IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA FAO(WCA) No. 45 of 2005 alongwith FAO(WCA) No. 74 of 2005 and FAO(WCA) No. 147 of 2005. Date of Decision : March 3, 2009 1. FAO(WCA) No. 45 of 2005 Sh. Beli Ram Appellant Versus Sh. Rajinder Kumar and another. Respondents 2. FAO(WCA) No. 74 of 2005 National Insurance Company Ltd. Appellant Versus Sh. Rajinder Kumar and another. Respondents. 3. FAO(WCA) No. 147 of 2005 Sh. Rajinder Kumar Appellant Versus Sh. Beli Ram and another. Respondents. Coram: Hon’ble Mr. Justice Sanjay Karol, Judge. Whether approved for reporting?1 Yes. In FAO No. 45 of 2005 For the appellant : Mr. J.R. Poswal, Advocate, for the petitioner For the respondents : Mr. T.S. Chauhan, Advocate, for respondent No. 1 Mr. Ashwani Kumar Sharma, Advocate, for respondent No. 2. In FAO No. 74 of 2005 For the appellant : Mr. Ashwani Kumar Sharma, Advocate for the petitioner. For the respondents: Mr. T.S. Chauhan, Advocate, for respondent No. 1. Mr. J.R. Poswal, Advocate, for respondent No. 2. 1 Whether reports of Local Papers may be allowed to see the judgment? 2 In FAO No. 147 of 2005 For the appellant: Mr. T.S. Chauhan, Advocate for the appellant. For the respondents: Mr. J.R. Poswal, Advocate for respondent No. 1. Mr. Ashwani Kumar Sharma, Advocate for respondent No. 2. Sanjay Karol, J. (Oral) The present appeals arise out of common award dated 8.12.2004 passed by the commissioner, under the Workmen’s Compensation Act, Bilaspur, H.P. in case file No. 06/1999, titled Shri Rajinder Kumar versus Shri Beli Ram and another, directing the National Insurance Company, insurer of vehicle No. HP-24-4111 and owner Shri Beli Ram to pay compensation of a sum of Rs. 94,464/- plus interest @ 9% amounting to Rs. 67,313/- from the date of filing of the petition till the date of the payment. The liability to pay the compensation is fastened upon the National Insurance Company whereas liability to pay interest has been fastened upon the owner Beli Ram. FAO No. 74 of 2005 has been filed by National Insurance Company Ltd., FAO No. 45 of 2005 has been filed by the owner Shri Beli Ram. FAO No. 147 of 2005 has been filed by the claimant who is seeking enhancement of the awarded amount. FAO (WCA) No. 45/2005 was admitted on the following substantial questions of law: “1. Whether the Ld. Commissioner below is right in fastening the liability on the employer, who is appellant, in 3 view of the law laid down by the Hon’ble Apex Court reported in 1997 (8) SCC 1 as well as judgement passed by this Hon’ble Court reported in 2004 (2) SLC 23 ? 2. Whether the Ld. Commissioner is right while fastening liability of interest part on the appellant in view of contract between the appellant and the respondent No. 2 which clearly says that the insurer has to indemnify the appellant in case of any accident under the Workmen’s Compensation Act ?” FAO (WCA) No. 147 of 2005 was admitted on the following substantial questions of law: “1. Whether the learned Commissioner below can calculate the awarded amount without giving calculation, as per Schedule given in the Act ? 2. Whether the learned Commissioner below can award lesser amount without giving any reason for that ? 3. Whether the learned Commissioner was right in not imposing the penalty specifically when it has been proved on the record that the employer has not deposited the compensation on the date when it fell due ?” FAO (WCA) No. 74 of 2005 was admitted on the following substantial questions of law: “1. Whether liability for payment of compensation to the claimant could legally be fastened upon the insurance- company in the facts and circumstances of the present case when the driving licence of the claimant-driver was proved on record to be invalid and ineffective. Whether in such situation, recovery rights of the amount payable by the insurer deserved to be granted against the insured for having engaged a driver in breach of policy conditions? 4 2. Whether impugned order awarding the amount of compensation to the claimant against the provisions of the Workmen’s Compensation Act is sustainable in the eyes of law? 3. Whether in a petition under the provisions of Workmen’s Compensation Act, the injured-claimant is entitled to get amount of medical expenses incurred for his treatment as a result of accident in addition to the amount payable to him under Section 4 and 4-A of the Act ?” Brief facts giving rise to the filing of the present petition are as under. Appellant/claimant Shri Rajinder Kumar was gainfully employed by Shri Beli Ram as driver on truck bearing No. HP-24- 4111. The said vehicle met with an accident on 20th of May, 1999 in which Rajinder Kumar sustained injuries and consequently suffered permanent disability of 20%. The claimant had to undergo medical treatment at the hospital at Bilaspur and subsequently at the Post Graduate Institute, Chandigarh. He remained admitted for a period of more than three months and had to incur an expenditure of Rs. 67,313/-. Under the provision of Workmen’s Compensation Act, 1923 (hereinafter referred to as the ‘Act’), claimant claimed compensation which was denied to him and consequently legal notice dated 3.11.1999 was also served upon Shri Beli Ram. Compensation was wrongfully denied and consequently the claimant filed a petition under Section 22 of the Act. In the claim petition he 5 specifically pleaded that he was gainfully employed with Shri Beli Ram and he sustained injuries in the accident in question. Importantly in the reply to the claim petition the factum of gainful employment, the occurrence of the accident, the injuries sustained and the entitlement of the compensation was not disputed but, however, the defence taken was that the liability was that of the National Insurance Company Ltd., the insurer of the vehicle in question. In a separate reply, the insurer inter alia denied any liability alleging that the material terms and conditions of the policy stood breached as the driver, in the present case being the claimant himself, was not possessing a valid and effective driving licence. Based on the pleadings of the parties the Commissioner framed the following issues: “1. Whether the petitioner has suffered a permanent disability in the accident during the course of employment of respondent No.1? …OPP 2. If issue No. 1 is proved then to what amount of compensation the petitioner is entitled and from whom? … OPP 3. Whether the petitioner was having valid and effective driving licence at the time of accident? …OPR-2 4. Whether there is any contract of indemnity between the parties? OPR-2” The opportunity to lead evidence was afforded to the parties. 6 Appreciating the material on record the Commissioner decided Issue No. 1 in the affirmative by holding that the claimant suffered permanent disability in the accident which was in the course of his employment. On issue No. 2 the findings were returned to the effect that the claimant was entitled to a sum of Rs. 94,464/- as compensation in addition to Rs. 67,313/- incurred towards the expenditure for medical treatment undertaken by him. The compensation was determined taking into account the monthly wages of Rs. 4500/-, the age of the injured 29 years, and the permanent disability being 20%. On the question of claimant possessing a valid and effective driving licence the Commissioner held that since the licence in question was endorsed by the “Superintendent of R&LA Office Udaipur” hence the licence is deemed to have been issued in accordance with the provisions of the Act. Issue No. 4 was answered in the affirmative as the vehicle in question was found to have been insured in terms of insurance policy Ext. RA. The liability to pay the interest was fastened upon the owner and issue No. 5 was answered as such. I have heard the learned Counsel for the parties and also perused the record. In order to prove his case claimant Rajinder Kumar examined himself as PW-1, Shri Rashbir Singh (PW-2) and Shri Parmanand (PW-3). 7 Respondent Beli Ram examined himself as RW-1 as also Shri Manoj Kumar and Shri Bal Krishan as his witnesses. The vehicle in question was insured in terms of insurance policy Ext. RA. The driver proved his valid and effective driving licence Ext.PW1/C. As per the statement of Shri Bal Krishan the licence in question was endorsed by the Superintendent R&LA Udaipur. He, however, categorically deposed that the licence in question, even though bearing the endorsement of the Superintendent of the R&LA was not endorsed for renewal after 6.9.1996. Importantly, there is a letter written by Manoj Kumar, Surveyor and Assessor, on which there is an endorsement that “no such licence has been endorsed by this Office during 1996 (As per office record)”. The vehicle in question met with an accident on 20.5.1999, thus, in the absence of any renewal, in my considered view, the findings returned by the Commissioner that the applicant being an illiterate person cannot be expected to know whether the endorsement was signed by the Office Superintendent are wrong, perverse and contrary to record and as such are set aside. Findings with regard to issue No. 3 returned by the Commissioner are set aside and it is categorically held that the driver in question was not possessed with a valid and effective driving licence at the time of occurrence of the accident. In the absence of any valid and effective driving licence, the liability to pay the compensation cannot be fastened upon the 8 insurer notwithstanding the fact that the vehicle in question was insured by the insurer. That the vehicle was ensured in terms of insurance policy Ext. RA is not in dispute. Clause (17) of the same, as is sought to be pressed by learned counsel for the insured is of no consequence. In the absence of any valid and effective driving licence the terms and the conditions of the Policy stood materially breached. Therefore, the findings of the Commissioner that the liability to pay the compensation is that of insurer are illegal and needs to be reversed. The substantial question of law as framed at the instance of the insurer is thus answered. Section 4 of the Act reads 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 fifty per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees, whichever is more; (b) Where permanent total disablement results from the injury an amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or an amount of ninety thousand rupees, whichever is more. Explanation I. – For the purposes of clause (a) and clause (b), “relevant factor”, in relation to a workman means the factor specified in the second column of Schedule IV against the entry in the first column of that Schedule specifying the number of years which are the same as the completed years of the age of the workman on his last birthday immediately preceding the date on which the compensation fell due. 9 Explanation II. – Where the monthly wages of a workman exceed four thousand rupees, his monthly wages for the purposes of clause (a) and clause (b) shall be deemed to be four thousand rupees only; (c) Where permanent partial disablement results from the injury (i) in the case of an injury specified in Part II of Schedule I, such percentage of the compensation which would have been payable in the case of permanent total disablement as is specified therein as being the percentage of the loss of erring capacity caused by that injury, and (ii) in the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity (as assessed by the qualified medical practitioner) permanently caused by the injury. Explanation I. – Where more injuries than one are caused by the same accident, the amount of compensation payable under this head shall be aggregated but not so in any case as to exceed the amount which would have been payable if permanent total disablement had resulted from the injuries. Explanation II. - In assessing the loss of earning capacity for the purposes of sub-clause (ii), the qualified medical practitioner shall have due regard to the percentages of loss of earning capacity in relation to different injuries specified in Schedule I; (d) Where temporary disablement, whether total or partial, results from the injury A half-monthly payment of the sum equivalent to twenty-five per cent of monthly wages of the workman, to be paid in accordance with the provisions of sub-section (2). (1-A) Notwithstanding anything contained in sub- section(1), while fixing the amount of compensation payable to a workman in respect of an accident occurred outside India, the Commissioner shall taken into account the amount of compensation, if any, awarded to such workman in accordance with the law of the country in 10 which the accident occurred and shall reduce the amount fixed by him by the amount of compensation awarded to the workman in accordance with the law of that country. (2) The half-monthly payment referred to in clause (d) of sub-section(1) shall be payable on the sixteenth day— (i) from the date of disablement where such disablement lasts for a period of twenty-eight days or more, or (ii) after the expiry of a waiting period of three days from the date of disablement where such disablement lasts for a period of less than twenty-eight days; and thereafter half-monthly during the disablement or during a period of five years, whichever period is shorter: Provided that----- (a) there shall be deducted from any lump sum or half-monthly payments to which the workman is entitled the amount of any payment or allowance which the workman has received from the employer by way of compensation during the period of disablement prior to the receipt of such lump sum or of the first half-monthly payment, as the case may be; and (b) no half-monthly payment shall in any case exceed the amount, if any, by which half the amount of the monthly wages of the workman before the accident exceeds half the amount of such wages which he is earning after the accident. Explanation.--- Any payment or allowance which the workman has received from the employer towards his medical treatment shall not be deemed to be payment or allowance received by him by way of compensation within the meaning of clause (a) of the proviso. (3) On the ceasing of the disablement before the date on which any half-monthly payment falls due, there shall be payable in respect of that half-month a sum proportionate to the duration of the disablement in that half-month. (4) If the injury of the workman results in his death, the employer shall, in addition to the compensation under sub-section (1), deposit with the Commissioner a sum of two thousand and five hundred rupees for payment of the same to the eldest surviving dependant of the workman towards the expenditure of the funeral of such workman or where the workman did not have a dependant or was not living with his dependant at the time of his death to the person who actually incurred such expenditure.” 11 Section 4 of the Act prescribes the method and mode of determination of compensation payable to the claimant. There is no provision for payment of medical expenditure incurred by the claimant for treatment. The Act does not envisage such Determination and Payment. The findings of the Commissioner that the claimant shall be entitled to reimbursement of the actual expenditure incurred towards medical treatment thus needs to be set aside. However, the claimant shall be at liberty to initiate appropriate proceedings before the appropriate Forum in accordance with the law. The accident took place in the year 1999. The monthly wages of Rs. 4500/- is stated to have been paid by the owner, in the year 1999. The maximum amount of wages permissible under the Act, for determining the compensation could be Rs. 2000/-. PW-1 no doubt has deposed that he was being paid Rs. 5000/- per month by Beli Ram. No doubt in the cross examination he has deposed that there is no documentary evidence to prove the said fact but however it be noticed that the owner himself has cross examined PW-1 and has suggested that he was getting a salary of Rs. 1500/- per month. Importantly, while stepping into the witness box owner has not deposed as to what was the salary he was paying to the claimant. He did not produce any material on record to the said effect either. In this view of the matter wages payable to the 12 claimant by the owner is taken to be the maximum as provided for under the Act. As per the disability certificate Ext.AW1/B the claimant sustained permanent disability of 20% of the whole body. The injury sustained by the claimant is not specified in Schedule-I, therefore, the percentage of compensation payable in case of permanent disability has to be proportionate to the loss of earning capacity. Unfortunately, in the present case there is no medical evidence to show that the loss of earning capacity has been assessed by the qualified medical practitioner. But be that as it may be, keeping in view the disability certificate Ext.AW1//b, the disability of the claimant is taken to be 20%. The relevant factor applicable in the case of the claimant is 209.92, he being 29 years of age in terms of birth certificate Ext.PW1/E, therefore, the claimant is entitled to the compensation as under: 20% of 2000 = 400 X 209.92 = Rs. 83,968/-. That the claimant was entitled to compensation was not in dispute at any point of time. DW-1 has deposed that immediately upon knowing about the accident he sent his son and got the claimant admitted in the hospital at Bilaspur and also gave him a sum of Rs. 5000/-. This only proves that the liability in question was never in dispute and the amount to pay the compensation fell due immediately within 30 days from the date of the accident. The owner took the plea that since the vehicle was insured hence the 13 liability was that of the insurer. The owner in my considered view, was liable to pay compensation immediately and atleast 30 days after the date of the accident, when the amount, in the present case, fell due. The owner ultimately could have recovered the amount from the insurer if it was ultimately established that the insurer was liable to have indemnified the insured. In the present case the insurer miserably failed in complying with the provisions of the statute. He was enjoined with the duty to pay the compensation to the employee under the Act. The Act being a benevolent legislation it was incumbent upon the owner to have directly paid the amount so as to enable the employee to tied over the financial crisis arisen due to the accident which took place during the course of his employment. Therefore, in my view, keeping in view the ratio of law laid down by the Apex Court in Sher Singh versus Rakesh Kumar and others (2006)4 ACJ 2367, Himachal Pradesh State Forest Corpn. Ltd. versus Ganu Devi and others (2006) 1 ACJ 624 the owner is liable to pay interest as also the maximum penalty of 50%. The owner shall pay interest at such rates as have been awarded by the Tribunal. In view of my findings that the insurer was not liable to have indemnified the insured, reliance on the ratio of law laid down in Ved Prakash Garg versus Premi Devi and others (1997) 8 SCC 1, United India Insurance Co. Ltd. Versus. Smt. Chanchala Devi and another (2004) 2 Shim. L. C. 23, 14 P.J. Narayan versus Union of India and others (2004) ACJ 452, New India Assurance Co. Ltd. versus Harshadbhai Amrutbhai Modhiya and another (2006) ACJ 1699, Ved Prakash Garg. Versus Premi Devi and others AIR (1997) SC 3854, is of no consequence. In these cases, the Courts were dealing with the matters where the insurer was held liable to have indemnified the insured. The sum of Rs. 5000/- paid by the owner shall be deducted from the compensation paid to him. The Commissioner was required to make calculation as provided for under the Act. The issue No. 2 has been decided without applying the mandatory provisions and the parties were left in the realm of guess work. The Commissioner ought to have carried out the necessary calculations. The Commissioner also ought to have imposed penalty and therefore he seriously erred in not exercising the powers and the jurisdiction vested in him. Thus the claimant is entitled to the following compensation: 1. Amount of compensation = Rs. 83,968/- 2. Penalty @ 50% on the amount of compensation = Rs. 41,984/- 3. Interest w.e.f. 20.6.1999 to 3.3.2009 (9 years & 257 days) on the amount of compensation = Rs. 73,335/- The substantial questions of law are answered accordingly. 15 For the aforesaid reasons the appeals filed by the claimant and Insurance Company are allowed and that of owner is dismissed. The impugned award is modified accordingly. (Sanjay Karol), Judge. March 3, 2009 (PK)