Madhya Pradesh Flying Club Ltd. vs Haseena Khatun Khan

Headnote:(A) Employee's Compensation Act, 1923 - Section 4 - Quantum of compensation - Determination of monthly wages - The 2009 amendment deleted the deeming provision (Explanation II) which previously capped monthly wages - The purpose of the amendment is to remove the deeming cap and extend compensation based on actual monthly wages drawn by the employee, as interpreted by the Apex Court; therefore, actual wages are to be considered for calculating compensation (Paras 9.2, 9.3, 9.6, 9.7, 9.8).

(B) Employee's Compensation Act, 1923 - Section 8 - Deposit of compensation - Payments made under a contractual insurance policy which specifically excludes liability under the Act cannot be treated as statutory compensation - The requirement to deposit funds with the Commissioner under Section 8 applies only to compensation provided for by the Act and not to contractual liabilities arising from an insurance policy (Paras 11.2, 11.5, 11.6, 11.7).

(C) Employee's Compensation Act, 1923 - Section 30 - Maintainability of appeal - The defect of non-deposit of the interest part under the third proviso to Section 30 is curable in nature (Paras 8, 8.1).

Facts of the case:
An employee employed as a manager and pilot died in an aircraft crash during the course of employment. The claimants sought compensation under the Employee's Compensation Act. The Labour Court awarded compensation based on the actual monthly salary of Rs. 20,000/-. The insurance company had previously paid Rs. 10,00,000/- directly to the employer, who then paid the claimants. However, the Labour Court directed the insurance company to pay the amount again, holding that the previous payment was invalid because it was not deposited with the Commissioner as mandated by Section 8 of the Act. All three parties appealed to the High Court.

Findings of Court:
The court found that the wage cap of Rs. 8,000/- is no longer applicable following the 2009 amendment to the Act. It also found that the claim for additional flying incentives was not supported by evidence. Regarding the insurance company, the court noted that the policy explicitly excluded liability under the Employee's Compensation Act, meaning the payment made was a contractual obligation under a personal accident cover and not statutory compensation; thus, Section 8 was not applicable.

Issues: Whether the statutory cap of Rs. 8,000/- applies to the calculation of compensation; whether flying incentives should be included in the monthly wages; and whether a contractual payment under an insurance policy that excludes statutory liability must comply with the deposit requirements of Section 8.

Ratio Decidendi: Legislative intent behind the 2009 amendment was to ensure compensation is based on actual wages whenever determinable. Additionally, Section 8 governs only statutory compensation as defined by the Act; it does not govern independent contractual payments made under insurance policies that specifically exclude liability under the Employee's Compensation Act.

Result: appeal Nos.2606/2020 and 2854/2020 (filed by the employer and employee) are hereby dismissed and appeal No.2743/2020 (filed by the insurance company) is allowed.

Legal Category Hierarchy

1. Employee died in aircraft crash during employment; compensation claim under Employee's Compensation Act, 1923. (Para 2 )

2. Employer claimed wage cap under Section 4; insurer denied coverage; claimants sought inclusion of incentive in wages. (Para 4 , 5 , 6 )

3. Employer's and claimants' appeals dismissed; insurer's appeal allowed; employer liable for entire compensation. (Para 14 , 15 )

4. Whether an insurance company is liable under the Employee's Compensation Act when the policy expressly excludes such liability?

No, the exclusion clause is effective; the insurer is not liable under the Act and Section 8 deposit is not required. (Para 13 )

5. Whether an employer's appeal is maintainable if interest was not initially deposited under Section 30 third proviso?

Yes, the defect is curable; no penalty imposed due to bonafide reliance on a previous order. (Para 8 )

ORDER :

PAVAN KUMAR DWIVEDI, J.

These appeals have been filed by the respective appellants against the common award dated 17.03.2020 passed by the Commissioner Employees' Compensation / Labour Court, Indore in Case No.06/WC/16(F).

1.1 Appeal No.2606/2020 has been filed by the employer (Madhya Pradesh Flying Club Limited) challenging the quantum of compensation.

1.2 M.A. No.2743/2020 has been filed by the Insurance Company against the direction to pay Rs.10,00,000/- again in view of the provisions of Section 8 of the Employee's Compensation Act and Appeal No.2854/2020 has been filed by the legal representatives of the deceased employee also on the question of the quantum of compensation.

1.3 As all three interested parties have filed their respective appeals, for the sake of convenience, they are hereinafter referred to as the employer, the 'Insurance Company' and the 'claimants'.

2. The facts relevant to the case are that the deceased Arshad Noor Qureshi was employed as Manager (Co-ordination) with the employer. The employer M/s Madhya Pradesh Flying Club was operating registered aircraft being registration number VT EUE (Victor Tango Eco Uniform Echo), Model : Cessna-152.

2.1 On 19.11.2014 at around 10:45 AM, deceased Arshad Noor was piloting the said aircraft. Along with him, one Pawan Deep Singh Pabla was also seated in the aircraft. While landing, the aircraft lost balance and as the pilot Arshad Noor could not control it, the aircraft crashed into the ground and was damaged resulting in grievous injuries to both occupants.

2.2 Arshad Noor succumbed to the injuries sustained in the said accident and Pawan Deep Singh sustained grievous injuries to both his legs, spinal bone and other parts of his body. Both were rushed by the personnel of employer to Shri Aurobindo Institute of Medical Sciences Hospital, Indore, where Arshad Noor was declared dead and Pawan Deep Singh was admitted for treatment.

2.3 An inquest was registered in terms of Section 174 of the Cr.P.C. at Inquest No.88/2014.

2.4 The deceased Arshad Noor was 28 years of age at the time of the accident and Pawan Deep was 25 years of age. The aircraft in question was insured with the Insurance Company under Aircraft Insurance Policy which covered the risk of passengers under personal accident insurance to the extent of Rs.10,00,000/- only.

2.5 Consequent to the accident, the claimants filed an application under Sections 4 and 22 of the Employee's Compensation Act, 1923 before the Labour Commissioner for grant of compensation. In the claim petition, it was asserted that the deceased was earning Rs.20,000/- per month as salary and was additionally receiving Rs.300/- per hour for flying. The claim was denied by both, the employer as well as the Insurance Company.

3. The case of the employer was that the actual wages of Rs.20,000/- cannot be taken into consideration in view of the upper limit provided in Section 4 of the Employee's Compensation Act which according to the employer was Rs.8,000/- per month. It was thus contended that the entire amount of compensation had already been paid through the insurer by issuance of cheque of Rs.10,00,000/- which had duly been received.

3.1 The Insurance Company on the other hand denied its liability by asserting that it had insured the employer only under Aircraft Insurance Policy and that there was no insurance coverage for any liability arising under the Employee's Compensation Act.

3.2 The Labour Court based on pleadings of the respective parties, framed as many as six issues. Upon consideration, it recorded a finding that the deceased was in the employment of the employer namely Madhya Pradesh Flying Club and that he died during the course of his employment. It was further held that the accident occurred during the course of 'employment' in terms of the provisions of the aforesaid Act. The Labour court also concluded that the deceased was earning Rs.20,000/- per month.

3.3 As such, compensation was awarded to the claimants to the tune of R

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2026 Supreme(MP) 611

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
PAVAN KUMAR DWIVEDI, J.
M/s Madhya Pradesh Flying Club Ltd. – Appellant
Versus
Haseena Khatun Khan And Others – Respondents
MISC. APPEAL No. 2606 of 2020, MISC. APPEAL No. 2743 of 2020, MISC. APPEAL No. 2854 of 2020
Decided On : 09-02-2026

Legal Category Hierarchy

Table of Contents

4. Whether an insurance company is liable under the Employee's Compensation Act when the policy expressly excludes such liability?

5. Whether an employer's appeal is maintainable if interest was not initially deposited under Section 30 third proviso?

Judicial Analysis

2026 Supreme(MP) 611

IN THE HIGH COURT OF MADHYA PRADESH AT INDOREPAVAN KUMAR DWIVEDI, J.M/s Madhya Pradesh Flying Club Ltd. – Appellant VersusHaseena Khatun Khan And Others – Respondents MISC. APPEAL No. 2606 of 2020, MISC. APPEAL No. 2743 of 2020, MISC. APPEAL No. 2854 of 2020Decided On : 09-02-2026

Legal Category Hierarchy

Table of Contents

4. Whether an insurance company is liable under the Employee's Compensation Act when the policy expressly excludes such liability?

5. Whether an employer's appeal is maintainable if interest was not initially deposited under Section 30 third proviso?

Cases Referred (1)

Judicial Analysis

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
PAVAN KUMAR DWIVEDI, J.
M/s Madhya Pradesh Flying Club Ltd. – Appellant
Versus
Haseena Khatun Khan And Others – Respondents
MISC. APPEAL No. 2606 of 2020, MISC. APPEAL No. 2743 of 2020, MISC. APPEAL No. 2854 of 2020
Decided On : 09-02-2026