Karnataka High Court
The Oriental Insurance Company Ltd vs Smt Thayamma on 14 December, 2023
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MFA No. 784 of 2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF DECEMBER, 2023
BEFORE
R
THE HON'BLE MR JUSTICE C M JOSHI
MISCELLANEOUS FIRST APPEAL NO. 784 OF 2019 (WC)
BETWEEN:
THE ORIENTAL INSURANCE COMPANY LTD.,
DIVISIONAL OFFICE, NO.II,
T.P HUB, MUSLIM HOSPITAL COMPLEX,
1ST MAIN, SARASWATHIPURAM,
MYSURU - 570 009.
REPRESENTED BY REGIONAL MANAGER,
THE ORIENTAL INSURANCE CO. LTD.,
REGIONAL OFFICE,
MISC DEPARTMENT, FIRST FLOOR,
LEO SHOPPING COMPLEX,
RESIDENCY ROAD CROSS,
BANGALORE - 560 025.
...APPELLANT
(BY SRI H C VRUSHABHENDRAIAH, ADVOCATE)
Digitally signed
by AND:
VIJAYALAKSHMI
BN
Location: High
Court of 1 . SMT. THAYAMMA,
Karnataka W/O. LATE MADEGOWDA,
AGED ABOUT 58 YEARS.
2 . MANJU,
S/O. LATE MADEGOWDA,
AGED ABOUT 35 YEARS.
3 . BASAPPA
S/O LATE MADEGOWDA
AGED ABOUT 26 YEARS.
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MFA No. 784 of 2019
ALL ARE RESIDING AT:
THARALLI VILLAGE,
P O NITRE, BEGUR HOBLI,
GUNDLUPET TALUK-571 111.
4 . SMT. BASAMMA,
W/O MADAPPA,
AGED ABOUT 45 YEARS,
R/O THORAVALLI VILLAGE,
GUNDLUPET TALUK-571 111.
5 . RENUKA,
W/O LATE REVANNA,
AGED ABOUT 43 YEARS,
R/AT NO. 58, NEAR SANKETI
HOSTAL, JAYANAGAR,
MYSURU - 570 014.
6 . SWAMY,
S/O LATE MADEGOWDA,
AGED ABOUT 41 YEARS,
R/AT THORAVALLI VILLAGE,
GUNDLUPET TALUK-571 111.
7 . SHIVANNA,
S/O GOVINDA,
AGED ABOUT 39 YEARS,
R/AT KEMPISIDDNAHUNDI VILLAGE,
NANJANGUD TALUK-571 301.
8 . JAGADISH,
S/O CHIKKAJAVAREGOWDA,
MAJOR,
R/O KEPARAYYANAKOPPALU
VILLAGE (DARASAGUPPE VILLAGE),
SRIRANGAPATNA TALUK,
MANDYA DISTRICT-571 401.
...RESPONDENTS
(BY SMT. SUMA KEDILAYA, ADVOCATE FOR
SRI V.PADMANABHA KEDILAYA, ADVOCATE FOR R1 TO R7;
R-8 SERVED)
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MFA No. 784 of 2019
THIS MFA IS FILED U/S 30(1) OF ECA ACT, 1923
AGAINST THE JUDGMENT AND AWARD DATED 17.09.2018,
PASSED IN ECA NO.64/2014 ON THE FILE OF THE IV
ADDITIONAL SENIOR CIVIL JUDGE & JMFC, MYSURU,
AWARDING COMPENSATION OF RS.4,69,640/- WITH INTEREST
@ 12% P.A. FROM THE DATE OF PETITION TILL REALIZATION.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY THROUGH VC AT KALABURAGI THE
COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the Insurance Company is directed
against the judgment and award dated 17-09-2018 passed
in ECA No.64/2014 by the learned IV Additional Senior
Civil Judge and JMFC, Mysuru, whereby a sum of
Rs.4,69,640/- has been awarded as compensation
together with interest at 12% p.a. fastening liability on
the Insurance Company on account of the death of
Madegowda.
2. It is the case of the petitioners that, deceased
Madegowda was the husband of petitioner No.1 and father
of petitioner Nos. 2 to 5 and was working under
respondent No.1 in Sugar Cane Crushing Factory engaged
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in preparation of Jaggary at Kopparayanakoppal,
Srirangapatna, Mandya District. On 20.07.2014 at about
4.50 PM when the deceased was putting sugar cane
bagasse into oven and two oxen were taking rounds near
sugar cane furnace. At that time the wooden stick which
was kept on the oxen hit the deceased Madegowda and he
fell down in the sugar cane furnace and sustained burn
injuries. He was taken to K.R.Hospital, Mysuru and
admitted as inpatient and died on 23.07.2014. After
conducting the post-mortem, the dead body was taken to
their village and funeral and obsequies ceremonies were
conducted. He was the only earning member of the family
and the petitioners were depending on the deceased. The
police have registered the case in UDR No.40/2014 dated
24.07.2014. Respondent no.1 being the employer has not
helped the petitioners in any way. At the time of incident,
the deceased was 60 years old and he was getting coolie
of Rs.300/-per day and the respondent No.2 being the
Insurance Company is liable to pay compensation of
Rs.5,00,000/- with interest at the rate of 12% per annum.
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3. On issuance of notice, the respondents No.1
and 2 have appeared and filed their objections. The
respondent No.1 has admitted that he is the owner of the
sugar cane crushing machine/jaggary unit and contended
that the deceased was getting Rs.200/- per day as coolie
and the respondent no.2 is the insurance company and the
crushing machine was insured with respondent no.2 and
therefore, the respondent No.2 is liable to pay the
compensation.
4. The respondent No.2 contended that the
petitioners are the residents of Taralli village, Beguru
Hobli, Gundlupete Taluk, Chamarajanagar District and the
alleged accident has occurred in Mandya District and
therefore, the Tribunal has no jurisdiction to try the
matter. It has also contended that the petitioners are
taking undue advantage of the names referred as
Mahadevegowda and Madegowda. The husband of
petitioner No.1 was not getting the alleged salary under
the respondent No.1. It has contended that the
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respondent No.1 has taken employers liability other than
colliers policy from the respondent under the policy
no.422800/48/2015/633 covering for the period from
17.07.2014 to 16.07.2015. If there is any violation of
condition, it is not liable to indemnify the respondent No.1
as the petitioners and the respondent no.1 have not
produced any documents to show that the deceased was
working under respondent No.1 and prayed to dismiss the
petition.
5. The Tribunal on the basis of the above
pleadings, framed the following issues:
"1. Whether the petitioners prove that the
deceased was working under respondent
no.1 at the time of incident?
2. Whether the petitioners prove that the
deceased died due to the injuries sustained
during the course of his employment ?
3. Whether the petitioners prove the salary of
the deceased under the employment of
respondent no.1 as stated in the petition ?
4. Whether the petitioners prove they were the
dependents of the deceased ?
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5. Whether the petitioners prove that the
respondents are liable to pay compensation
and interest as prayed in the petition ?
6. What order?"
6. The Tribunal after considering the oral and
documentary evidence of PW-1 and Exs.P1 to P8 on behalf
of petitioners as no oral or documentary evidence is
adduced by the respondents, heard the arguments by both
sides and partly allowed the claim petition holding that
the wages as per the notification of the Central
Government u/s 4 (1B) of EC Act is Rs.8000/- per month,
petitioner No.1 is entitled for a compensation of
Rs.4,69,640/- (Rs.8,000/- x 50% x 117.41 factor) from
respondent No.2 along with interest at 12% p.a. after 30
days from the date of incident till its realization and
dismissed the claim of petitioner Nos. 2 to 7 and directed
the respondent No.2-Insurance company to pay the
compensation amount within thirty days from the order.
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7. Being aggrieved by the above said judgment
and award, the Insurance Company has approached this
Court in appeal.
8. This Court while admitting the appeal on
7-7-2022, framed the following substantial question of law
for consideration:
"Whether the trial Court was justified in
fastening the entire liability on the Insurance Company
to pay the compensation when the policy has been
taken for monthly wages of the employee below
Rs.4,000/-?"
appeared through their counsel and respondent
No.8/insured served and remained unrepresented. The
Tribunal records were secured.
10. Arguments by both sides are heard.
11. The learned counsel for the appellant submits
that the appellant insurer is liable to pay only to the extent
of the compensation that is applicable for wages of
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Rs.3000/- per month per employee, up to 6 employees as
per the policy. He further submits that the insurance
company is not liable to pay the interest, since there is a
specific clause in the policy to that effect. In this regard he
relied on the decision in the case of BRANCH MANAGER
UNITED INDIA INSURANCE CO. LTD VS IRAYYA in
MFA NO.22224 OF 2013. He also relied on the decision
of this Court in the case of NEW INDIA ASSURANCE CO
LTD VS SMT.SHANUNA MANDAL in MFA NO.3750 OF
1996.
12. Per contra, learned counsel for the respondents
claimants contended that the question of liability of
interest has been considered by the Apex court and it was
held that the interest alone can be fastened on the
Insurance company, but not the penalty. In this regard
she relied on the decision of the Supreme Court in VED
PRAKASH GARG VS PREMI DEVI AND OTHERS1. She
also relied on the decision of Delhi High Court in the case
(1997) 8 SCC 1
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of NATIONAL INSURANCE CO LTD VS BHIM SINGH
AND OTHERS2 and the decision of High Court of Himachal
Pradesh in the case of NEW INDIA ASSURANCE CO LTD
VS LACHHMAN THAPA AND OTHERS3. Both these
judgments rely on the decision in the case of VED
PRAKASH GARG (referred supra).
13. The first aspect to be decided by this Court is
regarding the liability of the interest. The second would be
about the portion of the compensation to be paid by the
insurer.
14. The judgment of this Court in the case of
IRAYYA (Supra) in MFA No.22224 of 2013 relied on the
judgment of the Apex Court in NEW INDIA ASSURANCE
CO. LTD. V. HARSHADBHAI AMRUTBHAI MODHIYA4
in coming to the conclusion that the interest cannot be
fastened on the insurer. The Apex court in above decision
has held as below:
2011 SCC OnLine Del 1705
2022 ACJ 326
(2006) 5 SCC 192
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"4. However, therein a proviso has been added
which reads as under:
"Provided that the insurance granted hereunder is
not extended to include:
(i) any interest and/or penalty imposed on the
insured on account of his/her failure to comply with
the requirements laid down under the WC Act, 1923,
and
(ii) any compensation payable on account of
occupational diseases listed in Part 'C' of Schedule III
of the WC Act, 1923."
XXXXXXXXXX
19. As indicated hereinbefore, a contract of
insurance is governed by the provisions of the
Insurance Act. Unless the said contract is governed by
the provisions of a statute, the parties are free to
enter into a contract as for their own volition. The Act
does not contain a provision like Section 147 of the
Motor Vehicles Act. Where a statute does not provide
for a compulsory insurance or the extent thereof, it
will bear repetition to state that the parties are free to
choose their own terms of contract. In that view of the
matter, contracting out, so far as reimbursement of
amount of interest is concerned, in our opinion, is not
prohibited by a statute.
20. The views taken by us find support from a
recent judgment of this Court in P.J.
Narayan v. Union of India [(2006) 5 SCC 200]
wherein it was held:
"This writ petition is for the purposes of
directing the insurance company to delete the
clause in the insurance policy which provides that
in cases of compensation under the Workmen's
Compensation Act, 1923, the insurance company
will not be liable to pay interest. We see no
substance in the writ petition. There is no
statutory liability on the insurance company. The
statutory liability under the Workmen's
Compensation Act is on the employer. An
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insurance is a matter of contract between the
insurance company and the insured. It is always
open to the insurance company to refuse to
insure. Similarly, they are entitled to provide by
contract that they will not take on liability for
interest. In the absence of any statute to that
effect, insurance companies cannot be forced by
courts to take on liabilities which they do not
want to take on. The writ petition is dismissed.
No order as to costs.
21. For the reasons aforementioned, the
impugned judgment cannot be sustained. It is set
aside accordingly. The appeal is allowed. The appellant
is not liable for the interest. However, we make it
clear that the employer shall be liable to pay the
amount of interest to the claimant. In the facts and
circumstances of the case, there shall be no order as
to costs."
XXXXXXXXXXXXXX
24. Section 17 of the Workmen's Compensation
Act voids only a contract or agreement whereby a
workman relinquishes any right of compensation from
the employer for personal injury arising out of or in the
course of the employment and insofar as it purports to
remove or reduce the liability of any person to pay
compensation under the Act. As my learned Brother has
noticed, in the Workmen's Compensation Act, there are
no provisions corresponding to those in the Motor
Vehicles Act, insisting on the insurer covering the entire
liability arising out of an award towards compensation to
a third party arising out of a motor accident. It is not
brought to our notice that there is any other law
enacted which stands in the way of an insurance
company and the insured entering into a contract
confining the obligation of the insurance company to
indemnify to a particular head or to a particular amount
when it relates to a claim for compensation to a third
party arising under the Workmen's Compensation Act.
In this situation, the obligation of the insurance
company clearly stands limited and the relevant proviso
providing for exclusion of liability for interest or penalty
has to be given effect to. Unlike the scheme of the
Motor Vehicles Act the Workmen's Compensation Act
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does not confer a right on the claimant for
compensation under that Act to claim the payment of
compensation in its entirety from the insurer himself.
The entitlement of the claimant under the Workmen's
Compensation Act is to claim the compensation from the
employer. As between the employer and the insurer, the
rights and obligations would depend upon the terms of
the insurance contract. Construing the contract involved
here it is clear that the insurer has specifically excluded
any liability for interest or penalty under the Workmen's
Compensation Act and confined its liability to indemnify
the employer only against the amount of compensation
ordered to be paid under the Workmen's Compensation
Act. The High Court was, therefore, not correct in
holding that the appellant Insurance Company, is also
liable to pay the interest on the amount of
compensation awarded by the Commissioner. The
workman has to recover it from the employer."
15. Later, in the decision of KAMLA CHATURVEDI
V. NATIONAL INSURANCE CO,5 the Apex Court had the
occasion to clarify the above judgments and held as
below:
"8. In New India Assurance Co. Vs Harshadbhai
case, [(2006) 5 SCC 192] Ved Prakash Garg
case [(1997) 8 SCC 1] was distinguished on facts. It
was observed that in the said case the Court was not
concerned with a case where an accident had occurred
by use of motor vehicle in respect whereof the contract
of insurance will be governed by the provisions of the
Motor Vehicles Act, 1988 (in short "the MV Act"):
19. ... a contract of insurance is governed by the
provisions of the Insurance Act [, 1938 (in short
'the Insurance Act')]. Unless the said contract is
governed by the provisions of a statute, the parties
are free to enter into a contract as [per] their own
volition. The Act does not contain a provision like
(2009) 1 SCC 487
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Section 147 of the Motor Vehicles Act. Where a
statute does not provide for a compulsory
insurance or the extent thereof, ... the parties are
free to choose their own terms of contract. In that
view of the matter, contracting out, so far as [the]
reimbursement of amount of interest is concerned,
... is not prohibited by a statute."
This position has been reiterated in P.J.
Narayan v. Union of India [(2006) 5 SCC 200]. In the
instant case the position is different. The accident in
question arose on account of vehicular accident and the
provisions of the MV Act are clearly applicable. We have
gone through the policy of insurance and we find that
no such exception as was the case in New India
Assurance Co. Vs Harshadbhai case [(2006) 5 SCC
192] was stipulated in the policy of insurance.
Therefore, the Insurance Company is liable to pay the
interest."
16. Therefore, when the matter stood
distinguished, the liability to pay the interest would be
governed by the terms and conditions in the policy. In the
case on hand, though the policy was produced by the
appellant Insurance Company, before the learned
Commissioner, it was not marked. The insured did not
dispute the policy. A perusal of the policy shows that the
following endorsement is found:
"It is hereby understood and agreed that the
cover provided under this policy shall not extend to
indemnify the Insured/Insured's in respect of any
interest and/or penalty which may be imposed on
him/them on account of his/their failure to comply with
the requirements laid down under the Workmen's
Compensation Act, 1923 and subsequent amendments
of the said Act."
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17. Obviously, this clause is in pari-materia with
the clause contained in the policy that was considered by
the Apex Court in para 4 of Harshadbhai's case supra. In
that view of the matter, the appellant Insurance Company
is not liable to pay the interest on the compensation
amount.
18. Coming to the question of quantum of the
compensation to be fastened on the insurance Company,
again the liability is governed by the wages as agreed in
the policy. Obviously, the policy covered 6 workmen with
wages of Rs.3000/- per month. The appellant insurer is
liable to compensate to the extent of 3000 x 50% x
117.41 (factor)= Rs.1,76,115/- since the age of 60 years
of the deceased is not in dispute.
19. Rest of the compensation and the interest on
entire compensation amount has to be fastened on the
insured/employer. Substantial question of law is answered
accordingly. Hence, the following:
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ORDER
i) The appeal is allowed. Impugned judgment and
award is modified.
ii) The appellant-Insurance Company is liable to
pay a compensation of Rs.1,76,115/- to the
claimants.
iii) The insured/respondent No.8 herein, is liable to
pay Rs.2,93,525/- to the claimants.
iv) The insured/respondent No.8 herein is also
liable to pay interest at 12% p.a., on
Rs.4,69,340/- commencing after 30 days from
the date of incident till the date of realisation.
v) The amount in deposit if any shall be
transmitted to the jurisdictional Tribunal,
forthwith.
Sd/-
JUDGE
tsn*
