IMPORTANT POINT
Injury suffered in course of employment – Insurer would be liable only to reimburse employer, in the event employer fails to make payment for any reason.

ORDER :

1. Heard learned counsel for the parties.

2. The present appeal arises from an order of the High Court at Calcutta¹[High Court] dated 09.04.2015 whereby the appeal of the first respondent (insurer - the insurance company) was allowed in part and the order of the Commissioner, Workmen’s Compensation (1st Court), West Bengal²[Commissioner] dated 04.03.2011, in Claim Case No. 12/2006, was modified to the extent that direction to the insurer (the first respondent) to pay the compensation to the workman (the second respondent) was substituted with a direction to the appellant (insured - employer) to pay the compensation and seek reimbursement from the insurer. However, while doing so, the order of the Commissioner awarding compensation of Rs. 2,58,336 with statutory interest of 12% per annum to the workman was affirmed.

3. Record reflects that the second respondent, employed as driver of the appellant, made a claim, under the Workmen’s Compensation Act, 1923³[1923 Act] (now known as Employee’s Compensation Act, 1923), against the appellant and the first respondent for compensation, by alleging, inter alia, that claimant suffered a disabling injury by accident arising out of and in the course of employment. Based on the pleadings of the parties, Commissioner framed multiple issues for consideration. One of them, namely, issue no.4, being as to whether insurance company is liable to pay compensation. The said issue was decided against the insurance company upon finding that the risk was covered under the certificate of insurance issued by the first respondent to the appellant.

4. Against the order of the Commissioner, the insurance company (the first respondent herein) filed an appeal before the High Court on a technical ground that the award should have been against the employer (i.e., the appellant herein) with liberty to the employer to seek reimbursement from the insurer under the contract of insurance.

5. High Court accepted the aforesaid plea and, accordingly, modified the order of the Commissioner in terms supra.

6. Aggrieved by the order of the High Court, the employer is in appeal before us.

7. The submission on behalf of the appellant is that there is no dispute regarding the claim being covered by the contract of insurance. Further, there is no dispute regarding appellant’s right of reimbursement; and there is no challenge to the amount of compensation awarded. In such circumstances, there was absolutely no justification for the High Court to modify the award in the aforesaid terms. Additionally, it has been argued that the High Court erroneously brushed aside the decision of this Court in Mahendra Rai vs. United India Insurance Company Ltd. & Anr. (Civil Appeal No.6697 of 2014, decided on July 23, 2014), where a similar plea raised on behalf of the insurance company was rejected.

8. Per contra, the learned counsel for the first respondent (insurance company) supported the decision of the High Court by submitting, inter alia, that the 1923 Act imposes liability on the employer; and there is no provision therein for compulsory insurance or fastening liability on the insurer to satisfy judgment and awards against persons insured, as is there in Section 149 of MOTOR VEHICLES ACT , 1988. Hence, rights of insured and insurer are governed by the contract of insurance, which is to indemnify the insured, and therefore, the claimant would have no right to directly claim compensation from the insurer. As a result, the appropriate course for the Commissioner is to award compensation against the employer only, who may seek reimbursement from the insurer in terms of the contract of insurance. In support of his submissions, decisions of