Judgement
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE
JURISDICTION CIVIL APPEAL NO. 8925 OF 2012 (Arising out of S.L.P. (Civil) No.
17272 of 2006)
Sanjeev Kumar Samrat ... Appellant
Versus
National Insurance Co.
Ltd. and others ... Respondents
WITH CIVIL APPEAL NO. 8926 OF 2012 (Arising
out of S.L.P. (Civil) No. 17273 of 2006)
Sanjeev Kumar Samrat ... Appellant
Versus
National Insurance Co. Ltd. ... Respondent
Dipak Misra, J.
Leave granted.
2. The centripodal issue that emanates for consideration in these appeals is
whether the insurer is obliged under law to indemnify the owner of a goods
vehicle when the employees engaged by the hirer of the vehicle travel with the
owner of the goods on the foundation that they should be treated as
“employees†covered under the policy issued in accordance with the provision
contained under Section 147 of the Motor Vehicles Act, 1988 (for brevity “the
Actâ€).
3. The expose’ of facts are that a truck bearing HP/10/0821 was hired on
12.4.2000 for carrying iron rod and cement by one Durga Singh who was travelling
with the goods along with two of his labourers. When the vehicle was moving
through Khara Patthar to Malethi, 1.5 KM ahead of Khara Patthar, about 4.30
p.m., it met with an accident as a consequence of which the labourers, namely,
Nagru Ram and Desh Raj and also Durga Singh, sustained injuries and eventually
succumbed to the same.
4. The legal heirs of all the deceased persons filed separate claim petitions
under Section 166 of the Act before the Motor Accidents Claims Tribunal (II),
Shimla (for short “the tribunalâ€). Before the tribunal, respondent No. 3,
namely, National Insurance Company Ltd., apart from taking other pleas,
principally took the stand that it was not liable to indemnify the labourers
employed by the hirer. The owner of the truck, the present appellant, admitted
the fact of hiring the truck but advanced the plea that the insurer was under
legal obligation to indemnify the owner.
5. On consideration of the evidence brought on record, the tribunal came to
hold that the legal representatives of Nagru Ram and Desh Raj were covered as
per the insurance policy, exhibit RW-2/3/A, as the policy covered six employees
and accordingly fixed the liability on the insurer. As far as the legal
representative of Desh Raj is concerned, the tribunal treated him as the owner
of the goods who was travelling along with the goods and accordingly saddled the
liability on the 3rd respondent therein.
6. Being grieved by the awards passed by the tribunal, the insurer preferred
FAO (MBA) Nos. 175, 176 and 178 of 2003 before the High Court of Himachal
Pradesh at Shimla. In appeal, the learned single Judge, by order dated
13.1.2006, allowed FAO Nos. 175 and 176 of 2003 wherein the legal
representatives of the deceased employees were the claimants. As far as FAO No.
178 of 2003 is concerned, the High Court concurred with the finding recorded by
the tribunal that Durga Singh was the owner of the goods and travelling along
with the goods and, therefore, the insurer was liable to pay compensation to his
legal representatives. It is worthy to note that as the insurance company had
already deposited the amount of compensation, the High Court, placing reliance
on the decision in National Insurance Company Ltd. v.
Baljit Kaur and others[1], directed that the insurance company having
satisfied the award shall be entitled to recover the same along with interest
from the owner-insured by initiating execution proceedings before the tribunal.
Hence, the present appeals at the instance of the owner of the vehicle.
7. We have heard Mr. Rajesh Gupta, learned counsel for the appellant, and Mr.
M. K Dua, learned counsel for respondent No. 1.
8. It is submitted by Mr. Gupta that the High Court has committed serious
error in coming to hold that an employee of the hirer is not covered without
appreciating the terms of the policy which covers the driver and six employees.
Learned Counsel has laid emphasis on the words “any person†used in Section
147 of the Act. Referring to the said provision, it is urged by him that the
term “employee†has to be given a broader meaning keeping in view the
language employed in the policy and also in view of the fact that the Act is a
piece of beneficial legislation. It is his further submission that there is a
distinction between “passenger†in a goods vehicle and an “employee†of
the hirer of the vehicle but the High Court has gravely erred by not
appreciating the said distinction in proper perspective.
9. Mr. M.K. Dua, learned counsel for the first respondent, combating the
aforesaid proponements, contended that the decision rendered by the High Court
is absolutely flawless inasmuch as the entire controversy is covered by many a
dictum of this Court some of which have been appositely referred to by the High
Court. It is urged by him that the extended meaning which is argued to be given
to the term “employee†by the appellant is not legally acceptable as the
employee has to be that of the insurer. It is canvassed by him that there is a
manifest fallacy in the argument propounded on behalf of the appellant that the
policy covers such kinds of employees though on the plainest reading of the
policy, it would be vivid that the same does not cover such categories of
employees. It is his further submission that the policy in question is an “Act
Policy†and in the absence of any additional terms in the contract of
insurance, the same can be broadened to travel beyond the language employed in
the policy to cover the employees of the owner of the goods making the insurer
liable.
10. To appreciate the controversy, it is necessary to refer to certain
statutory provisions. Section 146 of the Act provides for the necessity for
injuries against third party risk. On a reading of the said provision, there can
be no trace of doubt that the owner of the vehicle is statutorily obliged to
obtain an insurance for the vehicle to cover the third party risk, apart from
the exceptions which have been carved out in the said provision. Section 147 of
the Act deals with requirements of policies and limits of liability. The
relevant part of Section 147 (1) is reproduced below:- “147. Requirements of
policies and limits of liability.- (1) In order to comply with the requirements
of this Chapter, a policy of insurance must be a policy which- (a) is issued by
a person who is an authorised insurer; or (b) insures the person or classes of
persons specified in the policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by him in respect of the death
of or bodily [injury to any person, including owner of the goods or his
authorised representative carried in the vehicle] or damage to any property of a
third party caused by or arising out of the use of the vehicle in a public
place;
(ii) against the death of or bodily injury to any passenger of a public
service vehicle caused by or arising out of the use of the vehicle in a public
place:
Provided that a policy shall not be required— (i) to cover liability in
respect of the death, arising out of and in the course of his employment, of the
employee of a person insured by the policy or in respect of bodily injury
sustained by such an employee arising out of and in the course of his employment
other than a liability arising under the Workmen's Compensation Act, 1923 (8 of
1923) in respect of the death of, or bodily injury to, any such employee— (a)
engaged in driving the vehicle, or (b) if it is a public service vehicle engaged
as conductor of the vehicle or in examining tickets on the vehicle, or (c) if it
is a goods carriage, being carried in the vehicle, or (ii) to cover any
contractual liability.â€
11. Be it noted, before Section 147(1)(b)(i) came into existence in the
present incarnation, it stipulated that a policy of insurance must be a policy
which insured the person or classes of persons to the extent specified in
sub-section (2) against the liability incurred by him in respect of the death of
or bodily injury to any person or damage to any property or third party caused
by or arising out of the use of the vehicle in public place.
12. Regard being had to the earlier provision and the amendment, this Court
in New India Assurance Co. Ltd. v. Satpal Singh[2], scanned the anatomy of the
provision and also of Section 149 of the Act and expressed the view that under
the new Act, an insurance policy covering the third party risk does not exclude
gratuitous passenger in a vehicle, no matter that the vehicle is of any type or
class. It was further opined that the decisions rendered under the 1939 Act in
respect of gratuitous passengers were of no avail while considering the
liability of the insurer after the new Act came into force.
13. The correctness of the said decision came up for consideration before a
three-Judge Bench in New India Assurance Co. Ltd. v. Asha Rani and Others[3].
The learned Chief Justice, speaking for himself and H.K.
Sema, J. took note of Section 147(1) prior to the amendment and the amended
provision and the objects and reasons behind the said provision and came to hold
as follows:- “The objects and reasons of clause 46 also state that it seeks to
amend Section 147 to include owner of the goods or his authorised representative
carried in the vehicle for the purposes of liability under the insurance policy.
It is no doubt true that sometimes the legislature amends the law by way of
amplification and clarification of an inherent position which is there in the
statute, but a plain meaning being given to the words used in the statute, as it
stood prior to its amendment of 1994, and as it stands subsequent to its
amendment in 1994 and bearing in mind the objects and reasons engrafted in the
amended provisions referred to earlier, it is difficult for us to construe that
the expression “including owner of the goods or his authorised representative
carried in the vehicle†which was added to the pre-existing expression
“injury to any person†is either clarificatory or amplification of the
pre-existing statute. On the other hand it clearly demonstrates that the
legislature wanted to bring within the sweep of Section 147 and making it
compulsory for the insurer to insure even in case of a goods vehicle, the owner
of the goods or his authorised representative being carried in a goods vehicle
when that vehicle met with an accident and the owner of the goods or his
representative either dies or suffers bodily injury.†[Emphasis supplied]
14. S.B. Sinha, J., in his concurring opinion, stated thus: - “Furthermore,
sub-clause (i) of clause (b) of sub-section (1) of Section 147 speaks of
liability which may be incurred by the owner of a vehicle in respect of death of
or bodily injury to any person or damage to any property of a third party caused
by or arising out of the use of the vehicle in a public place, whereas
sub-clause (ii) thereof deals with liability which may be incurred by the owner
of a vehicle against the death of or bodily injury to any passenger of a public
service vehicle caused by or arising out of the use of the vehicle in a public
place.
An owner of a passenger-carrying vehicle must pay premium for covering the
risks of the passengers. If a liability other than the limited liability
provided for under the Act is to be enhanced under an insurance policy,
additional premium is required to be paid. But if the ratio of this Court's
decision in New India Assurance Co. v.
Satpal Singh[4] is taken to its logical conclusion, although for such
passengers, the owner of a goods carriage need not take out an insurance policy,
they would be deemed to have been covered under the policy wherefor even no
premium is required to be paid.†[Emphasis supplied] Being of the aforesaid
view, the three-Judge Bench overruled the decision in Satpal Singh (supra).
15. In Baljit Kaur (supra) and National Insurance Co. Ltd. v. Bommithi
Subbhayamma and Others[5], the aforesaid view was reiterated.
16. In New India Assurance Co. Ltd. v. Vedwati and Others[6], after referring
to the scheme of the Act and the earlier pronouncements, it has been held that
the provisions of the Act do not enjoin any statutory liability on the owner of
a vehicle to get his vehicle insured for any passenger travelling in a goods
carrier and the insurer would have no liability therefor.
17. In National Insurance Co. Ltd. v. Cholleti Bharatamma and Others[7], the
Court laid down that the provisions engrafted under Section 147 of the Act do
not enjoin any statutory liability on the owner of a vehicle to get his vehicle
insured for any passenger travelling in a goods vehicle and hence, any injury to
any person in Section 147(1)(b) would only mean a third party and not a
passenger travelling in a goods carriage, whether gratuitous or otherwise.
18. At this juncture, we may refer with profit to the decision of a three-
Judge Bench in National Insurance Co. Ltd. v. Prembati Patel and Others[8]
wherein the legal representatives of the driver of the truck had succeeded
before the High Court and were granted compensation of Rs.2,10,000/- repelling
the contention of the insurer that the liability was restricted as provided
under the Workmen’s Compensation Act, 1923 (for short “the 1923 Actâ€).
After discussing the schematic postulates of the provision, the Court ruled that
where a policy is taken by the owner of the goods vehicle, the liability of the
insurance company would be confined to that arising under the 1923 Act in case
of an employer. It further observed that the insurance policy being in the
nature of a contract, it is permissible for an owner to take such a policy
whereunder the entire liability in respect of the death of or bodily injury to
any such employee as is described in Sub-Sections (a), (b) or (c) of the proviso
to Section 147(1)(b) may be fastened upon the insurance company and the insurer
may become liable to satisfy the entire award. But for the said purpose, he may
be required to pay additional premium and the policy must clearly show that the
liability of the insurance company is unlimited.
19. Keeping in view the aforesaid enunciation of law, it is to be seen how
the term “employee†used in Section 147 is required to be understood.
Prior to that, it is necessary to state that as per Section 147(1)(b)(i), the
policy is required to cover a person including the owner of the goods or his
authorised representative carried in the vehicle. As has been interpreted by
this Court, an owner of the goods or his authorised agent is covered under the
policy. That is the statutory requirement. It does not cover any passenger. We
are absolutely conscious that the authorities to which we have referred to
hereinbefore lay down the principle regarding non- coverage of passengers. The
other principle that has been stated is that the insurer’s liability as
regards employee is restricted to the compensation payable under the 1923 Act.
In this context, the question that has been posed in the beginning to the effect
whether the employees of the owner of goods would come within the ambit and
sweep of the term “employee†as used in Section 147(1), is to be answered.
In this context, the proviso to Section 147(1)(b) gains significance. The
categories of employees which have been enumerated in the sub-clauses (a), (b)
and (c) of the proviso (i) to Section 147(1) are the driver of a vehicle, or the
conductor of the vehicle if it is a public service vehicle or in examining
tickets on the vehicle, if it is a goods carriage, being carried in the vehicle.
It is submitted by the learned counsel for the appellant that sub- clause (c) is
of wide import as it covers employees in a goods carriage being carried in a
vehicle. The learned counsel for the insurer would submit that it should be read
in the context of the entire proviso, regard being had to the schematic concept
of the 1923 Act and the restricted liability of the insurer. It is further urged
that contextually read, the meaning becomes absolutely plain and clear that
employee which is statutorily mandated to be taken by the insured only covers
the employees employed or engaged by the employer as per the policy.
20. It is the settled principle of law that the liability of an insurer for
payment of compensation either could be statutory or contractual. On a reading
of the proviso to Sub-Section (1) of Section 147 of the Act, it is demonstrable
that the insurer is required to cover the risk of certain categories of
employees of the insured stated therein. The insurance company is not under
statutory obligation to cover all kinds of employees of the insurer as the
statute does not show command. That apart, the liability of the insurer in
respect of the said covered category of employees is limited to the extent of
the liability that arises under the 1923 Act. There is also a stipulation in
Section 147 that the owner of the vehicle is free to secure a policy of
insurance providing wider coverage.
In that event, needless to say, the liability would travel beyond the
requirement of Section 147 of the Act, regard being had to its contractual
nature. But, a pregnant one, the amount of premium would be different.
21. At this stage, we may usefully refer to Section 167 of the Act which
reads as follows: - “167. Option regarding claims for compensation in certain
cases.- Notwithstanding anything contained in the Workmen’s Compensation Act,
1923 (8 of 1923) where the death of, or bodily injury to, any person gives rise
to a claim for compensation under this Act and also under the Workmen’s
Compensation Act, 1923, the person entitled to compensation may without
prejudice to the provisions of Chapter X claim such compensation under either of
those Acts but not under both.†From the aforesaid provision, it is quite
vivid that where a death or bodily injury to any person gives rise to a claim
under the Act as well as under the 1923 Act, the said person is entitled to
compensation under either of the Acts, but not under both.
22. Coming to the scheme of the 1923 Act, it is worth noticing that under
Section 3 of the said Act, the employer is liable to pay compensation to the
workman in respect of personal injury or death caused by an accident arising out
of or in the course of his employment. Section 4 provides the procedure how the
amount of compensation is to be determined. In this context, we may usefully
quote a passage from Oriental Insurance Co. Ltd.
v. Devireddy Konda Reddy and Others[9]: - “....Section 147 of the Act
mandates compulsory coverage against death of or bodily injury to any passenger
of “public service vehicleâ€. The proviso makes it further clear that
compulsory coverage in respect of drivers and conductors of public service
vehicle and employees carried in goods vehicle would be limited to liability
under the Workmen’s Compensation Act, 1923 (in short “the WC Actâ€). There
is no reference to any passenger in “goods carriage.†[Underlining is ours]
23. In Ved Prakash Garg v. Premi Devi and Others[10], after referring to the
scheme of the 1923 Act in the context of payment of penalty for default by the
insurer under Section 4-A of the Act, this Court held thus: - “On a conjoint
operation of the relevant schemes of the aforesaid twin Acts, in our view, there
is no escape from the conclusion that the insurance companies will be liable to
make good not only the principal amounts of compensation payable by insured
employers but also interest thereon, if ordered by the Commissioner to be paid
by the insured employers. Reason for this conclusion is obvious. As we have
noted earlier the liability to pay compensation under the Workmen's Compensation
Act gets foisted on the employer provided it is shown that the workman concerned
suffered from personal injury, fatal or otherwise, by any motor accident arising
out of and in the course of his employment. Such an accident is also covered by
the statutory coverage contemplated by Section 147 of the Motor Vehicles Act
read with the identical provisions under the very contracts of insurance
reflected by the policy which would make the insurance company liable to cover
all such claims for compensation for which statutory liability is imposed on the
employer under Section 3 read with Section 4-A of the Compensation Act.â€
[Emphasis supplied] Thereafter, the Bench proceeded to state thus:- “So far as
interest is concerned it is almost automatic once default, on the part of the
employer in paying the compensation due, takes place beyond the permissible
limit of one month. No element of penalty is involved therein. It is a statutory
elongation of the liability of the employer to make good the principal amount of
compensation within permissible time-limit during which interest may not run but
otherwise liability of paying interest on delayed compensation will ipso facto
follow.†Though the said decision was rendered in a different context, yet we
have referred to the same only to highlight the liability of the insurer in
respect of certain classes of employees.
24. It is worthy to note that sub-clause (i)(c) refers to an employee who is
being carried in the vehicle covered by the policy. Such vehicle being a goods
carriage, an employee has to be covered by the statutory policy.
On an apposite reading of Sections 147 and 167 the intendment of the
Legislature, as it appears to us, is to cover the injury to any person including
the owner of the goods or his authorised representative carried in a vehicle and
an employee who is carried in the said vehicle. It is apt to state here that the
proviso commences in a different way. A policy is not required to cover the
liability of the employee except an employee covered under the 1923 Act and that
too in respect of an employee carried in a vehicle. To put it differently, it
does not cover all kinds of employees. Thus, on a contextual reading of the
provision, schematic analysis of the Act and the 1923 Act, it is quite limpid
that the statutory policy only covers the employees of the insured, either
employed or engaged by him in a goods carriage. It does not cover any other kind
of employee and therefore, someone who travels not being an authorised agent in
place of the owner of goods, and claims to be an employee of the owner of goods,
cannot be covered by the statutory policy and to hold otherwise would tantamount
to causing violence to the language employed in the Statute.
Therefore, we conclude that the insurer would not be liable to indemnify the
insured.
25. Presently, for the sake of completeness, we shall refer to the policy.
The policy, exhibit R-2/3/A, clearly states that insurance is only for carriage
of goods and does not cover use of carrying passengers other than employees not
more than six in number coming under the purview of the 1923 Act. The language
used in the policy reads as follows:- “The Policy does not cover :
1. Use for organized racing, pace-making reliability trial or speed testing
2. Use whilst dwaing a trailer except the towing (other then for reward) or
any one disabled mechanically propelled vehicle.
3. Use for varying passengers in the vehicle except employees (other than
driver) not exceeding six in number coming under the purview of Workmen’s
Compensation Act, 1923.†On a bare reading of the aforesaid policy, there can
be no iota of doubt that the policy relates to the insured and it covers six
employees (other than the driver, not exceeding six in number) and it is
statutory in nature. It neither covers any other category of person nor does it
increase any further liability in relation to quantum.
26. In view of the aforesaid analysis, we repel the contentions raised by the
learned counsel for the appellant and as a fall-out of the same, the appeals,
being sans merit, stand dismissed without any order as to costs.
...................................................J.
[K. S. Radhakrishnan]
.....................................................J.
[Dipak Misra] New Delhi;
December 11, 2012.
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