Kerala High Court
National Insurance Company Limited vs Megha .C on 18 December, 2025
2025:KER:98497
M.F.A.(ECC).No.34 of 2025
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
MFA (ECC) NO. 34 OF 2025
AGAINST THE JUDGMENT DATED 29.05.2024 IN ECC NO.153
OF 2021 OF INDUSTRIAL TRIBUNAL, KOZHIKODE
APPELLANT/2nd OPPOSITE PARTY:
NATIONAL INSURANCE COMPANY LIMITED
DIVISIONAL OFFICE, KANNUR, REPRESENTED BY
MANAGER,
KOCHI REGIONAL OFFICE, 1ST AND 2ND FLOOR,
OMANA BUILDING, PADMA, KOCHI, PIN - 682035.
BY ADV SHRI.KIRAN PETER KURIAKOSE
RESPONDENTS/CLAIMANTS 1 TO 3/1ST OPPOSITE PARTY:
1 MEGHA .C.
PARAKKANDI HOUSE, EACHUR P.O., KANNUR, PIN -
670591
2 DHYANAV
AGED 5 YEARS
SREYAS', VANDIKARAN PEEDIKA, MAMBA, KANNUR-
670611, REPRESENTED BY MOTHER MEGHA.C., W/O LATE
LYJU.K,
AGED 31 YEARS, PARAKKANDI HOUSE, EACHUR P.O.,
KANNUR, PIN - 670591
3 V.K.KARTHIYANI
AGED 68 YEARS
'SREYAS', VANDIKARAN PEEDIKA, MAMBA,
KANNUR, PIN - 670611
2025:KER:98497
M.F.A.(ECC).No.34 of 2025
2
4 MANAGING DIRECTOR, KERALA STATE ROAD TRANSPORT
CORPORATION
TRANSPORT BHAVAN, FORT, TRIVANDRUM,
KERALA, PIN - 695023
BY ADVS.
SRI.LIJIN THAMBAN
SRI.P.C.CHACKO(PARATHANAM)
SMT.ANJU GIREESH
THIS MFA (ECC) HAVING BEEN FINALLY HEARD ON
11.12.2025, THE COURT ON 18.12.2025 DELIVERED THE
FOLLOWING:
2025:KER:98497
M.F.A.(ECC).No.34 of 2025
3
S.MANU, J.
-------------------------------------------------
MFA (ECC) No.34 of 2025
-------------------------------------------------
Dated this the 18th day of December, 2025
JUDGMENT
Second opposite party in ECC 153/2021 of the Industrial Tribunal and Employees' Compensation Commissioner, Kozhikode has filed this appeal. Respondents 1 to 3 were the applicants before the Commissioner. They are respectively the wife, minor son and mother of late Sri.Lyju.K., a Reserve Conductor in KSRTC who passed away in a road traffic accident on 30.10.2019 at about 5:45 am while travelling on his motorcycle to join duty at Kannur depot of KSRTC. The place of accident was between his residence and place of employment. He was bound to join duty for operating a bus owned by the KSRTC scheduled to start its first trip at 6:20 am on the fateful day.
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 4
2. The learned Commissioner found that the respondents 1 to 3 were entitled for compensation. An amount of Rs.23,60,401/- was awarded as compensation with simple interest at 12%. Rs.15,000/- was granted towards funeral expenses. The appellant was the insurer of the bus bearing registration No.KL-15-8419 in which the deceased was employed. Hence, the learned Commissioner held that the appellant was liable to indemnify the employer, KSRTC. Aggrieved by the said conclusion of the learned Commissioner, the appellant has filed this appeal. According to the appellant, various substantial questions of law are involved in this M.F.A. The appeal was admitted on the following question of law-- 'whether the Commissioner was legally correct in directing the appellant insurer to bear the liability to pay compensation though the insured vehicle was not involved in the accident'.
3. Respondents 1 to 3 entered appearance through their counsel and the Standing Counsel appeared for 4 th respondent 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 5 KSRTC. Heard the learned counsel for the appellant and the learned counsel for the respondents 1 to 3 as also the learned Standing Counsel for the 4th respondent.
4. The learned counsel for the appellant contended that the policy issued by the appellant was a Motor Vehicle Policy for the bus owned by the KSRTC. The said vehicle was not involved in the accident which resulted in the death of Sri.Lyju. Hence the learned counsel contended that the appellant is not liable to indemnify the employer, KSRTC. He submitted that the deceased was travelling on his motor cycle when he met with the accident. Therefore, the appellant, as the insurer of the KSRTC bus, was not liable in any view of the matter, to indemnify the employer for a claim arising under the Employees' Compensation Act. The learned counsel relied on a judgment of the Madras High Court in Jothi and Others v. K.P.Saraswathi and Another [2022 KHC 2658]. He also relied on some other judgments dealing with the principle of notional extension. He 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 6 contended that notional extension cannot be extended in each and every case when there is no connection between the insured vehicle and the accident which occurred at some other place.
5. Learned counsel for the appellant pointed out the following observation of the Madras High Court in Jothi and Others (supra):-
"22. This court is of the considered opinion that the fundamental aspect of insurance for vehicles is to cover accident "caused by or arising out of use of the vehicle" as per S.146 and S.147 of Motor Vehicles Act. Thus, the requirement of coverage is for accident caused by or arising out of use of the vehicle. Liability under Workmen's Compensation Act is only for death arising out of and in the course of employment and unless the accident occurs during use of the vehicle, the insurer of the vehicle cannot be fastened with liability as held by Hon'ble Supreme Court in the case of Mamtaj Bi Bapusab Nadaf v. United India Insurance Co. Ltd., 2010 ACJ 2661 (SC), wherein, in the case of coverage under insurance policy in the context of S.147 of the Motor Vehicles Act and involvement of the vehicle in the accident, the dismissal of the claim on the ground that death was not caused by use of the vehicle was upheld by the Hon'ble Supreme Court."
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 7
6. The learned counsel for respondents 1 to 3 submitted that the accident occurred when the deceased employee was travelling from his residence to join duty in the KSRTC depot. He submitted that the theory of notional extension would apply in the case at hand and the employer was liable to pay compensation. He also submitted that as per the terms of the insurance policy, the appellant was undoubtedly liable to indemnify the employer, KSRTC. He hence contended that the appeal is only to be dismissed for total want of merits.
7. The learned Standing Counsel for the KSRTC submitted that no question of law is involved in this appeal. He contended that as per the specific terms of the insurance policy and also for the reason that separate premium was paid with respect to two employees by the KSRTC, the appellant is undoubtedly liable to indemnify the KSRTC. He also submitted that the appellant had no specific case before the Commissioner that the policy would not cover the liability in the instant case.
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 8 He further pointed out that such a contention has not been specifically pleaded in the memorandum of appeal also. He relied on Chimajirao Kanhojirao Shirke and Another v. Oriental Fire & General Insurance Co.Ltd. [(2000) 6 SCC 622]. The learned Standing Counsel also referred to some reported judgments on the principle of notional extension.
8. In the facts and circumstances of this case, the principle of notional extension would definitely apply. The deceased was travelling from his residence to the KSRTC depot. He was expected to join duty to operate a bus commencing its trip at 6:20 am. The accident occurred at about 5:45 am at a place situated between the residence of the deceased and the depot. Opposite parties had no case before the Commissioner that the deceased was not assigned duty on the date of accident. Therefore, in view of the principles of notional extension, the respondents 1 to 3 were entitled for compensation under the Employees' Compensation Act. The 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 9 principle was explained yet again by the Hon'ble Supreme Court recently in Daivshala & Others v. Oriental Insurance Company Ltd. and Another [2025 SCC OnLine SC 1534]. I do not find it necessary to make elaborate references to the various judgments cited at the Bar regarding the principle of notional extension.
9. The main contention of the appellant is that the policy would cover the driver and conductor, only with respect to personal injury or death arising in connection with the operation of the insured vehicle. The learned counsel for the appellant stressed that the insured vehicle was not involved in the accident and the deceased was not involved in the operation of the insured motor vehicle at the time of the accident. Hence, the learned counsel contended that the appellant was not liable to indemnify the employer for the liability under the Employees' Compensation Act. He placed reliance over clause 3 under the general exceptions of the policy which reads as under:-
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 10 "GENERAL EXCEPTIONS ......................................................................
3. Except so far as is necessary to meet the requirements of the Motor Vehicles Act, the Company shall not be liable in respect of death arising out of and in the course of employment of a person in the employment of the Insured or in the employment of any person who is indemnified under this policy or bodily injury sustained by such person arising out of and in the course of such employment."
10. He contended that in view of the above, the appellant cannot be held accountable for any liability other than the requirements of the Motor Vehicles Act with respect to persons employed by the insured. The policy document contains a section of various endorsements. The appellant is undoubtedly bound by those endorsements also. IMT-40 under the endorsements is applicable to passenger vehicles. The said endorsement reads as under:-
"IMT-40-LEGAL LIABILITY TO PAID DRIVER AND/OR CONDUCTOR AND/OR CLEANER EMPLOYED IN CONNECTION WITH THE OPERATION OF MOTOR VEHICLE In consideration of the payment of an additional premium it is hereby understood and agreed that 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 11 notwithstanding anything contained herein to the contrary the insurer shall indemnify insured against his legal liability under the Workmen's Compensation Act, 1923 and subsequent amendments of that Act prior to the date of this endorsement, the Fatal Accidents Act, 1855 or at Common Law in respect of personal injury to any paid driver and/or conductor and/or cleaner whilst engaged in the service of the insured in such occupation in connection with the vehicle insured and will in addition be responsible for all costs and expenses incurred with its written consent. The premium to be calculated and paid while taking insurance of the vehicle concurred at the rate of Rs.25/- per driver and/or conductor and/or cleaner. Provided always that:-
(1) this Endorsement does not indemnify the insured in respect of any liability in cases where the insured holds or subsequently effects with any insurer or Group of Underwriters a Policy of Insurance in respect of liability as herein defined for his general employees. (2) the insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligations.
(3) the insured shall keep a record of the name of each driver, cleaner, conductor or person employed in loading and/or unloading and the amount of wages salary and other earnings paid to such employees and shall at all times allow the insurer to inspect such record. (4) in the event of the policy being cancelled at the request of the insured no refund of the premium paid in respect of this Endorsement will be allowed.
Subject otherwise to the terms exceptions, conditions and limitations of this Policy except so far as necessary to meet the requirements, of the Motor Vehicles Act, 1988."
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 12
11. The learned counsel for the appellant pointed out that the legal liability, as per the heading would arise with respect to driver/conductor/cleaner only when they are employed in connection with the 'operation of motor vehicle'. He submitted that the deceased was not employed at the time of the accident in connection with the operation of the insured vehicle and hence the appellant was not liable.
12. I find it difficult to accept the contention of the appellant in this regard. Plain reading of the endorsement under IMT-40 shows that the additional premium is accepted to indemnify the insured against legal liability under the Workmen's Compensation Act, 1923, and any subsequent amendments thereto prior to the date of the endorsement, the Fatal Accidents Act, 1855, or at common law, in respect of personal injury to any driver, conductor, or cleaner while engaged in the service of the insured in connection with the 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 13 insured vehicle. Therefore, separate premium is accepted to indemnify the insured and the liability under the Employees' Compensation Act would definitely fall under the scope of the endorsement. What has been mentioned is personal injury to the driver or conductor or cleaner while engaged in the service of the insured in such occupation in connection with the vehicle insured. A restricted meaning as canvassed by the learned counsel for the appellant cannot be ascribed to the expression 'while engaged in the service of the insured in such occupation in connection with the vehicle insured'. What is principally required to satisfy the said expression is that the employee was engaged in such occupation in connection with the vehicle insured. In the instant case the deceased was the conductor assigned to operate the insured KSRTC bus. Therefore, he was certainly engaged in a particular occupation in connection with the vehicle insured. He was proceeding from his residence to join duty and as found above the principle of notional extension 2025:KER:98497 M.F.A.(ECC).No.34 of 2025 14 would definitely apply. Hence in my view, the requirements of the endorsement - IMT-40 are impeccably fulfilled in this case. Though in the heading of the endorsement, the set of words 'employed in connection with the operation of motor vehicle' are used, in the body- the paragraph under the same, those words are not incorporated. Operating a passenger vehicle, as in the instant case, would mean putting the vehicle to use for the transportation of passengers. The insured vehicle was scheduled to start its trip at 6:20 a.m., and the deceased was travelling from his residence to join duty in the bus. Hence, the insured vehicle, from the point of view of the insured and the employee, was put in operation on the date of the accident. It cannot be said that the vehicle would be in operation for the purpose of the above endorsement only when it is physically operated by starting the trip. Hence, in any view of the matter, the appellant company is liable to indemnify the KSRTC for the liability under the Employees' Compensation Act.
2025:KER:98497 M.F.A.(ECC).No.34 of 2025 15
13. The decision relied on by the learned counsel for the appellant, rendered by the Madras High Court, mainly considered the applicability of the principle of notional extension. The terms of the policy involved in the said case are not discernible from the narration of facts available in the judgment. Hence, no reliance can be placed on the said judgment.
14. I also find merit in the contention raised by the learned Standing Counsel for KSRTC, relying on Chimajirao Kanhojirao Shirke and Another (supra) that the appellant had not pleaded the grounds stressed in this appeal before the Commissioner in its written statement.
In conclusion, the question of law is found against the appellant and the appeal is dismissed.
Sd/-
S.MANU JUDGE skj