IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT GULBARGA DATED ThIS THE 4 th DAY OF NOVEMBER 2008 BEFORE THE HON’BLE MRJUSTICE JAWAD RAHIM M.F.A. NO. 14895/2007 (MV-Si) BETWEEN: THE BRANCH MANAGER, THE NEW INDIA ASSURANCE CO.LTD., BI.JAPUR. REP. BY THE DEPUTY MANAGER, THE NEW INDIA ASSURANCE CO.LTD., REGIONAL OFFICE, NO.2-B, UNITY BUIWING ANNEXE, MISSION ROAD, BANGALORE - 560 002. APPELLANT (SRI SHIVANANDA PATIL, ADV.) AND: SIDDAGONDA S/Q OGGEPPA BIRADARA, AGE : 45 YEARS, 0CC: AGRICULTURE. 2. KUM. PARVATHI, D/O SIDDAGONDA BIRADARA, AGE: 15 YEARS, 0CC: STUDENT. & w 2 3. KUM. JYOThI, D/O SIDDAGONDA BIRADARA, AGE: 13 YEARS, 0CC: STUDENT. RESPONDENTS 2 AND 3 BEING MINOR REP.BY THEIR FATHER RESPONDENT NO.1 ALL ARE R/O DEVARANIMBARAGI, TALUK INDI, DISTRICT BUAPUR. 5. SMT. GANGABAI, W/O SIDDAGONDA BIRADARA, AGE : 40 YEARS, 0CC: BUSINESS, R/O DEVARANIMBARAGI, TALUK INDI, DISTRICT BUAPUR. RESPONDENTS (SRI BABU H.METAGUDDA, ADV.) THIS M.F.A. IS FILED U/S 30(1) OF WC ACT, AGAINST THE JUDGEMENT AND AWARD DATED 18-09-2007 PASSED IN WCA/SR-92/2007 ON THE FILE OF THE LABOUR OFFICER AND COMMISSIONER FOR WORKMEN’S COMPENSATION, SUB-DIVISION-I, BUAPUR, AWARDING A COMPENSATION OF RS.3,13,600/- WITH INTEREST @ 12% P.A., ETC., THIS APPEAL COMING ON FOR ORDERS THIS DAY, ThE COURT DELIVERED ThE FOLLOWING r JUDGMENT Insurer is in appeal against the judgement and award passed by the Commissioner for Workmen’s Compensation, Bijapur in No. WCA/SR92/2OO7 dated 18O92OO7, awarding compensation in a sum of Rs3,13,OOO/ to the respondents 1 to 3 herein. 2, The contextual facts are: That, Siddagonda Biradara, Parvathi and Jyothi, lodged a claim before the Commissioner for Workmen’s Compensation for compensation on the premise that one Bhimashankara, was employed by Respondent No4 Smt, Gangabai to work as labourer in the Tractor and Trailer unit bearing registration NoKA28 T9601 & 9603 on a monthly salary of Rs5,000/ plus Rs.50/ as batta. 3. On 180i2C07, as per instructions of the respondent No.4 Smt, Gannabai, Bhimashankara boarded the trailer for loading and unloading sugar cane from Devaranim baragi to Sa ngoia CmOperative Sugar Factory. 4 On 19-01-2007, while the Tractor and Trailer was proceeding on Mangalaveda — Maravade Road at Bheiavadi cross the driver lost control due to rash and negligent driving, consequent to which, he suffered grievous Injuries and succumbed to the same. Shimashankar was aged 20 years at the time of death. His father and two sisters lodged the claim seeking compensation. 4. The insurer resisted the claim contending that the deceased was not an employee of the Insured. He was a gratuitous passenger travelling in the trailer. It also urged as the Tractor and Trailer covered under the agriculture policy, the risk of such person was not covered. Alternatively, it contended that even if It is to be held that the deceased was an employee of the owner — insured, the policy would not cover the such risk. 5. The Commissioner for Workmen’s Compensation considering the material proposition In the pleadIng of the parties and the evidence lead negated the objections raised and allowed the claim petition quantifying the compensation 5 at Rs.3,13,600/- vide the impugned judgement dated 18- 09-2007. AssailIng the said judgement the Insurer is In appeal. 6. The learned counsel Sri Shivananda Patil, for the appellant — Insurer reiterating the grounds, which were urged before the Commissioner for Workmen’s Compensation and in supplementation to It contends that the vehicle involved In the accident is indisputably the Tractor and Trailer. As per provisions of Motor Vehlde Act no person can be carried other than the driver at seat. The tractor is meant for agriculture use and it Is not a gods vehicle. Since, it is not goods vehicle, carrying any employee by the owner Is impermissible. He relied on the restrictions imposed by the Motor Vehide Act in carrying of the employees in Tractor and Trailer and prohibition of passengers being carried in such a vehicle. 7. The learned counsel would submit this issue was not considered by the Commissioner, as a consequence of which entire proceedings are vitiated as he would have no Li 6 jurisdictIon to adjudicate the claim. Lastly, it is urged that even If It Is held victim dIed while travelling In Tractor and TraIler, the policy excludes such a person and hence compensation if any shall be payable by the insured. 8. Per contra, the learned counsel for dalmants refuting the contentions of the• appellants contends the policy issued by the insurance company covering the vehicle In question is not an act policy. It Is a package policy and Is described as “Miscellaneous and Special Type of Vehicle Policy and Package” and It covers the risk of the victim. 9. In order to counter such arguments Sri Shivananda Patil has once again referred to the terms and conditions of the Insurance policy. 10. Based on the contentions of both the learned counsel, it is necessary to formulate the following points for decision: 7 (1) Whether the insurer could avoid the liability even after collecting additional premium in respect of a person indicated in the policy as ‘employee’ on the basis that it is referable to the driver of the vehicle? (2) Whether the temis and condition of the policy prohibits carrying of any person? (3) What is statutory liabilIty in respect of driver and employee travelling a goods vehide? (4) How are the temis of the policy to be interpreted? 11. The vehicle involved In this case Is Tractor and Trailer bearing registration No. KA-28 T-9601 & 9603. The policy issued by the appellant is described as “Mlscllaneous and Special Type of Vehicle Policy and Package” The limitation for use; persons or class of persons entitled to drive and limits of liabIlity, are incorporated in the policy read as hereunder: 8 “UMITATION AS TO USE :- The policy covers use of only under a permit within the meaning of the Motor Vehicle Act, 1988 or such a carriage failing under sub-section (3) of Section 66 of the Motor Vehicles Act, 1988; a) Organised Racing; b) Pace making; c) Reliability Trails; d) Speed testing. PERSONS OR CLASS OF PERSONS ENTITLED TO DRIVE:- Any person including insured provided that a person driving holds an effective driving lincece at the time of the accident and is not disqualified from holding of obtaining such a licence. Provided also that the person holding an effective learners licence may also drive the vehicle and such a person satisfies the requirements of Rule 3 of Central Motor Vehicles Rule, 1989. UMIT OF LIABILITY:-Under section 11(i) In respect of any one accident: As per Motor Vehicles Act 1988. Under section 11(u) in respect of any one claim of series of daims arising out of one event Rs.1,50,000” 12. The policy contains following IMT endorsements: “IMT Endorsement Numbers printed herewith attached hereto 7, 21, 48, 36, 24, 40. Name of the financier under hypothecatlon agreement: Imposed Excess: R.0 State Bank of India, Kannur Branch:Not Given Voluntary excess:R.0 Hire Purchase Agreement: Compulsory Excess:Rs7,OOO 0.5% of LEV subject to a minimum of Rs7,000 13. The learned counsel Sri Shivananda Patil refer to the entry which reads ‘ WC to employeeI”. According to him collection of Rs25/- under the said head is referable to the wider coverage provided to the driver of the tractor. Based on that contention he submits that even if it is shown by evidence that the deceased was an employee of the insured owner he will not be covered. Collection of Rs.25/- is to have a wider coverage for the driver who would otherwise be entitled to claim compensation only as is permissible under Workmen’s Compensation Act. In other words, the coflection of Rs25/ is said to enlarge of liability of the insurer to pay compensation over and above what is payabie under Workmen’s Compensation Act. 14. Therefore, It is necessary to consider whether this is acceptable in the case of this nature. The Tariff Regulatory Authority (in short ‘TRA’) is a creation of statute 10 under the provisions of Insurance Act, 1939. Provisions of SectIon 64 of the said Act deals with this aspect. We are concerned with the powers conferred under TRA. Under the Act by the provisions of Section 64 UC, which reads thus: “POWER OF ThE ADVISORY COMMI1TEE TO REGULATE RATES, ADVANTAGES, ETC. (1) The Advisory Committee may, from time to time and to the extent it deems expedient, control and regulate the rates, advantages, terms and conditions that may be offered by insurers In respect of any risk or of any class or category of risks, the rates, advantages, terms and conditions of which, In its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions shall be binding on all insurers.” 15. By exercise of that power conferred by the provisions of Section 64 UC of TRA, it has prescribed rates of premium to be paid. The basic minimum premium payable in respect of Act policy is Rs 125/-. 16. As against the said prescribed, rate of premium at Rs.125/- in this case the appeiiant has collected from the insured a sum of Rs.785/-. Therefore, the insurer has to II account for the amount in excess of Rs.125/- fixed by the TRA. This is because, if It is to be construed that It is the Act Policy covering the risk only of the third party then the maximum premium it could have collected was only at Rs.125/-. If any amount is collected in excess of the amount fixed by the TRA, it amounts to collection of additIonal premium and when the additional premium is collected, the burden is on the Insurance company to account for such extra collection. 17. SimIlar is the case of trailer, for the trailer te premium to be collected is Rs.300/-, but in the instance case, the appellant has collected from the insured a sum of Rs.750/-. There is excess of Rs.400/- collected over and above the basic premium fixed by the TRA. Therefore, it is for the appellant to show for what liability it collected amount collected in excess of basic premium. 18. Be that as it may, certainly the policy cannot be considered as an Act policy relatable only to the claim of third party and covering third party risk. It is undoubtedly, 12 the policy of wider coverage. Apart from what Is noted above, we have seen from the policy the Insurer has collected Rs.100/- for compulsory personal accident to owner cum driver fixing the amount at Rs.20,0000/- and a sum of Rs.25/- collected under WC to employee-I. 19. The contention of learned counsel for appellant that WC means wider coverage to employee Is only confined to claim of the driver, is worth rejection for the following reasons. 20. In a simple Act policy issued under the provisIons of SectIon 146 of the Motor Vehicle Act, the insurer is bound to indemnify the Insured against the classes and category of persons specified under Section 147 of the Motor Vehicle Act. ProvIsions of SectIon 147 of the Motor Vehicle Act reads thus: “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 \1 13 (a) is issued by a person who is an authorised 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 or bodily injury to any person, Including owner of the goods or his authorised representative carried In the vehicle 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 trhe 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) engaged in driving the vehicle, or (b) if It is a public service vehicle engaged as 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 (1 14 (ii) to cover any contractual liability.” 21. Reading of which makes it clear, indemnity to a driver is statutorily provided. Similarly, employee as Indicated in’ the provision are also covered. The provision makes it dear that apart from driver category of the employees regarding to there in are statutorily. 22. CounterIng it the learned counsel Sri Shivananda Path submits that as the Tractor and Trailer does not come within the category of goods vehide there is no question of any employee being carried in the vehide. Therefore, in the drcumstance the use of the word vehicle and employee in the policy must be construed as making reference to only to the driver of the insured and none else. 23. This submission, with reference to Section 145, should be rejected because, be It a tractor or be it a goods vehicle the word used is ‘employee’. Whereas in the case of passenger vehicle a separate category of persons under head conductor and cleaner Is also statutorily included. It is U 15 therefore immaterial as to who is the employee and what was the nature of work he was doing as long as extra premium is paid. The loader is statutorily covered, whereas the employee could be a loader and or any other person employed for any other purpose and carried In the vehicle. We are concerned not only with the coverage to the employee under statutory provisions of section 147 of the Motor Vehide Act but what the Insurer has agreed to indemnify under Sub Section 5 of Section 147 of Motor Vehicle Act. 24. However, even if we accept the contention of the learned counsel and exdude such coverage because it Is a Tractor and Trailer, then the fact of collecting Rs.25/- under head WC employee-I makes policy a contractual polIcy as permissible under sub-sectIon 5 of Section 147 of the Motor Vehicle Act. This is because insurer and insured could agree upon such terms to enlarge or to Increase the liability from more than what Is statutorily prescribed. 30v 16 25. In the Instance case, as seen from the Tariff and the amount collected in a sum of Rs.25/-, the driver is statutorily covered. The policy is not an Act policy. The policy is “Miscellaneous and Special Type of Vehicle Policy and Package”. Rs.125/- is the basic premium fixed by the TRA. Therefore, the limitation of the liability of the insurance company to pay compensation to the driver as is payable under the provisions of the Workmen’s Compensation Act is enlarged as the policy is converted into comprehensive special polIcy after collecting extra premium. Once the driver Is statutorily covered to get indemnified collecting Rs.25/- cannot be interpreted to mean it refers only to driver. The employee has to be understood as separate category of person other than the driver of the tractor, who statutorily covered. 26. It Is further noticed that the policy contain certain endorsement have been made in the policy. Endorsement No.7 is read as follows: “It Is hereby declared and agreed that the vehicle insured is pledged to / hypothecated — 17 with •. .. (hereinafter referred to as the “Piedgee”) and it Is further understood and agreed that the Pledgee is interested in any monies which but for this Endorsement would be payable to the insured under this policy in respect of such loss or damage to the vehicle insured as cannot be made good by repair and/or replacement of parts and such monies shall be paid to the Pledgee as long as they are the Pledgee of the vehicle insured and their receipt shall be a full and final discharge to the Insurer In respect of such loss or damage. It is further declared and agreed that for the purpose of the Personal Accident Cover for the owner-driver granted under this policy, the insured named in the policy will continue to be deemed as the owner - driver subject to compliance of provisions of the policy relating to this cover. Save as by this Endorsement expressiy agreed that nothing herein shall modify or affect the rights or liabilities of the Insured or the insurer respectively under or in connection with this policy or any term, provision or condition thereof. Subject otherwise to the terms exceptions conditions and limitations of this policy.” 27. From It, It is clear that liability of the Insurance company has been enlarged by virtue of endorsement No.7 and by collection of Rs.25/-. The question is If it has to be treated as the enlarged liabIlity for a driver, the endorsement should have read that WC to the driver. But, In the Instance case, It has been shown as WC to 18 Employee-I. Likewise, as the other endorsement 21, 48, 36, 24, 40 read as follows: “21. SPECIAL EXCLUSIONS AND COMPULSORY DEDUCTIBLE (Applicable to all Commercial Vehicles excluding taxis and motorized two wheelers carrying passengers for hire or reward.) Notwithstanding anything to the contrary contained herein It Is hereby understood and agreed that (a) Special Exclusions Except in the case of Total loss of the vehicle insured, the Insurer shall not be liable under Section 1 of the policy of loss of or damage to lamps tyres tubs mudguards bonnet side parts bumpers and paint work. (b) Compulsory Deductible In addition to any amount which the insured may be requIred to bear under para (a) above the insured shall also bear under section 1 of the policy in respect of each and every event (Including event giving rise to total loss/constructive total loss) the first Rs..... *of any expenditure (or any less expenditure which may be incurred) for which provisions Is made Under this policy and/or of any expenditure by the Insurer In the exercIse of Its discretIon under Condition No.4 of thIs policy. (1 19 If the expenditure Incurred by the insurer shall indude any amount for which the insured Is responsible hereunder such amount shall be repaid by the Insured to the insurer forthwith. For the purpose of this Endorsement the expression “event” shall mean an event or series of events arising out of one cause In connection with the vehicle insured in respect of which indemnIty is provided under this policy. Subject otherwise to the terms conditions limitations and exceptions of this policy. *to insert amount as appropriate to the class of vehlde Insured as per GR.40 of the tariff. 48. AGRICULTURAL AND FORESTRY VEHICLES AND OTHER MSICELLANEOUS VEHICLES WITH TRAILERS ATtACHED EXTENDED COVER. It is hereby declared and agreed that in consideration of an additional premium of Rs...., the Indemnity provided by this policy shall apply in respect of any trailer (including Agricultural Implements such as ploughs, Harrows and the like) described in the under noted Schedule of trailers as though it were a vehicle described In the Schedule and has set against it in the Schedule the value set against it in the under noted Schedule of trailers. Provided that the insurer shall be under no liability under Section 1 of the policy in respect of breakage of any part of the agricultural trailer or implements caused by ground obstructions. 20 Schedule of Trailers Insured’s Declared value (IDU) * Insert make, number or some other means of identification. Threshing Machines, Drums, Balling Machines, Trusses and Tiers must be identified as such. Subject otherwise to the terms, exceptions, conditions and limitations of this polIcy. NOTE: In the case of Liability only Policies, the Endorsement must be suitably amended. 36. INDEMNITY TO HIRER - PACKAGE POLICY - NEGLIGENCE OF ThE INSURED OR HIRER. It Is hereby declared and agreed that the company will indemnify any hirer of the vehicle insured against loss, damage and liability as defined in this Policy arising in connection with the vehicle Insured by reason of the negligence of the within named Insured or of any employee of such insured while the vehicle Insured is let on hire. Provided that any such hirer shall as though he/she were the insured observe fulfill and be subject to the terms, exceptions, conditions and limitations of thIs policy in so far as they apply. 24. ELECTRICAL / ELECTRONIC FITTINGS 21 (items fitted In the vehide but not included In the manufactuter’s listed selling price of the vehicle — package policy only) In consideration of the payment of additional premium of Rs . notwithstanding anything to the contrary contained In the policy it Is hereby understood and agreed that the insurer will Indemnify the insured against loss of or damage to such electrical and/or electronic fitting(s) as specified in the schedule whilst it/these 1sfare fitted In or on the vehicle Insured where such loss or damage Is occasioned by any to the perils mentioned in Section.1 of the policy. The insurer shall, however, not be liable for loss of or damage to such fitting(s) caused by/as a result of mechanical or electrical breakdown. Provided always that the liability of the insurer hereunder shall not exceed the insured’s Declare Value (IDV) of item. Subject otherwise to the terms conditions limitations and exceptions of this policy. 40. LEGAL LIABILITY TO PAID DRIVER AND/OR CONDUCTOR AND/OR CLEANER EMPLOYED IN CONNECTION WITH THE OPERATION OF MOTOR VEHICLE. (for buses, taxis and motorized three/four wheelers under commercial vehides tariff) IN consideration of the payment of an additional premium it Is hereby understood and agreed that notwlthsanding anything contained herein to the contrary the insurer shall indemnify insured against his legal liability under the Workmen’s Compensation Act, 1923 and subsequent amendments of that Act prior to the date of this endorsement, the Fatal Accidents Act, 1855 or at Common Law in respect of personal Injury to any paid driver and/or conductor and/or cleaner whilst engaged in the service of the insured in such occupation in connection with the vehicle insured and will in addItion be responsible for all costs and expenses incurred with its written consent. The premium to be calculated and paid while taking Insurance of the vehicle concurred at the rat of Rs.25/- per driver and/or conductor and/or cleaner. Provided always that: (1) this Endorsement does not indemnify the insured In respect of any liability In cases where the insured holds or subsequently effects with any insurer or Group of Underwriters a Policy of Insurance In respect of liability as herein defined for his general employees. (2) The insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligations. (3) the Insured shall keep a record of the name of each driver cleaner conductor or person employed In loading and/or unloading an the amount of wages salary and other earnings paid to such employees and shall at all times allow the Insurer to inspect such record. e)r 23 (4) in the event of the policy being cancelled at the request of the insured no refund of the premium paid in respect of this Endorsement will be allowed. Subject otherwise to the terms exceptions conditions and limitations of this policy except so far as necessary to meet the requirements of the Motor Vehides Act, 1988. 28. Therefore, the limit of liability is enlarged to cover risk of the employee for the purpose of grant of compensation either under Workmen’s Compensation Act or Motor VehIcle Act. In this case, the impugned order has been passed under Workmen’s Compensation Act, though claimants could maintain petiton under Section 166 of Motor Vehicle Act.