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[Cites 8, Cited by 1]

Gujarat High Court

National Insurance Co vs Legal Heirs Of Decd Premji Lalji Sindhav ... on 28 February, 2014

Author: Harsha Devani

Bench: Harsha Devani

         C/FA/1901/2013                                    JUDGMENT




          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                          FIRST APPEAL NO. 1901 of 2013



FOR APPROVAL AND SIGNATURE:



HONOURABLE MS.JUSTICE HARSHA DEVANI

================================================================

1    Whether Reporters of Local Papers may be allowed to see
     the judgment ?

2    To be referred to the Reporter or not ?

3    Whether their Lordships wish to see the fair copy of the
     judgment ?

4    Whether this case involves a substantial question of law as
     to the interpretation of the Constitution of India, 1950 or any
     order made thereunder ?

5    Whether it is to be circulated to the civil judge ?

================================================================
              NATIONAL INSURANCE CO.....Appellant(s)
                            Versus
    LEGAL HEIRS OF DECD PREMJI LALJI SINDHAV & 1....Defendant(s)
================================================================
Appearance:
MR DAKSHESH MEHTA, ADVOCATE for the Appellant
MR DHAVAL D VYAS, ADVOCATE for the Respondents No. 1.1 - 1.4
RULE SERVED for the Respondents No. 1.1 - 1.5 , 2
================================================================

         CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI

                                 Date : 28/02/2014


                                ORAL JUDGMENT
Page 1 of 18

C/FA/1901/2013 JUDGMENT

1. The judgement and award dated 31st December, 2012 passed by the Ex-officio Commissioner For Workmen's Compensation Act and Judge, Labour Court, Senior Division, Junagadh, Camp at Porbandar (hereinafter referred to as "the Commissioner") in Workman Fatal Case No.8 of 2000, is subject matter of challenge in this appeal under section 30 of the Workmen's Compensation Act, 1923 (hereinafter referred to as "the Act").

2. The facts of the case stated briefly are that the respondents No.1/1 to 1/5 filed a claim petition before the Commissioner claiming compensation in relation to the death of Shri Premjibhai Laljibhai. It was the case of the claimants that the deceased Premjibhai Laljibhai was employed by Jadavji Devjibhai Gosiya, the respondent No.2 (original defendant No.1). During the course of his employment, the fishing boat Jaldhar bearing No.R.R.L. 8084 owned by the respondent No.2 (original defendant No.1) which was insured with the appellant, broke down in the sea near Dwarka. On 16.04.1997, the deceased was engaged in the work of rescuing the said fishing boat. On 17.06.1997, early in the morning, he was engaged in the task of pulling the boat, at that time, the deceased fell off the boat and became unconscious, hence, the respondent No.2 and other labourers took him for primary treatment to Dwarka, however by that time, he had expired. At the time of the accident, the deceased was approximately 38 years of age. He was earning about Rs.6,000/- per month. The accident took place on the boat of the respondent No.2 and hence, it was the liability of the respondent No.2 and the appellant - Insurance Company to pay the compensation. Accordingly, the claim Page 2 of 18 C/FA/1901/2013 JUDGMENT petition came to be filed for compensation of Rs.11,00,000/- with interest at the rate of 18% per annum.

3. The Commissioner, after appreciating the evidence on record, came to the conclusion that the employer - employee relationship between the deceased and the respondent No.2 herein as well as the fact that the deceased had died during the course of discharging his duties, had been established beyond doubt. Considering the age of the deceased to be 38 years as well as the fact that under section 4 of the Act, as was in force at the relevant time, it was not permissible to take into consideration the salary above Rs.2,000/-, the Commissioner considered the salary of the deceased at Rs.2,000/- and accordingly, held that the claimants were entitled to compensation of Rs.1,89,560/-. He, accordingly, partly allowed the claim petition and held that the appellant - Insurance Company was liable to pay compensation of Rs.1,89,560/- under the provisions of the Workmen's Compensation Act with simple interest at the rate of 9% per annum from the date of the filing of the claim petition till realization thereof. The Commissioner also held the respondent No.2 - owner liable to pay penalty of Rs.40,000/-. Being aggrieved, Insurance Company is in appeal.

4. At the outset, Mr. Rushang Mehta, learned advocate for Mr. Dakshesh Mehta, learned advocate for the appellant submitted that the insurance policy is a "Marine and Hull Policy" and it is only if the conditions thereof are satisfied that the Insurance Company can be saddled with the liability to pay the compensation. It was submitted that the Commissioner has failed to appreciate the basic fact that the policy issued by the Page 3 of 18 C/FA/1901/2013 JUDGMENT appellant - Insurance Company was a Marine Hull Policy, which does not cover the risk of the crew or Tandel. Referring to the insurance policy and more particularly clause (20.3) thereof, it was pointed out that the policy contained certain exclusion clauses and by virtue of clause (20.3.1), any liability of the Assured under the Workmen's Compensation Act or the Employees' Liability Act or any other statutory or common law, general maritime law or other liability has been excluded. Under the circumstances, in no manner, could the appellant - Insurance Company be held liable in respect of any compensation payable under the Workmen's Compensation Act.

4.1 Next, it was submitted that in the whole claim petition, it has not been stated that the deceased was an employee of the Assured. The facts clearly show that the labourers were hired for getting repairs done. Thus, they were daily wagers and not the employees of the respondent No.2. Referring to the extracts of the attendance register, it was submitted that mere production of vouchers is not sufficient to establish that the deceased and other labourers were employees of the Assured and mere presence for a period of six days does not establish the employer - employee relationship. According to the learned counsel, the employer had merely availed of services provided by the service provider, namely, the salvage agency. Referring to the impugned award, it was submitted that the Commissioner has observed that the Insurance Company has not produced any evidence to the contrary. It was submitted that the Insurance Company could have produced the evidence, provided it was furnished to the Insurance Company, in absence of any such evidence being furnished to the Page 4 of 18 C/FA/1901/2013 JUDGMENT Insurance Company, it was not possible for it to produce any evidence to the contrary. It was argued that when there was no workmen's compensation policy in existence, the question of the Insurance Company proving that the deceased was not an employee of the Assured would also not arise.

4.2 Next, it was pointed out that the Commissioner has placed reliance upon the provisions of section 15 of the Act, which makes special provisions relating to masters and seamen. It was submitted that by virtue of section 15 of the Act, the provisions of the Workmen's Compensation Act would apply in the case of the employees who are masters of ships or seamen subject to the modifications enumerated in the said section. Referring to the definition of "seaman" as defined under clause (k) of section 2 of the Act, it was pointed out that the same means any person forming part of the crew of any ship, but does not include the master of the ship. It was submitted that assuming that section 15 of the Act would be applicable in the present case, the deceased was not a person forming part of the crew. In respect of such submission, reference was made to the statement of the Tandel which forms part of the record before the Commissioner, wherein the names of the crew are mentioned, to point out that the name of the deceased does not find a mention in the list of crew members. It was submitted that the deceased was only a salvage labourer, which is also borne out from the statement of the Tandel of the fishing boat in question. It was submitted that apart from the fact that the policy does not cover the liability under the Act, even otherwise the deceased would not be covered by section 15 of the Act and as such, the Commissioner was not justified in holding the Insurance Page 5 of 18 C/FA/1901/2013 JUDGMENT Company liable for satisfying the award. Referring to the finding that the Insurance Company has not led any evidence, it was submitted that the insurance policy itself was sufficient evidence. It was, accordingly, urged that the impugned award, to the extent the same holds the appellant - Insurance Company to be liable, is not in consonance with the insurance policy and as such, deserves to be quashed and set aside.

5. On the other hand, Mr. Dipen Sanklesaria, learned advocate for Mr. Dhaval Vyas, learned advocate for the respondents No.1.1 to 1.4 (original claimants) supported the impugned award. Referring to the record of the case, it was submitted that the record of the employer shows that the deceased was assigned the work of salvage. The employer had not remained present before the Commissioner and has not disputed the fact that the deceased was his employee. Reference was made to clause (20) of the terms and conditions of the insurance policy, which provides for "Protection and Indemnity", to point out that under clause 20.1 thereof, the Insurance Company has agreed to indemnify the assured for any sum or sums paid by the assured to any other person or persons by reason of the assured becoming legally liable, as owner of the Vessel for any claim, demand, damages and/or expenses, where such liability is in consequence of any matters or things enumerated therein and arises from an accident or occurrence during the period of insurance. It was submitted that under clause (20.1.4), the insurer is liable to indemnify the Assured in respect of loss of life, personal injury, illness or payment made for life salvage. It was submitted that in view of this clause, the Insurance Company would be liable to indemnify the owner of the boat even if he is not an Page 6 of 18 C/FA/1901/2013 JUDGMENT employee. Reference was made to the definition of "salvage" as defined in the Law Lexicon, to submit that the same means the action of saving a ship or its cargo from wreck, capture, etc. It was pointed out that "salvage" also means a compensation allowed to persons who have saved or aided in saving ships or cargo from actual loss after wrecks, or from impending danger, whether from fire, pirates, enemies or the ordinary perils of the sea. "Salvage", in its simple character, is the service which those who recover property from loss or danger at sea, render to the owners, with the responsibility of making restitution, and with a lien for their reward. Reference was made to the affidavit of the Tandel to point out that it is not in dispute that the deceased died during the salvage operation.

5.1 As regards the relationship between the deceased and the respondent No.2 - owner of the fishing boat, it was submitted that employer-employee relationship has been duly established by the claimants by producing on record the attendance register indicating the attendance of the concerned workman. The vouchers of payment were also produced on record evidencing the payment made to the deceased. Thus, when the respondent No.2 - employer has not appeared before the Commissioner and disputed the aforesaid position, the Commissioner was justified in holding that the employer- employee relationship had been duly established. Referring to the definition of "workman" as defined under the Act, it was pointed out that the same would include any person engaged in repairing of the ship and that salvage being a form of repairing, the deceased would squarely fall within the ambit of the expression "workman" as defined under the Act.

Page 7 of 18

C/FA/1901/2013 JUDGMENT 5.2 In support of his submissions, the learned counsel placed reliance upon the decision of the Rajasthan High Court in the case of Madanlal v. Mangali, AIR 1961 Rajasthan 45, for the proposition that section 2(1)(n) is not limited to workmen who are employed by the month. A daily wage-earner may as well be a workman. Reliance was also placed upon the decision of this court in the case of Sulekhram Stainless Steel Rolling Mill v. Babubhai Chanaji, 2002 JX (Guj) 1439, for the proposition that under clause (n) of sub-section (1) of section 2 of the Act, even a substitute will be a workman if engaged for the purpose of the principal employer's trade or business. It was submitted that in the facts of the present case, the deceased was engaged for salvaging the fishing boat of the principal employer and as such, the Commissioner was wholly justified in holding that the employer-employee relationship had been duly established. Reliance was placed upon the decision of the Punjab and Haryana High Court in the case of Smt. Raj Rani w/of Jagdev Dutt and another v. Firm Narsing Das Mela Ram and another, AIR 1964 Punjab 315, wherein the deceased was employed on wages for painting premises of a shop. The court held that he was not an employee of a casual nature but, was one employed in the course of the business of the shop as his work falls within the meaning of the word "repair" occurring in clause (viii) of Schedule II. If such person, while painting the premises, touches a live electric wire and dies on account of electric shock, his widow is entitled to the claim for compensation under the Act. It was held that in order to exclude a person from the category of workman entitled to compensation under the Act, it has to be shown that he was a casual employee and Page 8 of 18 C/FA/1901/2013 JUDGMENT was not engaged in the trade or business of an employer. Adverting to the facts of the present case, it was submitted that the employer had not led any evidence to show that the deceased was a casual employee and was not engaged in the trade or business of the employer, under the circumstances, the finding recorded by the Commissioner being just, legal and proper, does not warrant interference. It was submitted that in light of clause (20.1.4) of the insurance policy, the Insurance Company is liable to indemnify the Assured and as such, the Commissioner was justified in holding the Insurance Company liable to pay the compensation awarded to the claimants.

5.3 In conclusion, it was submitted that in case the court holds that the Insurance Company is not liable for payment of compensation, the court may direct the Insurance Company to satisfy the award and recover the same from the owner.

6. The present appeal has been filed by the appellant - Insurance Company challenging its liability to indemnify the respondent No.2-Assured, in respect of the compensation awarded by the Commissioner in relation to the death of deceased Shri Premjibhai Laljibhai.

7. In the backdrop of the facts and contentions noted hereinabove, the following question of law arises for consideration:

"Whether, on the facts and in the circumstances of the case and more particularly, in view of the terms and conditions/clauses of the insurance policy, the Commissioner was justified in holding that the appellant Page 9 of 18 C/FA/1901/2013 JUDGMENT
- insurer was liable to indemnify the assured in respect of the compensation awarded to the claimants under the provisions of the Workmen's Compensation Act?"

8. The fact that the deceased was working as a salvage labourer on a fishing boat-Jaldhar bearing No.R.R.L. 8084 owned by the respondent No.2 - Jadavji Devjibhai Gosiya, is not in dispute. The fishing boat had stopped in the sea near Dwarka and the deceased admittedly was engaged in the work of salvaging the boat. From the affidavit of the Tandel of the boat, it is apparent that the deceased, while he was engaged in the work of salvaging the boat, fell off near the shore and became unconscious. He was taken to the hospital, where he was declared dead. Thus, the fact regarding the accident having occurred while the deceased was doing salvage work on the fishing boat owned by the respondent No.2 is not in dispute.

9. A perusal of the impugned award reveals that before the Commissioner, the Insurance Company had contended that there was no employer-employee relationship between the deceased and the respondent No.2 (original opponent No.1). However, on behalf of the owner, no evidence had been led, nor had any evidence to the contrary been adduced. The Commissioner noted that the claimant had proved the facts of her case by her statement on oath, at Exhibit-22. The Commissioner also noted that the Insurance Company had challenged the fact regarding the employer-employee relationship as well as the income of the deceased in the cross- examination of the claimant. The claimant, in her cross- examination had stated that she had no personal knowledge Page 10 of 18 C/FA/1901/2013 JUDGMENT regarding the accident; neither had any technical examination been done, nor had she produced any documentary evidence; she had denied the suggestion that her husband had not sustained injuries while carrying out the repairing work; she had denied the suggestion that it was not true that there was employer-employee relationship between her husband and the original opponent No.1; she had stated that she was not aware as to whether the original opponent No.1 had obtained a policy under the Workmen's Compensation Act for protection of the employees. The Commissioner noted that though the Insurance Company had challenged its liability on the ground that there was no employer-employee relationship between the deceased and the respondent No.2 and that the policy did not cover the risk under the Workmen's Compensation Act, it has not led any kind of evidence in support of its case. That the fact regarding the deceased having died while discharging his duties has been brought on record and that from the police papers, the panchnama, the postmortem report etc., it is established beyond doubt that there was an employer- employee relationship between the deceased and the original opponent No.1 and that he died while on duty. These in sum and substance are the findings recorded by the Commissioner on the question of employer-employee relationship as well as the liability of the Insurance Company to indemnify the owner of the fishing boat.

10. As noted hereinabove, the principal submission advanced on behalf of the appellant is that the insurance policy is a Marine and Hull Policy and does not cover the risk under the Workmen's Compensation Act. In support of such submissions, strong reliance has been placed upon the exclusion clause Page 11 of 18 C/FA/1901/2013 JUDGMENT provided under the terms and conditions of the insurance policy and more particularly, clause (20.3.1), which reads thus:

"EXCLUSIONS:
20.3 Notwithstanding the provisions of clauses (20.1) and (20.2), this clause (20) does not cover any liability cost or expense arising in respect of:
20.3.1 any direct or indirect payment by the Assured under the workmen's compensation or employees' liability acts and any other statutory or common law, general maritime law or other liability whatsoever in respect of accidents to/or illness of workmen or any other persons employed in any capacity whatsoever by the Assured or others in on or about or in connection with the Vessel or her catch, materials or repairs."

11. On behalf of the claimants, the learned counsel has placed reliance upon clause (20) of the terms and conditions of the insurance policy, which bears the heading "Protection and Indemnity" and to the extent the same is relevant for the present purpose, reads thus :

"20.1 The Underwriters agree to indemnify the Assured for any sum or sums paid by the Assured to any other person or persons by reason of the Assured becoming legally liable, as owner of the Vessel for any claim, demand, damages and/or expenses, where such liability is in consequence of any of the following matters or things and arises from an accident or occurrence Page 12 of 18 C/FA/1901/2013 JUDGMENT during the period of insurance.
20.1.1 Loss of or damage to any fixed or movable object or property or other thing or interest whatsoever other than the Vessel, arising from any cause whatsoever in so far as such loss or damage is not covered by clause 18.
20.1.2 Any attempted or actual raising, removal or destruction of any fixed or movable object or property or other thing, including the wreck of the Vessel or any neglect or failure to raise, remove or destroy the same.
20.1.3 Liability assumed by the Assured under the contracts or customary towage for the purpose of entering or leaving port or manoeuvring within the port during the ordinary course of trading.
20.1.4 Loss of life, personal injury, illness or payment made for life salvage.
20.1.5 xxx xxx xxx"

12. The learned advocate for the claimants has stressed upon clause (20.1.4), which provides for the loss of life, personal injury, illness or payment made for life salvage. According to the learned counsel for the claimants, the clause includes "life salvage" and hence, the deceased having been engaged in the work of salvage, even de hors the provisions of the Workmen's Compensation Act, the insurer is liable to indemnify the Assured in respect of any loss of life during the Page 13 of 18 C/FA/1901/2013 JUDGMENT course of salvage proceedings. It was submitted that, thus, the insurance policy clearly covers the accident like the present one where the deceased has died due to an accident that has occurred during salvage operation.

13. The question that arises for consideration is as regards the interpretation of the provisions of the indemnity clause and the exclusion clauses. As regards clause (20.1.4), whereby the Insurance Company has undertaken to indemnify the Assured in respect of loss of life, personal injury, illness or payment made for life salvage. On a plain reading of the said condition, it is apparent that what the Insurance Company is required to indemnify is in respect of loss of life, personal injury, illness or payment made for life salvage. The same provides for indemnifying the Assured in respect of loss of life, personal injury, illness or payment made for life salvage.

14. The expression "life salvage" has not been defined anywhere. However, in the introductory guide to personal injury and loss of life insurance it has been stated that a ship owner may become obliged to pay a life salvage award to a person who has saved or attempted to save the life of persons on board the salvaged vessel. Where property has also been saved, the usual practice is for the property salvage award to be "enhanced" by an unspecified amount in recognition of the life salvage service. Thus, life salvage means an attempt to save the life of person on board the salvage vessel. Reverting to the facts of the present case, as noted hereinabove, since the vessel was stranded as the engine was not working, the labourers were engaged to salvage the vessel. The deceased was one of the labourers engaged in the task of salvaging the Page 14 of 18 C/FA/1901/2013 JUDGMENT vessel and died on account of the injury sustained by him while attempting to salvage the vessel. Thus, it was only the vessel which was being salvaged and there was no attempt to save the life of persons on board. The injuries sustained by the deceased were not sustained on account of any attempt to save the life of any person on board. Under the circumstances, the question of any payment being made for life salvage by the Assured would not arise. Clearly therefore, clause (20.1.4) which relates to loss of life, personal injury, illness or payment made for life salvage would not be attracted in the facts of the present case.

15. On the other hand, the exclusion clause is clear and unambiguous and excludes any liability that the Assured may incur under the Workmen's Compensation Act or any other statutory enactment. The same clearly provides that notwithstanding the provisions of clauses (20.1) and (20.2), clause (20) does not cover any liability cost or expense arising in respect of any direct or indirect payment by the Assured under the workmen's compensation or employees' liability acts and any other statutory or common law, general maritime law or other liability whatsoever in respect of accidents to/or illness of workmen or any other persons employed in any capacity whatsoever by the Assured or others in on or about or in connection with the Vessel or her catch, materials or repairs. Thus, notwithstanding the provisions of clause (20.1) on which reliance has been placed by the learned advocate for the claimants, the exclusion clause does not cover any liability arising under the Workmen's Compensation Act or in respect of accidents to/or illness of workmen or any other persons employed in any capacity whatsoever by the Assured or others Page 15 of 18 C/FA/1901/2013 JUDGMENT in on or about or in connection with the Vessel. Under the circumstances, the exclusion clause being clear and unambiguous, the same excludes any liability of the Insurance Company qua any liability that may be incurred by the Assured under the Workmen's Compensation Act or any other statutory enactment. In the facts of the present case, it is in the proceedings under the Workmen's Compensation Act that the liability has been imposed upon the Insurance Company. By virtue of clause (20.3) read with clause (20.3.1) of the insurance policy, the liability of the Insurance Company under the Workmen's Compensation Act stands totally excluded and as such, the Commissioner was not justified in holding the appellant - Insurance Company liable for payment of compensation under the Workmen's Compensation Act. In the opinion of this court, the Commissioner has failed to examine the terms of the insurance policy in proper perspective and has failed to take note of the exclusion clauses which excludes the liability of the Insurance Company in relation to any liability under the Workmen's Compensation Act.

16. On the other hand, the Commissioner has placed reliance upon the provisions of section 15 of the Act, which makes special provision relating to masters and seamen and states that the Act shall be applicable in the case of the employees who are masters of ships or seamen subject to the modifications enumerated thereunder. In the opinion of this court, reliance placed by the Commissioner upon section 15 of the Act, is also misplaced as the same makes special provisions relating to masters and seamen. Whereas, there is not even a shred of evidence on record to even suggest that the deceased was either the master of the vessel or a seaman.

Page 16 of 18

C/FA/1901/2013 JUDGMENT The specific case of the claimants is that the deceased was a labourer engaged for salvage work. Under the circumstances, section 15 of the Act would also not be attracted in the facts of the present case. Assuming for the sake of argument that section 15 of the Act would be applicable, even then, the policy in question is a Marine and Hull Policy, and not a policy under the Workmen's Compensation Act and specifically excludes any liability of the Assured under the Workmen's Compensation Act. In these circumstances, the appellant - Insurance Company cannot be held liable for indemnifying the respondent No.2 - owner for the liability arising under the Workmen's Compensation Act.

17. Having regard to the fact that the Insurance Company has been held to be not liable for payment of compensation under the Workmen's Compensation Act or under any other clauses of the insurance policy, the court does not deem it fit to enter into any discussion as to whether there was an employer-employee relationship between the deceased and the respondent No.2 - Assured.

18. In the light of the above discussion, the appeal succeeds and is, accordingly, allowed. The impugned award dated 31 st December, 2012 passed by the Commissioner to the extent the same holds the appellant- Insurance Company (original defendant No.2) liable to pay compensation of Rs.1,89,560/- with interest at the rate of 9% per annum to the claimants, is hereby quashed and set aside. Consequently, the respondent No.2 - owner (original defendant No.1) shall be liable for payment of such compensation to the claimants, in addition to the penalty imposed by the Commissioner.

Page 17 of 18

C/FA/1901/2013 JUDGMENT

19. The request that the Insurance Company be directed to pay the compensation to the claimants and recover the same from the owner, cannot be accepted for the reason that when there is no liability at all for indemnifying the Assured in respect of any compensation under the Workmen's Compensation Act, no such direction can be issued by this court.

20. The appellant - Insurance Company has deposited a sum of Rs.4,00,000/- with the Commissioner. Such amount shall be forthwith refunded to it with the interest accrued thereon, if any. There shall be no order as to costs.

21. The Registry shall forthwith send back the record and proceedings of the case.

(HARSHA DEVANI, J.) parmar* Page 18 of 18