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CASE NO.: Appeal (civil)  856 of 2007

PETITIONER: Gottumukkala Appala Narasimha Raju & Ors

RESPONDENT: National Insurance Co. Ltd. & Anr

DATE OF JUDGMENT: 20/02/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T  (Arising out of S.L.P. (C) No. 9771 of 2004)

S.B. Sinha, J.

       Leave granted.

       Interpretation of Section 167 of the Motor Vehicles Act, 1988 (for  short, ’1988 Act’) falls for consideration in this appeal which arises out of a  judgment and order dated 23/7/2003 passed by the High Court of Judicature  Andhra Pradesh at Hyderabad in Appeal Against Order No.2720 of 2003,  holding that no Award could be passed against the insurer in the proceeding  under the provisions of Workmen’s Compensation Act, 1923 (’1923 Act’,  for short).

       Before adverting to the question involved in this appeal, we may  notice the factual matrix obtaining herein.

       A tractor bearing No. AP 37P 3717 belonged to Smt. Gottumukkala  Venkata Lakshmi, the wife of deceased Bangaru Raju @ Appala Raju.  Respondent No. 1 was the insurer of the said vehicle.  An accident took  place.  Bangaru Raju died in that accident while driving the said tractor.   How the accident occurred is not known. Claiming a sum of Rs.3 lakhs by  way of compensation, a petition before the Commissioner of Workmen’s  Compensation in terms of the 1923 Act was filed against Smt. Gottumukkala  Venkata Lakshmi, the owner of the tractor, and the insurer herein.   According to the claimants, the deceased was earning about Rs.3,000/- per  month towards salary and Rs.25/- as Bata per day.

       The owner of the tractor, being wife of the deceased, raised a  contention that she and her husband had been living separately prior to the  date of accident and the tractor in question being insured with the 1st  respondent herein, she was not liable to pay any amount to the claimant by  way of  compensation.   She, however, examined herself as P.W.1.   Although, no such case was made out in the objection filed by the owner of  the tractor, it was alleged that her brother had engaged the deceased on a  monthly salary of Rs.3,000/- per month and Bata of Rs.25/- per day.  

       The contention raised by the 1st respondent before the Commissioner  under 1923 Act was that as the deceased and the owner of the tractor were  husband and wife, the question of there being a relationship of employer and  employee between them did not arise and in that view of the matter, the  deceased was not a "workman" within the meaning of the provisions of  Section 2(n) of the 1923 Act.   

       Despite the fact that no contract of employment was brought on  records, the Commissioner for Workmen’s Compensation proceeded to  calculate the amount of compensation payable under the 1923 Act in terms

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of a purported Notification dated 27.7.2000 fixing minimum wages for the  drivers of light vehicles.  The age of the deceased was found to be 41 years  at the time of his death.  Opining that the salary of the deceased would be  Rs.2334/- per month, it was held that the claimants were entitled to  Rs.2,11,659/- by way of compensation.  It was directed :

       "In view of the above facts the quantum of  compensation payable to the dependents is = Age factor x  50% of wages = 181.37 x 2334 x 50/100 = 2,11,658.79  Ps rounded to Rs.2,11,659/- (Rupees two lakhs eleven  thousand six hundred and fifty nine only).

       Therefore the O.P.1 being the employer and owner  of the vehicle and the O.P.2 being the insurer of the  vehicle are hereby directed to deposit jointly and  severally Rs.2,11,659/- (Rupees two lakhs eleven  thousand six hundred and fifty nine only) towards  compensation payable to the applicants by way of  demand draft drawn in favour of the Commissioner for  Workmen’s Compensation and Deputy commissioner of  Labour, Eluru within 30 days from the date of receipt of  this orde."  

       An appeal preferred thereagainst before the High Court has been  allowed by reason of the impugned judgment holding that no Award could  be passed against the insurer by the Commissioner for Workmen’s  Compensation.

       Mr. Venkateswara Rao Anumolu, learned counsel appearing on behalf  of the appellants would submit that having regard to the provisions of  Section 167 of the 1988 Act, the claimants had an option to file an  application either under the 1988 Act or under the 1923 Act and, thus, an  Award could be made also against the insurer.

       Mr. Kishore Rawat, learned counsel appearing on behalf of the  respondents, on the other hand, would support the judgment under appeal.

       The provisions of 1988 Act provide for a complete code.  A contract  of insurance is a contract between two parties.  The 1988 Act mandates  compulsory insurance of motor vehicles in terms of Section 147 thereof.

       Compulsory insurance, therefore, is provided under the 1988 Act and  not under the 1923 Act.  Statutory duty to indemnify the insured by the  insurer arises only thereunder.  Section 143 of the 1988 Act occurring in  Chapter X thereof shall also apply in relation to any claim for compensation  in respect of death or permanent disablement of any person under the 1923  Act resulting from an accident of the nature referred to in Sub-Section (1) of  Section 140 and for the said purpose, the said provisions shall, with  necessary modifications, be deemed to form part of that Act.  Chapter X  deals with certain categories of cases.  A claim petition under Section 166 of  the 19088 Act, however, comes under Chapter XII thereof.  Applicability of  the provisions of 1988 Act shall, therefore, be confined to Chapter X thereof  for the purpose of a proceeding initiated under the 1923 Act.

       Section 2(n) of the 1923 Act defines "workman" in the following  terms : "2. (1)(n) "workman" means any person who is \026  (i)     a railway servant as defined in Section 3 of  the Indian Railways Act, 1890 (9 of 1890),  not permanently employed in any  administrative, district or sub-divisional  office of a railway and not employed in any  such capacity as is specified in Schedule II,  or  (ia)    (a)     ***             ***

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       (b)     ***             ***         (c)     a person recruited as driver, helper,          mechanic, cleaner or in any other          capacity in connection with a motor          vehicle,         (d)     ***             ***, and who is employed outside India in any such capacity  as is specified in Schedule II and the ship, aircraft or  motor vehicle, or company, as the case may be, is  registered in India, or; (ii)    employed in any such capacity as is  specified in Schedule II."

 A "workman" within the meaning of the provisions of the 1923 Act  would, therefore, be entitled to maintain an application for payment of  compensation if, for a personal injury caused to him by accident arising out  of or in case of his employment in which the employer shall be liable to pay  compensation in accordance with the provisions of the Chapter X.  Chapter  X of the 1988 Act, thus, is made applicable in relation to a claim which  could have also been made under Section 3 of the 1923 Act.  But, having  regard to the fact that Section 143 of Chapter X makes a special provision,  the same shall apply only to cases arising under the said Chapter and not  under Chapter XI of the 1988 Act. The 1988 Act provides for mandatory insurance for the matters laid  down under Section 147 of the Act and, thus, an Award can be passed  against an insurer.  An insurer, having regard to Sub-Section (2) of Section  149 of the Act, would, ordinarily, have limited defence as provided for  therein.  The defence of an insurer in a proceeding under the 1923 Act   would be unlimited and all the defences which are available to the employer  would be available to it. Section 143 of the 1988 Act has a limited applicability so far as the  provisions of the 1923 Act are concerned.  Where a liability arises despite  the fact that accident might have taken place without any fault of the driver  of the vehicle and others under control thereof, the insurer may have a  liability, whereas under 1923 Act a "workman" would be entitled to  compensation, even if no negligence is proved against the owner or the  person in charge of the vehicle; but the applicability of Section 143 of the  1988 Act, therefore, cannot be extended to one made under Chapter XI  thereof.  In a case of this nature, provision of Section 167 of the 1988 Act  would be of no significance.         The question in regard to the applicability of Section 167 of the 1988  Act fell for consideration in National Insurance Co. Ltd. v. Mastan & Anr.  [(2006) 2 SCC 641], wherein it was held : "Section 167 of the 1988 Act statutorily provides  for an option to the claimant stating that where the death  of or bodily injury to any person gives rise to a claim for  compensation under the 1988 Act as also the 1923 Act,  the person entitled to compensation may without  prejudice to the provisions of Chapter X claim such  compensation under either of those Acts but not under  both. Section 167 contains a non obstante clause  providing for such an option notwithstanding anything  contained in the 1923 Act. The "doctrine of election" is a branch of "rule of  estoppel", in terms whereof a person may be precluded  by his actions or conduct or silence when it is his duty to  speak, from asserting a right which he otherwise would  have had. The doctrine of election postulates that when  two remedies are available for the same relief, the  aggrieved party has the option to elect either of them but  not both. Although there are certain exceptions to the  same rule but the same has no application in the instant  case."   Balasubramanyan, J. in his concurring judgment, held :

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"......The exclusiveness of the jurisdiction of the Motor  Accidents Claims Tribunal is taken away by Section 167  of the Motor Vehicles Act in one instance, when the  claim could also fall under the Workmens Compensation  Act, 1923. That section provides that death or bodily  injury arising out of a motor accident which may also  give rise to a claim for compensation under the  Workmens Compensation Act, can be enforced through  the authorities under that Act, the option in that behalf  being with the victim or his representative. But Section  167 makes it clear that a claim could not be maintained  under both the Acts. In other words, a claimant who  becomes entitled to claim compensation under both the  Motor Vehicles Act, 1988 and the Workmens  Compensation Act, because of a motor vehicle accident  has the choice of proceeding under either of the Acts  before the forum concerned. By confining the claim to  the authority or the Tribunal under either of the Acts, the  legislature has incorporated the concept of election of  remedies, insofar as the claimant is concerned. In other  words, he has to elect whether to make his claim under  the Motor Vehicles Act, 1988 or under the Workmens  Compensation Act, 1923. The emphasis in the section  that a claim cannot be made under both the enactments, is  a further reiteration of the doctrine of election  incorporated in the scheme for claiming compensation.  The principle "where, either of the two alternative  Tribunals are open to a litigant, each having jurisdiction  over the matters in dispute, and he resorts for his remedy  to one of such Tribunals in preference to the other, he is  precluded, as against his opponent, from any subsequent  recourse to the latter" (see R. v. Evans, 118 ER 1178) is  fully incorporated in the scheme of Section 167 of the  Motor Vehicles Act, precluding the claimant who has  invoked the Workmens Compensation Act from having  resort to the provisions of the Motor Vehicles Act, except  to the limited extent permitted therein. The claimant  having resorted to the Workmens Compensation Act, is  controlled by the provisions of that Act subject only to  the exception recognised in Section 167 of the Motor  Vehicles Act."         The learned counsel appearing on behalf of the appellants, therefore,  in our opinion, was not correct in contending that all the pleas available in a  proceeding under the 1988 Act shall proprio vigore be available in a  proceeding under the provisions of 1923 Act.           In Ved Prakash Garg v. Premi Devi and Others [(1997) 8 SCC 1],  Majmudar, J. speaking for a Division Bench opined that the insurer would  be liable to indemnify the owner of the vehicle, stating : "19. As a result of the aforesaid discussion it must be  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  Workmens Commissioner under the Compensation Act  on the conjoint operation of Section 3 and Section 4-A  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 Workmens  Commissioner under Section 4-A(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.

       The correctness of the said decision is not in question before us.  We

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may, however, notice that the said decision was distinguished in New India  Assurance Co. Ltd. v. Harsahadbhai Amrutbhai Modhiya and Anr. [(2006) 5  SCC 192], wherein it was held that whereas under the 1988 Act contracting  out is not permissible, it would be so permissible under the 1923 Act,  stating: "As indicated hereinbefore, a contract of insurance  is governed by the provisions of the Insurance Act.  Unless the said contract is governed by the provisions of  a statute, the parties are free to enter into a contract as for  their own volition. The Act does not contain a provision  like Section 147 of the Motor Vehicles Act. Where a  statute does not provide for a compulsory insurance or  the extent thereof, it will bear repetition to state that the  parties are free to choose their own terms of contract. In  that view of the matter, contracting out, so far as  reimbursement of amount of interest is concerned, in our  opinion, is not prohibited by a statute."

Balasubramanyan, J. in his concurring judgment, opined : "23. The law relating to contracts of insurance is  part of the general law of contract. So said Roskill, L.J. in  Cehave v. Bremer. This view was approved by Lord  Wilberforce in Reardon Smith v. Hansen-Tangen (1976)3  All ER 570 (HL) (All ER p. 576h) wherein he said:  "It is desirable that the same legal principles  should apply to the law of contract as a whole and  that different legal principles should not apply to  different branches of that law."   A contract of insurance is to be construed in the first  place from the terms used in it, which terms are  themselves to be understood in their primary, natural,  ordinary and popular sense. (See Colinvauxs Law of  Insurance, 7th Edn., para 2-01.) A policy of insurance  has therefore to be construed like any other contract. On  a construction of the contract in question it is clear that  the insurer had not undertaken the liability for interest  and penalty, but had undertaken to indemnify the  employer only to reimburse the compensation the  employer was liable to pay among other things under the  Workmen’s Compensation Act. Unless one is in a  position to void the exclusion clause concerning liability  for interest and penalty imposed on the insured on  account of his failure to comply with the requirements of  the Workmen’s Compensation Act of 1923, the insurer  cannot be made liable to the insured for those amounts."

       Thus, if the vehicle is covered by an insurance, the insurer may be  made a party and it may be liable to indemnify the owner, but the situation  in this case is entirely different, as would appear from the discussions made  hereinafter.            In our considered opinion, it is wholly absurd to suggest that the  husband would be a "workman" of his wife in absence of any specific  contract.  We have no doubt in our mind that for the purpose of proceeding  under the 1923 Act, only the appellants have concocted the story of husband  and wife living separately.  If they have been living separately in view of  certain disputes, the question of husband being a "workman" under her  appears to be a far-fetched one.           Technically, it may be possible that the husband is employed under  the wife, but, while arriving at a conclusion that when a dispute has been  raised by other side, the overall situation should have been taken into  consideration.   The fact, which speaks for itself shows that the owner of the  tractor  joined hands with the claimant for laying a claim only against the  insurer.  The claim was not bona fide.         No documentary proof to establish the contract of employment was  produced.  No independent witness was examined.  Even as to for what

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purpose the tractor was being used had not been disclosed.  How the  accident had taken place is also known borne out from the records of the  case.  If the deceased, with all intent and purport, was the owner of the  tractor, the claim petition under the 1988 Act might not have been  maintainable.  A petition under 1923 Act certainly would not lie.  Only  because Section 143 and 167 of the 1988 Act refer to the provisions of the  1923 Act, the same by itself would not mean that the provisions of the 1988  Act, proprio vigore would apply in regard to a proceeding for payment  under the 1923 Act.  The limited applicability of the provisions of the 1988  Act, in relation to the proceedings under the 1923 Act has been discussed by  this Court in the aforementioned judgments.  It is, thus, not possible to  extend the scope and ambit of the provisions of 1988 Act to  the provisions  of 1923 Act save and except to the extent noticed hereinbefore.          The ingredients for maintaining a proceeding under 1988 Act and  1923 Act are different.  The purpose for which a contract of insurance is  entered into may be different, whereas 1988 Act, it will bear repetition to  state, a contract of insurance would be mandatory;  for the purpose of  applicability of the 1923 Act, it will be optional and as indicated  hereinbefore, in Harshadbhai Amrutbhai Modhiya (supra), even  contracting out is permissible, as under the 1923 Act, the liability of the  insurer is limited to the claim of the workman.  The liability under Section  147(2)(b) of the 1988 Act, on the other hand,  extends to third party.                   Our attention has been drawn to some decisions of the High Courts  which have taken different views in regard to the liability of the insurer to be  joined as a party in a proceeding under the 1923 Act.  It is not necessary for  us to into the correctness or otherwise of the said decisions, as in our  opinion, there does not exist any bar in the 1923 Act in this behalf.  Section  19(1) of the 1923 Act specifically provides that any question in regard to the  liability of a person who is required to indemnify the employer must be  determined in the proceeding under the said Act and not by way of a  separate suit. Thus, a question of this nature should be gone into the  proceeding under the 1923 Act.         We, therefore, albeit for different reasons would uphold the judgment  of the High Court.  This appeal, therefore, being devoid of the merit, is  dismissed.  No costs.