The New India Assurance Co. Ltd. vs Daya Shanker Tiwari And Others
2019 Latest Caselaw 4127 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Reserved On 19.12.2018
 
 Delivered On 06.05.2019
 

 
Case :- FIRST APPEAL FROM ORDER No. - 2715 of 2011
 

 
Appellant :- The New India Assurance Co. Ltd.
 
Respondent :- Daya Shanker Tiwari And Others
 
Counsel for Appellant :- Saurabh Srivastava
 
Counsel for Respondent :- A.K. Sharma,Atul Sharma,R.P.Pandey
 

 
Hon'ble Saral Srivastava,J.

1. Heard Sri Saurabh Srivastava, learned counsel for the appellant and Sri Atul Sharma, learned counsel for the respondents.

2. The present appeal is directed against the judgement and order dated 23.06.2011 passed by the Commissioner Employee's Compensation Act, 1923/Assistant Labour Commissioner, Kanpur Region, Kanpur whereby, Commissioner has awarded Rs. 2,98,849/- along with 6% interest as compensation to the respondent nos. 1 and 2.

3. Respondent no.3, the owner of the truck No. BR-13-P-6339 (hereinafter referred to as 'offending vehicle') did not appear despite service of notice by registered post. Therefore, the appeal is being proceeded exparte against him.

4. The brief facts giving rise to the present appeal are that one Vikas Tiwari was employed as driver on the truck No. U.P.78-T-0227 (hereinafter referred to as 'truck') and was paid Rs. 2,000/- as salary and Rs.70/- per day towards daily diet. Vikas Tiwari on the instruction of respondent no.3(owner of the truck) was driving the truck to Ranchi. When he reached Ranchi, he parked the truck to collect builty, and in the process, he was hit by offending vehicle at about 8.30 am on 11.04.2011. As a result of the said accident, he suffered injuries and later on died. In the aforesaid backdrop, respondent nos.1 and 2, parents of the deceased, instituted the claim petition claiming compensation for the death of their son.

5. The claim petition was contested by the owner by filing written statement denying the employment of the deceased with him. He further denied the fact that on his instructions, Vikas Tiwari was driving the truck. He further denied the fact that while collecting the builty, Vikas Tiwari met with an accident. It was further pleaded that since the truck was duly insured with the New India Assurance Company Ltd., therefore, liability to pay compensation, if any, is of the insurance company.

6. Insurance company also filed written statement denying its liability to pay compensation. It further denied the fact that Vikas Tiwari had died during the course of employment while he was on duty to load the coal on the truck from coal mine. The insurance company filed additional written statement contending therein that truck on the date of accident was not insured with it as the cheque issued by the owner towards payment of premium was dishonoured and insurance company had cancelled the policy No.420/03/31/001-21622 with respect to the said truck.

7. It further pleaded that information with regard to the cancellation of policy was given to the respondent no.3 and to the Regional Transport Authority, Sarvodaya Nagar, Kanpur Nagar by registered A.D. letter dated 10.11.2003. Hence, there was no policy in existence with respect to the truck on the date of accident and, therefore, insurance company is not liable to pay any compensation. It further pleaded that liability to pay compensation, if any, is of the owner of the truck and not the insurance company.

8. The Commissioner on the basis of evidence on record held that deceased was employed as driver on the truck and had died during the course of employment due to the injuries suffered by him in the accident. The Commissioner further held that the policy in respect of the truck was valid on the date of accident as the intimation with respect to the cancellation of policy was given to the owner after about two and half years from the date of accident and thus, insurance company is liable to pay compensation.

9. Challenging the aforesaid finding, learned counsel for the appellant has contended that in the instant case, a cheque of Rs. 13,477/- issued by respondent no.3 towards payment of premium of insurance of truck was dishonoured, and intimation with regard to the cancellation of policy was given to the owner and to the concerned Regional Transport Authority by registered A.D. letter dated 10.11.2003, as such, there was no contract of insurance subsisting on the date of accident between owner and the insurance company, therefore, no liability can be fixed upon the insurance company to pay compensation. He further contends that as Section 149 of the Motor Vehicles Act, 1988 (hereinafter referred as 'Act,1988') is not applicable in a proceeding under Employees' Compensation Act, 1923 [hereinafter referred as 'Act, 1923'], therefore, the principles enunciated in case of dishonour of cheque by the Apex Court fixing liability upon the insurance company by interpreting Section 149(l) of the Act,1988 in a claim under Act, 1988 are not applicable in cases where claim has been made under the Act, 1923.

10. It is further submitted that owner in his written statement has stated that truck was duly insured with New India Assurance Company on the date of accident whereas he admitted the fact of dishonour of cheque in the statement before the Commissioner. Thus, the statement of owner regarding payment of premium by his wife through cash to the agent of insurance company on 30.04.2001 cannot be read in evidence in the absence of any pleading to this effect in the written statement. Hence, insurance company can not be fixed with the liability to pay compensation under the award passed by Employees' Compensation Commissioner. In support of his contention he has placed reliance upon the judgements of Apex Court in the cases of United India Insurance Company Ltd. Vs. Laxamamma and Others 2012 (3) T.A.C. 8 (SC) and National Insurance Company Ltd. Vs. Seema Malhotra and Others 2001(2) A.W.C. 1007 (SC).

11. Per contra, learned counsel for the respondents contends that insurance policy in respect of truck was subsisting on the date of accident inasmuch as, admittedly the insurance company has given alleged intimation of cancellation of policy to the respondent no. 3 and to the concerned Regional Transport Authority after about two and half years from the date of issuance of policy, thus, the policy was valid on the date of accident and as such insurance company is liable to pay compensation. In support of his submission, he has relied upon the judgement of this Court in the case of New India Assurance Company Vs. Ahmed Hussain and Another 2003 (6) AWC 4836 and judgement of Apex Court in the case of United India Insurance Company Ltd. Vs. Laxamamma and Others 2012(3) T.A.C. 8 (SC)

12. I have considered the rival submissions of the parties and perused the record.

13. The question which arise for consideration in the present appeal is as to whether Section 149(1) of Act,1988 can be invoked to compel the insurance company in a proceeding under Act, 1923 to pay compensation where admittedly cheque paid towards premium has been dishonoured.

14. Before adverting to the controversy involved in the present case, it would be useful to notice Section 167 of the Act, 1988 to understand the scope and nature of proceeding under the Act, 1988 and Act, 1923 which is extracted herein below:-

"Section167. 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."

15. As per the said Section, any person who is entitled to claim compensation under Act, 1988 and also under the Act, 1923 for the death or bodily injury to any person may claim compensation under the Act, 1988 or under Act, 1923 but not under both the Acts. Thus, it is the choice of the claimant to choose either of the two forum as provided under Section 167 of Act,1988 for claiming compensation.

16. The Apex Court in the case of Gottumukkala Appala Narasimha Raju & Others Vs. National Insurance Company Ltd. & Another 2007(13) SCC 446 while construing the ambit of a proceeding in matter of compensation under the Act, 1923 has held that in a claim for compensation under Act,1988, insurance company can take only those defense which are available to it under Section 149 (2) of Act, 1988, but defense of insurance company under Act, 1923 would be unlimited and all the defences which are available to the employer would be available to it. Paragraphs 15, 16 and 25 of the aforesaid judgement are extracted herein below:-

"15. The 1988 Act provides for mandatory insurance for the matters laid down under Section 147 of the Act and, thus, an Award can be passed against an insurer. An insurer, having regard to Sub-Section (2) of Section 149 of the Act, would, ordinarily, have limited defence as provided for therein. The defence of an insurer in a proceeding under the 1923 Act would be unlimited and all the defences which are available to the employer would be available to it.

16. Section 143 of the 1988 Act has a limited applicability so far as the provisions of the 1923 Act are concerned. Where a liability arises despite the fact that accident might have taken place without any fault of the driver of the vehicle and others under control thereof, the insurer may have a liability, whereas under 1923 Act a "workman" would be entitled to compensation, even if no negligence is proved against the owner or the person in charge of the vehicle; but the applicability of Section 143 of the 1988 Act, therefore, cannot be extended to one made under Chapter XI thereof. In a case of this nature, provision of Section 167 of the 1988 Act would be of no significance.

25. The ingredients for maintaining a proceeding under 1988 Act and 1923 Act are different. The purpose for which a contract of insurance is entered into may be different, whereas 1988 Act, it will bear repetition to state, a contract of insurance would be mandatory; for the purpose of applicability of the 1923 Act, it will be optional and as indicated hereinbefore, in Harshadbhai Amrutbhai Modhiya (supra), even contracting out is permissible, as under the 1923 Act, the liability of the insurer is limited to the claim of the workman. The liability under Section 147(2)(b) of the 1988 Act, on the other hand, extends to third party."

17. Apex Court in the case of National Insurance Company Ltd. Vs. Mastan and Others, 2006 (2) SCC 641 has held that scope and ambit of an appeal in terms of Section 30 of the 1923 Act and Section 173 of the Act, 1988 are distinct and different. The Apex Court further noticed the fact that under 1988 Act driver of the vehicle is liable but he would not be liable in a case arising under the 1923 Act. Paragraphs 20 and 21 of the aforesaid judgement are being extracted herein below:-

"20. An insurer, subject to the terms and conditions of contract of insurance, is bound to indemnify the insured under the 1923 Act as also the 1988 Act. But as noticed hereinbefore, keeping in view the nature and purport of the two statutes, the defences which can be raised by the insurer being different, the scope and ambit of appeal are also different.

21. Under the 1988 Act, the driver of the vehicle is liable but he would not be liable in a case arising under the 1923 Act. If the driver of the vehicle has no licence, the insurer would not be liable to indemnify the insured. In a given situation, the Accident Claims Tribunal, having regard to its rights and liabilities vis-`-vis the third person may direct the insurance company to meet the liabilities of the insurer, permitting it to recover the same from the insured. The 1923 Act does not envisage such a situation. Role of Reference by incorporation has limited application. A limited right to defend a claim petition arising under one statute cannot be held to be applicable in a claim petition arising under a different statute unless there exists express provision therefor. Section 143 of the 1988 Act makes the provisions of the 1923 Act applicable only in a case arising out of no fault liability, as contained in Chapter X of the 1988 Act. The provisions of Section 143, therefore, cannot be said to have any application in relation to a claim petition filed under Chapter XI thereof. A fortiori in a claim arising under Chapter XI, the provisions of the 1923 Act will have no application. A party to a lis, having regard to the different provisions of the two Acts cannot enforce liabilities of the insurer under both the Acts. He has to elect for one."

18. The Apex Court in the case of New India Assurance Company Ltd. Vs. Harshadbhai Amrutbhai Modhiya and Another 2006 (5) SCC 192 has held that liability of the insurance company would depend upon terms and conditions of the insurance policy in a case of compensation under the Act, 1923. Paragraphs 14 and 15 of the aforesaid judgement are being extracted herein below:-

"14. By reason of the provisions of the Act, an employer is not statutorily liable to enter into a contract of insurance. Where, however, a contract of insurance is entered into by and between the employer and the insurer, the insurer shall be liable to indemnify the employer. The insurer, however, unlike under the provisions of the Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-`-vis the insurer.

15. The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimize his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law."

19. From the judgements of the Apex Court referred above, it can be safely culled out that the scope and procedure prescribed under the Act, 1988 and under the Act, 1923 are different inasmuch as if a party has chosen a forum under the Act,1923 for claiming compensation, the insurance company can take all defence which are available to the employer unlike in a case under Act,1988 where the defence of insurance company is restricted to Section 149(2) of Act,1988 unless permission under Section 170 of Act,1988 is granted by the tribunal to the insurance to take all defence as are available to the owner.

20. Further, it also emanates from the aforesaid judgements of the Apex Court that Section 149 of the Act, 1988 is not applicable in a proceeding for compensation under Employees Compensation Act, 1923 inasmuch as, it is evident from the aforesaid judgements that defence of insurance company in a proceeding under the Act, 1988 is limited to the extent provided under Section 149 (2) of the Act, 1988 which is not a case in a proceeding instituted under Act,1923.

21. Now coming to the facts of this case, a cheque was issued by respondent no.3 towards payment of premium of insurance of truck, which was dishonoured. The owner has not taken any plea in the written statement that his wife had paid premium of insurance in cash to the agent of the insurance company. Therefore, the statement of owner as regards the payment of premium in cash to the agent of insurance company by his wife cannot be read in evidence in the absence of any pleading by the owner in this regard in the written statement.

22. Further, the statement of owner that his wife had paid premium of the policy in cash may have been set up as an afterthought to counter the specific plea of the insurance company in the additional written statement denying its liability on the ground of dishonour of cheque.

23. At this juncture, it is useful to notice the judgement of Apex Court in the case of Seema Malhotra (supra) wherein after noticing the provisions of Contract Act, it held that when the insurer has failed to pay premium or cheque issued towards payment of premium was dishonoured, insurer is not obliged to perform his part of promise. Apex Court has further held that in case insured makes payment towards premium even after dishonour of cheque but before the date of accident, payment of premium can be considered as consideration for the performance of the contract and in such an event, the insurance company is liable to pay compensation. Paragraph 17 to 20 of the Apex Court judgement in the case of Seema Malhotra (supra) is reproduced herein below:-

"17. In a contract of insurance when an insurer gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a Bill of Exchange drawn on a specified banker. A Bill of Exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.

18. Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.

19. Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, insurer is entitled to get the money back.

20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case the insurance company is legally justified in refusing to pay the amount claimed by the respondents."

24. It is also worth noticing that the statement of Smt. Bhupendra Kaur, wife of owner, before the Commissioner does not disclose the name of the agent whom she had paid premium. Thus, it is evident from the record that owner could not establish the payment of any premium by cash.

25. The judgement of Apex Court in the case of Laxamamma (supra) relied upon by both the parties has held that in case payment of premium is paid through cheque and cheque is dishonoured, and the insurance company had cancelled the policy and had sent intimation of cancellation of insurance policy to the owner and concerned Regional Transport Authority before the occurrence of accident, the insurance company will not be liable to pay compensation. The said judgment is of no help to the respondent for two reasons; firstly, in the present case, from the statement of the owner, it is manifest that he knew that the cheque paid towards premium has been dishounerd, and thus, contract of insurance had terminated for want of consideration which led to setting up a case by owner in his testimony that premium of policy was paid in cash by his wife on 30.04.2001 to the agent of the insurance company. Secondly, the said case was related to compensation under Act,1988 and the apex court by invoking Section 149(1) of the Act,1988 had fixed the liability upon insurance company whereas the present case is under Act,1923 wherein there is no provision like Section 149(1) of the Act,1988. Paragraph 19 of the aforesaid judgement is extracted herein below:-

"19. In our view, the legal position is this : where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1)of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof."

26. From what has been stated above, it is established that the cheque was dishonoured and no consideration was paid by the owner towards premium for insurance of truck, and therefore, on the date of accident there was no policy in existence.

27. The Apex Court while interpreting Section 149 (1) of the Act, 1988, though, has held the liability of the insurance company in case of claim under the Act, 1988 as it is obligatory upon the insurance company to satisfy award; but as the proceedings under the Act, 1988 and Act, 1923 are different, and Section 149 of the Act, 1988 is not applicable in case of proceedings under Employee's Compensation Act, the insurance company cannot be held liable to pay compensation.

28. Judgement of this Court relied upon by learned counsel for the respondents in Ahmed Hussain and Another (supra) passed in F.A.F.O. No. 1727 of 2003 is also not applicable in the facts of the present case as it was rendered in a context where plea of breach of policy was set up by the insurance company and this Court in paragrah 11 of the said judgement permitted the insurance company to recover the awarded amount after establishing breach of policy from the employer in a separate proceeding.

29. Thus, for the reasons given above, the appeal is allowed and the order of the Commissioner is set aside to the extent it fixed the liability upon the appellant to pay compensation. However, the amount already paid to the claimants under the interim order of this Court shall not be recovered from them and the claimants may execute the award for the balance of amount under the award against the owner. Likewise, the insurance company is also at liberty to recover the amount from owner which it has paid to the claimant under interim orders of this Court. The Commissioner is further directed to refund the amount which has been invested by it under the interim orders of this Court to the owner of truck within a period of two months from the date of production of the certified copy.

Order Date :- 06.05.2019

Sattyarth