FA/2845/2000 1 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL Nos. 2845 of 2000 For Approval and Signature: HONOURABLE MR.JUSTICE K.M.MEHTA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? YES (To be circulated to Judges of Labour Court and Industrial Court also. ========================================================= UNITED INDIA INS. COMPANY LTD. - Appellant(s) Versus SHAKURA ISHAQ BHAYA & 1 - Defendant(s) ========================================================= Appearance : MR PV NANAVATI for Appellant(s) : 1,MR VIBHUTI NANAVATI and MR VC THOMAS for Appellant(s) : 1, MR AR SHAIKH for Defendant(s) : 1, MR MEHUL S SHAH for Defendant(s) : 2, MR SURESH M SHAH for Defendant(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE K.M.MEHTA Date : 11/07/2007 ORAL JUDGMENT FA/2845/2000 2 JUDGMENT 1. United India Insurance Company Limited, appellant-original opponent No.2, has filed this appeal against the judgment and award dated 27th April, 2000, passed by the Ex-officio Commissioner for Workmen's Compensation and Labour Judge, Labour Court, Jamnagar in Workmen's Case No.10/94 to 23/94 and 30/94. The learned Judge was pleased to award compensation as per the table in para 6 of the judgment. The learned Judge has also awarded interest at the rate of 6% from the date of the application i.e. 26.2.1994. 2. The facts giving rise to this appeal is as under: 2.1 The original claimants were the employees of one Abdulla Haji Ibrahim Bhayad, owner of the ship, who is original opponent No.1. According to the claimants, they were working with opponent No.1 and opponent No.1 used to pay Rs.1,000/- as salary per month to one Shri Ishak Osman original claimant No.1 and other claimants were getting Rs.500/- per month. All these claimants boarded one ship bearing Registration No.MNG 353 named “M.S.V. Albuquerque” FA/2845/2000 3 JUDGMENT (hereinafter referred to as “the ship in question”). They boarded the said ship in December 1991 from Veraval for going to Dubai. They boarded the same on 26.12.1991. 2.2 It is the case of the claimants that when they boarded the ship on 26.12.1991, thereafter the ship never reached it's destination i.e. Dubai and there was no whereabouts of those 15 persons i.e. crew of the ship as well as the ship in question. It was further stated that the owner of the ship has obtained an insurance policy with respondent No.2 - United India Insurance Co. Ltd. They also contended that they were not aware as to whether the ship reached to Dubai or where that 15 crew members have gone. Ultimately they inquired at the respective places but there was no whereabouts of the ship as well as 15 crews. 2.3 The plaintiff through their learned advocate has addressed a notice dated 24.5.1993 to the owner of the ship which is produced at Exh.17. It was submitted that in the said ship there were 15 crew members who were travelling in the said ship and the said ship left in December 1991 and thereafter there FA/2845/2000 4 JUDGMENT was no whereabouts about the ship as well as those 15 crews and so the owner of the ship is liable to pay compensation of Rs.2,50,000/- and the owner has taken out insurance policy as he has already paid the amount of premium to the insurance company in this behalf. 2.4 They have stated that they have inquired at that time and they have found that the ship lost in the sea and there is no whereabouts of the ship as well as 15 crews. In view of the same the claimant No.1 has filed application for obtaining compensation of Rs.65,228/-. The said application was filed on 16.2.1994. 2.5 In the suit the defendant No.1 has filed a written statement in which it has been stated that the said ship was “MSV Albuquerque” Registration No.MNG 353 and insurance was taken from 8.1.1992 to 7.2.1992 and Policy No.066201/91/1/00058/92 through United India Insurance Co. Ltd. 2.6 The plaintiff has relied upon insurance policy taken by the United India Insurance Co. Ltd. for the ship from 8.1.92 to 7.2.92 for two months. The said FA/2845/2000 5 JUDGMENT policy has been produced at Exh.47 being Policy No. 066201/91/1/00058/92. It was also stated that premium of Rs.6,850/- was paid and the ship was ITC Hull Clause and Personal Accident Insurance for 20 crews. The amount of insurance was for Rs.10.00 lakhs. The ship name was also shown as “MS Albuquerque”. 2.7 Similarly another policy of the said ship is also produced at Exh.49. The period of insurance policy is from 7.2.1992 to 6.5.1992 bearing Policy No.066201/91/1/00064/92 of Rs.10.00 lakhs. They have paid the premium of Rs.21,150/- in this behalf. It was stated that policy covers ITC Hull Clause and Personal Accident insurance for 20 crews. 2.8 It was stated that they have also inquired with certain agencies but there is no whereabouts of the ship as well as 15 crews and therefore they addressed a notice to the insurance company somewhere in 1992 but the insurance company has not replied to the said notice. 2.9 He has also stated that on 16.12.1991 the ship was left with 15 crews and thereafter there is no FA/2845/2000 6 JUDGMENT whereabouts about the ship as well as those 15 crew members. Though the ship has lost on 16.12.1991 but it has been reported lost in January 1992 and therefore the policy taken by United India Insurance Co. Ltd., at Exh.47 as well as Exh.49 covers the loss in this behalf. However, he has denied any liability in this behalf. The said reply was filed on 28.4.94. Thereafter the Court has framed the issues on 9.11.95. Insurance Company's Contention: 2.10 Before the learned trial Judge, the insurance company has filed reply and denied the contention in this behalf. They have denied that the ownership of the opponent. They have also stated that the ship which was lost and the insurance policy of the ship in question is not of the same ship and the ship in question in not at all damage or lost and therefore the insurance company is not at all liable. They further contended that there is no question of total vanished of the ship or 15 crews who have boarded the ship. The ship owner filed a complaint before the police. However, the insurance company stated that they had filed bogus complaint FA/2845/2000 7 JUDGMENT for obtaining damages in this behalf. They have also not admitted that the notice has been served to them. Contention of Mr.A.R.Shaikh, on behalf of defendant No.1 - owner of ship. 2.11 The defendant No.1 has produced about 34 documents vide Lists Exh.45. From the said lists, following documents are produced. (i) Exh.46 Marine Acceptance Advice Cum Receipt of Rs.21,150/-. (ii) Exh.48 Marine Acceptance Advice Cum Receipt of Rs.6,850/-. Documentary Evidence produced by the owner of the ship. 2.12 As regards two insurance policy, I have already referred earlier at Exh.48 and Exh.49. Exh.50 is the receipt from Inspector of Customs showing that vessel was sailed on 26.12.91. Exh.51 certificated from Suptd. Of Customs, Custom House, Veraval showing that the ship in question left for Dubai along with original documents issued by Kozikode Customs with 15 crews vide port clearance FA/2845/2000 8 JUDGMENT dated 26.12.91. Exh.52 is the list of crews and the certificate issued by Suptd. Of Customs, Custom House, Veraval dated 26.12.91. Exh.53 is a certificate of registry of a sailing vessel. Exh.54 is a certificate issued by registry of a sailing vessel where description of vessel, survey/inspection and valuation done by one J.B. Boda Surveyors. Exh.55 is an agreement between Dawood Mamad and Abdulla Haji Ibrahim in connection with the sailing of the ship dated 3.2.92. Exh.56 is a telegram to Custom Officer from Abdulla Haji Ibrahim, Jamnagar regarding ship in question. Exh.57 is a communication from Ship Officer, Maritime Board in connection with the inquiry of the ship in question at Dubai. Exh.58 is a letter dated 31.1.92 from Abdulla Haji Ibrahim to Suptd. Of Customs, Veraval. Another letter dated 31.1.92 also by Abdulla Haji Ibrahim to Suptd. Of Customs and the copy of the same was given to various Ports Authority. Similarly Exh.60 was also about the same. Exh.61 is a letter dated 22.1.92 addressed by Abdulla Haji Ibrahim to Suptd. Of Customs and the registered acknowledgment is at Exh.62 has been produced. Exh.63 is a letter dated 24.4.92 written by Abdulla Haji Ibrahim to the Director General of Shipping, Bombay in connection FA/2845/2000 9 JUDGMENT with the ship in question. Exh.64 is a registered acknowledgment. Another letter dated 9.11.92 addressed by Abdulla Haji Ibrahim to Branch Manager, United India Insurance Co. Ltd. in connection with the insurance. 5.3.93 is a letter of Abdulla Haji Ibrahim to Branch Manager, United India Insurance Co. Ltd. viz regarding the ship in question enclosing Marine Casualty Report. Then notice through advocate one Jayantilal D.Kanakhara by Abdulla Haji Ibrahim to United India Insurance Co. Ltd. at Exh.67 and registered acknowledgment at Exh.68. The affidavit of Abdulla Haji Ibrahim dated 1.9.92 at Exh.69. The affidavit in Gujarati by Dawood Mamad at Exh.70 regarding loss of ship dated 16.9.92. Notice from Ishaq Osman Bhaya through his advocate A.H.Gagdani to Abdulla Haji Ibrahim dated 24.5.93. Acknowledgment receipts Exh.72 to Exh.78. Dairy of Daudbhai has been produced at Exh.79. Oral Evidence: 2.13 The deposition of Abdulla Haji Ibrahim is at Exh.46. Exh.47 application by defendant No.1. Deposition of defendant No.1 at Exh.80 owner of the ship in which it has been stated that the ship is of FA/2845/2000 10 JUDGMENT his ownership. Trial Court's finding: 2.14 The trial Court held that all applicants are workmen in view of Section 2(n) of the Workmen's Compensation Act, 1923. All the workmen have died during their course of employment and part of their duty when the accident arose. Both the defendants are liable to pay compensation to the applicants. The defendants are not liable to pay the amount of penalty. However, they are liable to pay 6% interest from the date of the application. Contention of Insurance Company before this Court and Court's observation: 3. Mr.Vibhuti Nanavati, learned advocate and Mr.V.C.Thomas, learned advocates appeared on behalf of the appellant - United India Insurance Company Ltd. He has submitted that the learned trial Judge granted compensation as per Section 4(a) of the Workmen's Compensation Act of 50% of wages. He has FA/2845/2000 11 JUDGMENT invited my attention to Sec.4(a) of the Act which is the present section which provides that 50% was amended by Act 30 of 1995 with effect from 15.9.1995, but prior to that it provides for 40% damages. The section at relevant time reads as as under: “4.Amount of Compensation :- (1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely :- (a) where death results from the injury an amount equal to [forty per cent] of the monthly wages of the deceased workman multi- plied by the relevant factor; or an amount of [twenty five thousand rupees], whichever is more. 3.1 He submitted that as the accident occurred on 26.12.1991 i.e. prior to 1995, the learned Judge ought to have taken compensation at the rate of 40% and not 50% and therefore the said contention is accepted. 3.2 As far as second contention that in the main claim application, as regards claimant No.1 is concerned, they have claimed Rs.65,000/-, and as far as other claimants are concerned, they have claimed FA/2845/2000 12 JUDGMENT Rs.20,000/- to Rs.24,000/-. 3.3 The next question is whether the defendants i.e. Insurance Company and the owner are liable to pay compensation. The owner of the ship as well as some of the claimants had invited my attention Exh.79 diary maintained by Dawood Mohd. Gandhar. They have also invited my attention to the affidavit filed by Dawood Mohd. Gandhar which is at Exh.70 which was filed on 16.9.1992. In the said affidavit it has been stated that when he reached Pakistan on 16.1.1992, at that time another ship which is about 500 to 600 ft. away a ship was lying which was owned by Abdul which named as “MSV Albuquerque”. He had seen the ship in question at that time. In his affidavit he has stated that he has made such endorsement in his diary and the extract of diary is also produced at Exh.79. Thereafter it appears that he received information that the ship is lost after 16.1.1992. The learned counsel has relied upon this affidavit as well as extract of diary only for the purpose to show that though the ship left from the relevant date i.e. December 1991, ultimately lost after 16.1.1992. According to them, therefore, the insurance policy taken out by them which is produced FA/2845/2000 13 JUDGMENT at Exh.47 covers the period from 8.1.1992 to 7.2.1992 and another policy Exh.49 covers the period from 7.2.1992 to 6.5.1992. Thus the ship sailed earlier but the ship was lost after 16.1.1992 and therefore the same covered by the insurance policies and so the insurance company is liable to pay the damages in this behalf. 3.4 The learned counsel for the appellant submitted that they are not liable to pay the amount equivalent to 50% of monthly wages of the deceased workmen multiplied by relevant factor. They submitted that the accident arose on 26.12.1991 and prior to 1995 the rate of compensation was 40% and not 50% as held by the learned trial Judge. Thus I see considerable force in view of Section 4 of the Workmen's Compensation Act which I have set out earlier and it is true that the accident took place on 26.12.1991 which is prior to amendment in 1995. After 1995 the Act has been amended and compensation has been given at the rate of 50% but the said provision is not applicable in the present case and therefore in view of existing provision of Section 4(a) of the Workmen's Compensation Act, I accept the contention of the learned advocate for the appellant FA/2845/2000 14 JUDGMENT Insurance Company that the applicants – respondents herein are entitled to compensation at the rate of 40% and not 50%. Regarding interest to be paid to the workmen from which date: 4. The learned advocate has stated that the learned trial Judge has granted interest from the date of the application filed by the applicant i.e. 16.2.94 till payment. The said payment is to be made within one month from the date of the judgment. The judgment is dated 27.4.2000. The learned advocate has stated that the aforesaid finding of the learned trial Judge is required to be interfered with and the interest is to be paid from the date of the order of the Commissioner and not from the date of the application filed by the applicant. 4.1 In support of the same the learned advocate has relied upon the judgment of Hon'ble Apex Court in the case of NATIONAL INSURANCE CO. LTD. VS. MUBASIR AHMED AND ANOTHER reported in (2007) 2 SCC 349 particularly para 9 which reads as under: “Interest is payable under Section 4-A(3) if FA/2845/2000 15 JUDGMENT there is default in paying the compensation due under this Act within one month from the date it fell due. The question of liability under Section 4-A was dealt with by this Court in Maghar Singh v. Jashwant Singh (1998) 9 SCC 134. By amending Act 30 of 1995, Section 4-A of the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest @ 12%. In the instant case, the accident took place after the amendment and, therefore, the rate of 12% as fixed by the High Court cannot be faulted. But the period as fixed by it is wrong. The starting point is on completion of one month from the date on which it fell due. Obviously it cannot be the date of accident. Since no indication is there as to when it becomes due, it has to be taken to be the date of adjudication of the claim. This appears to be so because Section 4-A(1) prescribes that compensation under Section 4 shall be paid as soon as it falls due. The compensation becomes due on the basis of adjudication of the claim made. The adjudication under Section 4 in some cases FA/2845/2000 16 JUDGMENT involves the assessment of loss of earning capacity by a qualified medical practitioner. Unless adjudication is done, question of compensation becoming due does not arise. The position becomes clearer on a reading of sub-section (2) of Section 4-A. It provides that provisional payment to the extent of admitted liability has to be made when employer does not accept the liability for compensation to the extent claimed. The crucial expression is “falls due”. Significantly, legislature has not used the expression “from the date of accident”. Unless there is an adjudication, the question of an amount falling due does not arise.” 5. On the other hand, on behalf of claimant Mr.A.R.Shaikh, learned advocate as well as Mr.Mehul Suresh Shah, learned advocate appeared for the owner of the ship and also for one of the claimants. They stated that when the accident took place, the liability of the Insurance Company and the owner arises to pay compensation and in support of the same they relied upon Section 3 of the Workmen's' FA/2845/2000 17 JUDGMENT Compensation Act which reads as follows: “Employer's liability for compensation :- (1) 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 accordance with the provisions of this Chapter: Provided that the employer shall not be so liable - (a) in respect of any injury which does not result in the total or partial disablement of the workman for a period exceeding [three days]; (b) in respect of any [injury, not resulting in death [or permanent total disablement], caused by] an accident which is directly attributed to - (i) the workman having been at the time therefore under the influence of drink of drugs, or (ii) the wilful disobedience of the FA/2845/2000 18 JUDGMENT workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workman, or (iii) the wilful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of workmen. 5.1 Section 4 provides amount of compensation to be paid. The said amount is to be paid subject to provisions of this Act and amount of compensation shall be awarded as under for which I have already made reference in this behalf. 5.1A Section 4-A provides compensation to be paid when due and penalty for default which reads as under: “(1) Compensation under Section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make FA/2845/2000 19 JUDGMENT provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall - (a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the official Gazette, on the amount due; and (b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a FA/2845/2000 20 JUDGMENT further sum not exceeding fifty per cent of such amount by way of penalty : Provided that an order for the payment of penalty shall not be passed under Clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. Explanation - For the purposes of this sub- section, `scheduled bank' means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934. (3-A) The interest payable under Sub- section (3) shall be paid to the workman or his dependant, as the case may be, and the penalty shall be credited to the State Government.” 5.1B Section 5 provides method of calculating wages. Section 8 provides distribution of compensation. Section 9 provides compensation not to be assigned, attached or charged. Section 10 provides FA/2845/2000 21 JUDGMENT notice and claim. Section 10-A provides power to require from employers statements regarding fatal accidents. Section 10-B provides reports of fatal accidents and serious bodily injuries. Section 15 provides special provisions relating to masters and servants. Section 15-A provides in the case of workmen who are captains or other members of the crew of aircrafts subject to the following modifications. Section 16 provides returns as to compensation. Section 18 provides proof of age. Section 18-A provides penalties. Sec.19 falls under Chapter III Commissioners and provides reference to Commissioners which reads as under: “Sec. 19 - Reference to Commissioners – (1) If any question arises in any proceedings under this Act as to the liability of any person to pay compensation (including any question as to whether a person injured is or is not a workman) or as to the amount or duration of compensation (including any question as to the nature or extent of disablement), the question shall, in default of agreement, be settled by [a Commissioner]. FA/2845/2000 22 JUDGMENT (2) No civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under this Act.” 5.1C The learned advocate submitted that, in view of Section 3 of Workmen's Compensation Act, the employer shall be liable to pay compensation if personal injury is caused to a workman by accident arising out of and in the course of his employment. In view of Section 3 of the Act, the employer therefore became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident. 5.1D The learned counsel has relied upon other sections which I have quoted in this behalf. The claimant has to prove that accident arose out of and in the course of the employment. He has also relied upon Sec.19 of the Workmen's Compensation Act which provides that the Commissioner has power to determine the compensation. FA/2845/2000 23 JUDGMENT 5.2 On conjoint reading of Section 3 and Section 19 of the Workmen's Compensation Act, there is nothing to justify the argument of insurance company that the employer's liability to pay compensation under Section 3 of the Act, in respect of the injury or death, was suspended until after the settlement contemplated by Section 19. It was submitted that the owner as well as insurance company were liable to pay compensation as soon as the accident was caused to the claimant and there is no justification by the insurance company to contend that interest can be liable only from the date of the order of the Commissioner. 5.3 They also submitted that they have not only