IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
F.A.O. No. 973 of 1985
Date of Decision : November 14, 2008
Oriental Insurance Company Limited
....Appellant
Versus
Sahara Bano and another
.....Respondents
CORAM : HON'BLE MR. JUSTICE T.P.S. MANN
Present : Mr. N.K. Khosla, Advocate
for the appellant.
None for the respondents.
T.P.S. MANN, J.
Application filed by Sahara Bano claimant/respondent No. 1
for the grant of compensation on account of death of her husband Ismile
was accepted by learned Workmen’s Compensation Commissioner,
Gurgaon vide impugned order dated March 29, 1985 and the appellant-
Insurance Company and Inder Sain Bhasin/respondent No. 2-owner of the
offending truck were held jointly and separately responsible for depositing
an amount of Rs. 57,500/- as compensation and penalty of Rs. 28,750/-,
besides interest on the amount of compensation from 20.9.1984 till the
deposit of the same with the learned Commissioner. Aggrieved of the
same, the present appeal has been filed under Section 30 of the Workmen’s
Compensation Act, 1923 (hereinafter referred to as ‘the Act’).
F.A.O. No. 973 of 1985 -2-
The facts of the case are that deceased Ismile had been
employed by respondent No. 2 for working as a Cleaner on his truck
bearing registration No. DEG-2666, which stood insured with the
appellant-Insurance Company. While the deceased was on duty on the
aforementioned truck on 20.9.1984, the truck was involved in an accident
and he died at the spot. Prayer was, accordingly, made by the claimant-
respondent for awarding an amount of Rs. 2,00,000/- as compensation.
The claim petition was opposed by the Insurance Company by
pleading that the accident which occurred on 20.9.1984 did not arise out of
and in the course of employment of deceased Ismile. Notice issued by the
claimant was not in conformity with the mandatory procedure and,
therefore, the Insurance Company was not liable to pay any amount of
compensation. In his written statement, the owner of the truck admitted
the fact that his truck was involved in the accident and deceased Ismile
used to get Rs. 500/- per month as wages.
On the pleadings of the parties, learned Commissioner framed
the following issues :-
1. Whether the applicant is entitled to the
amount claimed in the application ? OPA.
2. Relief.
After going through the pleadings of the parties and evidence
led by them, learned Commissioner held that the death of Ismile stood
F.A.O. No. 973 of 1985 -3-
proved and, therefore, the claimant-respondent was entitled to receive the
aforementioned amount as compensation and penalty along with interest.
The only submission made on behalf of the appellant-
Insurance Company is that the liability of the Insurance Company to
indemnify the insured in respect of any liability under this Act could only
arise in case the employer was 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. No such
circumstances had arisen and, therefore, the Insurance Company was not
liable to indemnify the insured, i.e. respondent No. 2.
Section 14 (1) of the Act reads as under :-
“Section 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
F.A.O. No. 973 of 1985 -4-
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 the employer.”
Policy of Insurance Ex. R.1 is available on the record. It was
clearly stated therein by the Insurance Company that it would indemnify
the insured against all sums, including claimant’s costs and expenses, which
the insured shall become legally liable to pay in respect of :-
(i) death of or bodily injury to any person caused by
or arising out of the use (including the loading
and/or unloading) of the Motor Vehicle.
(ii) damage to property caused by the use (including
the loading and/or unloading) of the Motor
Vehicle.”
As per the cover note issued on behalf of the Insurance
Company, it had charged an amount of Rs. 48/- under heading P.A. to
Driver/Cleaner etc, besides four coollies at the rate of Rs. 8/- per person.
However, under certain conditions, the Insurance Company
was not liable under the policy in respect of :-
(i) any accident loss damage and/or liability
caused sustained or incurred outside the
F.A.O. No. 973 of 1985 -5-Geographical area,
(ii) any claim arising out of any contractual
liability,
(iii) any accident loss damage and/or liability caused
sustained or incurred whilst the Motor Vehicle
is–
(a) being used otherwise than in accordance
with the Limitations as to Use or
(b) being driven by any person other than
driver.
(iv) any accident loss damage and/or liability
caused sustained or incurred after any variation
in or termination of the Insured’s Interest in the
Motor Vehicle.
(v) (a) any accident loss or damage to any
property whatsoever or any loss or expense
whatsoever resulting or arising therefrom or
any consequential loss,
(b) any liability of whatsoever nature
directly or indirectly caused by or contributed
to by or arising from ionising radiations or
contamination by radioactivity from any
F.A.O. No. 973 of 1985 -6-nuclear fuel or from any nuclear waste from the
combustion of nuclear fuel. For the purpose of
the exception combustion shall include any self
sustaining process of nuclear fission.
(vi) any accident loss damage or liability directly
or indirectly caused by or contributed to by or
arising from nuclear weapons material
(vii) any accident loss damage or liability caused
sustained or incurred during the period of
requisition or commandeering by the
Government for any purpose.
It stands proved from the evidence that deceased Ismile used to
work as a Cleaner on the truck in question and, therefore, Insurance
Company was liable to indemnify the insured in respect of the death of
Ismile.
Nowhere in the exception Clause any stipulation was made that
the liability of the Insurance Company would arise only in the event of the
employer/insured becoming insolvent. In such a situation, provisions of
Section 14(1) of the Act were not applicable to the facts and circumstances
of the case.
Even otherwise, Section 14(1) of the Act does not absolve the
Insurance Company of its liability to pay the compensation amount.
Instead, it only enables the Insurance Company to step into the shoes of the
F.A.O. No. 973 of 1985 -7-
insured 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. Under any of these situations, the rights of the employer
against the Insurance Company gets transferred to and vests in the
workman. Considered from this angle, the argument submitted on behalf of
the appellant that the Insurance Company was not liable to indemnify the
insured unless and until the employer became insolvent cannot be accepted.
Another submission made on behalf of the appellant is that the
Insurance Company be, at the most, burdened with liability to pay the
amount of compensation and not the penalty or interest. However, as is
clear from the insurance policy, the Insurance Company was to indemnify
insured against all sums, including costs and expenses, which the insured
became legally liable to pay Therefore, the Insurance Company cannot
avoid its liability for the penalty or interest as the same was imposed on
account of not paying the amount of compensation from the date it fell due.
No other point has been urged on behalf of the appellant
The impugned order passed by the learned Workmen’s
Compensation Commissioner, Gurgaon was based upon proper
appreciation of the pleadings of the parties and the evidence led by them.
No case is made out for interference in the impugned order. The appeal,
being without any merit is, therefore, dismissed. No order as to costs.
F.A.O. No. 973 of 1985 -8-
At the time of admission of the appeal, learned counsel for the
appellant had stated that the amount of compensation had already been paid
to the claimant, whereas the amount of penalty and interest stood deposited
by the Insurance Company. Accordingly, it was directed that the amount so
deposited be put in fixed deposit in a nationalised bank for 37 months. If
that be so, the amount of penalty and interest along with accrued interest be
disbursed to the claimant-respondent on proper identification and against
receipt.
( T.P.S. MANN )
November 14, 2008 JUDGE
satish
Whether to be referred to the Reporters : YES / NO