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Workmen’s Compensation Act | Commissioner Can Order Insurer To Directly Compensate Employee Injured In Motor Accident During Employment: Gauhati HC

Udit Singh
25 Jan 2023 5:13 AM GMT
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The Gauhati High Court has upheld an order whereby the Insurance company was directly made liable to pay compensation to an employee injured in a motor accident during the course of his employment.

The insurance company in appeal had argued that in view of the specific provision of the Workmen’s Compensation Act, 1923, it is not liable to satisfy the award at the first instance; it is only to indemnify the owner of the involved vehicle/ insured.

The issue before the court was whether the insurance company can be directed to pay the compensation as the first instance awarded to a workman.

Single bench of Justice Malasri Nandi observed,

"Realization of the compensation from the employer alone even where the insurer is to bare the loss as per the terms of the policy would put the victims in a difficult situation in as much as it is well known that realization of compensation is easier when it is fastened on the insurer than on the insured. The financial position of the latter may in many cases thwart that realization of the dues. The policy taken out for the benefit of the workmen has to allow him to reap the full advantage of the same"

The bench referred to various provisions of the WC Act including Section 12(2) which states that principal shall be liable to pay compensation to an employee, he shall be entitled to be indemnified by the contractor for any other person from whom the employee could have recovered compensation. Section 19 stipulates that if any question arises as to the liability of any person to pay compensation, the question shall be settled by a Commissioner

In this backdrop it observed,

"Section 12 (2) and (13) of the WC Act do indicate that persons other than employers can be made liable to pay compensation under the provisions of the WC Act. In this context a narrow meaning to the expression “any person” in section 19 of the act would militate against the wide sweep of the expression, especially when it is viewed in the background of the provisions finding place in the MV Act."

The bench went on to analyze the interplay between WC Act and the Motors Vehicle Act. It observed:

After going through the different provisions of the WC Act and the provisions of old and present MV Act, it reveals that the provisions of the WC Act cannot be viewed in isolation when the MV Act has specifically stated that a policy of insurance taken out under the provisions of chapter VIII cannot exclude the liability arising under the Workmen’s Act. The awareness of the liability under the WC Act even while dealing with the liability under the MV Act has been clearly shown in the proviso to section 95(1) of the MV Act.

The court relied upon C.I.T v. Shahjada Nand and sons AIR 1966 SC 1342; State of Gujarat v. Ramji Bhai AIR 1979 SC 1098, Union of India v. India Fisheries Pvt Ltd AIR 1966 SC 35, Pradip Port Trust v. Their Workmen AIR 1977 SC 36, where the Supreme Court has held that when there is a conflict between a general and the special provision, the latter shall prevail.

It observed,

The liability of the insurer being a very material part relating to granting of compensation under the provision of the MV Act, the legislature incorporating section 167 in the MV Act, could not have intended that the insurer would cease to be liable at the hands of the commissioner under the WC Act in case approach were to be made to him under the latter Act...There can be no doubt that the provisions finding place in the MV Act regarding the liability of insurer and his obligation to indemnify the insured have to be regarded in the nature of special provisions in so far as compensation for motor accident is concerned, where as the provision in the WC Act are of general nature covering compensation for all types of accidents."

Hence, the court held that the insurer was rightly made liable in the present case to pay compensation to the claimant/respondent no 1.

Case Title: The National Insurance Company Limited v. Omar Ali and Anr.

Click Here to Read/Download Judgment

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