/Tribunal after contest, on an appreciation of oral and documentary evidence has passed an award on 13.07.2004 awarding a sum of Rs.98,214/- (Rupees Ninety Eight Thousand Two Hundred and Fourteen only) as compensation and out of the said sum of Rs.98,214/-, it has directed the appellant/second respondent Insurance Company to deposit a sum of Rs.50,000/- and the balance sum of Rs.48,214/- has been directed to be deposited by the second respondent/first respondent (employer), within thirty days from the date of receipt of the order.
3. The necessary facts leading to the filing of the appeal are as follows:
The first respondent/injured petitioner was a workman/employee by the second respondent/first respondent in his workshop as a carpenter on a salary of Rs.110/- per day and he was working for the last one and half years. He was doing his duty on 09.11.2001 and during his course of his employment, while working in the wood cutting machine, he received a personal injury by an accident, as a result of which his left hand was crushed by the machine. He was rushed to the Government Hospital, Kovilpatti and first aid was given. On the advice of the medical authorities, he went to Madurai and took treatment at Madurai Government Rajaji Hospital as an inpatient and his left hand index finger was amputated through an operation. He was discharged on 20.11.2001 and got himself admitted into TVS Hospital, Madurai, for better treatment and remained as an inpatient till 16.12.2001 and two more fingers were also amputated at the TVS Hospital, Madurai. He took treatment as an inpatient for two months and later, got discharged and was advised to continue the treatment and to take full rest for three months, thereby he was forced to remain jobless for more than six months. His disability was determined as 60% and the said disability arose out of an industrial accident, which took place during the course of his employment under the second respondent/first respondent (employer). He spent more than Rs.50,000/- towards treatment. Because of the accident, he was deprived of his earning permanently. The second respondent/first respondent took a 'Group Personal Accident Policy' from the appellant/second respondent Insurance Company and the same was alive at the time of the occurrence and therefore, the appellant/second respondent as an insurer was liable to pay compensation of Rs.4,93,520/- (Rupees Four Lakhs Ninety Three Thousand Five Hundred and Twenty only) to the claimant.
4. The appellant/second respondent Insurance Company has filed the counter before the Tribunal stating that the second respondent/first respondent (employer) took a 'Group Personal Accident Policy' with the appellant/second respondent for thirty unnamed workers, working under him with the limited liabilities of Rs.50,000/- and that the said policy was not taken by the second respondent/first respondent (employer) under the Workmen's Compensation Act and therefore, the appellant/second respondent Insurance Company was not at all liable to pay any compensation and that the Tribunal had no jurisdiction to try the case in regard to the appellant/second respondent and that the right of the first respondent/petitioner was to proceed against the second respondent/first respondent (employer) alone under the Workmen's Compensation Act and that the claimant was not entitled to claim interest in accordance with law.
5. The second respondent/first respondent (employer) has filed a counter inter alia stating that he, being a building contractor was not liable to pay compensation since carpentry work was taken by some other person as a sub- contractor and for their safety, took Group Policy to cover the risk under the accident and that the first respondent/petitioner was not working for the last one and half years and he was not employed under him.
6. Before the Deputy Commissioner of Labour/ Tribunal, on the side of the first respondent/petitioner, witnesses P.W.1 and P.W.2 were examined and Exs.P.1 to P.11 were marked and on the side of the appellant/second respondent, witness R.W.1 was examined and no documents were marked and on the side of the second respondent/first respondent (employer), no witness was examined and no documents were marked.
7. The following substantial questions of law were framed by this Court at the time of admission of this Civil Miscellaneous Appeal:
"(i) Whether the learned Commissioner is correct in law in assuming jurisdiction over the appellant/insurer in respect of the proceedings under the Workmen Compensation Act, 1923, when the Policy taken is only 'Group Personal Accident Policy'?
(ii) Whether the learned Commissioner is correct in law in deciding the liability of the appellant/insurer on the nature of the policy and that the workmen was not working in the company in respect of which the policy was taken, only on the basis that the appellant/insurer did not reply to the notice sent, without adverting to the evidence and the terms of Policy?
(iii) Whether it is correct in law to fasten the liability upon the appellant/insurer when the policy was taken for 30 unnamed workers, when admittedly about 60 workers were working in the company in respect of which the policy was taken and the claimant was working in another company where another 15 workers were working?"
8. Heard the learned Counsel appearing for the parties and this Court noticed their respective contentions.
9. Findings on the substantial questions of law Nos.1 to 3:
The learned Counsel for the appellant/second respondent Insurance Company, urges before this Court that the Commissioner/Tribunal erred in assuming the jurisdiction to decide the dispute against the appellant/second respondent, when there was no 'workmen's compensation policy' to cover the liabilities that likely to arise under the provisions of the Workmen's Compensation Act, 1923 and that the occurrence was not a motor accident and further that, fastening the liability upon the appellant/second respondent was not correct and that the Tribunal went wrong in determining the liability of the appellant at Rs.50,000/- without adverting to the policy conditions and that the coverage of Rs.50,000/- was applicable only in the case of death or irrevocable loss of both eyes or the physical separation of both legs or hands and that the first respondent/petitioner working in Sivasakthi Saw Mill where the occurrence took place, but the policy was taken in respect of thirty unnamed employees of 'Jayam Engineering Constructions' and that the said policy was not to be pressed into service to the workman working in Sivasakthi Saw Mill and that these facts were not taken into consideration by the Commissioner/Tribunal and that the second respondent/first respondent employer fraudulently took a policy of thirty unnamed persons, whereas the total number of employees in 'Jayam Engineering Constructions' was sixty and that the total number of employees in 'Sivasakthi Saw Mill' (occurrence mill) was fifteen and that mixing up the liability of both the companies under one policy was not permissible in the eye of law and prays for allowing the appeal to prevent miscarriage of justice.
10. It is significant to point out that the first respondent/petitioner in his evidence has deposed that he worked in Sivasakthi Saw Mill under the second respondent/first respondent (employer) and that on 09.11.2001 while he was working in the wood cutting machine, the preventive log gave way. as a result of which his left hand met with an accident and that the second respondent/first respondent was owning (i) Jayam Engineering Constructions, (ii) Sivasakthi Saw Mill and (iii) Sivasakthi Finance and that he worked under the second respondent/first respondent (employer) for one and half years.
11. It is further evidence of P.W.1/petitioner that the second respondent/first respondent (employer) used to send him for another job and that totally ten persons used to work and that the second respondent/first respondent (employer) used to send him for other jobs also and that he received his salary directly from his employer, namely the second respondent/first respondent and that he used to receive his salary from 'Jayam Engineering Constructions'.
12. It is the categorical evidence of P.W.1/petitioner/insured that in Sivasakthi Saw Mill, fifteen persons are employed and in Jayam Engineering Constructions, approximately sixty persons are employed and that the accident took place in Sivasakthi Saw Mill and that the second respondent/first respondent took Ex.P.2 'Group Personal Accident Policy' in the name of 'Jayam Engineering Constructions'.
13. P.W.2, Dr.Chockalingam, in his evidence has deposed that he examined the first respondent/petitioner on 26.09.2002 and gave him Ex.P.1, disability certificate and that he assessed the disability at 60% and that the first respondent/petitioner cannot do any work with the left hand and that the disability is permanent one.
14. At this stage, it is pertinent to point out that R.W.1 Kumaresan (Assistant Administrative Officer of the appellant/second respondent Insurance Company) in his evidence has stated that the second respondent/first respondent (employer) took 'Group Personal Accident Policy', Ex.P.2 for 'Jayam Engineering Constructions' and that the contract was between the appellant/second respondent Insurance Company and Jayam Engineering Constructions and that the policy was taken for unnamed thirty workers and in case of death of an individual, as per the contract, Rs.50,000/- was to be paid as compensation and that the injured persons could not make a claim directly with the appellant/second respondent Insurance Company and that a claim could be made by a policy holder through an application and that since the first respondent/petitioner worked in Sivasakthi Saw Mill, he could not claim compensation and that the Insurance Policy was not valid in respect of Sivasakthi Saw Mill.
15. In his cross-examination, R.W.1, has stated that the second respondent/first respondent (employer) took 'Group Personal Accident Policy' and that as per policy, it was correct to state that compensation was to be paid to thirty persons.
16. The learned Counsel for the appellant/second respondent Insurance Company contends that Ex.P.2, policy, does not cover the claim made under the Workmen's Compensation Act and therefore, the appellant/second respondent was not liable for the sum which was payable under the Workmen's Compensation Act and in support of his claim, he cites the decision in National Insurance Company Limited v. V.Prabhu Das and another (2005 ACJ 409), at page 410, wherein it is inter alia observed as follows:
"From the evidence available on record, we are able to see that the said policy does not cover any claim under the provisions of Workmen's Compensation Act. According to the said policy, the amount has already been paid to the owner of the vehicle. The learned Deputy Commissioner, without even appreciating the scope of the said policy, has found that the insurance company is liable to pay the amount fixed by the insurance company in view of Exh.R-1. The learned Deputy Commissioner of Labour has not even admitted the defence taken by them in the counter and also the evidence adduced on its side. Hence, the liability fixed on the insurance company by the Deputy Commissioner of Labour alone is set aside and the claimant can recover the amount from the respondent No.2.'. (para 4)
17. He also further relies on the decision in M/s.United India Insurance Company Limited , Madras-1 v. Cordial Company, Madras-50 and another {2004 (1) TN MAC (DB) 405}, at page 410, wherein it is held as under:
"We have already found that the wage register of the employer goes to show that employment of more than two masons found in the proposal form. It clinches the issue that the masons in direct service were not included in the schedule of proposal. It was also not mentioned in the proposal that any two masons out of total masons in service are to be included. Thus, it amounted to suppression of material factors.
In a similar case referred to Hindusthan General Insurance Society by its General Secretary v. S.Subramaniam, 1975(1) MLJ 28, in the proposed form for the issue of an insurance policy under the column 'licensed carrying capacity', the capacity of the lorry was mentioned as five tons. The real licensed capacity was 5.392 tons. The point for consideration was as to whether this was a material misrepresentation. It was held in the affirmative and the insurance company was entitled to repudiate the policy.
By holding that the act of insurance is a beneficial legislation, we cannot interpolate a clause, which is not available in the bilateral contract itself; and if so done, it may result in its own consequences. Assuming that there was no suppression of material factor regarding the number of masons, two masons mentioned in the schedule of proposal would never cover the deceased mason - K.Anbalagan because the proposal was dated 7.8.1992 and the employment of the deceased commenced on 7.4.1993. The policy itself commenced from 9.5.1993 for one year. Since the deceased employee was admittedly, an employee in the construction company only from the month of April 1993, there is no coverage of risk of that individual. His death took place on 7.5.1993. Viewed from any angle, the insurance company may not become liable. We make it clear that so far as the quantum of compensation is concerned, there is no cross objection and the liability of the employer is not in dispute. Hence, we hold that the insurance company is not liable to reimburse the compensation.'.
(paras 12 - 15)
18. Per contra, the learned Counsel for the first respondent/petitioner, cites the decision in New India Assurance Company Limited v. R.Shridhara and another (1991 ACJ 204), at page 206, wherein it is held as follows:
"Before us the only contention advanced for the appellant by Mr.Suryanarayana Rao was that the insurance company was not liable to pay the compensation awarded in terms of the policy as there was no lis between the company and the workman and therefore there was no liability to make good the amount. But however, he fairly conceded that the first respondent manufacturer had taken out group insurance covering his 4 employees in the establishment and liability if arose only in favour of the assured manufacturer-employer. He made available to the court the statement of objections filed by the insurance company before the Commissioner. We found that no specific plea was taken which could be said to be similar to the contention advanced before this Court. Therefore, the Commissioner went by the admitted fact that the first respondent was covered by group insurance policy under which the insurer was liable to make good to the extent of Rs.25,000/- in respect of any miscellaneous accident suffered by the employees in the manufacturing unit which the insured wanted to pay and we have no doubt about it. Then the liability of the insurance company to pay under that policy cannot be disputed. That the insurance company has different types of policies including the one under the provisions of the Workmen's Compensation Act, is not a defence to absolve itself from paying under the miscellaneous group insurance as in the instance case. That will be helping technical defence which this Court will not countenance. In any event, as long as it is clarified that there is no dual liability of the insurance company to the insured as well as the workman, insurance company cannot make a grievance of making payment to the workman." (para 8)
19. It cannot be gainsaid that the general principle of the Workmen's Compensation Act, 1923 is that the compensation should ordinarily be granted to the workman who sustained personal injuries by accident arising out of and in the course of their employment. It is needless to point out that the liability to pay compensation for the personal injuries is admittedly on the employer. As a matter of fact, the petitioner who makes a claim, can either file a suit for recovery of damages or prefer a claim before the Commissioner. However, both the remedies are not open to the first respondent/petitioner as per Section 3(5) of the Act. No doubt, there must be an existence of master - servant relationship so as to bring an individual within the ambit of 'a workman' under the Workmen's Compensation Act. In fact, whether there exists a relationship of master - servant between the management and the workman is a question of fact depending on the facts and circumstances of each case. No wonder, the said relationship is characterised by contract of service between the parties.
20. A perusal of Ex.P.2, xerox copy of the policy, indicates that the insured's name is mentioned as 'Jayam Engineering Constructions', 238-A, New Road, Kovilpatti and 'Group Personal Accident Policy' has been taken in respect of thirty number of workers working with the insured. In the said policy, Ex.P.2, it is mentioned that insured persons and the sum assured are unnamed workers 30 persons who are temporary/contract/permanent whose name is found in the any one of the register maintained by the insured. 30 X 50,000 = Rs.15,00,000/-. The period of insurance is from 23.08.2001 to the midnight of 22.08.2002. In the claim form, Ex.P.4, the name of the insured is mentioned as 'Jayam Engineering Constructions' and the name of the injured person is mentioned as 'M.Mahendran', namely the first respondent/petitioner. In the claim form, the date of accident is mentioned as 09.11.2001. It is relevant to point out that in Ex.P.4, claim form, the second respondent/first respondent (employer) has not stated that the first respondent/injured petitioner has been working in 'Sivasakthi Saw Mill' at the time of accident on 09.11.2001 and therefore, it is quite clear that the second respondent/first respondent has suppressed the material particular in regard to the happening of the occurrence at the exact place and resultantly, there has been a significant omission in the claim form in regard to the exact place of accident.
21. A perusal of the records indicates that the appellant/second respondent has filed I.A.No.2 of 2003 in W.C.No.115 of 2002 praying to exonerate the appellant/second respondent Insurance Company from the case on the ground that the second respondent/first respondent (employer) had not taken a Workmen's Compensation Policy and that the policy taken in the company was a 'Group Personal Accident Policy' in respect of thirty unnamed workers working with the second respondent/first respondent and that the Commissioner/Tribunal had no jurisdiction to pass any direction to the appellant/second respondent and after contest, the Commissioner/Tribunal has passed an order on 17.04.2003 to the effect that 'the issue raised in the application is not a matter to be decided for the present and these types of issues will be examined at the time of passing of final orders and there is no necessity to exonerate the appellant/second respondent Insurance Company and whether the policy will apply to the case or not, will be examined at the time of passing of final orders and in that view of the matter, has dismissed the said I.A.No.2 of 2003.'.
22. Admittedly, the first respondent/petitioner at the time of accident on 09.11.2001, has been working as Carpenter in Sivasakthi Saw Mill under the second respondent/first respondent (employer). As a matter of fact, Ex.P.2, Group Personal Accident Policy, has been taken by the second respondent/first respondent (employer) in the name of 'Jayam Engineering Constructions', in respect of thirty unnamed workers working with the insured and in such a situation, how Ex.P.2, policy, will cover a claim made by the first respondent/petitioner in respect of the accident that took place at Sivasakthi Saw Mill on 09.11.2001, a legal plea, has not been spelt out or met by the Commissioner/Tribunal in accordance with law in his award dated 13.07.2004 in W.C.No.115 of 2002. Merely because, no reply has been sent by the appellant/second respondent Insurance Company, to the notice Ex.P.5, dated 12.07.2002, issued by the first respondent/petitioner, a liability cannot be fastened on the appellant/second respondent Insurance Company by the Commissioner/Tribunal without adverting to the evidence and the terms and conditions of Ex.P.2, policy, since the parties are governed by contract and they are to abide by the terms of the policy strictly, in the considered opinion of this Court.
23. Even though R.W.1, Kumaresan, has stated in his cross-examination that as per the policy, thirty persons will have to be given the compensation, yet it is the duty of the Commissioner/Tribunal to give a finding whether Ex.P.2, Group Personal Accident Policy will apply to a claim under the Workmen's Compensation Act. Moreover, Ex.P.2, policy, covers for thirty unnamed workers working in 'Jayam Engineering Constructions' where sixty workers were working and in another company, namely Sivasakthi Saw Mill, fifteen workers were working. Therefore, liability cannot be fastened upon the appellant/second respondent Insurance Company in the considered opinion of this Court, in regard to the accident that has taken place in Sivasakthi Saw Mill on 09.11.2001, where the first respondent/petitioner has sustained injury, during the course of his employment with the second respondent/first respondent (employer) and that too when Ex.P.2, 'Group Personal Accident Policy' stands in the name of 'Jayam Engineering Constructions', Kovilpatti.
24. In Ex.P.1, disability certificate dated 26.09.2002, P.W.2, Dr.Chockalingam has assessed the disability of the first respondent/petitioner at 60%. He has not mentioned about the loss of earning capacity of the first respondent/petitioner in the disability certificate. It is to be borne in mind that the permanent or partial disablement and the loss of earning capacity are not one and the same, in the considered opinion of this court.
25. A perusal of the award passed by the Commissioner/Tribunal dated 13.07.2004 shows that the Commissioner/Tribunal without prejudice to both sides has determined the disability loss at 40%. When P.W.2 Dr.Chockalingam has assessed the disability of the first respondent/petitioner (workman) at 60% as per Ex.P.1, disability certificate, then it is not open to the Commissioner/Tribunal on a vacuum or void to substitute his unilateral and self- serving conclusion of determining the loss of disability at 40% and decide the compensation amount accordingly.
26. By virtue of the Amendment Act 22 of 1984 (which has come into force), the loss of earning capacity caused by an injury to a workman is required to be assessed by a qualified medical practitioner. As far as the present case is concerned, the Commissioner/Tribunal has evidence of P.W.2, Dr.Chockalingam only to show 60% permanent disability, but not the evidence to indicate the actual loss of earning capacity. Therefore, one cannot come to the conclusion that the loss of earning capacity of the first respondent/petitioner (workman) is equal to the percentage of permanent or partial total disablement. In fact, the Commissioner/Tribunal before he proceeds to determine the compensation payable as per Section 4 of the Workmen's Compensation Act, 1923, read with Schedule IV, he ought to have necessarily assessed the loss of future earning capacity of the workman properly assessed by a qualified medical practitioner.
27. In the instant case, there is no assessment of loss of earning capacity of the first respondent/petitioner/workman by any qualified medical practitioner. Per contra, there is only an assessment of permanent disability at 60%. It is relevant to make a mention that when a procedure prescribed under a statute is not followed, any deviation from the statutorily fixed procedure amounts to an apparent error on the face of record.
28. Inasmuch as the duty cast on the Commissioner/Tribunal has not been complied with in this case, the award dated 17.03.2004 passed in W.C.No.115 of 2002, by the Workmen's Compensation Commissioner (Deputy Commissioner of Labour), Tirunelveli-2, is opposed to law, unsustainable and suffers from an error apparent on its face in the considered opinion of this Court and in the light of the detailed discussions, this Court holds that the Commissioner/Tribunal has erred in assuming jurisdiction over the appellant/second respondent Insurance Company in respect of the proceedings and the Workmen's Compensation Act, 1923, when the policy refers to 'Group Personal Accident Policy' and further holds that the Commissioner/Tribunal has erred in determining the liability of the appellant/second respondent Insurance Company without adverting to the evidence and the terms and conditions of Ex.P.2, policy and also holds that how Ex.P.2, policy will cover a claim made by the first respondent/petitioner (workman) in respect of the accident that took place at Sivasakthi Saw Mill on 09.11.2001, a legal plea, has not been spelt out or met by the Commissioner/Tribunal in his award dated 17.03.2004 in W.C.No.115 of 2002 in accordance with law and further holds that when Ex.P.2, policy covers for thirty unnamed workers in Jayam Engineering Constructions where sixty workers were working and in another company namely Sivasakthi Saw Mill, fifteen persons were working, the liability cannot be fastened upon the appellant/second respondent Insurance Company in respect of the accident that has taken place in Sivasakthi Saw Mill on 09.11.2001 where the first respondent/petitioner sustained injury and the substantial questions of law are answered accordingly.
29. In the result and for the reasons mentioned supra, the Civil Miscellaneous Appeal is allowed and the award dated 13.07.2004 passed in W.C.No.115 of 2002 by the Workmen's Compensation Commissioner (Deputy Commissioner of Labour), Tirunelveli-2, is set aside and the proceedings are remanded to the Commissioner/Tribunal with a direction to dispose of the claim of the first respondent/petitioner afresh directly in accordance with the provisions of the Workmen's Compensation Act and Rules framed thereunder, after providing opportunity to adduce additional or fresh evidence of the parties concerned, within a period of three months from the date of receipt of a copy of this order. Bearing in mind the facts and circumstances of the case, there shall be no order as to costs.
rsb To The Workmen's Compensation Commissioner, (Deputy Commissioner of Labour), Tirunelveli-2.