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CASE NO.: Appeal (civil)  7381 of 2005

PETITIONER: National Insurance Company                                               

RESPONDENT: Mastan & Anr.                                                            

DATE OF JUDGMENT: 09/12/2005

BENCH: S.B. Sinha & P.K. Balasubramanyan  

JUDGMENT: J U D G M E N T  [Arising out of SLP (Civil) No. 26615 of 2004] WITH

CIVIL APPEAL NO. 7383 OF 2005 [Arising out of S.L.P.  (Civil) No. 5861 of 2005]

S.B. SINHA,  J :

       Leave granted.

       Whether an insurer, while defending an action initiated under the  Workmen’s Compensation Act, 1923, (for short, ’1923 Act’)  is precluded  from raising any defence as envisaged in under sub-section (2) of Section  149 of the Motor Vehicles Act, 1988, (for short, ’the 1988 Act’) is the  question involved in these appeals.

       We will notice the fact of the matter from the Civil Appeal arising out  of Special Leave Petition (Civil) No.26615 of 2004.

       A lorry bearing registration No. KA 34-545 was insured with the  Appellant company.  The First Respondent herein was a cleaner and the  Second Respondent was an owner of the said lorry.  The said lorry was  involved in an accident resulting in sufferance of injuries by the First  Respondent which led to his disability to the extent of 45 to 50%.  He  initiated a proceeding under the 1923 Act. The Commissioner for  Workmen’s Compensation, Davangere, by an order dated 30.04.1997  awarded a sum of  Rs.2,70,264/- by way of compensation and interest of   Rs.33,230/- to the workman payable by the Appellant herein.   

       Aggrieved by and dissatisfied therewith the Appellant preferred an  appeal before the High Court under Section 30(1) of the 1923 Act, which  was dismissed by the High Court on the premise that the Appellant was not  entitled to urge any ground  therein which was not available to it in terms of  the 1988 Act.  In support of the said finding, reliance was placed upon a   Full Bench judgment of the High Court dated 17.12.2003 in MFA Nos. 1910  of 1997 etc.  The question  referred to the Full Bench of the High Court for  its consideration was as under :

"Whether the restrictions on the defences available to an  insurance company in terms of Section 149(2) of the  Motor Vehicles Act have any application to the  proceedings under the workmen’s Compensation Act ?"

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       Upon consideration of various provisions of the 1988 Act including  Sections 143, 167 and 149 thereof,  the Full Bench held :

       "\005Under the circumstances, under the W.C. Act,  the Insurance Company can only agitate violation of any  condition of the policy to make substantial question of  law, and therefore, the question of raising other defences  available in terms of Sec. 149(2) of the M.V. Act does  not arise."

       It was also held :

       "Under the provisions of Workmen’s  Compensation Act a statutory appeal is provided under  Section 30 of the Act to the High Court on the orders  enumerated therein.  The proviso to that Section makes it  very clear that no appeal shall lie against any order unless  a substantial question of law is involved in the appeal.   As stated earlier negligence or contributory negligence of  the offending vehicle is not a ground to be considered at  all while awarding compensation under the Workmen’s  Compensation Act.  Therefore, the insurer cannot prefer  any appeal either challenging the quantum of  compensation or on  any other grounds except the ground  available to him under Section 149(2) of the 1988 Act."

In arriving at the said findings, the Full Bench inter alia relied upon  decisions of this Court in National Insurance Company Ltd. v. Nicolletta  Rohtagi and Others [(2002) 7 SCC 456]], United India Insurance  Co. Ltd. v.  Bhushan Sachdeva & Ors. [(2002) 2 SCC 265] as also Ved Prakash Garg v.  Premi Devi and Others [(1997) 8 SCC 1].  The Full Bench apart from the  finding that the contributory negligence is not a defence on the part of the  owner of the vehicle or the insurance company further opined that the  question of proving negligence does not arise under the 1923 Act.  It was  further observed that the expression ’death’ shall carry the same meaning  both under the 1923 Act as also the 1988 Act.  

Both the 1923 and 1988 Acts are self-contained Codes.  Subject to the  provisions made in the later Act, Section 3 of the 1923 Act provides that if  personal injury is caused to a workman by accident arising out of and in the  course of his employment, his employer shall be liable to pay compensation  in terms of the provisions of the said Chapter.  Section 4 of the 1923 Act  provides for amount of compensation.  Section 5 elucidates the method of  calculating wages.  Section 15B(ii) provides that the 1923 Act shall apply if  the persons have been sent for work abroad along with motor vehicles  subject to the modifications mentioned therein.  

The Commissioner for Workmen’s Compensation has been conferred  with various powers  including the power to record evidence.  He has also  the power to refer any question of law for the decision of the High Court.

       The appeal against an order passed by a Commissioner lies before the  High Court on a substantial question of law involved.

       Applicability of the 1988 Act in a proceeding under the 1923 Act is  contained in Section 143 of the 1988 Act, which reads as under :

       "143. Applicability of Chapter to certain claims  under Act 8 of 1923.- The provisions of this Chapter  shall also apply in relation to any claim for compensation  in respect of death or permanent disablement of any

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person under the Workmen’s Compensation Act, 1923  resulting from an accident of the nature referred to in  sub-section (1) of Section 140 and for this purpose, the  said provisions shall, with necessary modifications, be  deemed to form part of that Act."               

        Section 143 occurs in Chapter X of the 1988 Act.  Section 144  contains a non-obstante clause stating that the provisions of the said chapter  shall have effect notwithstanding anything contained in any other provisions  of the said Act or of any other law for the time being in force.  Chapter X  deals with liability without fault in certain cases.  Chapter X, therefore, will  have no application in relation to a claim made in terms of Chapter XI of the  1988 Act.   

Applicability of the provisions of the 1988 Act in a proceeding under  the 1923 Act is confined to a matter coming within the purview of Chapter  X only.  It cannot be stretched any further.  

The High Court, noticed hereinbefore, was of the view  that under the  1923 Act, negligence is not required to be proved for the purpose of  determining the quantum of compensation payable. However, under the  1988 Act, in a case where the liability arises without fault no difficulty arises  in this behalf in view of the provisions of Section 143 of the 1988 Act.  But  difficulty in applying the provisions of the 1988 Act arises in relation  to a  claim made under Chapter XI thereof.  Claims under the said chapter are to  be proved in terms of Section 166 of the 1988 Act, where negligence on the  part of the driver of the vehicle is required to be proved.  Indisputably, in  relation to such a claim, insurer can raise only a limited defence in view of  sub-section (2) of Section 149 which reads as under :

"149. Duty of insurers to satisfy judgments and award  against persons insured in respect of third party risks.

               (1)             xxx             xxx             xxx (2) No sum shall be payable by an insurer under sub- section (1) in respect of any judgment or award unless,  before the commencement of the proceedings in which  the judgment of award is given the insurer had notice  through the Court or, as the case may be, the Claims  Tribunal of the bringing of the proceedings, or in respect  of such judgment or award so long as execution is stayed  thereon pending an appeal; and an insurer to whom  notice of the bringing of any such proceedings is so given  shall be entitled to be made a party thereto and to defend  the action on any of the following grounds, namely:\027 (a)  that there has been a breach of a specified   condition of the policy, being one of the  following       conditions, namely:\027  (i)    a condition excluding the use of the vehicle\027 (a) for hire or reward, where the vehicle is on the  date of the contract of insurance a vehicle not  covered by a permit to ply for hire or reward,  or   (b) for organised racing and speed testing, or   (c) for a purpose not allowed by the permit under  which the vehicle is used, where the        vehicle is a transport vehicle, or   (d) without  side-car being attached where the  vehicle is a motor cycle; or

(ii)    a condition excluding driving by a named person

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or persons or by any person who is not duly   licensed, or by any person who has been  disqualified for holding or obtaining a driving  licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused  or contributed to by conditions of war, civil war,        riot or civil commotion; or   (b)     that the policy is void on the ground that it was  obtained by the nondisclosure of a material fact  or by a representation of fact which was false in  some material particular."

       Interpretation of this provision fell for consideration before this Court  in National Insurance Company Ltd. v. Baljit Kaur [(2004) 2  SCC 1]  wherein the principles have been laid down in some details and thus, it is not  necessary to reiterate the same herein once over again.  

       However, despite Section 149(2) of the 1988 Act, the Parliament was  of the opinion that if any circumstance arises as enumerated in Section 170  thereof, an insurer may be granted leave to contest the claim on one or any  of the grounds available to the person against whom the claim has been  made.

       It is beyond any doubt or dispute that in a proceeding where the right  of the insurer to raise a defence is limited in terms of sub-section (2) of  Section 149, an appeal preferred by it against an award of the Motor  Accidents Claims Tribunal must only be confined or limited to some extent.    But once a leave has been granted to the insurer to contest the claim on any  ground as envisaged in Section 170 of the 1988 Act, an appeal shall also be  maintainable as a matter of right, wherein the High Court can go into all   contentions.  The Full Bench of the Karnataka High Court, in our opinion,  committed a serious error in relying upon the judgments of this Court, in  terms whereof the right of appeal of the insurance company has been held to  be limited, inasmuch in those decisions this Court was considering a  situation where sub-section (2) of Section 149 was attracted.

       Section 143 of the 1988 Act limits its applicability to the 1923 Act in  a case where the liability arises despite the fact that the accident might have  taken place without any fault on the part of the driver of the vehicle or others  in control thereof.  Under the 1923 Act also, as noticed hereinbefore, a  workman is entitled to compensation even if no negligence is proved against  the owner or any other person in charge of the vehicle.  It is, thus, not  possible to extend the applicability of Section  143 of the 1988 Act to  include Chapter XI thereof to a claim under the 1923 Act.    Right of appeal is a creature of statute.  The scope and ambit of an  appeal in terms of Section 30 of the 1923 Act and Section 173 of the 1988  Act  are distinct and different.  They arise under different situations.  In a  case falling under the 1923 Act, negligence on the part of the owner may   not be required to be proved.  Therein what is required to be proved is that  the workman suffered injuries or died in course of  employment.  The  amount of compensation  would be determined having regard to the nature  of injuries suffered by the worker and other factors as  specified in the Act.  The findings of fact arrived at by the Commissioner for Workmen’s  Compensation are final and binding.  Subject to the limitations contained in  Section 30 of the 1923 Act, an appeal would be maintainable before the  High Court; but to put the insurer to further disadvantages would lead to an  incongruous situation.

       An insurer, subject to the terms and conditions of contract of  insurance, is bound to indemnify the insured under the 1923 Act as also the  1988 Act.  But as noticed hereinbefore, keeping in view the nature and  purport of the two statutes, the defences which can be raised by the insurer

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being different, the scope and ambit of appeal are also different.   

       Under the 1988 Act, the driver of the vehicle is liable but he would   not  be liable in a case arising under the 1923 Act.  If the driver of the  vehicle has no licence, the insurer would not be liable to indemnify the  insured.  In a given situation, the Accident Claims Tribunal, having regard to  its rights and liabilities vis-‘-vis the third person may direct the insurance  company to meet the liabilities of the insurer, permitting it to recover the  same from the insured.  The 1923 Act does not envisage such a situation.   Role of Reference by incorporation has limited application.  A limited right  to defend a claim petition arising under one statute cannot be held to be  applicable in a claim petition arising under a different statute unless there  exists express provision therefor.  Section 143 of the 1988 Act makes the  provisions of the 1923 Act applicable only in a case arising out of no fault  liability, as contained in Chapter X of the 1988 Act.  The provisions of  Section 143, therefore, cannot be said to have any application in relation to a  claim petition filed under Chapter XI thereof.  A fortiori in a claim arising  under Chapter XI, the provisions of the 1923 Act will have no application.   A party to a lis, having regard to the different provisions of the two Acts  cannot enforce liabilities of the insurer under both the Acts.   He has to elect  for one.  

       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.    

       In Nagubai Ammal and Others v. B. Shama Rao and Others [AIR  1956 SC 593], it was stated:

"It is clear from the above observations that the  maxim that a person cannot ’approbate and  reprobate’ is only one application of the doctrine  of election, and that its operation must be confined  to reliefs claimed in respect of the same transaction  and to the persons who are parties thereto."

       In C. Beepathuma and others v. Velasari Shankaranarayana  Kadambolithaya and others [AIR 1965 SC 241], it was stated:

"The doctrine of election which has been applied  in this case is well-settled and may be stated in the  classic words of Maitland \027 "That he who accepts a benefit under a deed or  will or other instrument must adopt the whole  contents of that instrument, must conform to all its  provisions and renounce all rights that are  inconsistent with it." (see Maitland’s lectures on Equity  Lecture 18) The same principle is stated in White and Tudor’s  Leading Cases in Equity Vol. 18th Edn. at p. 444  as follows: "Election is the obligation imposed upon a party

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by courts of equity to choose between two  inconsistent or alternative rights or claims in cases  where there is clear intention of the person from  whom he derives one that he should not enjoy  both.... That he who accepts a benefit under a deed  or will must adopt the whole contents of the  instrument."

       [See also Prashant Ramachandra Deshpande v. Maruti Balaram  Haibatti, 1995 Supp (2) SCC 539]

       Thomas, J. in P.R. Deshpande v. Maruti Balaram Haibatti [(1998) 6  SCC 507] stated the law, thus:

"The doctrine of election is based on the rule of  estoppel \027 the principle that one cannot approbate  and reprobate inheres in it. The doctrine of  estoppel by election is one of the species of  estoppel in pais (or equitable estoppel) which is a  rule in equity. By that rule, 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.

       [See also Devasahayam (Dead) By LRs. v. P. Savithramma and  Others, (2005) 7 SCC 653]

The First Respondent having chosen the forum under the 1923 Act for  the purpose of obtaining compensation against his employer cannot now fall  back upon the provisions of the 1988 Act therefor, inasmuch as the  procedure laid down under both the Acts are different save and except those  which are covered by Section 143 thereof.        We, therefore, with respect do not subscribe to the views of the Full  Bench of the Karnataka High Court.

       Mr. P.R. Ramasesh is not correct in contending that both the Acts  should be read together.  A party suffering an injury or the dependents of the  deceased who has died in course of an accident arising out of  use of a motor  vehicle may have claims under different statutes.  But when cause of action  arises under different statutes and the claimant elects the forum under one  Act in preference to the other, he cannot be thereafter permitted to raise a  contention which is available to him only in the former.  

The decision of this Court in  Ved Prakash Garg (supra) whereupon  Mr. Ramasesh placed strong reliance may not have any application in the  instant case as the liability of insurer therein arose under the 1923 Act;  where having regard to proviso (i)(c) appended to sub-section (1) of Section  147 was considered in the context of clause (i) of sub-section (1) of Section  11 of the insurance policy vis-‘-vis Section 4A(3) thereof.  Such a question  does not arise herein as the claim under the 1923 Act  vis-‘-vis Chapter XI  of the 1988 Act stand absolutely on a different footing.

       For the reasons aforementioned, the impugned judgments cannot be  sustained which are set aside accordingly.  The appeals are allowed and the  matters are remitted to the High Court for consideration of these appeals  afresh on merit.  The appeals, it is needless to say, would be entertained only  in the event, the Appellants satisfy the requirements contained in the proviso  appended to sub-section (1) of Section 30 of the 1923 Act.  In the facts and  circumstances of the case, however, there shall be no order as to costs.   

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