THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY CMA.No.845 of 2010 Dt:17-09-2010 Between : The New India Assurance Company Limited, Rep. by its Branch Manager, Kadapa ..Appellant And Pujala Chenchu Nagaiah and others .. Respondents Counsel for the appellant: Sri B. Devanand Counsel for respondents : Sri K.S. Murthy < GIST >HEAD NOTE: ? CASES REFERRED : 1) AIR 2003 SC 2877 2) 2008 (1) ALD 161 3) 2004 (3) ALD 400 4) AIR 2005 SC 2337 5) 2006 (4) ALD 398 6) 2010 (1) ALD SC 74 THE HON’BLE MR JUSTICE L. NARASIMHA REDDY CMA.No.845 of 2010 JUDGMENT: This appeal is preferred under Section 30 of the Workmen’s Compensation Act (for short ‘the W.C Act’), challenging order dated 30-03-2008 passed by the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour, Kadapa (for short ‘the Commissioner’), in W.C.Case No.141 of 2004. The respondents 1 and 2 filed the case before the Commissioner, stating that Pujala Nagaraju, son of the 1st respondent and elder brother of the 2nd respondent, was employed as a Cleaner to work on a Mini Lorry, bearing No.AP-04-U-6653, owned by the 3rd respondent and insured with the appellant, died in an accident, that occurred on 09-06-2004, near Santhamaguluru -- Puttavaripalem road in Prakasam District. It was stated that the Mini lorry was coming from Narasaraopet side, loaded with flower plants, the driver of the vehicle lost control, and dashed against a stone and tree on the road side, resulting in the death of the deceased and another person, on the spot. Crime No.55 of 2004 was registered by the Police Station, Santhamaguluru. It was alleged that the deceased was earning wages @ Rs.4,000/- per month, and that the 3rd respondent and appellant are liable to pay the compensation of Rs.4 lakhs with interest at 12% per annum. On behalf of the 3rd respondent, the owner of the vehicle, a counter was filed, admitting that the deceased was employed by him as a cleaner on the vehicle, and that there existed a policy, covering the liability towards him. The actual contest to the case was, by the appellant. The occurrence of the accident, the factum of employment of the deceased with the 3rd respondent, the age and wages of the deceased, as pleaded by the respondents 1 and 2, were disputed. It was further stated that though there existed an insurance policy, the owner of the vehicle did not pay extra premium to cover the risk towards the cleaner. Through the order under appeal, the Commissioner awarded a sum of Rs.2,86,608/-, holding the 3rd respondent and the appellant are jointly and severally liable to pay the compensation with interest at 12% per annum, from the date of accident. Sri B. Devanand, learned counsel for the appellant, submits that there is any amount of doubt as to the employment of the deceased with the 3rd respondent, and the Commissioner has arrived at the conclusion in this regard, without any basis. He contends that the 3rd respondent did not pay any extra premium to cover the risk towards the cleaner, and the order under appeal cannot be sustained, in so far as it has held the appellant also, to pay the compensation. He further submits that there was no justification for the Commissioner in awarding interest, that too, from the date of accident. He has placed reliance upon certain decided cases, in support of his contention. Sri K. S. Murthy, learned counsel for the respondents 1 and 2, on the other hand, submits that the employer of the deceased, i.e. the 3rd respondent herein, filed a counter in the case, admitting that the deceased was employed with him. He contends that the 3rd respondent has taken out a policy, as provided for under Section 147 of the Motor Vehicles Act (for short ‘the M.V. Act’), and even if no extra premium was paid, it would cover the liability towards the bodily injuries to, or the death of the persons, employed by the owner of the vehicle. He submits that the Commissioner is conferred with the power to award interest and that the order under appeal does not warrant any interference. On the basis of the pleadings before him, the Commissioner framed the following issues for his consideration: 1. Whether the deceased was a work man as per the provisions of Workmen’s Compensation Act, 1923 and he met with an accident arising out of and in the course of his employment under Opp.Party-I, resulting to death ? 2. What was the age of the deceased at the time of the accident? 3. What was the wage paid to the deceased at the time of his death in the accident ? 4. What is the quantum of the compensation payable to the applicants ? 5. Who are liable to pay the compensation to the applicants ? The 1st respondent deposed as AW-1, and he filed Exs.A-1 to A-6, being the F.I.R. in Crime No.54 of 2004, inquest report of the deceased, copy of legal notice, dated 17-08-2004, postal receipts, etc. Hardly any evidence was adduced on behalf of the appellant, except that the policy was filed as Ex.B-1. The claim was presented before the Commissioner by the father and brother of the deceased-cleaner. Though the appellant disputed the relationship of employer and employee, between the deceased and the 3rd respondent, the counter filed by the 3rd respondent clinched the issue. The appellant did not adduce any evidence, to contradict that. The age of the deceased was taken at 20 years. Though the wages of the deceased were stated to be at Rs.4,000/- per month, the Commissioner adopted the minimum wages for the post of cleaner, under the notification issued under the Minimum Wages Act, being Rs.2,559/-. Relevant factor under the provisions of the W.C. Act was adopted. The controversy in this appeal is not much about the quantum of compensation. On the other hand, it is about the very liability of the appellant to pay the compensation. The basis for this plea is that the 3rd respondent did not pay any extra premium towards the risk to the cleaner. Therefore, it needs to be seen as to whether a basic and act policy taken out by the 3rd respondent would cover the risk to a cleaner. The obligation to take out an insurance policy for a vehicle arises under the M.V. Act, and the extent to which the policy must cover, is indicated in Section 147 of that Act. The minimum coverage provided for under Section 147 is towards the death or bodily injury or damage to any property of a third party caused due to the use of the vehicle, the liability in respect of a passenger of a public vehicle, and the liability arising out of the death or bodily injury of a person engaged in driving or performing other functions upon the vehicle, which, in turn, specified under proviso to sub-section (1) of Section 147 of the M.V. Act. Section 147 reads; “Sec.147: Requirements of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (a) is issued by a person who is an authorized insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)- (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place : Provided that a policy shall not be required— (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen’s Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee— (a) engage in driving the vehicle, or (b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or (c) if it is a goods carriage, being carried in the vehicle, or (ii) to cover any contractual liability”. The purport of Section 147 of the M.V. Act was explained by the Hon’ble Supreme Court in several cases, in the recent past. In RAMASHRAY SINGH V. NEW INDIA ASSURANCE CO. LTD.,[1] the claim was on account of death of a person, said to have been engaged as a cleaner in a passenger Bus. After referring to Section 147, Their Lordships of the Supreme Court held that, such an employee is not covered under Section 147 (1)(b). The plea, that he can be treated as a Conductor; was also repelled. A pausing observation was made to the effect that no extra premium was paid for the conductor. On this basis, it is urged that the Insurance Company cannot be held liable to meet the liability towards the Driver, Conductor, or other employee, unless extra premium is paid. In fact, a learned single Judge of this Court took such a view, in DUDEKULA SALABEE v. R. SIVA SANKAR REDDY[2]. Same view was adopted in NEW INDIA ASSURANCE COMPANY LIMITED V. LODYA SHANKAR[3]. The following observation was made: “…But as per proviso to sub-section (1) of Section 147 of 1988 Act, the owner of a Motor vehicle is not required to take out a policy to cover the risk of (i) his employees being carried in a goods vehicle, (ii) his driver driving the vehicle and (iii) his conductor or examiner of tickets, if the vehicle is a ‘Public Service Vehicle’. So, even if an owner of a motor vehicle does not take out an insurance policy to cover the risk of the above three categories of employee (workmen), he would not be liable for prosecution under Section 196 of the 1988 Act. Insurance to those employees is not made compulsory obviously because they would be covered by the provisions of the Act...” I n NATIONAL INSURANCE CO. LTD. V. PREMBAI PATEL[4], the Supreme Court explained the extents of coverage under Section 147 of the M.V. Act. It is relevant to extract paragraph 12 of the said judgment. “Para-12: The heading of Chapter XI of the Act is Insurance of Motor Vehicles against Third Party Risks and it contains Sections 145 to 164. Section 146(1) of the Act provides that no person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of Chapter XI, Clause (b) of sub-section (1) of Section 147 provides that a policy of insurance must be a policy which insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)against any liability which may be incurred by him in respect of death of, or bodily injury to any person or passenger or damage to any property of a third party caused by or arising out of the use of the vehicle in public place. Sub-clauses (i) and (ii) of clause (b) are comprehensive in the sense that they cover both ‘any person’ or ‘passenger’. An employee of owner of the vehicle like a driver or a conductor may also come within the purview of the words ‘any person’ occurring in sub-clause (i). However, the proviso (i) to clause (b) of sub-section (1) of Section 147 says that a policy shall not be required to cover liability in respect of death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen’s Act if the employee is such as described in sub-clauses (a) or (b) or (c). The effect of this proviso is that if an insurance policy covers the liability under the Workmen’s Act in respect of death of or bodily injury to any such employee as is described in sub-clauses (a) or (b) or (c) of proviso (i) to Section 147(1) (b), it will be a valid policy and would comply with the requirements of Chapter XI of the Act”. (emphasis supplied) In the earlier judgments, rendered by this Court, referred to above, it was proceeded on the assumption that the proviso to Section 147(1) of the M.V. Act would relieve the owners of vehicle from the obligation to take out a policy, to cover the risk towards drivers, conductors or other employees, and it is left to their discretion to take out such policy, by paying extra premium. The importance of the phrase “other than a liability arising under the Workmen’s Compensation Act” was not appreciated. The observations made by the Hon’ble Supreme Court in PREMBAI PATELI’S case (4 supra), would put at rest, the doubt, that may exist in this context. Recently, this Court in NATIONAL INSURANCE COMPANY LIMITED v. D. SIVASANKAR[5], explained the purport of sub-section (1) of Section 147 of the M.V. Act, as under; “Para-9: The liability, which a policy of insurance is expected to cover, is of three categories, viz., i) the liability that will be incurred by the owner of a vehicle, in respect of death or bodily injury or damage to property of a third party, caused due to the use of the vehicle in a public place; ii) such liability in respect of a passenger of a public service vehicle, and iii) the liability arising out of death or bodily injury of a person engaged in driving of the vehicle or other employees, depending on the category of the vehicle. A perusal of Section 147 of the M.V. Act makes this, amply clear...” “Para-10: The first two categories of coverage are referred to in Section 147(1)b(i) and (ii), in specific terms. The third type of coverage, namely, the one towards the Drivers and other employees, is to be discerned from the proviso. The proviso indicates that the policy is to per se, cover the liability towards the employees referred to in proviso (i) (a), (b) and (c), i.e., Driver of the vehicle, the Conductor of a public transport vehicle or any other employee in a goods vehicle. The coverage for any employees other than those, referred to above, is optional and cannot be treated as a requirement under the M.V. Act. The liability arising under the W.C. Act, in respect of death or bodily injury towards a Driver is statutory and mandatory and any basic policy would cover it. The insurer would not be under obligation to pay any extra premium to cover the liability towards the Driver of the vehicle”. Therefore, the contention of the appellant, that it is not under obligation to cover the liability arising out of the death or bodily injuries to a cleaner, unless extra premium is paid; cannot be accepted. The vehicle was admittedly a goods carriage, and a cleaner engaged on such vehicle is covered by clause (i)(c ) of proviso to Section 147 (1) of the M.V. Act. Therefore, no exception can be taken to the order passed by the Commissioner, holding that the 3rd respondent and the appellant herein are jointly and severally are liable to pay the compensation. No serious infirmity is pointed out, as to the quantum of compensation. The Commissioner is, no doubt, conferred with the power to award interest. However, it cannot be awarded from the date of the accident, unless there did not exist any controversy as to the liability. In such cases, the obligation on the part of the appellant to pay the interest would arise, after the expiry of one month, from the date of the order passed by the Commissioner. Hence, the C.M.A is partly allowed, upholding the order passed by the Commissioner, in all respects, except to the extent that the appellant or the 3rd respondent, as the case may be, shall be under obligation to pay interest, after expiry of thirty days from the date of the order of the Commissioner, till the date of payment. There shall be no order as to costs. ________________________ L. NARASIMHA REDDY, J. Dt.17-09-2010. Note: L.R. copy to be marked. (B/O) KO [1] AIR 2003 SC 2877 [2] 2008 (1) ALD 161 [3] 2004 (3) ALD 400 [4] AIR 2005 SC 2337 [5] 2006 (4) ALD 398