Employee's Compensation Act, 1923; To Absolve Liability, Insurer Must Prove Negligence By Employer In Verifying Employee's Driving License: Bombay High Court

Bombay High Court: A single judge bench consisting of Justice Nitin B. Suryawanshi overturned a Labour Court order that dismissed a compensation claim under the Employee's Compensation Act, 1923. The claim was filed by the family of a truck driver who succumbed to an accident at work. The court established that the deceased was indeed employed by the Respondent. Further, it refused to absolve the liabilities of the insurer despite the deceased not having a driving license. It held that to absolve any liability, the insurer must prove that the employer had been negligent in validating the license. Consequently, it awarded ₹8,25,400 to the family of the deceased. Background Balaji Tiwari's family (“Appellants”) filed for compensation under the Employee's Compensation Act, 1923. They claimed that Tiwari was working as a driver for Protrans Supply Chain Management (“PSCM”) and died in a truck accident while driving from Baramati to Gujarat. They stated he earned ₹8,000 a month and therefore sought a compensation of ₹8,25,400. On the other hand, Protrans denied any employment relationship. They argued that Tiwari was a gratuitous passenger who was traveling with the truck's official driver, Laxman Hunje. United India Insurance (“UII”), also argued that it wasn't liable as the deceased had no valid driving license. The Labour Court agreed. Consequently, it dismissed the claim, and held that no employer-employee relationship was established. This was challenged by the appellants. Arguments The appellants argued that the Labour Court had ignored key evidence, including a payment of ₹4,13,000 made by PSCM, which, they said, proved an employer-employee relationship. They also pointed to documents such as the FIR, spot panchnama, and inquest report that established Tiwari was driving the truck at the time of the accident. Further, citing Nirmala Kothari v. United India Insurance Co. Ltd. (AIR 2020 SC 1193), they argued that the insurer couldn't deny liability simply due to the absence of a driving license. The burden, they said, was on the insurer to prove negligence or policy violation by the employer. However, PSCM's counsel maintained that Tiwari was not their employee and was only traveling as a gratuitous passenger. They argued that the claimants had not provided salary slips or other clear evidence of employment. UII's counsel too backed the Labour Court's order, and argued that no valid license had been produced for the deceased. They also claimed that the precedents cited by the appellants were under Consumer Law, and could not be applied to the Employee's Compensation Act. Court's Reasoning The court noted that documents like the FIR filed after the accident, and spot panchnama proved Tiwari was driving the truck when the accident happened. It held that the inquest report signed by Laxman Hunje confirmed that Tiwari was on duty, transporting the truck to Delhi. Further, the court rejected the claim that Tiwari was a gratuitous passenger. It noted that the burden to prove that Tiwari was not an employee rested with PSCM. Since PSCM had not provided any testimony from Laxman Hunje or other evidence to support this assertion, the court concluded that it failed to meet the burden. On the issue of driving license, the court observed that the insurer's claim about the absence of a valid license was not supported by any evidence. Referring to Nirmala Kothari, the court held that the insurer bears the burden to prove that the employer had been negligent in ensuring the validity of the license. It noted that the insurer neither produced such evidence nor showed any attempt to verify this point. The court therefore ruled that an absent license could not absolve the insurer of all liability. Lastly, the court criticized the Labour Court for not hearing the facts on compensation and focusing on inconsistencies in the pleadings. It emphasized that a Tribunal is not bound by strict rules of pleadings and evidence. Finally, the court set aside the Labour Court's award and directed the respondents to pay the claimed compensation. Case title: Sunita Balaji Tiwari and Ors. v. Protrans Supply Chain Management Pvt. Ltd. & Anr.Citation: 2024 LiveLaw (Bom) 643 Counsel for the Appellants: Mr. Girish Rane Counsel for PSCM: Mr. S.S. Gangakhedkar Counsel for UII: Mr. V.R. Mundada Click Here To Read/Download The Order

Employee's Compensation Act, 1923; To Absolve Liability, Insurer Must Prove Negligence By Employer In Verifying Employee's Driving License: Bombay High Court

Pranav Kumar

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