IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.11430 of 2000 UNITED INDIA INSURANCE CO.LTD. REGONAL OFFICE, CHANAKYA COMMERCIAL COMPLEX, R BLOCK, PATNA P.S. SACHIWALAY DISTRICT PATNA THROUGH ITS REGIONAL MANAGER SHRI SURENDRA KUMAR Versus 1. THE STATE OF BIHAR 2. COLLECTOR, ROHTAS 3. ADDITIOAL COLLECTOR, ROHTAS. 4. PYRITES PHOSPHATES AND CHEMICALS LIMITED (GOVT. OF INDIA UNDERTAKING) AMJHORE UNIT, P.O. AMJHORE, DISTRICT ROHTAS THROUGH GENERAL MANAGER. ----------- For the Petitioner :- Mr. Ashok Priyadharshi. For the State :- Mr. Nirmal Kumar Sinha. For Respondent No. 4 :- Mr. Shivaji Pandey, Sr. Advocate. ----- 6 13/04/2010 United India Insurance Co. Limited, petitioner before the High Court, admits that a policy was taken by the erstwhile Pyrites Phosphates and Chemicals Limited (A Government of India Undertaking) under the Public Liability Insurance Act, 1991 (hereinafter referred to as the Insurance Act). Certain rights and obligations upon the Insurance Company was created in terms of the policy and the Act. The object of the Insurance Act states that this is an Act to provide for public liability insurance for the purpose of providing immediate relief to the persons affected by accident occurring while handling any hazardous substance and for - 2 - matters connected therewith or incidental thereto. After this enactment there is an obligation on all such Companies who are dealing with hazardous substance to take an Insurance policy. Other provisions of the Act may not be referred to in the present part of the order but two provisions are required to be taken note of. In this regard Sections 6 and 7 of the Insurance Act deal with application for claim for relief and award of relief respectively. They read as follows :- “6. Application for claim for relief “ (1) An application for claim for relief may be made __ (a) by the person who has sustained the injury; (b) by the owner of the property to which the damage has been caused; ( c) where death has resulted from the accident, by all or any of the legal representatives of the deceased; or (d) by any agent duly authorized by such person or owner of such property or all or any of the legal representatives of the deceased, as the case may be: Provided that where all the legal representatives of the deceased have not joined in any such application for relief, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined shall be impleaded as respondents to the application. (2) Every application under sub-section (1) shall be made to the Collector and shall be in such form, contain such particulars and shall be accompanied by such documents as may be prescribed. (3) No application for relief shall be - 3 - entertained unless it is made within five years of the occurrence of the accident. 7. Award of relief __ (1) On receipt of an application under sub-section (1) of section 6, the Collector shall, after giving notice of the application to the owner and after giving the parties an opportunity of being heard, hold an inquiry into the claim or, each of the claims, and may make an award determining the amount of relief which appears to him to be just and specifying the person or persons to whom such amount of relief shall be paid. (2) The Collector shall arrange to deliver copies of the award to the parties concerned expeditiously and in any case within a period of fifteen days from the date of the award. (3) When an award is made under this section ___ (a) the insurer, who is required to pay any amount in terms of such award and to the extent specified in sub-section (2B) of Section 4, shall, within a period of thirty days of the date of announcement of the award, deposit that amount in such manner as the Collector may direct; (b) the Collector shall arrange to pay from the Relief Fund, in terms of such award and in accordance with the scheme under section 7A, to the person or persons referred to in sub-section (1) such amount as may be specified in that scheme; © the owner shall, within such period, deposit such amount in such manner as the Collector may direct. (4) In holding any inquiry under sub- section (1), the Collector may, subject to any rules made in this behalf, follow such summary procedure as he thinks fit. (5) The Collector shall have all the powers of a Civil Court for the purpose of taking evidence on oath and of enforcing the attendance of witnesses and of compelling the discovery and production of documents and material objects and for such other purposes as may be - 4 - prescribed; and the Collector shall be deemed to be a Civil Court for all the purposes of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974), (6) Where the insurer or the owner against whom the award is made under sub- section (1) fails to deposit the amount of such award within the period specified under sub- section (3), such amount shall be recoverable from the owner, or as the case may be, the insurer as arrears of land revenue or of public demand. (7) A claim for relief in respect of death of, or injury to, any person or damage to any property shall be disposed of as expeditiously as possible and every endeavour shall be made to dispose of such claim within three months of the receipt of the application for relief under sub- section (1) of Section 6. (8) Where an owner is likely to remove or dispose of his property with the object of evading payment by him of any amount of the award, the Collector may, in accordance with the provisions of rules 1 to 4 of Order XXXIX of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), grant a temporary injunction to restrain such act.” The factual matrix to the present case is that large number of villagers belonging to village Basadih and Nawadih located in the district of Rohtas having close proximity to the factory of respondent no. 4 complained that they have suffered loss due to damage caused to their standing crop from the effluents of the factory. All applications made by the farmers were taken cognizance of. The factory was noticed. The farmers were heard and Award - 5 - contained in Annexure-1 series came to be passed by the Collector of Rohtas at Sasaram. When the Insurance Company was directed to compensate the farmers on the quantified amount, they decided to challenge such Award in the present writ application primarily on the ground that the law on the issue has not been followed. The first contention of the learned counsel representing the Insurance Company is that Section 7 of the Insurance Act envisages notice to all the parties concerned before an Award is made by the Collector. In the present case only the Company (respondent no. 4) as well as the villagers were noticed and no notice at any point of time was given to the Insurance Company. This has caused serious prejudice to the case of the Insurance Company not only in terms that they have been denied the opportunity to put their point of view but also in breach of Section 7 of the Insurance Act which mandates giving notice to all the parties concerned. The Collector on a mistaken understanding of the provisions of Section 7 of the Insurance Act came to an erroneous decision that the parties to be given opportunity are to be confined to the factory and the farmers. - 6 - There are not many areas of dispute in the present writ application except what has been noted above. The contention of the learned counsel for the petitioner seems to be borne out on a plain reading of Section 7 of the Insurance Act. The other challenge to the Award is that in terms of the Schedule of the Insurance Act quantification of damage has been made. It lays down the kind of compensation which can be made under Clause (v) of the Schedule. Provision for payment upto Rs.6,000/- depending on the actual damage to property is envisaged but in the present case there is a wide variation in compensation amount which has been awarded by the learned Collector in this regard. The stand of the respondent State is that in the past such compensation and the Awards have been made by the Collector and the liability fixed, payments made but no objection has been taken at any point of time. The other stand of the State is that there is no requirement of notice to the Insurance Company. Notices are to be issued to the affected parties and in this case it is the villagers and the Company alone. It is also the stand of the State that even if - 7 - no notice is given to the Insurance Company, it will not make any difference to the actual findings and the Awards. The question is whether an Award can be made in breach of the statutory provisions of the Act. Liability is to be fastened upon the Insurance Company because a policy has been taken by the Company giving it protective cover from any claim which may be lodged against it of such kind. Insurance Company does not deny that they had drawn up a policy in favour of respondent no. 4 and they have an obligation to extend benefit of such policy in case a claim is raised against them in the given situation. Since large scale complaints and applications had been made for compensation, the final liability will rest at the door of the Insurance Company. In that view of the matter, it cannot be said that the Insurance Company was not a necessary party to the dispute. If Section 7 of the Insurance Act envisages opportunity of hearing being extended to the concerned parties, this Court is of the opinion that necessary and concerned party also includes the Insurance Company since there was a policy subsisting at the relevant time. In absence of any material to show that notices had - 8 - been issued to the petitioner and also in view of the accepted position that no notice, in fact, was given to the Insurance Company, the Insurance Company has made out a case of interference with the Award contained in Annexure-1, which is set aside. But the matter is remitted back to the Collector, Rohtas with a direction that he shall now hear all the parties including the petitioner and pass appropriate order or Award depending on the outcome of the findings. This writ application is allowed. No order, however, as to the costs. AMIN (Ajay Kumar Tripathi, J.)