Patna High Court
Oriental Fire And General Insurance Co. ... vs Presiding Officer, Labour Court And ... on 29 July, 1987
Equivalent citations: II(1988)ACC1, [1989]66COMPCAS699(PATNA)
Author: S.B. Sinha
Bench: S.B. Sinha
JUDGMENT S.B. Sinha, J.
1. This writ petition involves a short but interesting question of law.
2. The petitioner is an insurance company and a truck bearing registration No. BRJ 4221 belonging to respondent No. 3 was insured with it. Kuldip Singh (respondent No. 2) who was a driver of the said truck of respondent No. 3 met with an accident on March 16, 1978, causing serious injuries to his person and as a result whereof, one of his legs had to be amputated. Respondent No. 2 filed an application before the Presiding Officer, Labour Court, under the provisions of the Workmen's Compensation Act, 1923 (hereinafter referred to as the Compensation Act), claiming compensation for meeting with the aforesaid accident, which according to him, arose out of and in the course of employment. In the said proceeding, the petitioner-company was also a party.
3. For the purpose of disposal of this application, the only short facts which are required to be noted are that, by order dated August 4, 1983. passed in W.C. Case No. 17 of 1978, respondent No. 1 allowed the said petition by awarding compensation to the extent of Rs. 30,240 and further directed that the aforementioned amount be paid by the petitioner-company to respondent No. 2.
4. The only question raised by Sri Birendra Kumar Sinha, learned counsel appearing on behalf of the petitioner, is that the Workmen's Compensation Act is a self-contained code and the liability of the petitioner would arise only if the case comes within the purview of Section 14 of the Compensation Act. He submits that, under the aforementioned provisions, the insurance company's liability comes into being only when the employer becomes an insolvent. He further submits that the liability of the insurance company to indemnify the owner of the insured vehicle arises only in the event a claim petition is filed before the Claims Tribunal in terms of the provisions of Section 110 of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act). Reliance in this connection has been placed by learned counsel in the case of R.B. Moondra and Co. v. Bhanwari [1970] Lab IC 695.
5. Mr. Satya Narain Sharma, learned counsel appearing on behalf of respondent No. 2, however, submitted that Section 14 of the Compensation Act has lost much of its force and cannot now be taken recourse to in view of the fact that covering the risk of a driver, khalasi, etc., and also insuring the vehicle is now a statutory must. He submits that the liability of the owner to get the vehicle insured is a statutory liability so far as the driver is concerned. Developing his argument, learned counsel submits that extensive amendments were carried out in the Motor Vehicles Act with regard to the aforementioned provisions of getting the vehicle insured much after the Compensation Act came into force and as such Section 14 thereof shall have no application whatsoever to the facts and circumstances of this case.
6. Section 14 of the Compensation Act reads as follows :
" 14. Insolvency of employer.--(1) Where any employer has entered into a contract with any insurers in respect of any liability under this Act to any workman, then, in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or if the employer is a company, in the event of the company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in any law for the time being in force relating to insolvency or the winding up of companies, be transferred to and vest in the workman, and upon any such transfer, the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so, however, that the insurers shall not be under any greater liability to the workman than they would have been under to the employer.
(2) If the liability of the insurers to the workman is less than the liability of the employer to the workman, the workman may prove for the balance in the insolvency proceeding or liquidation.
(3) Where in any case such as is referred to in Sub-section (1) the contract of the employer with the insurers is void or voidable by reason of non-compliance on the part of the employer with any terms or conditions of the contract (other than a stipulation for the payment of premia), the provisions of that sub-section shall apply as if the contract were not void or voidable and the insurers shall be entitled to prove in the insolvency proceedings or liquidation for the amount paid to the workman:
Provided that the provisions of this sub-section shall not apply in any case in which the workman fails to give notice to the insurers of the happening of the accident and of any resulting disablement as soon as practicable after he becomes aware of the institution of the insolvency or liquidation proceedings.
(4) There shall be deemed to be included among the debts which under Section 49 of the Presidency Towns Insolvency Act, 1909 (IIIof 1909), or under Section 61 of the Provincial Insolvency Act, 1920 (V of 1920), or under Section 230 of the Indian Companies Act, 1913 (VII of 1913), are in the distribution of the property of an insolvent or in the distribution of the assets of a company being wound up to be paid in priority to all other debts, the amount due in respect of any compensation the liability wherefor accrued before the date of the order of adjudication of the insolvent or the date of the commencement of the winding up, as the case may be and those Acts shall have effect accordingly.
(5) Where the compensation is a half-monthly payment, the amount due in respect thereof, shall, for the purpose of this section, be taken to be the amount of the lump sum for which the half-monthly payment could, if redeemable, be redeemed if application were made for that purpose under Section 7, and a certificate of the Commissioner as to the amount of such sum shall be conclusive proof thereof.
(6) The provisions of Sub-section (4) shall apply in the case of any amount for which the insurer is entitled to prove under Sub-section (3), but otherwise these provisions shall not apply where the insolvent or the company being wound up has entered into such a contract with the insurer as is referred to in Sub-section (1).
(7) This Section shall not apply where a company is wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company ".
7. There cannot be any doubt that the employer and insurer are absolutely separate and distinct persons and under the provisions of the said Act, the insurer does not ipso facto become liable only because the employer has been held to be so. Under the provisions of Section 14 of the Compensation Act, the liability of the insurer comes into being only in the event of one or other of the conditions mentioned therein is fulfilled. However, from a perusal of the aforementioned provision, it would be evident that the said provisions apply only if the employer had entered into a contract with any insurer in respect of any liability under the Compensation Act (underlining is mine for the sake of emphasis). Therefore, it is absolutely clear that Section 14 contemplates two situations--(i) that a contract must be entered into by an employer with an insurer in respect of the liability of the workman and (ii) such liability must arise under the said Act.
8. However, the situation is now completely changed in view of the extensive amendments made in Chapter VIII of the Motor Vehicles Act as noticed hereinafter. The Motor Vehicles Act was enacted in the year 1939. Chapter VIII of the Act provides for insurance of motor vehicles against third party risks. Under the provisions of the Act also, a test of competence to drive is provided for and such person who passes the test of competence only can be granted a licence to drive the vehicles.
9. Under the provisions of Section 94 of the Act, a person is prohibited from using a motor vehicle in a public place unless the same is covered by a policy of insurance complying with the requirement of the said Chapter. Under Sub-section (4) of Section 95 of the Act, the policy shall be by way of a certificate of insurance in the prescribed form within the meaning of Section 93(b) of the Act. Section 95(1)(b) of the Act provides that, in order to comply with the requirements of the said Chapter, a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2). Proviso to the aforementioned provision specifically covers the case of an employee engaged in driving the vehicle. Under Section 96(1) and (2), a statutory duty has been cast upon the insurer to satisfy the judgment against persons insured in respect of third party' risks. Section 96 of the Act further provides for other rights, liabilities and obligations on the part of the insurer.
10. Although a Tribunal has been set up to entertain a claim arising out of an accident by reason of use of a motor vehicle and an elaborate procedure has been laid down therefor, so far as an employee is concerned, a separate option has been conferred upon him either to prefer a claim under Section 110 of the Act or under the provision of the Workmen's Compensation Act, but not under both as contained in Section 110AA of the Act.
11. In view of the aforementioned provision of Section 110AA of the Act, a provision has been made enabling a person to adjudicate the forum. In my opinion, the very fact that the Motor Vehicles Act itself has made an exception with regard to an employee, the same clearly demostrates that a person, merely because he prefers a claim under the Compensation Act and not under the Act, does not thereby ipso facto lose his statutory right nor is the insurer absolved from its statutory liability to indemnify the owner of a vehicle to the extent it is made statutorily liable.
12. It is now well-settled that a contract of insurance is entered into so that the insured may be indemnified by the insurer in the event it becomes liable to pay compensation in respect of the matters covered under the insurance policy and for which a certificate of insurance has been obtained by him. From a perusal of the provisions of Section 96 of the Act, it is evident that the liability of the insurer extends to a case even where it is not made a party as, in that event also, an award of compensation may be executed as against the insurer. From the scheme of the Act, it is evident that the rights and liabilities of both the insurers as also the insured are statutory ones. In view of the statutory liability imposed upon the insurer by reason of the provisions engrafted ,in the Act, in my opinion, the insurer cannot escape such liability merely because a claim has been filed by an insured under the Compensation Act and not under the Motor Vehicles Act. In this connection, reference may be made to the cases of Northern India Motor Owners Insurance Co. Ltd. v. Magan Shanaji Solanki [1974] Lab IC 72, New India Assurance Co. Ltd. v. Smt. Fatma Bai [1972] 61 FJR 299 (MP); [1982] Lab IC 732, New India Assurance Co. Ltd. v. M. Jayarama Naik [1982] Lab IC 1235 and New India Assurance Co, Ltd. v. Smt. Darshani Dei [1984] Lab IC 489. I respectfully agree with the aforementioned decisions.
13. In the result, the application is dismissed, but without any order for costs.
14. By an order dated January 20, 1984, a Bench of this court, while admitting this application, stayed the operation of the order as contained in annexure 3. In that view of the matter, the petitioner is hereby directed to pay the amount as directed by respondent No. 1 in its order dated August 4, 1983, as contained in annexure 3 to this petition with interest at the rate of 12 per cent. per annum. On the facts and in the circumstances of the case, respondent No. 2 shall also be entitled to the costs of this petition from the petitioner which are quantified at Rs. 1,000.