IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O. No. 973 of 1985 Date of Decision : November 14, 2008 Oriental Insurance Company Limited ....Appellant Versus Sahara Bano and another .....Respondents CORAM : HON’BLE MR. JUSTICE T.P.S. MANN Present : Mr. N.K. Khosla, Advocate for the appellant. None for the respondents. T.P.S. MANN, J. Application filed by Sahara Bano claimant/respondent No. 1 for the grant of compensation on account of death of her husband Ismile was accepted by learned Workmen's Compensation Commissioner, Gurgaon vide impugned order dated March 29, 1985 and the appellant- Insurance Company and Inder Sain Bhasin/respondent No. 2-owner of the offending truck were held jointly and separately responsible for depositing an amount of Rs. 57,500/- as compensation and penalty of Rs. 28,750/-, besides interest on the amount of compensation from 20.9.1984 till the deposit of the same with the learned Commissioner. Aggrieved of the same, the present appeal has been filed under Section 30 of the Workmen's Compensation Act, 1923 (hereinafter referred to as 'the Act'). F.A.O. No. 973 of 1985 -2- The facts of the case are that deceased Ismile had been employed by respondent No. 2 for working as a Cleaner on his truck bearing registration No. DEG-2666, which stood insured with the appellant-Insurance Company. While the deceased was on duty on the aforementioned truck on 20.9.1984, the truck was involved in an accident and he died at the spot. Prayer was, accordingly, made by the claimant- respondent for awarding an amount of Rs. 2,00,000/- as compensation. The claim petition was opposed by the Insurance Company by pleading that the accident which occurred on 20.9.1984 did not arise out of and in the course of employment of deceased Ismile. Notice issued by the claimant was not in conformity with the mandatory procedure and, therefore, the Insurance Company was not liable to pay any amount of compensation. In his written statement, the owner of the truck admitted the fact that his truck was involved in the accident and deceased Ismile used to get Rs. 500/- per month as wages. On the pleadings of the parties, learned Commissioner framed the following issues :- 1. Whether the applicant is entitled to the amount claimed in the application ? OPA. 2. Relief. After going through the pleadings of the parties and evidence led by them, learned Commissioner held that the death of Ismile stood F.A.O. No. 973 of 1985 -3- proved and, therefore, the claimant-respondent was entitled to receive the aforementioned amount as compensation and penalty along with interest. The only submission made on behalf of the appellant- Insurance Company is that the liability of the Insurance Company to indemnify the insured in respect of any liability under this Act could only arise in case the employer was insolvent or making a composition or scheme of arrangement with his creditors or if the employer is a company, in the event of the company having commenced to be wound up. No such circumstances had arisen and, therefore, the Insurance Company was not liable to indemnify the insured, i.e. respondent No. 2. Section 14 (1) of the Act reads as under :- “Section 14. Insolvency of employer – (1) Where any employer has entered into a contract with any insurers in respect of any liability under this Act to any workman, then in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or, if the employer is a company, in the event of the company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in any law for the time being in force relating to insolvency or the winding up of companies, be transferred to and vest in the workman, and upon any such transfer the F.A.O. No. 973 of 1985 -4- insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so, however, that the insurers shall not be under any greater liability to the workman than they would have been under the employer.” Policy of Insurance Ex. R.1 is available on the record. It was clearly stated therein by the Insurance Company that it would indemnify the insured against all sums, including claimant's costs and expenses, which the insured shall become legally liable to pay in respect of :- (i) death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the Motor Vehicle. (ii) damage to property caused by the use (including the loading and/or unloading) of the Motor Vehicle.” As per the cover note issued on behalf of the Insurance Company, it had charged an amount of Rs. 48/- under heading P.A. to Driver/Cleaner etc, besides four coollies at the rate of Rs. 8/- per person. However, under certain conditions, the Insurance Company was not liable under the policy in respect of :- (i) any accident loss damage and/or liability caused sustained or incurred outside the F.A.O. No. 973 of 1985 -5- Geographical area, (ii) any claim arising out of any contractual liability, (iii) any accident loss damage and/or liability caused sustained or incurred whilst the Motor Vehicle is-- (a) being used otherwise than in accordance with the Limitations as to Use or (b) being driven by any person other than driver. (iv) any accident loss damage and/or liability caused sustained or incurred after any variation in or termination of the Insured's Interest in the Motor Vehicle. (v) (a) any accident loss or damage to any property whatsoever or any loss or expense whatsoever resulting or arising therefrom or any consequential loss, (b) any liability of whatsoever nature directly or indirectly caused by or contributed to by or arising from ionising radiations or contamination by radioactivity from any F.A.O. No. 973 of 1985 -6- nuclear fuel or from any nuclear waste from the combustion of nuclear fuel. For the purpose of the exception combustion shall include any self sustaining process of nuclear fission. (vi) any accident loss damage or liability directly or indirectly caused by or contributed to by or arising from nuclear weapons material (vii) any accident loss damage or liability caused sustained or incurred during the period of requisition or commandeering by the Government for any purpose. It stands proved from the evidence that deceased Ismile used to work as a Cleaner on the truck in question and, therefore, Insurance Company was liable to indemnify the insured in respect of the death of Ismile. Nowhere in the exception Clause any stipulation was made that the liability of the Insurance Company would arise only in the event of the employer/insured becoming insolvent. In such a situation, provisions of Section 14(1) of the Act were not applicable to the facts and circumstances of the case. Even otherwise, Section 14(1) of the Act does not absolve the Insurance Company of its liability to pay the compensation amount. Instead, it only enables the Insurance Company to step into the shoes of the F.A.O. No. 973 of 1985 -7- insured in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or, if the employer is a Company, in the event of the Company having commenced to be wound up. Under any of these situations, the rights of the employer against the Insurance Company gets transferred to and vests in the workman. Considered from this angle, the argument submitted on behalf of the appellant that the Insurance Company was not liable to indemnify the insured unless and until the employer became insolvent cannot be accepted. Another submission made on behalf of the appellant is that the Insurance Company be, at the most, burdened with liability to pay the amount of compensation and not the penalty or interest. However, as is clear from the insurance policy, the Insurance Company was to indemnify insured against all sums, including costs and expenses, which the insured became legally liable to pay Therefore, the Insurance Company cannot avoid its liability for the penalty or interest as the same was imposed on account of not paying the amount of compensation from the date it fell due. No other point has been urged on behalf of the appellant The impugned order passed by the learned Workmen's Compensation Commissioner, Gurgaon was based upon proper appreciation of the pleadings of the parties and the evidence led by them. No case is made out for interference in the impugned order. The appeal, being without any merit is, therefore, dismissed. No order as to costs. F.A.O. No. 973 of 1985 -8- At the time of admission of the appeal, learned counsel for the appellant had stated that the amount of compensation had already been paid to the claimant, whereas the amount of penalty and interest stood deposited by the Insurance Company. Accordingly, it was directed that the amount so deposited be put in fixed deposit in a nationalised bank for 37 months. If that be so, the amount of penalty and interest along with accrued interest be disbursed to the claimant-respondent on proper identification and against receipt. ( T.P.S. MANN ) November 14, 2008 JUDGE satish Whether to be referred to the Reporters : YES / NO