Rajasthan High Court - Jaipur
United India Insurance Co. Ltd. vs Smt. Sire Kanwar And Ors. on 22 May, 2006
Equivalent citations: 2007(1)SLJ381(RAJ)
Author: Prakash Tatia
Bench: Prakash Tatia
ORDER Prakash Tatia, J.
1. It was claimed that applicant No. 1's son and applicant No. 2's brother Gayad Singh was the driver of vehicle RJ19 G6800, as employed by non-applicant No. 1. Because of blast in the said vehicle on 12.5.2001 the said driver died on 12.5.2001 itself. The applicant submitted claim petition before the Court of Workmen' s Compensation Commissioner, Jodhpur, impleading the employer and the insurer of the said vehicle in the claim petition. The Workmen's Compensation Commissioner passed the award in favour of the claimants on 29.12.1984. The learned Workmen's Compensation Commissioner held that the Insurance Company is liable to pay the entire compensation amount including the interest and penalty amount awarded in the award.
2. According to the learned Counsel for the appellant, in view of the various judgments, the appellant-Insurance Company cannot be held liable to pay penalty amount because of the simple reason that the penalty amount is not the statutory liability nor insurer accepted to cover said liability. The learned Counsel for the appellant submitted that this view has been taken by this Court in various earlier decisions as well as in the decisions given by the Hon'ble Apex Court. It is also submitted that even as per Condition IMT-17, the Insurance Company can be held liable to indemnify the insured for all legal liabilities and not the liability which is result of default of insured.
3. The learned Counsel for the respondents claimants vehemently submitted that the Division Bench of this Court in its recent judgment delivered in the case of United India Insurance Co. Ltd. v. 5m/. Roop Kanwar and Ors. 2006(2) RCR (Civil) 655 : 2006(2) RDD 726 (Raj.) (DB), clearly held that since the insurer had charged additional premium to cover all liabilities incurred by the insured under the Workmen's Compensation Act, the Insurance Company cannot deny the liability to reimburse the penalty amount.
4. The learned Counsel for both the parties referred various judgments, which I shall be considering hereinbelow:
The earliest judgment on this issue cited is the judgment of this Court delivered in the case of United India Insurance Co. Ltd. v. Roop Kanwar and Ors. . In this case, the Insurance Company charged additional premium of Rs. 16/- for covering the liability for the driver and cleaner. This premium was charged to cover liability of the said persons for which specific endorsement No. 16 was in the insurance policy. The Single Bench of this Court in the said Roop Kanwar's case held that in view of the endorsement No. 16, since additional premium has been paid to the insurer by the insured to cover the liabilities under the Workmen's Compensation Act, 1923 and amounts of penalty and interest have been levelled by the Commissioner under Section 4A of the Act of 1923, therefore, the Insurance Company is liable to pay the amount of penalty also. Relevant portion of the Condition No. 16 is as under:
In consideration of the payment of an additional premium it is hereby understood and agreed that notwithstanding anything contained herein to the contrary the Company shall indemnify the insured against his legal liability under:
The Workmen's Compensation Act, 1923 and subsequent amendment of the 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 Or cleaner or conductor or person employed in loading and/or unloading whilst engaged in the service of the insured in such occupation in connection with any motor vehicle and will in addition be responsible for all costs and expenses incurred with its written consent.
5. Said Roop Kanwar's case of this Court came up for consideration before the Hon'ble Supreme Court in the case of Ved Prakash Garg v. Premi Devi and Ors. . Hon'ble the Supreme Court in Para 18 considered the case of Roop Kanwar (supra), which is as under:
In the case of United India Insurance Co. Ltd. v. Roop Kanwar , a learned Single Judge of the Rajasthan-High Court had to consider a situation where on payment of additional premium the Insurance Company had agreed in the light of Endorsement No. 16 of the policy to cover all liabilities incurred by the insured under Compensation Act. In view of this contractual coverage of liability the Insurance Company in that case was held liable to meet the claim for penalty and interest as imposed upon the insured under Section 4-A(3) of the Compensation Act. This judgment proceeded on its own facts and was concerned with a situation converse to the one as was examined by the Karnataka High Court in Oriental Insurance Co. Ltd. v. Raju . In the case decided by Karnataka High Court, as seen earlier, there was an express exclusion of such liability of the Insurance Company. In the aforesaid case decided by the Rajasthan High Court there was an express inclusion of such liability for the Insurance Company which had taken additional premium. This judgment also, therefore, is of no assistance to either side.
(Emphasis supplied) Even after considering the said judgment, Hon'ble the Apex Court laid down in Para No. 14 (page 13) as under:
So far as this penalty amount is concerned it cannot be said that it automatically flows from the main liability incurred by the insured employer under the Compensation Act. To that extent such penalty amount as imposed upon the insured employer would get out of the sweep of the term 'liability incurred' by the insured employer as contemplated by the proviso to Section 147(1)(b) of the M.V. Act as well as by the terms of the insurance policy found in provisos (b) and (c) to Sub-section (1) of Section II thereof.
(Emphasis supplied) and held in same para as under:
But so far as the amount of penalty imposed on the insured employer under contingencies contemplated by Section 4-A(3)(b) is concerned as that is on account of personal fault of the insured not backed up by any justifiable cause, the Insurance Company cannot be made liable to reimburse that part of the penalty amount imposed on the employer. The latter because of his own fault and negligence will have to bear the entire burden of the said penalty amount with proportionate interest thereof if imposed by the Workmen's Commissioner.
(Emphasis supplied) and ultimately laid down in Para 19 which reads as under:
As a result of the aforesaid discussion it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words the Insurance Company will be liable to meet the claim for compensation along with interest as imposed on the insured employer by the Workmen's Commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4-A Sub-section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen's Commissioner under Section 4- A(3)(b) is concerned, however, the Insurance Company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone.
The Division Bench of this Court in the case of Oriental Insurance Co. Ltd. v. Vilas Devi and Ors. , relying upon the judgment of the Hon'ble Supreme Court delivered in the case of Ved Prakash Garg (supra) and after considering the judgment of Roop Kanwar's case (supra), held that:
The aforesaid pronouncement of the Supreme Court in Ved Prakash Garg's case , leaves no doubt in our mind that the principal amount as well as the interest made payable thereon would remain part and parcel of the legal liability arising under the Workmen's Compensation Act, 1923, but so far as the amount of penalty imposed on the insured employer under contingencies contemplated by Section 4- A(3)(b) is concerned, as that is on account of personal fault of the insured not backed up by any justifiable cause, the Insurance Company cannot be made liable to reimburse that part of the penalty amount imposed on the employer as that is not a legal liability of compensation which automatically arises out of injury caused to the employee during the course of employment but is a result of default committed by the employer in not paying the compensation without reasonable cause. While the liability to pay interest is almost automatic and becomes part of legal liability, penalty does not.
The same issue came up for consideration before another Division Bench of this Court in the case of Oriental Insurance Co. Ltd. v. Momina Begum and Ors. , following the same Ved Prakash Garg's case held that the Insurance Company is not liable to cover and pay the penalty amount in view of the decision of the Hon'ble Supreme Court delivered in the case of Ved Prakash Garg (supra).
6. The learned Counsel for the appellant pointed out that the learned Single Bench of this Court in the case of National Insurance Company Ltd. v. Smt. Nema and Ors. 2003 RAR 148 (Raj.), after considering the condition in the insurance policy having 1MT-17, took contrary view which is as under:
By this endorsement, the appellant Insurance Company agreed to indemnify the insured employer Smt. Santosh for her liability under the Workmen' s Compensation Act, 1923 in respect of personal injury to the driver and the cleaner. In view of the aforesaid contractual coverage of the liability, the appellant Insurance Company has undertaken to indemnify the insured for all liabilities in respect of personal injuries to the driver and the cleaner of the vehicle involved in the accident, which includes compensation, interest and penalty as imposed upon the insured under Section 4- A(3)(b) of the Workmen's Compensation Act, 1923.
Said judgment was challenged by performing D.B. Civil Special Appeal No. 47/2-2 (Civil) -National Insurance Company Ltd. v. Smt. Nema and Ors. The issue was again considered by the Division Bench of this Court in its judgment dated 25.4.2003. The Division Bench reversed the judgment of the Single Bench delivered in the case of Smt. Nema and others and again held that the penalty is not the legal liability and even if premium or additional premium has been taken by the Insurance Company to cover the risk as provided under ITM-17, still the Insurance Company is not liable to pay the penalty amount and in another D.B. Appeal, challenging the same judgment of Deva Ram was also allowed by the Division Bench of this Court in D.B. Civil Special Appeal No. 48/2002(Civil) dated 22.5.2003.
7. The learned Counsel for the appellant further pointed out that the same issue again came up for consideration before the Division Bench in the case of Oriental Insurance Co. Ltd. v. Smt. Kaki Bai and Ors. 2005 RAR 494 (Raj.), wherein also it has been held after considering Ved Prakash Garg's case (supra), that Insurance Company is not liable to pay the penalty amount awarded by the Workmen's Compensation Commissioner.
8. Above referred judgments (1) Oriental Insurance Co. Ltd. v. Vilas Devi and Ors. ; (2) Oriental Insurance Co. Ltd. v. Momina Begum and Ors. ; (3)National Insurance Company Ltd. v. Smt. Nema and Ors. 2003 RAR 148 (Raj.), (4)D.B. Civil Special Appeal No. 48 of 2002 (Civil) decided on 22.5.2003 National Insurance Co. Ltd. v. Deva Ram and Ors. and (5) Oriental Insurance Co. Ltd. v. Smt. Kaki Bai and Ors. 2005 RAR 494 (Raj.) were not before the Division Bench when Roop Kanwar's case [United India Insurance Co. Ltd. v. Smt. Roop Kanwar and Ors. 2006(2) RDD 726 (Raj.) (DB)], was decided.
9. One more judgment has come to the notice of this Court which is delivered in the case of New India Assurance Co. Ltd. v. Harshdbhai Amrutbhai Modhiya and Anr. 2006(3) SLJ 448 (SC) : 2006(2) RCR (Civil) 814 : JT 2006(5) 228. In this case Hon'ble the Apex Court, even considered the question whether interest payable by an insured awarded under the Workmen's Compensation Act, 1923, the insurer is liable to indemnify the insurer ? Hon'ble the Apex Court in view of the term contained in the contract between the insured and insurer excluding the coverage of liability for interest and penalty amount held that the insurer is not liable to even pay the interest amount. The proviso in the insurance contract was as under:
Provided that the insurance granted hereunder is not extended to include:
(i) any interest and/or penalty imposed on the insured on account of his/her failure of comply with the requirements laid down under the W.C. Act, 1923, and
(ii) any compensation payable on account of occupational diseases listed in part C of Schedule III of the W.C. Act, 1923.
The Apex Court in the above case of Uarshadbhai Amrutbhhai Modhiya also considered the earlier decision delivered in the case of P.J. Narayan v. Union of India and Ors. , wherein it has been held that "an insurance is a matter of contract between the Insurance Company and the insured. It is always open to the Insurance Company to refuse to insure. Similarly they are entitled to prove by contract that they will not take on liability for interest." Hon'ble the Apex Court further held that "in the absence of any statute to that effect, the Insurance Company cannot be forced by Courts to take on liabilities which they do not want to take on." The above judgment of P.J. Narayan was considered by this Court (by me) in the case of New India Assurance Co. Ltd. v. Bhoma Ram @ Hanuta Ram and Anr. 2004 RAR 415 (Raj,) and it has been held that the Insurance Company can contract out so as to make the insurer not liable as regards certain matters and in case there is contract of exclusion of any matter then that condition is not void and the Insurance Company cannot be held liable for the matters which have been specifically excluded by contract.
10. The judgment of P.J. Narayan has been considered in the subsequent judgment of this Court in the case of Kosher Begum (Smt.) and Anr. v. Ashfakh Khan, 2005 RAR 330 (Raj.). The judgment of P.J. Narayan is also relevant as pointed out by the learned Counsel for the appellant also.
11. At this stage it will be worthwhile to quote the condition IMT-17, a condition incorporated in the insurance policy, which reads:
IMT-17-Legal Liability to Persons Employed in connection with the operation and/or maintaining, and/or unloading or goods carrying commercial vehicles In consideration of the payment of an additional premium it is hereby understood and agreed that notwithstanding anything contained herein to the contrary the Company shall indemnify the insured against his legal liability under the Workmen's. Compensation Act, 1923 and subsequent amendment of the Act prior to the date of the Endorsement, the Fatal Accidents Act, 1855 or at common Law in respect of personal injury to any paid driver or cleaner or persons employed in loading/or unloading but in any case not exceeding seven in number including driver and cleaner whilst engaged in the service of the insured in such occupation in connection with the goods carrying Commercial vehicle and will in addition to responsible for the costs and expenses incurred with it written consent;
The premium have been calculated at the rate of Rs. 15/- per driver and/or cleaner and/or person employed in loading and/or unloading but not exceeding seven in number including driver and cleaner.
Provided always that:
(1) This Endorsement does not indemnify the insured in respect of any liability in case wherein insured holds or subsequently effect with any Insurance Company of policy of insurance in respect of liability as herein defined for this general employees.
(2) The insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligation.
(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 the wages/salary and other earnings paid to such employees and shall at all times allow the Company 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.
On the basis of said clause, it is submitted that the Insurance Company covers only legal liability under the Workmen's Compensation Act, 1923 and not the liability which is result of default of the insured, In view of the above, the issue can be considered only by the Division Bench to settle the controversy.
Therefore, the matter may be placed before Hon'ble the Chief Justice for placing it before the appropriate Bench.