UNITED INDIA INSURANCE CO. LTD, v. VASUDEVAN — 1988 DIGILAW 618 (KER)

Judgment :- 1. These appeals under S.30 of the Workmen's Compensation Act, 1923 have been referred to the larger Bench in view of the conflicting views expressed is Beach decisions of this Court on the scope of S.14 of the Act. 2. The question raised is whether in adjudicating the claim of a dependant of a workman who died as a result of a motor accident, the Workmen's Compensation Commissioner can direct the insurer to pay the amount awarded as compensation. The appellants contend that the Workmen's Compensation Commissioner has no jurisdiction or authority to pass an award against the Insurance Company and the only occasion a liability can be fixed on the insurer by the Commissioner is when the conditions contemplated by S.14 of the Act exist. 3. In New India Assurance Company Ltd. v. Parameswari Amma, ILR. 1976 (1) Ker. 237, this Court, in considering the legality of the direction by the Commissioner that the insured is entitled to be indemnified by the insurer to the full amount of compensation, said: "Of course, as between the insurer and the employer there may be scope for indemnity apart from the terms of the Workmen's Compensation Act. That is because of the contract of the insurance and any adjudication on that question is not within the province of the Workmen's Compensation Commissioner. Therefore, the direction of the nature found in the impugned order and which is under challenge is not one which Commissioner for Workmen's Compensation is expected to make." In United India Fire and General Insurance Co. Ltd. v. Joseph Mariam & anr.1979 ACJ 349 the aforesaid decision was understood as laying down the principle that "the only circumstances under which the liability of the employer extends to the insurer also are those specified in sub-section (1) of S.14 and that except in cases where the conditions laid down in the sub-section are duly satisfied, the Commissioner for Workmen's Compensation has no jurisdiction to issue any direction to the insurer to deposit into bis court the amount of compensation payable by the employer to the dependant of the deceased employee." Agreeing with this view, the learned judges held that the direction issued by the Commissioner to the Insurance Company to deposit the amount of compensation was not legal or proper. 4. In United India Firs and General Insurance Co. Ltd. v. P.M. Ishmmal and ors. 4. In United India Firs and General Insurance Co. Ltd. v. P.M. Ishmmal and ors. 1979 A.C.J. 448 though the question of want of jurisdiction for the Commissioner to direct the insurer to pay the compensation was raised, the court held: "Where there is no lack of inherent jurisdiction in a court or tribunal and jurisdiction is conditional on the existence of certain facts, lack of jurisdiction on account of non-existence of jurisdictional facts ought in the first instance be raised before the Tribunal or the court as the case may be." 5. These decisions based on S.14 of the Act had been distinguished in the subsequent decisions. We shall notice the decision in United India Fire and General Insurance Co. Ltd. v. Kamalakshi, 1980 KLT 441. Viswanatha Iyer J., speaking for the Bench, on analysing the provisions of the Workmen's Compensation Act and Motor Vehicles Act, said: "Whichever may be the court or authority which determined the liability of the insured in such motor vehicles accident, if the judgment is in respect of such liability which is required to be covered by the policy under S.95 (1) that judgment must be satisfied by the Insurance Company. Therefore, it is obvious that S.96 (1), (2) and (6) are to be read, by the express mandate of the Parliament even into the Workmen's Compensation Scheme in respect of Motor Vehicle Accidents." It was also observed: "The forum is the Commissioner and his jurisdiction is wide enough to cover this as the language of S.19 (I) implies. He can decide the tenability of the objection and if the insurer fails, the consequential direction of the commissioner to the insurer to pay is also covered under S.19 (1). In any event in execution of the order against the insured, namely, the employer, the Commissioner can enforce his liability against the Insurance Company under S.31. In the light of S.19 read along with S.31 the order of the Commissioner can never be challenged as being without jurisdiction " In United India Insurance Co. Ltd. v. Gangadharan, 1986 KLT. 1034 Sivaraman Nair J., speaking for the Bench said on the scope of S.14 of the Workmen's Compensation Act: "The purport of the provision appears to be only that in such circumstance the right of the workmen shall not be defeated and the insurer can then be substituted in the place of the insolvent-employer. Ltd. v. Gangadharan, 1986 KLT. 1034 Sivaraman Nair J., speaking for the Bench said on the scope of S.14 of the Workmen's Compensation Act: "The purport of the provision appears to be only that in such circumstance the right of the workmen shall not be defeated and the insurer can then be substituted in the place of the insolvent-employer. It does not appear to operate as a prohibition against any proceedings before the Workmen's Compensation Commissioner involving the insurer who Is liable under a contract of insurance to discharge the liability of the employer to compensate the workmen; according to the provisions of the Workmen's Compensation Act. The submission that a provision which enables the insurer to be substituted in the place of an employer shall be read as a prohibition against the insurer being proceeded against before the Workmen's Compensation Commissioner cannot be accepted. Similar provisions are available in S.101 of the Motor Vehicles Act. which also provide that in case if the insured becomes insolvent or the employer company is wound up etc. the employer shall be entitled to proceed against the insurer If the similar provision under S.101 of the Motor Vehicles Act does not enable the insurer to disclaim liability, one cannot understand how an identical provision in the Workmen's Compensation Act should be read as providing immunity in favour of the insurer in spite of the terms of the contract of insurance " The objection to the jurisdiction was not however, considered on merits, in that case. in National Insurance Co. Narayanan Nair, 1988 (I) KLT. 794 the Division Bench considered the question whether the Commissioner is not entitled to direct the insurer to pay compensation in proceedings under Workmen's Compensation Act in view of S.14 of the Act and pointed out that in a case where a question of jurisdiction was not taken up before the Commissioner the appellant need not be permitted to raise that question for the first lime in appeal and even if the appellant is allowed to raise, be cannot succeed in view of the provisions in the Motor Vehicles Act. The learned judges, after referring to S.110AA of the Motor Vehicles Act, said that the option given to the claimant cannot be rendered an ineffective choice and that the non obstacle clause with which S.110AA of the Motor Vehicles Act begins clearly indicates that these alternatives are provided with full awareness of the bar created by S.14 of the Workmen's Compensation Act and despite that bar and therefore the objection that the claim under the Workmen's Compensation Act is not entertainable cannot be sustained. 6. In United India Insurance Co. Ltd. v. Alphonsa, 1988 (1) KLT. 661 ParameswarI Amma's case (ILR. 1976 (I) Ker. 237) was expressly dissented from stating "The provisions contained in S.14 of the Workmen's Compensation Act cannot be a bar in directing the insurer to discharge the liability of the employer in proceedings before the Workmen's Compensation Commissioner under the provisions of Workmen's Compensation Act." 7. We, thus find that the decisions are not uniform. We shall therefore examine the question whether the Commissioner for Workmen's Compensation has jurisdiction under the Act in a proceeding for compensation for personal injury or death of an employee occurring in a motor accident to award compensation against the Insurance Company and whether the Insurance Company can be fastened with the liability of making payment of compensation in a successful application. 8. The Workmen's Compensation Act is a welfare legislation intended to provide speedy and cheap disposal of disputes relating to compensation to workmen and their dependants. In construing the provisions of the Act the purpose sought to be achieved by the legislation has to be considered. S.3 of the Act provides that if any personal injury is caused to a workman by accident arising out of or in the course of his employment his employer shall pay compensation in accordance with the provisions of the Act. The measure of the compensation indifferent categories of claims is provided in S.4. S.19 empowering the Commissioner to settle the dispute relating to such compensation read: "19. The measure of the compensation indifferent categories of claims is provided in S.4. S.19 empowering the Commissioner to settle the dispute relating to such compensation read: "19. Reference to Commissioners: (1) If any question arising in any proceedings under this Act as to the liability of any person to pay compensation (including any question as to whether a person injured is or is not a workman) or as to the amount or duration of compensation (including any question as to the nature or extent of disablement) the question shall, in default of agreement, be settled by a Commissioner. (2) No civil court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under this Act". S.14 of the Act provides as under: "14. Insolvency of employer: (1) Where any employer has entered toto a contract with any insurers in respect of any liability under this Act to any workman, then in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or. if the employer is a company, in the event of the company having commenced to be wound up, the rights of the employer a gainst the insurers as respects that liability shall, notwithstanding anything in any law for the time being in force relating to insolvency or the winding up of companies, be transferred to and vest in the workman, and upon any such transfer the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so, however, that the insurers shall not be under any greater liability to the workman than they would have been under the employer. (2) If the liability of the insurers to the workman is less than the liability of the employer to the workman, the workman may prove for the balance in the insolvency proceedings or liquidation, (3) Where in any case such as is referred to in sub-section (1) the contract of the employer with the insurers is void or voidable by reason of non-compliance on the part of the employer with any terms or conditions of the contract (other than a stipulation for the payment of premia), the provisions of that sub-section shall apply as if the contract were not void or voidable, and the insurers shall be entitled to prove in the insolvency proceedings or liquidation for the amount paid to the workman; Provided that the provisions of this sub-section shall not apply in any case in which the workman fails to give notice to the insurers of the happening of the accident and of any resulting disablement as soon as practicable after be becomes aware of the institution of the insolvency or liquidation proceedings." 9. The Motor Vehicles Act, 1939 is enacted to consolidate and amend the taw relating to the Motor Vehicles. Compulsory insurance of the Motor Vehicles under S.94 of the Act was introduced to cover the liability which the owner of the vehicle may incur with the object that the injured or the dependants would be able to get damages straight away from the Insurance Company and the recovery would not depend upon the financial conditions of the owner. After the 1956 amendment, a policy shall be required to cover liability arising under the Workmen's Compensation Act in respect of the death or bodily injury of certain employees. Thus a compulsory insurance even in respect of employee risk has now been statutorily covered by the scheme. The liability of the employer covered by the policy is transformed as the liability of the insurer with the aid of the non obstacle clause contained in S, 95 (5). Therefore the Insurance Company would be liable to satisfy the judgment even in respect of the liability under the Workmen's Compensation Act to the extent provided therein and for that purpose S.96(1) has enacted a statutory fiction that the Insurance Company is to be treated as if it were a judgment-debtor. Therefore the Insurance Company would be liable to satisfy the judgment even in respect of the liability under the Workmen's Compensation Act to the extent provided therein and for that purpose S.96(1) has enacted a statutory fiction that the Insurance Company is to be treated as if it were a judgment-debtor. The Workmen's Compensation Commissioner in determining the absolute liability under the Act is thus enabled to determine the question as to the liability of the insurer to pay compensation as if it were the judgment-debtor subject to the safeguard provided under S.96(2). The Workmen's Compensation Act, a welfare and beneficial legislation to make provisions for Special Tribunals to deal cheaply and expeditiously with dispute regarding compensation is supplemented by the provisions of the Motor Vehicles Act. 10. The scope of S.3 of the Workmen's Compensation Act is to lay down the principle that the employer shall be liable to compensate a workman for personal injury sustained by him by accident arising out of and in the course of his employment. "Compensation" as defined in S.2 (c) means compensation as provided for by the Act. S.3 (5) further indicates that nothing contained is the Section shall be deemed to confer any right to compensation on a workman in respect of any injury if he has instituted in a civil court a suit for damages in respect of the injury against the employer or any other person. It is also provided that no suit for damages is maintainable by a workman in any court of law in respect of any injury if he has instituted a claim to compensation in respect of the injury, before a Commissioner. The remedy thus available to a workman to claim compensation for injuries sustained in the course of the employment either before the Commissioner or before the Claims Tribunal is alternative and mutually exclusive. The workman has the option and when be makes an application under S.22 of the Workmen's Compensation Act the Commissioner is empowered under S.19 (1) to settle the question arising in such proceedings as to the liability of any person to pay compensation or as to the amount or duration of the compensation. The workman has the option and when be makes an application under S.22 of the Workmen's Compensation Act the Commissioner is empowered under S.19 (1) to settle the question arising in such proceedings as to the liability of any person to pay compensation or as to the amount or duration of the compensation. The jurisdiction of the Commissioner under sub-section (2) is also exclusive and no civil court shall have jurisdiction to settle, decide or deal with any question which is required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under the Act. S.31 enables the Commissioner to recover as arrears of land revenue any amount payable by a person under the Act. 11. The scheme thus provides for absolute liability of the employer in case of accidents arising out of and in the course of the employment of the workman. S.19 constitutes the Commissioner as the sole authority to determine this liability of the employer and to enforce that liability incurred under the Act. The Civil Court's jurisdiction is totally excluded from this liability. S.19 (1) is wide enough to confer jurisdiction on the Commissioner to determine a question arising in any proceeding under the Act as to the liability of any person' to pay compensation as provided for by the Act. It is not restricted to determination of the liability of the employer alone. 12. Chapter VIII of the Motor Vehicles Act provides the scheme for compulsory insurance of the motor vehicle for the benefit of not only third parties but also of certain category of employees. S.94 requires that no person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of the Chapter. Under S.95 in order to comply with the requirements of the Chapter a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2) against the liability mentioned. Under S.95 in order to comply with the requirements of the Chapter a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2) against the liability mentioned. The proviso under the section states that the policy shall be required to cover the liability in respect of the death arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment, in the case of an employee (a) engaged in driving the vehicle (b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle or (c) if it is a good vehicles being carried in the vehicle, to the extent of the liability arising under the Workmen's Compensation Act, 1923. Sub-section 5 of S.95 states that notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this Section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. Under S.96 (1) the insurer is required to pay to the person entitled to the benefit of the benefit of the adjudication the sum assured under the policy when a judgment is rendered against the insured as if the insurer is the judgment-debtor in respect of that liability. Sub-section(2) requires a notice to be served on the insurer in respect of the proceedings and the insurer is enabled to contest on specified grounds. When the insurer is required to pay more than what is payable under the policy the remedy is provided under sub-section (4) and the insurer is entitled to recover the excess from the insured. Thus the statutory obligation is enjoined on the insurer to discharge the liability of the insured in the adjudication proceedings and for that purpose the statute enables an authority to bear the insurer and give appropriate directions. The Motor Vehicles Act in S.94 to 96 does not specify the forum before which the liability of the insurer is to be settled. The Motor Vehicles Act in S.94 to 96 does not specify the forum before which the liability of the insurer is to be settled. The non obstante clause of sub-section (5) of S.95 empowers the authority to enforce the liability of the insurer in the case before it. When the authority gives the direction it is only enforcing the statutory liability and not a contractual liability. The terms 'judgment' and 'decree' occurring in S.95 only denote the award and is not limited to that of the Claims Tribunal or civil court. It signifies the decision of the competent forum under any law whatsoever empowered to adjudicate upon the claim for compensation involving a motor vehicle. The provisions of the Motor Vehicles Act are therefore necessarily to be read into the provisions of the Workmen's Compensation Act when the question arises as to the liability of the insurer to indemnify the insured and satisfy the claim of the person entitled to get the benefit of the adjudication. We are clearly of the view that under the Workmen's Compensation Act, in proceedings under S.22 thereof the Commissioner is empowered to enforce the liability of the employer to pay the compensation to the employee by directing the insurer to discharge the liability in terms of the policy which covers the liability. 13. The Commissioner's jurisdiction to determine the liability of any person to pay compensation is in no way limited by the provisions contained in S.14 of the Act. This Section provides the safeguards in adjudicating upon the employee's claim in certain specified contingencies. Special jurisdiction to proceed against the Insurance Company even in such cases cannot be construed or treated as restriction on the general powers. When a person becomes insolvent or the winding up of a company had commenced, all the rights and remedies of such person enforceable against a third party under a contract stand transferred to and vest in the official receiver or official liquidator as the case may be. But in the interest of the workman and in order to enforce the absolute liability of the employer and the statutory liability of the insurer in accident claims arising under the Act. But in the interest of the workman and in order to enforce the absolute liability of the employer and the statutory liability of the insurer in accident claims arising under the Act. S.14 provides that the rights of the employer shall stand transferred to and vest in the workman, The Commissioner is enabled to enforce the liability of the insurer making available the full amount assured for the satisfaction of the employee's claim even in such cases. This is the purport of S.14. The special liability of the insurer under S.14 does not exclude or limit the general liability under S.95 of the Motor Vehicles Act. Similar provisions are contained in S.97 of the Motor Vehicles Act. 14. The Division Bench, in Parameswari Amma's case, (I.L.R.1976(1) Ker. 237), while stating that there may be scope for indemnity because of the contract of the insurance, observed that any adjudication on that question is not within the province of the Workmen's Compensation Commissioner. The Court, however, left open the question whether the relief could be worked out against the insurer by invoking S.96 of the Motor Vehicles Act. The impact of S.94 to 96 of the Motor Vehicles Act, whereby a statutory obligation has been created, was not examined by the learned judges and the wide import of S.19(1) of the Workmen's Compensation Act was left out of consideration. The law cannot be correctly stated without adverting to these provisions. We therefore, respectfully differ from the view exposed in ParameswarI Amma's case (supra) and followed in United India Fire & General Insurance Co. Ltd. v. Joseph Mariam, 1979 A.C. J. 349. For the same reasons, we do not agree with the decision of the Madras High Court in Charag Chemical Industries v. R.G. Ganesan, 1981 A.C.J. 532 wherein it is stated that the liability of the insurer to pay the amount assured under the policy cannot be said to arise under the provisions of the Act. 15. The view we had taken find support in the decisions of the various other High Courts. The Gujarat High Court in Northern India Motor Owners Insurance Co. 15. The view we had taken find support in the decisions of the various other High Courts. The Gujarat High Court in Northern India Motor Owners Insurance Co. Ltd. v. Magan Shanji Solanki,1974 A.C.J. 55 analysing the provisions of the two statutes succinctly stated that the fiction created under S.96(1) of the Motor Vehicles Act would enable the Commissioner under Workmen's Compensation Act to determine the question as to the liability of the Insurance Company to pay compensation as if it were the judgment-debtor in the order determining the absolute liability of the owner. In Sital Prasad v. Afsari Begum, 1977 A.C.J. 436 the Allahabad High Court, in considering whether the Insurance Company is a necessary party to the proceedings under Workmen's Compensation Act said that the Insurance Company is liable to pay the amount of compensation determined by the Compensation Commissioner as payable to the claimants and the inevitable impact of S.95 and 96 of the Motor Vehicles Act is to make the Insurance Company a necessary party to such proceedings. The Bombay High Court in Khwajabai v. Gulabkhan Jamalkhan Pathan, 1979 ACJ. 277 has also held the view that the liability of the insurer arises under the provisions of S.96 of the Motor Vehicles Act and that liability could be enforced before the Commissioner for Workmen's Compensation because the jurisdiction of that authority has not been excluded by reason of the language used and the necessary implication thereof. In National Insurance Co. Ltd. v. Prembai and ors. 1987 ACJ. 278 the Madhya Pradesh High Court, following the Full Bench decision of that Court dated 31-3-1985 held that the Insurance Company can be fastened with the liability of making payment of compensation to the successful applicant in a proceeding before the Commissioner for Workmen's Compensation under the Act, even is the absence of the employer being adjudged an insolvent as required under Sub-section (1) of S.14 of the Act. The Karnataka High Court in United India Fire and Genera! Insurance Co. Ltd. v. M/s. Machinery Manufacturers Corpn. Ltd. 1986 ACJ. 1979 held the identical view that the Commissioner has jurisdiction to direct the insurer to pay compensation notwithstanding the provisions contained in S.14 of the Act. The Karnataka High Court in United India Fire and Genera! Insurance Co. Ltd. v. M/s. Machinery Manufacturers Corpn. Ltd. 1986 ACJ. 1979 held the identical view that the Commissioner has jurisdiction to direct the insurer to pay compensation notwithstanding the provisions contained in S.14 of the Act. Venkatachalayya J. as be then was, construed S.3, 4 and 19 of the Act and observed that it the employer is entitled to recover the amount of compensation payable from his insurer, the Insurance Company is regarded as one falling within the expression "any person" under subsection (1) of S.19 of the Act against whom the liability for payment of compensation could also be fastened by the Commissioner and the expression "any person" used in the sub-section takes within its ambit the insurance company as well. The Orissa High Court in Oriental Fire & General Insurance Co. Ltd. v. Matias Burla, 1986 ACJ 732 held that by virtue of S.95 of the Motor Vehicles Act, the Tribunal constituted under the Workmen's Compensation Act is competent to determine the liability of the insurer to the extent the workman was entitled under the Workmen's Compensation Act and the insurer is bound to indemnify the owner to that extent. This view is reiterated by that Court in Bhajanlal Padia v. Rajinath, 1987 ACJ. 572 pointing out that the limited liability of the insurer under S.14 of the Workmen's Compensation Act does not exclude the General liability under S.95 of the Motor Vehicles Act. The High Courts of Andhra Pradesh and Jammu and Kashmir have taken the contrary view with which we do not agree (Vide G. Sreedharan v. Hindustan Ideal Insurance Corpn, 1976 LIC. 732, New Asiatic Insurance Co. v. Kulwaneti Devi 1959 J and K 90). After reviewing the entire case law, a learned single judge of the Gauhati High Court in Oriental Fire and General Insurance Co. Ltd. v. Nani Bala Devi, 1987 ACJ. 655 held that the provisions of Workmen's Compensation Act cannot be viewed in isolation when the Motor Vehicles Act has specifically stated that a policy of insurance cannot exclude the liability arising under the Workmen's Compensation Act, and that an insurer is also liable to pay compensation under the Workmen's Compensation Act, as the expression'any person' in S.19 of the Act has to cover an insurer also. The learned judge has also pointed out that the word 'compensation' has been defined in the Act to mean compensation as provided for by this Act and a narrow meaning to the expression 'any person' in S.19 of the Act would militate against the wide ambit of the expression especially when it is viewed in the background of the provisions finding place under the Motor Vehicles Act. We agree with the reasoning and conclusions. 16. In the light of what has been discussed, we bold that in proceedings under S.22 of the Workmen's Compensation Act, the Commissioner is empowered to direct the insurer to pay the compensation as provided for even in cases where S.14 of the Act has no application. 17. In the appeals before us by the Insurance Company the only question of law that has been raised is the jurisdiction of the Commissioner. The findings of fact arrived at by the Commissioner, on the basis of which the insurers have been directed to make the payment to the claimants, cannot be assailed and no argument had been advanced by the learned counsel for the appellants before us on that aspect. The appeals by the insurers accordingly fail. In the result, we dismiss the appeals. In the circumstances of the case, parties are directed to bear their respective costs.