Madras High Court
Smt.Kanaka Gowd vs M/S.P.R.Engineers And ... on 10 February, 2021
C.M.A.No.1121 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.02.2021
CORAM
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
C.M.A.No.1121 of 2016
1.Smt.Kanaka Gowd
2.Mr.Ponbini @ Parvengowd
... Appellants
Vs.
1.M/s.P.R.Engineers and Contractors,
D.No.365-A, Trinity Church Street,
Golden George Nagar, Nerkundram,
Chennai 600 107.
2.United India Insurance Co Ltd.,
7th Floor, Tarapore Towers,
Anna Salai, Chennai 02.
For Service at
Silingi Building,
No.134 & 136, Greams Road,
Thousand Lights, Chennai 06.
.. Respondents
Prayer : Civil Miscellaneous Appeal filed under Section 30 of the
Workmen Compensation Act, 1923, against the order dated 15.04.2016
made in W.C.No.48 of 2014 on the file of the Commissioner for
Workmen's Compensation-I (Deputy Commissioner of Labour-I)
Chennai.
1/22
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For Appellants : Mr.F.Terry Chellaraja for
Mr.K.Varadhakamaraj
For Respondents : Mr.J.Michael Visuvasam for R2
NA for R1
JUDGMENT
The award dated 15.04.2016, passed in W.C.No.48 of 2014 is
under challenge in the present civil miscellaneous appeal.
2. The substantial question of law raised is that whether the
Deputy Commissioner of Labour is right in dividing the liability both on
the Insurance Company as well as on the employer. In other words, a
part of the liability is fixed on the employer. Thus, the appellants have
chosen to file the present appeal. Secondly, the learned Commissioner
committed an error in not granting interest at the rate of 12% with
reference to Section 4-A(3)(a) of the Employees Compensation Act,
1923.
3. The facts in nutshell to be considered are that the appellants
filed an application under the Workmen Compensation Act seeking
compensation on the ground that on 12.01.2014, while the deceased was
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working in a building site as labourer, he fell down from the fourth floor
and sustained multiple and grievous head injuries. He was taken to
Government Hospital, Chengalpattu through a car and the doctors in the
Government Hospital examined him and declared “brought dead”.
Postmortem was also conducted on 14.01.2014. The legal heirs of the
deceased Krishnan filed an application seeking compensation. The claim
petition was contested by the United India Insurance Company/ the
second respondent.
4. The Deputy Commissioner of Labour adjudicated the issues
and arrived a conclusion that the second respondent Insurance Company
is liable to pay compensation strictly with reference to the terms and
conditions agreed in the policy. According to the policy, a sum of
Rs.9000/- is fixed as salary for 20 labourers, annually. Thus, the
employer/first respondent paid the premium. The monthly salary fixed
per labour is Rs.37.50/- per month. Thus, the total salary payable to 20
employees annually was calculated as Rs.9000/- and for the said sum of
Rs.9000/-, the premium was paid by the employer to the Insurance
Company. Taking note of the quantum agreed by the Insurance
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Company, the Deputy Commissioner of Labour fixed the liability and
accordingly awarded compensation. The balance amount of
compensation is directed to be paid by the employer/first respondent.
5. The appellants filed the present appeal on the ground that they
will not be in a position to recover the compensation from the employer
as they are in a disadvantageous position. As the victims, they are not in
a position to fight against the employer and collect the portion of the
award amount as awarded by the Deputy Commissioner of Labour. It is
further contended that the liability is to be fixed on the Insurance
Company in the entirety as the policy is the workmen compensation
policy and therefore, the Insurance Company is liable to pay the entire
compensation and if at all any dispute between the employer and the
Insurance Company exist, the same is to be resolved between them and if
necessary, the Insurance Company may recover the amount from the
employer. Contrarily, the benefits conferred under the welfare legislation
cannot be taken away by shifting the responsibility to the employer and
in the event of fixing the liability on the employer, the appellants are not
in a position to recover the award amount.
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6. With reference to the question of law mainly raised, the learned
counsel for the appellants contended that the policy itself is named as
workmen's compensation (general policy) and there is no dispute that the
coverage was in force during the relevant point of time when the accident
occurred. The factum regarding the accident was also established. The
Deputy Commissioner of Labour awarded compensation. However,
fixing the liability on the employer side is improper on the part of the
Deputy Commissioner of Labour, in view of the fact that the Insurance
Company had undertaken to indemnify the compensation on behalf of
the employer and now, they are estopped from shifting the responsibility
with reference to the policy.
7. It is contended that the act contemplates that rightful
compensation is to be paid to the workmen. Undoubtedly, the employer
is primarily liable to pay compensation. Once the Insurance Company
has undertook to indemnify the employer, then it is the liability of the
Insurance Company to settle the compensation on behalf of the employer
in entirety. The workmen is no way connected with the premium paid or
the sum assured by the Insurance Company to the employer. The
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workmen is not a party to the contract between the employer and the
Insurance Company. Thus, the rights of the workmen ought to be
protected in all respects with reference to the provisions of the Workmen
Compensation Act.
8. The learned counsel appearing on behalf of the second
respondent Insurance Company strenuously opposed the contention by
stating that the insurance policy is not statutory in character. It is a
contractual obligation between the employer and the Insurance Company
and under the contractual obligation, the Insurance Company is liable to
pay to the extent assured and certainly not more than that. Therefore, the
liability of the Insurance Company is to be restricted with reference to
the terms and conditions of the policy and not with reference to the
quantum to be awarded and for which, the workmen is legally entitled
under the Workmen Compensation Act. Secondly, it is contended that
the liability is based on the policy as the Insurance Company undertook
to indemnify the liability and therefore, it is a contractual obligation and
cannot be considered as statutory liability.
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9. The learned counsel for the second respondent distinguished by
stating that the statutory liability may be a mandatory one. However, the
contractual liability is to be fixed strictly in consonance with the terms
and conditions agreed upon by the parties and not beyond that. The
learned counsel for the second respondent further contended that the
primary liability is on the employer under the provisions of the Workmen
Compensation Act. Therefore, the Deputy Commissioner of Labour is
correct in sharing the liability with reference to the policy on one hand
and with reference to the Act on the other hand. Thus, there is no
infirmity and the appeal is to be dismissed. Further contention is raised
that the employer has not contested the case. Therefore, the employer
instigated the workmen to file the appeal in order to get the entire
compensation from the Insurance Company and such a practice cannot
be accepted.
10. The learned counsel for the second respondent solicited the
attention of this Court with reference to the policy issued by the
Insurance Company. Then the employer himself declared certain facts
and when such facts are accepted and the policy is issued, then the
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C.M.A.No.1121 of 2016
liability of the Insurance Company cannot be held, over and above the
agreed liability and even if the employer committed a mistake in
declaring the correct salary of the workmen, then the employer must be
responsible to that extent. Therefore, the Deputy Commissioner of
Labour has correctly fixed the liability and no interference is required.
Further, the policy was issued based on the proposals submitted by the
employer concerned. Accepting the proposal, the policy was issued. In
the policy, the number of workmen as well as the salary paid are also
stated. Thus, relying on the said statement, the premium is accepted and
policy was issued. Therefore, there is no liability on the part of the
Insurance Company over and above the agreed liability under the terms
and conditions of the policy.
11. This Court is bound to consider an important issue with
reference to the fixing of liability on the Insurance Company.
Undoubtedly, the policy is not a statutory policy entered into between the
parties under any specific provision. However, the nature of the policy
issued by the Insurance Company is to be considered with a right
perspective and in consonance with the principles, more specifically, in
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the matter of award of compensation to the workmen. Thus, a pragmatic
approach is required and the purpose and object of the welfare
legislation ought to be protected. Undoubtedly, the Insurance Company
is aware of the fact that the policy is issued for the welfare of the
workmen who are all working under the particular employer.
12. Further, the Insurance Company is aware that the Workmen
Compensation Act is the governing statute in the field of fixing liability.
The Insurance Company is well aware of the fact that the employer is
primarily liable to pay compensation and they are undertaking to
indemnify the employer in the matter of payment of compensation by
collecting the premium and by issuing policy. Therefore, it is a
commercial contract between the employer as well as the Insurance
Company, which is not directly connected with the workmen. However,
the benefits are connected with the workmen. Therefore, the relationship
between the employer, Insurance Company and the workmen are
inseparable. For the purpose of contract, the workmen is not connected.
However, for grant of compensation, the workmen is connected. Thus,
the workmen is the beneficiary from and out of the contract between the
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employer and the Insurance Company and such benefits are to be
granted under the provisions of the Workmen Compensation Act and
therefore, the policy is to be considered as if it is not limited to the
contractual obligation but attached with the provisions of the Workmen
Compensation Act.
13. Under these circumstances, straight jacket formula cannot be
adopted by simply stating that the Insurance Company is no way
connected with the workmen. The Insurance Company is within its
knowledge that the compensation to be paid is for the benefit of the
workmen. Thus, unlike other policies, wherein, the policy holder directly
gets the benefits, here is the policy where the beneficiary is the workmen
and the rights of the workmen are enunciated under the Workmen
Compensation Act and therefore, the Insurance Company cannot shift its
responsibility or state that they are no way connected with the Workmen
Compensation Act or it is not a statutory contract.
14. There is an implied implication to Workmen Compensation
Act with reference to the policy issued under the Workmen
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Compensation policy. Such an implied implication or liability to be
interpreted so as to ensure that the rights of the workmen are protected
as the Workmen Compensation Act is a welfare legislation. While
protecting the rights of the workmen, the liability of the Company and
the employer is also to be decided. Undoubtedly, collecting the
compensation from the Insurance Company may be an easy way, but,
the Courts have to consider various other aspects and in the event of
sustaining any monetary loss on the part of the Insurance Company, then
the Courts are bound to grant liberty to the Insurance Company to sue
the employer and to recover the loss if any caused to the Insurance
Company. Contrarily, the Courts cannot deny the welfare benefits to the
workmen as contemplated under the Workmen Compensation Act. The
Workmen cannot made to suffer or cannot be driven out from pillar to
post. The workmen is not a party to the contract. Therefore, there is no
reason to penalise him or deny compensation, which is otherwise assured
under the provisions of the Act.
15. Already such litigations are being prolonged at the instance of
the employer or at the instance of the Insurance Company and payment
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of compensation is paid belatedly. Therefore, it is to be clarified that the
liability is questioned by the Insurance Company or by the employer.
The Courts must ensure that the compensation which is just, is to be
disbursed as expeditiously as possible in order to save the victim and
thereafter, possible relief can be granted to the Insurance Company to
sue the employer or to recover the money or to recover the premium or
otherwise by following the procedures contemplated in law.
16. The very nature of the policy shows that it is a workmen
compensation (general policy). With reference to the premium paid by
the employer, the Insurance Company in the present case, accepted a
sum of Rs.9000/- per annum which cannot be the salary for 20 workmen
in a construction company. The Insurance Company being a public
authority, is expected to follow the general laws prevailing in our great
nation. The Minimum Wages Act or the Central Government
notifications issued under the provisions of the Workmen Compensation
Act are to be followed, while entering into a policy with any employer. It
is a statutory obligation on the part of the authorities to ensure that the
insurance policies are issued in accordance with the general principles,
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which are all established or in accordance with the general laws, which
are all in force.
17. The Insurance Companies, whether private or public are
governed under laws. They are expected to protect the interest of the
public at large and when the policy is entered into between the Insurance
Company and another person, then the principles laid down under the
applicable statutes must be adhered to and in violation, the Insurance
Company is responsible and if any loss occurred at the instance of any of
the officials, such losses are to be recovered from those officials, who
have committed such irregularity, by following the procedures.
Contrarily, the right of the workmen to get rightful compensation cannot
be denied.
18. The statement of objects and reasons for enacting the
workmen's compensation Act reveals that “the growing complexity of
industry in this Country, with the increasing use of machinery and
consequent danger to workmen, along with the comparative poverty of
the workmen themselves, renders it advisable that they should be
protected, as far as possible from hardship arising from accidents.”
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19. Therefore, the statement of objects and reasons must be read
in consonance with the constitutional principles of social justice. Equality
in the economical status is also a constitutional perspective under the
directive principles of the State policy. The State and the Union are
expected to strive hard to achieve the constitutional goal of social justice
and to provide an equal opportunity as well as to minimize the
inequalities in economical status.
20. Under these circumstances, if an employer is allowed to
collude with the Insurance Company which is also a public institution
and deprive the right of the workmen for compensation under the
Workmen Compensation Act, then, such a collusion or irregularity in the
matter of agreeing for an insurance policy, certainly amounts to violation
of the principles of social justice enunciated in the preamble under the
Constitution of India. Minimizing of economical status amongst the
citizens of our great nation is also a constitutional perspective and in the
event of allowing such collusion between the Insurance Company as well
as the employer in the matter of agreeing for an insurance policy so as to
indemnify the employer to a limited extent as per choice regarding
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payment of compensation under the Workmen Compensation Act, this
Court is of the considered view that the actions are to be construed as
unconstitutional and such insurance policies, which are all not meeting
out the requirements of the constitutional principles as well as the
welfare legislation viz., the Workmen Compensation Act, then such
policies are to be construed as not in consonance with the philosophy
and ethos of the Constitution. It is not as if the Insurance Company and
the employer can shake their hands and deprive the right of the workmen
from getting “just compensation” based on the insurance policy.
21. Undoubtedly, the Insurance Company may raise a point that
they are liable to the extent of the policy and the balance compensation is
to be paid by the employer. The Courts are bound to consider whether it
is practically possible for the workmen to collect the portion of the
compensation from his own employer. We are in an employer dominated
society and therefore, the welfare legislation alone will protect the
interest of the workmen in the matter of payment of compensation in the
event of any accident. Thus, any such terms and conditions in the
insurance policy, if agreed between the employer and the Insurance
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Company which is not fulfilling the requirements of the Workmen
Compensation Act, are to be held as invalid, in view of the fact that such
an agreement is depriving the workmen from getting' just compensation'
under the provisions of the Act.
22. In the present case, the policy reveals that the first respondent
employer paid the premium for a sum of Rs.9000/- which is fixed as an
annual salary for 20 employees. The officials of the Insurance Company
are very much aware that it is not an acceptable salary and its not a
minimum wages as per the statute. Under the Employees Compensation
Act, the Central Government periodically issuing notifications fixing the
minimum wages, so also the respective State Governments are passing
orders fixing minimum wages under the provisions of the Minimum
Wages Act. Therefore, those minimum wages must be the benchmark for
the purpose of calculating the premium and the premium cannot be
calculated at the whims and fancies of the Insurance Company and after
accepting the premium and entering into a policy, they cannot shift their
liability by stating that they are bound only by the terms and conditions
of the contract. In such cases, where the right of the workmen is ensured
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under the statute, as stated earlier, the grant of compensation is not
restricted with the contract between the employer and the Insurance
Company. The workmen is the beneficiary. Therefore, the interest of the
workmen is to be taken into account both by the employer as well as the
Insurance Company. The Insurance Companies are obligated to ensure
that the employer is also following the rules and regulations correctly.
23. Thus, if any insurance policy is issued, the Insurance
Company as a public authority must issue, if the premium is paid for the
minimum wages notified under the provisions of the Workmen
Compensation Act. If the Insurance Company decided to collect any
amount premium at the choice of the employer and accept the liability,
then it causes infringement of the right of the workmen, which is
otherwise assured under the provisions of the Workmen Compensation
Act. Therefore, the Insurance Company is also obligated to collect the
premium in consonance with the minimum wages so as to ensure that
the rightful compensation is paid by the Insurance Company in the event
of any accident or otherwise.
24. The IRDAI(Insurance Regulatory and Development Authority
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of India) must ensure that once the product is issued to cover any
liability under any of the statute, then, the Insurance Companies are
bound to follow the provisions of the said Act and ensure that the
beneficiaries realize the benefits in accordance with the provisions of the
Act. Thus, suitable orders or instructions or circulars are to be issued so
as to ensure that the Insurance Companies follow the requirements of the
statute, more specifically, in the present nature of cases, the minimum
wages, which is notified by the Central Government periodically under
the provisions of the Workmen Compensation Act. In the event of
collecting impracticable and lesser premium and thereafter denying
liability would cause infringement of the rights of the workmen and the
payment of compensation is delayed on account of these disputes.
Therefore, such unnecessary disputes are to be avoided by following the
provisions of the statute in its letter and spirit and in the event of any
violations on the part of the Insurance Company or its officials, who are
responsible, must be prosecuted and in the event of any monetary loss,
the same is to be recovered from those officials or from the Insurance
Company concerned by following the procedures contemplated.
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25. With reference to the filing of the appeal by the workmen, this
Court is of the considered opinion that the employer shifted his liability.
The case on hand is a classic case where the employer has not taken care
regarding the rights of the workmen. The Insurance Company is also
attempting to restrict its liability. Ultimately, the very purpose and object
of the Workmen Compensation Act is defeated. Therefore, this Court is
of the opinion that in the event of employer or the Insurance Company
shifting its responsibility, the Courts are expected to act swiftly and pay
“just compensation” immediately and liberty may be granted to the
Insurance Company concerned to initiate action against the employer for
recovery in accordance with law.
26. In view of the discussions made in the aforementioned
paragraphs, this Court is inclined to fix the liability on the Insurance
Company. However, the second respondent Insurance Company is at
liberty to file appropriate application before the Workmen Compensation
Commissioner under Section 31 of the Act to recover the portion of the
award to be paid by the employer to the workmen. Thus, the Insurance
Company is directed to deposit the entire award amount with accrued
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interest at the rate of 12% per annum from the date of expiry of 30 days
from the date of accident to the workmen within a period of twelve
weeks from the date of receipt of a copy of this order. On such deposit,
the appellants are permitted to withdraw the entire amount by filing an
appropriate application and the payments are to be made through RTGS.
The Insurance Company is at liberty to recover the portion of the liability
fixed on the employer by filing an appropriate application under Section
31 of the Workmen Compensation Act.
27. In this view of the matter, the award dated 15.04.2016 passed
in W.C.No.48 of 2014 is modified. C.M.A.No.1121 of 2016 stands
allowed in part. No costs.
28. The High Court Registry is directed to communicate the copy
of this order to Insurance Regulatory and Development Authority of
India (IRDAI), Sy No.115/1, Financial District, Nanakramguda,
Gachibowli, Hyderabad – 500 032.
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10.02.2021
Index: Yes/No
Internet:Yes/No
Speaking order/Non-Speaking Order
gsk
To
1. The Commissioner for Workmen's Compensation-I
(Deputy Commissioner of Labour-I) Chennai.
2.Insurance Regulatory and Development
Authority of India (IRDAI),
Sy No.115/1, Financial District,
Nanakramguda, Gachibowli, Hyderabad – 500 032.
S.M.SUBRAMANIAM, J.
gsk
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10.02.2021
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