National Insurnace Company Ltd., vs Srimanchala Srinivasa Rao 2 ...
2022 Latest Caselaw 7593 AP

          THE HON'BLE SRI JUSTICE VUTUKURU SRINIVAS

        CIVIL MISCELLANEOUS APPEAL No.741 of 2015


JUDGMENT:

This Civil Miscellaneous Appeal is directed against the order

of the Commissioner under Workmen's Compensation and Assistant

Commissioner of Labour, Guntur (hereinafter called as 'the

Commissioner'), in W.C.Case No.94 of 2009 dated 22.12.2012.

2. The insurer of the Lorry bearing No.AP 16 TT 4399 belonging

to the third respondent is the appellant. Respondents No.1 and 2

are the parents of the deceased by name Sri Manchala Rama

Krishna (hereinafter would be referred as 'the deceased').

3. According to the respondent Nos.1 and 2/applicants, in the

application before the Commissioner for Workmen's Compensation

at Guntur, the deceased was working as cleaner on a Lorry bearing

Registration No.AP 16 TT 4399 belonging to the 3 rd respondent

herein, the deceased was aged about 20 years on the date of the

incident. They further stated that on 25.01.2009, the deceased

was on duty as a cleaner on lorry with a load of rice belongs to

FCI, the lorry reached to KC Camp, Huzurabad Godown and as it

was a holiday on that day, the Godown was not opened and about

02.00 P.M., the deceased went to nearby canal to take bath and to

bring water to fill the radiator of the said lorry and the deceased

slipped and drowned in the canal and ultimately died. They further

stated that the third respondent was paying Rs.4,500/- as salary

besides batta. Contending that the deceased died during and in

the course of employment of the third respondent and

compensation of Rs.5,00,000/- was claimed by them against the 3rd

respondent and appellant herein.

4. The third respondent before the Commissioner remained

exparte.

5. The appellant herein alone filed its counter that most of the

averments mentioned in the application were denied and mainly

contending that there is no nexus between the employment and

death and it was not occurred in the course of his employment and

that when he went to the canal for bath the death was occurred

due to drowning into the canal. Thereby, it cannot be connected to

the employment. It is also contended that even findings of the

Commissioner regarding the fact is correct, but making the

appellant liable to pay penalty and interest in default of

depositing the award amount is not accordance with law. Thus

denying its liability, it is stated that even otherwise, the

compensation claimed is excessive.

6. The Commissioner settled the following issues for enquiry

basing on the material:

1.Whether deceased Manchala Rama Krishna was a workman u/s.2(1)(n) of the Workmen's Compensation Act at the time of his death ? And whether the deceased had died as a result of accident arising out of and in the course of employment ?

2.If so, what is the age and wage of the deceased at the time of his death ?

3.What is the amount of compensation ?

4.Who are liable to pay compensation to the dependants of the deceased ?

7. In the course of enquiry, the 1st applicant was examined

himself as A.W.1 and one Korapati Sambasiva Rao, resident of

Undavalli Village was examined as A.W.2, who said to be driver of

the Lorry bearing No.AP 16 TT 4399. In support of the claim nine

(9) documents marked as Exs.A.1 to A.9. On behalf of the

appellant/insurer, one M.Veeraiah, Administrative Officer

examined as R.W.1 and copy of the policy is marked as Ex.B.1.

8. On the material, the Commissioner held that the deceased

died during and in the course of employment of the third

respondent and that the liability of the appellant stands in view of

subsisting contract of insurance between the third respondent and

the appellant under Ex.B.1 policy. Thus, basing on the material,

considering the age of the deceased, wages applicable to the

cleaner on the date of the incident and applying appropriate

factor, the Commissioner arrived at a compensation of

Rs.3,59,156/- and directing the third respondent and appellant to

deposit the said compensation amount by way of demand draft

drawn on any scheduled bank in favour of Joint Commissioner of

Labour and the Commissioner for Workmen's Compensation,

Guntur within thirty (30) days and their liability is joint and several

and further ordered that if the opposite parties fails to deposit the

compensation amount within the stipulated time, they shall be

liable to 50% of the compensation as penalty together with interest

@ 12% per annum on the amount of compensation.

9. It is against the said order, this Civil Miscellaneous Appeal is

preferred by the insurer.

10. Smt.A.Jayanthi, learned counsel for the appellant and Sri

M.Madhava Reddy, learned counsel for the respondent Nos.1 and 2

addressed arguments.

11. Now, the following points arise for determination:

1. Whether the deceased died during and in the course of employment for the third respondent ?

2. Whether the appellant is liable to satisfy the claim of the respondent Nos.1 and 2 ?

3. Whether the order of the Commissioner in making the appellant liable to pay the penalty and interest in default of depositing the award amount within 30 days is sustainable under law ?

4. To what relief ?

12. POINT No.1:

Nature of the accident states that on 25.01.2009 the

deceased was on duty as a cleaner on Lorry bearing No.AP 16 TT

4399 of the 3rd respondent with a load of rice bags belongs to FCI,

when the lorry reached to KC Camp, Huzurabad Godown and as it

was a holiday on that day, the Godown was not opened and at

02.00 P.M., the deceased went to canal to take bath and to bring

water to fill the radiator of the said lorry and deceased slipped

and drowned in the canal and ultimately died.

13. In-order to prove the said facts, besides the father of the

deceased, one Korapati Sambasiva Rao, said to be driver, who

stated that he was driver and the deceased was cleaner of the

Lorry bearing No.AP 16 TT 4399 of the third respondent at the time

of incident and during the course of their employment, they

reached to KC Camp, Huzurabad Godown with a load of rice

belongs to FCI and as Sunday it was a holiday and the Godown was

not opened and at 02.00 P.M., he instructed the deceased to bring

water to fill the radiator in-order to clean the lorry and on his

instructions the deceased went to nearby canal, where he slipped

and drowned, resulting his death and he filed copy of his driving

license.

14. Ex.A.1 copy of F.I.R. and Ex.A.2 inquest report copy, which

show that the deceased was cleaner on the Lorry bearing No.AP 16

TT 4399 and he was on duty on the said lorry on 25.01.2009 and as

per the version of mediators under Ex.A.2 while the deceased was

taking bath in canal drowned and died. Ex.A.3 copy of Post Mortem

report shows cause of death of the deceased was Asphyxia due to

water inhaling due to drowning.

15. In this connection, the respondent Nos.1 and 2 herein placed

reliance on the judgment of High Court of Andhra Pradesh between

New India Assurance Company v. Smt.P.Padmavathi and ors.1,

wherein it was held that "when labour on work place met with an

accident, the employer could not deny compensation merely

because he was performing some of the work than his work". In

the said judgment it was held at Paragraph No.11 is as follows:

"11. With reference to the above said submissions, in this case, the only question which is required to be considered is: whether the deceased died during the course of employment with the O.P. No. 1, on 27-7-2004. It was the case of the applicants that the deceased was the cleaner and was travelling in the lorry bearing No. AP 24V.2272 from Hospet to Gaganpahad, Hyderabad and the vehicle was stopped when it reached Sunder Steel Company, Gaganpahad. In view of the instructions of the shop owner, the driver and cleaner were awaiting at that place, to collect hire charges. In the meanwhile, on the instructions of the driver, the deceased went to the hotel to bring tiffin to the driver. While the deceased was proceeding to bring tiffin, the deceased met with the accident, in which, he suffered severe injuries and died subsequently. Though, in the counter affidavit, the insurer has disputed the employment of the deceased as cleaner with O. P. No. 1,

1 (2005) SCC Online AP 299

but, there is no evidence at all from the side of the Opposite Parties, and, if oral and documentary evidence adduced on behalf of the applicants is considered, it is clearly proved that the accident occurred while the deceased was bringing tiffin to the driver on his instructions, when the vehicle was parked after reaching the destination point at Gaganpahad, Hyderabad. In the case of Prakasam District Co-operative Milk Producers Union Limited (1 supra) relied on by the learned counsel for the appellant, it is to be seen, it is a case where the workman while proceeding to his work place, went to the office the Employee's Union and died due to electric shock while he was removing flag post; as such, the learned Single Judge held that by his own act, he invited peril, he faced, and, there was no casual connection between the accident and employment of the deceased. The said view is taken primarily on the facts situation that the deceased went to the Union Office on his own and died on account of electric shock while doing job in the Union Office; in that view of the matter, the judgment (1 supra) relied on by the learned Counsel for the appellant will not support the case on hand. In this case, the cleaner was on duty and reached destination point in the lorry along with the goods and when they were waiting to collect hire charges, in the meanwhile, the driver asked the deceased to bring tiffin and during the said period, the unfortunate accident has occurred. The job which the deceased has undertaken to bring tiffin during their stay after reaching the destination point, is nothing but notional extension of duty, on the cleaner. As such, only on account of his employment, as cleaner on the lorry, owned by O.P. No. 1, the deceased had to be in that particular spot, at that particular moment, in view of his employment and as he has accompanied the said lorry, as otherwise, he could not have been there at all.

Merely because the accident occurred only when the vehicle was stopped, and, while he was bringing tiffin on the instructions of the driver; as such, it cannot be said that the accident did not take place during the course of

employment. The words 'arising out of and in the course of employment' as used in Section 3 of the Workmen's Compensation Act, 1923, are to be construed, keeping in view the objects of the Act, which is a beneficial legislation to workmen. The lorry was stopped at the place after reaching destination point and when they were asked to wait for collecting hire charges, the deceased, on the instructions of the driver, went to the hotel to bring tiffin; as such, the job which was undertaken by the deceased, is ancillary and incidental to his employment; in that view of the matter, necessarily it is has to be construed as 'arising out of and in the course of employment', within the meaning of Section 3 of the Workmen's Compensation Act, 1923. The judgments relied on by the learned counsel for the applicants also support their case. Further, in this case, though there is oral and documentary evidence adduced on behalf of the applicants on their behalf, to support their case, there is no evidence from the side of the Opposite parties, to rebut the same. Further, from the cross- examination of P.W.1, nothing adverse was elicited to disprove the claim of the applicants. For the foregoing reasons, I do not find any merit in this appeal.

16. In the case on hand, the evidence of A.W.2 that on his

instructions the deceased went to nearby canal to bring the water

to fill the radiator and to clean the lorry. The F.I.R./Ex.A.1 and

inquest report/Ex.A.2 clearly show that the contention of the

respondent Nos.1 and 2/applicants is true.

17. On the other hand, the contention of the appellant is that

the act of the deceased is not concerned with the employment,

there is no nexus between the death of deceased and his

employment and consistently stated that the death of the

deceased was not in the course of employment, when the

deceased died due to drown into the canal, which is not connected

to the employment.

18. On this aspect, except self serving counter and evidence of

R.W.1 there is no other cogent evidence to accept the contention

of the appellant that there is no nexus between employment and

the death of the deceased, as well the death of the deceased was

not in the course of the employment and when death was occurred

due to drowning into the canal when he went to bath, which is not

connected with the employment. As already stated supra, the

evidence of A.W.2 is very clear that as the deceased went to canal

to bring water on his instructions as part of his employment and

when this incident was occurred.

19. Contra to this evidence on behalf of respondent Nos.1 and

2/applicants, the appellant did not place any other material nor

the defence raised by the appellant in this respect is not in any

manner diluting the acceptable nature of the evidence adduced by

the respondent Nos.1 and 2 before the Commissioner.

20. Therefore, the inference to draw is that the deceased went

to bring the water to fill the radiator of the Lorry, on account of

drowning into the canal he died and his death connected to the

employment and the contention of the appellant that there is no

nexus between employment and death does not stand for legal

scrutiny. Thus, this appoint is answered in favour of the respondent

Nos.1 and 2 and against the appellant.

21. POINT No:2:

As regards to the liability, the respondent Nos.1 and 2 states

that the third respondent as employer of the deceased and owner

of the Lorry bearing No.AP 16 TT 4399 and appellant as insurer of

the said lorry are liable to pay compensation. Admittedly, the

employer/owner of the said lorry remained exparte. R.W.1, who is

Administrative Officer of the appellant, admitted the insurance of

the lorry of the third respondent with the appellant and the

validity of the policy at the time of death is in force and the

document covered under Ex.B.1, which is also show that the policy

was in force at the time of death of the deceased. As such relying

on the evidence of applicant No.1/A.W.1, as well as evidence of

appellant/R.W.1 and contents of Ex.B.1, the third respondent

along with appellant are liable to pay compensation to the

dependants of the deceased jointly and severally.

22. In terms of Section 147(1)(b) of the Motor Vehicle Act, in

case of application of Workmen's Compensation Act, between

employer and employee, when there is material to apply Section

3(1) of the Workmen's Compensation Act, when it is read along

with Section 147(1)(b) of Motor Vehicle Act, Ex.B.1 policy covers

such risk.

23. The commissioner took into consideration age of the

deceased, appropriate factor applicable to the age of the

deceased and also wages of the deceased and on calculating, the

Commissioner arrived at a figure of Rs.3,59,156/- and awarded

compensation by the order under challenge.

24. There is no reason to interfere with the order under appeal,

since it is a reasoned order. The contentions of the appellant did

not in any manner lead to hold that interference is required with

the same. Thus, this point is answered against the appellant.

25. POINT No.3:

In this connection, the appellant consistently contends in

this appeal that the insurance company cannot be made liable to

order penalty, which is against to Section 4-A(3)(b) and said

section is applicable on account of personal fault of the insured,

penalty can be imposed on the insured/employer, but not on

insurer.

26. For such proposition, the learned counsel for the appellant

relied upon judgment of the Hon'ble Supreme Court between Ved

Prakash Garg v.Prem Devi2, wherein at Paragraph Nos.14 and 17

held as follows:

"14. 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

2 1997(8) SCC (1) at Page 15

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. All these provisions represent a well-knit scheme for computing the statutory liability of the employers in cases of such accidents to their workmen. As we have seen earlier while discussing the scheme of Section 4-A of the Compensation Act the legislative intent is clearly discernible that once compensation falls due and within one month it is not paid by the employer then as per Section 4- A(3)(a) interest at the permissible rate gets added to the said principal amount of compensation as the claimants would stand deprived of their legally due compensation for a period beyond one month which is statutorily granted to the employer concerned to make good his liability for the benefit of the claimants whose breadwinner might have either been seriously injured or might have lost his life. 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. Even though the Commissioner under these circumstances can impose a further liability on the employer under circumstances and within limits contemplated by Section 4-A(3)(a) still the liability to pay interest on the principal amount under the said provision remains a part and parcel of the statutory

liability which is legally liable to be discharged by the insured employer. Consequently such imposition of interest on the principal amount would certainly partake the character of the legal liability of the insured employer to pay the compensation amount with due interest as imposed upon him under the Compensation Act. Thus the principal amount as well as the interest made payable thereon would remain part and parcel of the legal liability of the insured to be discharged under the Compensation Act and not dehors it. It, therefore, cannot be said by the insurance company that when it is statutorily and even contractually liable to reimburse the employer qua his statutory liability to pay compensation to the claimants in case of such motor accidents to his workmen, the interest on the principal amount which almost automatically gets foisted upon him once the compensation amount is not paid within one month from the date it fell due, would not be a part of the insured liability of the employer. No question of justification by the insured employer for the delay in such circumstances would arise for consideration. It is of course true that one month's period as contemplated under Section 4-A(3) may start running for the purpose of attracting interest under sub- clause (a) thereof in case where provisional payment has to be made by the insured employer as per Section 4-A(2) of the Compensation Act from the date such provisional payment becomes due. But when the employer does not accept his liability as a whole under circumstances enumerated by us earlier then Section 4-A(2) would not get attracted and one month's period would start running from the date on which due compensation payable by the employer is adjudicated upon by the Commissioner and in either case the Commissioner would be justified in directing payment of interest in such contingencies not only from the date of the award but also from the date of the accident concerned. Such an order passed by the Commissioner would remain perfectly justified on the scheme of Section 4-A(3)(a) of the Compensation Act. But similar consequence will not follow in case where additional amount is added to the

principal amount of compensation by way of penalty to be levied on the employer under circumstances contemplated by Section 4-A(3)(b) of the Compensation Act after issuing show-cause notice to the employer concerned who will have reasonable opportunity to show cause why on account of some justification on his part for the delay in payment of the compensation amount he is not liable for this penalty. However, if ultimately, the Commissioner after giving reasonable opportunity to the employer to show cause takes the view that there is no justification for such delay on the part of the insured employer and because of his unjustified delay and due to his own personal fault he is held responsible for the delay, then the penalty would get imposed on him. That would add a further sum up to 50% on the principal amount by way of penalty to be made good by the defaulting employer. So far as this penalty amount is concerned it cannot be said that it automatically flows from the main liability incurred by the insured employer under the Workmen's Compensation Act. To that extent such penalty amount as imposed upon the insured employer would get out of the sweep of the term "liability incurred" by the insured employer as contemplated by the proviso to Section 147(1)(b) of the Motor Vehicles Act as well as by the terms of the insurance policy found in provisos (b) and (c) to sub-section (1) of Section II thereof. On the aforesaid interpretation of these two statutory schemes, therefore, the conclusion becomes inevitable that when an employee suffers from a motor accident injury while on duty on the motor vehicle belonging to the insured employer, the claim for compensation payable under the Compensation Act along with interest thereon, if any, as imposed by the Commissioner, Sections 3 and 4-A(3)(a) of the Compensation Act will have to be made good by the insurance company jointly with the insured employer. But so far as the amount of penalty imposed on the insured employer under contingencies contemplated by Section 4-A(3)(b) is concerned as that is on account of personal fault of the insured not backed up by any justifiable cause, the

insurance company cannot be made liable to reimburse that part of the penalty amount imposed on the employer. The latter because of his own fault and negligence will have to bear the entire burden of the said penalty amount with proportionate interest thereon if imposed by the Workmen's Commissioner.

17. We may now refer to another Division Bench judgment of the Gujarat High Court in the case of Gautam Transport [1989 ACJ 587 (Guj)] wherein it is held that the insurance company would not be liable to meet the claim arising out of penalty imposed on the insured employer under Section 4-A(3) of the Compensation Act as the penalty arose on account of clear violation of statutory provisions of the Compensation Act by the employer and that could never be said to have been contemplated by the insurance company while offering contractual coverage as the said penalty would be the result of the negligence on the part of the insured. In our view, the said decision is in consonance with the schemes of the Compensation Act and the Motor Vehicles Act as discussed by us earlier. We may in this connection refer to a decision of the High Court of Delhi in the case of Oriental Insurance Co. Ltd. v. Hasmat Khatoon [1989 ACJ 862 (Del)] . A learned Single Judge of the Delhi High Court on the schemes of the Workmen's Compensation Act and the Motor Vehicles Act has taken the view that the liability covered by the statutory coverage of insurance is to make good the claim for compensation and that liability would not include interest and penalty. In our view, the said decision lays down the correct legal position so far as award of penalty against the insured employer is concerned. But insofar as it holds that even for the claim of interest on the principal amount of compensation, as imposed on the insured, the insurance company would not remain liable, it has to be overruled.

27. The learned counsel for the appellant also relied upon

judgment of the Hon'ble Supreme Court between L.R.Ferro Alloys

Ltd. v. Mahavir Mahto3, wherein at paragraph No.5 held as

follows:

5. The only contention put forth before us is that the entire liability including penalty and interest will have to be reimbursed by the insurance company and this aspect has not been examined by the learned Single Judge in the High Court and needs examination at our hands. In Ved Prakash Garg v. Premi Devi [(1997) 8 SCC 1] this Court after examining the entire scheme of the Act held that payment of interest and penalty are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment of that amount within one month. Therefore, claim for compensation along with interest will have to be made good jointly by the insurance company with the insured employer. But, so far as the penalty imposed on the insured employer is on account of his personal fault the insurance company cannot be made liable to reimburse penalty imposed on the employer. Hence the compensation with interest is payable by the insurance company but not penalty. Following the said decision and for the reasons stated therein, we modify the order made by the High Court to that extent. The appeal is allowed in part accordingly.

28. This court closely perused the legal proposition. The above

judgments, in particularly, the recent judgment of Hon'ble

Supreme Court in L.R.Ferro Alloys Ltd case stated supra, which is

relied upon by the appellant referred Ved Prakash Garg case

referred supra, at Paragraph Nos.14 and 17 clearly make the

3 (2002) 9 SCC 450

arrangement that the insurance company cannot be made liable to

pay penalty and insurance company would not be liable to meet

the claim arising out of penalty imposed on the insured/employer

under Section 4-A(3) of the Compensation Act as the penalty arose

on account of clear violation of statutory provisions of the

Compensation Act by the employer and that could never be said to

have been contemplated by the insurance company while offering

contractual coverage as the said penalty would be the result of the

negligence on the part of the insured.

29. In the present case, on perusal of the record placed before

this Court shows that on 19.02.2013 the entire award amount was

deposited by the appellant before the Commissioner under

Workmen's Compensation, Guntur.

30. In view of the same, the peculiar case of penalty cannot be

applicable to the insurance company and to that extent the order

has to be modified.

31. As the order of the Commissioner that, if the opposite

parties fail to deposit the compensation amount with the

stipulated time, they shall be liable to pay 50% of the

compensation as penalty together with interest @ 12% per annum

on the amount of compensation. As the penalty is not liable to be

deposited in the eye of law both the factual and legally, the said

order does not stand holds good. Therefore, the said order is liable

to be set aside. Thus, this point is answered in favour of the

appellant.

32. POINT No.4:

In view of the findings on point No.3, this civil miscellaneous

appeal has to be partly allowed setting aside the award of the

Commissioner for Workmen's Compensation, Guntur with regard

to the payment of the penalty by the appellant/insurance

company.

33. In view of the findings on point Nos.1 and 2, this civil

miscellaneous appeal is dismissed by confirming the order of the

Commissioner with regard to the quantum of compensation

awarded to the applicants and liability to pay the same.

34. In the result, this Civil Miscellaneous Appeal is allowed in

part setting aside the award of the Commissioner for Workmen's

Compensation and Assistant Commissioner of Labour, Guntur in

W.C.Case No.53 of 2006 dated 22.12.2012 as far as payment of the

penalty by the appellant/insurance company is concerned and as

far as the quantum of compensation awarded to the applicants and

liability to pay the same is concerned, the Civil Miscellaneous

Appeal is dismissed confirming the order of the Commissioner. The

respondent Nos.1 and 2/applicants are entitled for the

compensation amount in deposit to the credit of this case. The

Commissioner is directed to pay the compensation amount to the

respondent Nos.1 and 2, if any, without insisting for any security.

There shall be no order as to costs.

35. Interim orders, if any stand vacated. All pending petitions

stand closed.

___________________ VUTUKURU SRINIVAS, J Date: 11.10.2022 krs

THE HON'BLE SRI JUSTICE VUTUKURU SRINIVAS

CIVIL MISCELLANEOUS APPEAL No.741 of 2015

DATE: 11.10.2022

krs