Andhra Pradesh High Court - Amravati

The National Insurance Company ... vs Kammara Lakshmi Narayanamma 5 Ors on 6 May, 2022

       THE HONOURABLE SMT JUSTICE V.SUJATHA

       CIVIL MISCELLANEOUS APPEAL No.598 OF 2010


JUDGMENT:-


      The present Civil Miscellaneous Appeal is preferred by the

National Insurance Company Limited, Proddatur against the order

dated 22.06.2009, in W.C.No.55 of 2008 passed by the learned

Commissioner     for   Workmen's     Compensation     and    Deputy

Commissioner of Labour, Kadapa.


2.    The brief facts of the case are that the application was filed

before the Deputy Commissioner by the wife and children of the

deceased K. Kalachari, who is a Lorry Coolie aged about 55 years

and died in the lorry accident. A.W.1 - second claimant, who is the

son of the deceased, deposed that his father is a skilled labourer

and on 10.3.2007, at about 1:00 P.M., under the instructions of

Opposite Party No.1, while his father was proceeding along with

the lorry for loading of mines at Kolimigundla of Kurnool District

and unloading the same at Komannuthala Village of Lingala

Mandal, Kadapa District, at about 6:00 P.M. and when the lorry

bearing No.AP 09 U 5500 reached near Kasarlakunta Satram, the

front tyre of the lorry burst as a result of which, the driver of the

lorry lost control over the lorry and the lorry turned turtle, due to

which, the driver, cleaner, his father and another person received

serious injuries. The cleaner of the lorry died on the spot and the

father of the claimant died on the way to hospital. The accident

occurred and the deceased died out of and in the course of

employment as a loading and unloading coolie in the Opposite

Party No.1's lorry, which is insured with Opposite Party No.3. The
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insurance policy was in force at the time of accident. Hence the

claim for Rs.3,00,000/-.


3.    The Opposite party No.III filed counter denying all the

allegations in the petition.


4.    Basing on the above pleadings, the Court below framed the

following issues for consideration:

      1) Whether the deceased was a workman as per the
         provisions of the Workmen's Compensation Act, 1923
         and he met with the accident arising out of and in the
         course of his employment?
      2) What is the age of the deceased at the time of accident?
      3) What were the wages paid to the deceased at the time of
         the accident?
      4) What is the Quantum of compensation payable to the
         applicants?
      5) Who are liable to pay compensation to the Applicants?

5.    In order to prove their case, the 2nd applicant got examined

himself as AW-1 and got marked Exs.A1 to A6.               None were

examined on behalf of opposite Party-I.        One Y.Surendranatha

Reddy, Administrative Officer, Divisional Office, National Insurance

Company Limited, Ananthapur, was examined as RW-1 on behalf

of opposite Party-II and Ex.B1 was marked on their behalf.


6.    On considering the evidence and documents on record, the

Court below came to a conclusion that the deceased received

serious injuries and died on the way to hospital because of the

accident and out of and in the course of his employment.

Considering the age of the deceased as 60 years, the Court below,

by applying multiplier (50/100 x 3046.50 x 117.41 = 1,78,845/-),

awarded an amount of Rs.1,78,845/- towards compensation. The

Commissioner also directed that if the opposite Parties I to III failed

to deposit the awarded amount within the stipulated time, they
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have to pay the interest at 12% per annum from the date of receipt

of this order till realization and also penalty under Section 4(A) 3

(b) of the Workmen's Compensation Act, 1923 making the opposite

Parties I to III as jointly and severally liable to pay the said

compensation amount.


7.    Aggrieved by the said order, the Insurance Company filed the

present appeal on the ground that the insurance policy stands in

the name of Opposite Party No.2, but not in the name of Opposite

Party No.1, who is owner of the vehicle and as the deceased was an

employee under Opposite Party No.1, the Opposite Party No.3 does

not have any liability, as there is no insurance policy in the name

of Opposite Party No.1.   There is no privity of contract between

Opposite Party No.1, and Opposite Party No.3. Even otherwise, it

is only an act policy which has limited liability than the

comprehensive policy and the deceased is not covered under the

Act policy and he has to be treated as an unauthorized passenger.

He further contended that no premium was paid for covering the

loading and unloading coolies and as such, the Insurance

Company is not liable for payment of compensation as awarded by

the Court below.     He further submits that the Commissioner

grossly erred in imposing penalty without there being any default

in payment of compensation, which can be awarded only in case of

any default in payment of compensation.


8.    In view of the rival contentions raised by the parties, the

short point that arises for consideration is whether the Insurance

Company is liable to pay compensation as awarded by the

Commissioner?
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9.    Before proceeding further, it would be relevant to refer to

Section 4A(3)(b) of the Workmen's Compensation Act.

      Section 4A(3)(b) of the Act reads as under:-

      "4A.Compensation to be paid when due and penalty for
      default.-

      (1) Compensation under Section 4 shall be paid as soon as it
      falls due.

      (2) In cases where the employer does not accept the liability
      for compensation to the extent claimed, he shall be bound to
      make provisional payment based on the extent of liability
      which he accepts, and, such payment shall be deposited
      with the Commissioner or made to the workman, as the case
      may be, without prejudice to the right of the workman to
      make any further claim.

      [(3) Where any employer is in default in paying the
      compensation due under this Act within one month from the
      date it fell due, the Commissioner shall ---

      (a) direct that the employer shall, in addition to the amount
          of the arrears, pay simple interest thereon at the rate of
          twelve per cent per annum or at such higher rate not
          exceeding the maximum of the lending rates of any
          scheduled bank as may be specified by the Central
          Government, by notification in the Official Gazette, on
          the amount due; and
      (b) if, in his opinion, there is no justification for the delay,
          direct that the employer shall, in addition to the amount
          of the arrears and interest thereon, pay a further sum
          not exceeding fifty per cent of such amount by way of
          penalty.]"


      A reading of the provision extracted above makes it clear that

the imposition of penalty under clause (b) of Sub-section (3) of

Section 4A will arise only if there is no justification for the delay in

payment of arrears of the amount and interest thereon and such

imposition   must    not    be   passed    without     giving   reasonable

opportunity to the employer. As seen from the record, it appears

that the employer paid the award amount without any reasonable

delay. Since the employer paid the amount without any delay, the

question of imposition of penalty would not arise and the

Commissioner is grossly erred in imposing such penalty.
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10.      Learned counsel for the respondents relied upon a Judgment

in the case of Complete Insulations (P) Limited vs. New India

Assurance Company Limited1, wherein it was held that:

"New Act "157 : TRANSFER OF CERTIFICATE OF INSURANCE (1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.

(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.

5. Thus under the old Act the insured was required to apply in the prescribed form to the insurer for transfer of the certificate of insurance and the policy described therein. Once such an application was made the insurer had to communicate its refusal within fifteen days of the receipt of the application for transfer failing which the certificate of insurance and the police described therein "shall be deemed to have been transferred" in favour of the transferee. This shows that the insurer had the right to refuse transfer of the certificate of insurance and the policy described therein provided the right was exercised within the stipulated time of fifteen days. Section 157 of the new Act introduces a deeming provision whereby the transfer of the certificate of insurance and the policy of insurance are deemed to have been made where the vehicle along with the insurance policy is transferred by the owner to another person. This provision has withdrawn the insurer's right of refusal which was granted under the old Act.

8. The new Act came into force with effect from 1.7.1989. Since the vehicle in question was sold on 15.06.1989 and the letter of intimation of transfer and request to transfer the Certificate of Insurance and the policy described therein was sent on 26.06.1989, the old Act applied. Admittedly the request was not refused under Section 103-A of the old Act till the new Act came into force. Thereafter on 24.07.1989 the Insurance Company was once again requested to effect the transfer of the Certificate of Insurance as well as the policy but to no avail. By that day the new Act had come into force3. Actually the application dated 26.06.1989 was pending when the new Act had come into force. That application had to be processed under Section 157 of the new Act and hence the Certificate as well as the policy must be deemed to have been transferred in the name of the transferee.

(1996) 1 Supreme Court Cases 221

Even if it is assumed that the old Act applied to pending cases, the certificate and policy must be deemed to have been transferred since no refusal was communicated by the Insurance Company to the transferor or the transferee. Therefore, in either case the transfer of the Certificate of Insurance and policy described therein must be taken as complete in view of the language of Section 103-A of the old Act and Section 157 of the new Act".

The above judgment shows that in case of second-hand

purchase of vehicles, the transfer of certificate of insurance as well

as the policy would be the deemed transfer as per Section 157 of

the Motor Vehicles Act, 1988 and the Insurance Company cannot

escape the liability on the ground that the insurance policy was

not transferred in the name of the subsequent purchaser as the

insurance policy would run with the vehicle. Section 157 of the

new Act introduces a deeming provision whereby the transfer of

the certificate of insurance and the policy of insurance are deemed

to have been made where the vehicle along with the insurance

policy is transferred by the owner to another person. This

provision has withdrawn the insurer's right of refusal which was

granted under the old Act.

11. Learned counsel also relied on a Judgment of High Court of

Karnataka in the case of Krishnashetty vs. Oriental Insurance

Company Limited, Davanagere and others2, wherein it was held

as under:

"......Sub-section 1 of Section 157 would be sufficient to hold that in the absence of privity of contract between the third party victims and the insurance company and by virtue of the contract of indemnity between the insurance company and the insured, the judgment and award passed by the Tribunal in favour of third party would have to be satisfied by the insurance company."