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2025 Supreme(Del) 818
2025 DHC 2667
IN THE HIGH COURT OF DELHI AT NEW DELHI
DHARMESH SHARMA, J.
The National Insurance Co. Ltd. – Appellant
Versus
Harendra Singh @ Harendra Chaudhary & Anr. – Respondents
FAO 149 of 2022 & CM APPL. 24971 of 2022
Decided On : 17-04-2025
Advocates Appeared :
For the Appellant : Mr. Pankaj Seth, Adv
For the Respondents : Mr. R.K. Nain and Mr. Chandan Prajapati, Adv.
Insurance companies must fulfill liability under Employees' Compensation Act as per insurance contract, including penalties imposed for employer's non-compliance, interpreting functional disability assessments flexibly.
Headnote:(A) Employees’ Compensation Act, 1923 - Section 4 and 4A(3)(b) - Appeal by insurance company against award of compensation of Rs. 10,33,344/- and penalty - Commissioner found injuries sustained during employment with permanent disability resulting in total loss of earning capacity, hence, compensation granted. (Paras 1-10)
(B) Employer-Employee relationship - Burden of proof lies on claimant, relationship inferred based on evidence despite owner's claims of abandonment. (Paras 12-14)
(C) Liability of insurer - Insurance contract interpretation limited insurer's liability to penalty additionally imposed under Section 4A. (Paras 15-19)
Facts of the case:
Claimant, a driver employed for a vehicle, sustained grievous injuries due to an accident during work, resulting in a permanent disability and substantial medical expenses. (Paras 2-4)
Findings of Court:
The Commissioner ruled in favor of the claimant, upholding the employer-employee relationship and assessing total compensation and penalty under the Employees’ Compensation Act. (Paras 10-10)
Issues: The existence of an employer-employee relationship, the legitimacy of the claim relating to an accident sustained during employment, and whether a penalty was justifiable under the Act. (Paras 5-6)
Ratio Decidendi: The court upheld the Commissioner’s findings based on substantial evidence of employment, the nature of injuries, and interpreted the liability under the insurance contract as inclusive of interest and penalties where warranted. (Paras 11-29)
Result: Appeal dismissed.
JUDGMENT :
DHARMESH SHARMA, J.
1. This appeal has been preferred by the appellant/insurance company assailing the impugned order/judgment dated 13.10.2021 passed by the learned Commissioner, Employees’ Compensation, North-District, New Delhi [“Commissioner”], whereby the claim for compensation filed by the respondent No. 1/claimant/workman was allowed, granting a total compensation of Rs. 10,33,344/-, along with a penalty amount of Rs.2,58,336/- under section 4A(3)(b) of the Employees’ Compensation Act, 1923, [EC Act], payable with interest @ 12% per annum with effect from 25.07.2015 till its realization. The liability for payment was fastened upon the shoulders of the appellant/insurance company.
FACTUAL MATRIX:
2. Shorn off unnecessary details, admittedly, the respondent No.1/claimant/Sh. Harendra Singh @ Harendra Chaudhary, S/o Sh. Ranvir Singh, was employed as a driver of vehicle bearing registration number HR-55-J-5412, a truck owned by Sh. Nikhil Gill/Respondent No. 2. On 25.06.2015, the vehicle was engaged on a business trip from Meerut to Pune (Maharashtra), carrying a consignment of sports (gym) goods, with the claimant designated as the driver. At approximately 7:30 P.M., while operating the vehicle near Nanoo, Hathras Road, a truck approaching from the opposite direction collided with the vehicle driven by the claimant.
3. As a result of the collision, the respondent No. 1/claimant sustained grievous injuries, particularly to his right leg, right hand, and jaws; the vehicle also sustained damage. Suffice it to state that, after prolong medical treatment, the injuries resulted in causing permanent disability, notably shortening of the respondent No.1/claimant’s right leg by approximately one inch, rendering him incapable of sitting properly. The respondent No. 1/claimant asserted that he incurred substantial medical expenses and had become 100% disabled for the purpose of his employment as a driver, resulting in a total loss of earning capacity.
4. The vehicle in question was insured with the appellant/insurance company under Policy No. 36050031146300002766, valid from 01.09.2017 to 31.08.2018, in the name of Sh. Nikhil Gill/Respondent No. 2. It is pertinent to note that the appellant/insurance company had charged an additional premium from the insured under the provisions of the Employees’ Compensation Act, 1923.
5. In light of the aforesaid incident, respondent No. 1/claimant instituted a Claim Petition before the learned Commissioner, Employees’ Compensation, seeking compensation for the injured Harendra Singh. The learned Commissioner, Employees’ Compensation (District-North-West) framed the following issues for adjudication:
i. Whether Employee-Employer relationship exists between the parties?
ii. Whether accident resulting into injury to claimant is caused out of and during the course of employment and if so, to what amount of injury compensation, the claimant is entitled to?
iii. Whether penalty is imposable u/s-4A (3) and if so the quantum thereof?
iv. Relief if any?
6. It is borne out from the record that respondent No. 2, in his evidence by way of affidavit and written statement, stated that he is the registered owner of the vehicle bearing No. HR-55J-5412. He unequivocally denied that the said vehicle was involved in any accident on 25.06.2015, either in Delhi or at any other location within India, while the respondent No. 1/claimant was operating the vehicle. He further asserted that, although the respondent No. 1/claimant was employed as a driver on the relevant date, he abandoned the vehicle on the roadside and left for his village without prior intimation to the owner; and that despite repeated attempts to establish contact, the respondent No. 1/claimant failed to respond to phone calls, thereby compelling respondent No. 2 to engage an alternate driver to ensure the completion of the vehicle's journey to its intended destination. It was specifically contended that, as no accident involving the vehicle occurred and
