IMPORTANT POINT
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 Workmen s Compensation Act, along with interest thereon, if any, as imposed by the Commissioner u/s 3 and 4A(3)(a) will have to be made good by the insurance company jointly with the insured employer but the insurance company cannot be made liable to reimburse part of the penalty amount imposed on the employer.

Headnote:INSURANCE-Workmen s Compensation Act, 1923-Sections 4A, 19-Motor Vehicles Act, 1988-Section 147-Motor accident injuries caused to workman in course of his employment-Claims for compensation under Compensation Act-Award of compensation-Compensation due not paid either by employer or by insurance company as and when it fell due-Commissioner awarded a penalty with interest from date of accident till date of payment u/s 4A(3)(a) and (b) of Compensation Act-Whether insurance company is liable to meet awards of Workmen s Commissioner imposing penalty and interest against the insured employer u/s 4A(3) of the Compensation Act?-Held, claim for compensation payable along with interest thereon as imposed will have to be paid by insurance company jointly with insured employer-However, insurance company cannot be made liable to reimburse penalty amount imposed on employer.
       Held 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 4A(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 4A(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. (Para 14)
       Further held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words the insurance company will be liable to meet the claim for compensation along with interest as imposed on the insured employer by the Workmen s Commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4A sub-section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen s Commissioner under Section 4A(3)(b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone. (Para 17)

JUDGMENT

S.B. Majmudar, J.-In these three appeals by special leave, a short but ticklish question arises for consideration. It runs as under :

"Where an employee receives a personal injury in a motor accident arising out of and in the course of his employment while working on the motor vehicle of the employer, whether the insurance company, which has insured the employer-owner of the vehicle against third party accident claims under Motor Vehicles Act, 1988 (hereinafter referred to as `the Motor Vehicles Act ) and against claims for compensation arising out of proceedings under the Workmen s Compensation Act, 1923 (hereinafter referred to as `the Compensation Act ) in connection with such motor accidents, is liable to meet the awards of Workmen s Commissioner imposing penalty and interest against the insured employer under Section 4A(3) of the Compensation Act."

The High Court of Himachal Pradesh in the impugned judgments has answered this question in the negative and against the insured employer. For coming to that conclusion reliance is placed by the said High Court on a decision of a Division Bench of Karnataka High Court in the case of Oriental Insurance Co. Ltd. v. Raju and Ors.1, and the judgment of a learned Single Judge of the Gujarat High Court in the case of Jayantilal and Co. v. Garasia Rajvirba Udesinh and Ors.2. Identical view is taken by a Division Bench of the Gujarat High Court in the case of Gautam Transport, Bhavnagar v. Jiluben Huseinbhai and Ors.3. The decision of a learned Single Judge of the Delhi High Court in the case of Oriental Insurance Co. Ltd. v. Hasmat Khatoon and Ors.4 has also fallen in line. While on the other hand a learned Single Judge of Gauhati High Court in the case of Oriental Fire and General Ins. Co. Ltd. v. Nani Bala Devi and Anr.5; a Division Bench of the Orissa High Court in the case of Khirod Nayak v. Commissioner for Workmen s Compensation and Ors.6.; a learned Single Judge of the Madhya Pradesh High Court in the case of New India Assurance Co. Ltd. v. Guddi and Ors.7 and a learned Single Judge of the Rajasthan High Court in the case of United India Insurance Co. Ltd. v. Roop Kanwar and Ors.8 have answered this question in the affirmative against the insurance company. There is another judgment of a Division Bench of the Gujarat High Court in the case of Radhabehn and Ors. v. Mulji Kanji Dhord and Ors.9 which has adopted a middle course and has answered the question partly in the affirmative so far as the imposition of interest contemplated by Section 4A(3)(a) of the Compensation Act is concerned and partly in the negative so far as the imposition of penalty on the owner-employer under Section 4A(3)(b) is concerned. Before we proceed to resolve the aforesaid conflict of decisions it will be profitable to note a few background facts leading to these appeals.

Civil Appeal Nos. 15698-15699 of 1996

2. These two appeals arise out of a motor accident wherein the owner of a motor truck, appellant in these appeals, had entrusted the said truck for driving to one Pritam Singh and had employed one Hem Raj to be a cleaner attached to the said truck. The said truck met with an accident on 15th February, 1992 near Village Pulwahai on Kumarsain Dhamla Road in the State of Himachal Pradesh. In the said accident driver Pritam Singh and cleaner Hem Raj died on spot. It is the case of the appellant, owner of the truck, that having come to know about the accident on 16th February, 1992 he immediately informed the Branch Manager of respondent No. 9-insurance company about the accident. According to the appellant, respondent No. 9-insurance company had insured the appellant comprehensively against all the risks arising out of the use of the said motor vehicle. That still the insurance company though bound to pay the heirs of the deceased-employees appropriate compensation as per the insurance cover, did not carry out the said obligation.

3. The two claim petitions came to be filed by the h

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1997 Supreme(SC) 1273

Cases Referred (4)