Insurance Company Liable To Pay Compensation Only Under Workmen Compensation Act When Vehicle Driven By Deceased In Course Of Employment: Rajasthan HC

The Rajasthan High Court at Jaipur recently modified an award passed by Motor Accident Claims Tribunal and held that the liability of the Insurance Company would have to be restricted under the Workmen Compensation Act, 1923 and not under Motor Vehicles Act, 1988 when the vehicle in question was being driven by the deceased driver in the employment of the vehicle owner.

The single judge bench of Justice Anoop Kumar Dhand observed:

“In view of the provisions contained under proviso attached to Section 147(1) of the Act of 1988, this Court finds itself unable to uphold that the appellant Insurance Company is liable to make compensation under Section 163A of the Act of 1988 when admittedly the vehicle in question was being driven by the deceased driver himself in such capacity, in the course of employment of the owner of the vehicle, hence, the liability of the Insurance Company in terms of the Insurance policy would have to be restricted to the one enforceable under the WC Act of 1923.”

The Insurance Company had filed an appeal under Section 173 of the Motor Vehicles Act, 1988 seeking setting aside of award dated May 22, 2001 passed by the Motor Accident Claims Tribunal (Tribunal) Beawar, Ajmer by which a direction was issued to iy to pay compensation of Rs. 4,38,000/- with interest rate of 9 percent per annum to the claimants-respondents w.e.f. the date of filing the claim petition.

The deceased was driving the trolla (vehicle) on the day of accident when the driver of the truck caused the accident on 24.12.1999 due to which the driver of the trolla died and two persons sustained injuries.

The legal representatives of the deceased driver filed a claim under Section 163A of the 1988 Act for compensation of Rs.11,22,000/- before the Tribunal. The Insurance Company submitted a reply and took the specific objection that the claim petition is not maintainable in view of proviso contained under Section 147 (1) of the Act of 1988 and that the Insurance Company can be held responsible for liability under the provisions of Workmen Compensation Act, 1923.

However, the Tribunal allowed the claim petition filed by the claimants with direction to the appellant to pay the compensation of Rs. 4,38,000/- to the claimants with interest at the rate of 9 percent per annum.

After perusal of Section 147 of the Act of 1988, the court noted that when the driver of the insured vehicle is plying the vehicle, and if such it meets with an accident, the liability of the Insurance Company would be restricted to payment of compensation under the provisions of WC Act 1923.

The court relied upon the judgments of the Supreme Court in National Insurance Company Ltd. v. Prem Bai Patel & Ors., II (2005) ACC 365 (SC) and Oriental Insurance Co. Ltd. v. Meena Variyal [(2007) 5 SCC 428].

In view of Section 147(1) of the Act of 1988, the court noted that the liability of the appellant Insurance Company would be restricted to that arising under the WC Act 1923 and the respondent No.5 (owner) would be liable to satisfy the remaining part of the award.

Thus, the Court modified the award passed by the Tribunal and directed the Tribunal to recalculate the amount of compensation as per provisions of WC Act, 1923.

“Before parting with the order, it is made clear that till calculation of the award, the amount received by the claimants shall not be recovered. And in case, less amount is calculated in terms of WC Act 1923, the claimants would be bound to return the excess amount received by them to the Insurance Company,” the Court said.

Case Title: New India Assurance Co. Ltd. v. Gain Singh & Ors

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