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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1391 OF 2009

MALLAMMA (DEAD) BY L.Rs. … APPELLANT(S)

VERSUS

NATIONAL INSURANCE CO. LTD. & ORS. … RESPONDENTS

JUDGMENT

N.V. RAMANA, J.

1. This appeal by special leave is directed against the impugned  

judgment  and  order  dated  10th August,  2005 passed by  the  High  

Court of Karnataka in M.F.A. No. 3842 of  2003 whereby the High  

Court partly allowed the appeal preferred by the Respondent No. 1—

National  Insurance  Company  discharging  it  from  the  liability  of  

payment of compensation to the claimants— Appellants.

2. The brief facts of the case leading to this appeal are that on 3rd  

April, 1997 at about 1.00 p.m., when Honniah @ Dodda Thimmaiah  

was returning from the field driving a tractor with the sand load on the  

trailor, the tractor overturned and Honnaih @ Dodda Thimmaiah died  

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owing to the injuries sustained in the accident.  Appellants herein are  

the  claimants—legal  representatives  of  the  deceased  Honniah  @  

Dodda  Thimmaiah.  The  tractor  involved  in  the  accident  had  the  

registration  number  KA  18/717-718  and  the  tractor  was  originally  

registered in the name of one Gangadhara (Respondent No. 3) and  

the same was insured with the Respondent No. 1 while the deceased  

was employed as a driver with the Respondent No. 2-Jeeva Rathna  

Setty.

3. On  4th September,  1997,  the  legal  representatives  of  the  

deceased,  filed  an  application  before  the  Commissioner  for  

Workman’s Compensation, Chickmagalur (hereinafter referred to as  

“the  Commissioner”)  claiming  compensation  under  the  Workmen’s  

Compensation Act.

4. The  Commissioner  while  issuing  notices  to  the  respondents  

called for filing of objections, if any. The respondents filed objections  

denying their  liability to pay compensation. The National Insurance  

Company (Respondent No. 1) deposed before the Commissioner that  

as per its records on the date of accident, the vehicle was no doubt  

under the insurance policy but  in the name of Gangadhara,  not in  

the  name  of  Jeeva  Ratna  Setty,  hence  there  is  no  relation  of  

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employee-employer  between  the  deceased  and  Gangadhara  and  

therefore,  it  has no burden of  liability  to  pay compensation to the  

claimants.

5. After hearing parties and perusing the documents brought on  

record, the Commissioner came to the conclusion that the deceased  

was employed with Jeeva Rathna Setty, hence there is an employee-

employer  relationship  between the  deceased and the  Respondent  

No.  1  and  the  deceased  had  died  during  the  course  of  his  

employment. At the time of accident, the age of the deceased was  

determined as 25 years with a monthly earning capacity of Rs.2,000/-  

p.m.  and  thereby  the  Commissioner  fixed  compensation  at  

Rs.2,16,910/-.  As  the  Insurance  Company  did  not  deposit  the  

amount, the Commissioner awarded an interest @ 12% p.a. from 3 rd  

April  1997  till  the  date  on  which  he  passed  the  order,  i.e.  14 th  

February, 2003, which amounted to Rs.1,50,265/- and ordered that  

the  appellants  are  entitled  to  receive  a  total  compensation  of  

Rs.3,67,275/-  from  the  employer  Jeeva  Ratna  Setty  and  the  

Insurance Company. Finally, by the Award dated 28 th February, 2003,  

the Commissioner held that  though the insurance policy was in the  

name of  Gangadhara, the ownership of the vehicle on the date of  

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accident was with the Jeevaratna Setty; it is proved that during the  

validity  period  of  the  said  insurance  policy,  the  said  vehicle  was  

transferred  from Gangadhara  to  Jeevaratna  Setty;  as  per  Section  

157(1)  of  the  Motor  Vehicles  Act,  1968  whenever  a  vehicle  is  

transferred from one person to another, the benefits of the insurance  

policy shall also be transferred to the new owner; accordingly instant  

policy benefits will also be automatically transferred from Gangadhara  

to  Jeevaratna  Setty.  Therefore,  the  National  Insurance  Company  

shall be liable to pay the compensation and interest thereupon to the  

claimants. Accordingly, the Commissioner fixed the liability of paying  

compensation  on  the  Insurance  Company and Jeeva  Ratna  Setty  

individually and severally and directed them to deposit the amount  

within a period of 30 days from the date of the Award failing which  

they shall further be liable to pay interest @ 9% p.a. for the delayed  

period.  The  Commissioner,  however,  discharged  Gangadhara  

(Respondent No. 3) and Laxmana Bhovi, (Respondent No. 4) from  

the case.

6. Aggrieved by the said order of the learned Commissioner, the  

Insurance Company (Respondent  No.  1)  filed  M.F.A.  No.  3842 of  

2003 before the High Court of Karnataka urging that no liability could  

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have  been  fastened  by  the  Commissioner  on  the  Insurance  

Company.

7. The High Court, by the impugned order, affirmed the findings of  

the  Commissioner  that  (i)  the  deceased  workman  was  actually  

employed with Jeeva Rathna Shetty, and therefore, there is a relation  

of  employee-employer  between them;   (ii)  the deceased workman  

having died as a result of an accident arising out of and in the course  

of employment, hence the claimants as legal representatives of the  

deceased are entitled to recover compensation, (iii) there was a valid  

insurance policy in force on the date of accident (iv) and the original  

owner  of  the  tractor  was  Gangadhara.   However,  the  High  Court  

excluded the liability of the Insurance Company on the ground that  

the contention of deemed transfer of the insurance policy in favour of  

Jeeva Rathna Setty  by virtue of  Section 157 of  M.V.  Act  was not  

actually urged before the Commissioner.   

8. Against the Judgment of the High Court relieving the Insurance  

Company from the liability of payment of compensation, the claimants  

are before this Court in this appeal.

9. We have heard learned counsel for the parties and perused the  

material on record.

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10. Before  us,  learned  counsel  for  the  appellants  relying  upon  

Section 157 of  the M.V.  Act,  contended that  there is  an admitted  

transfer  of  ownership  of  the  vehicle  as  proved  before  the  

Commissioner.   Once  the  ownership  of  the  vehicle  is  admittedly  

proved to have been transferred to Jeeva Rathna Setty, the existing  

insurance policy in respect of the same vehicle will also be deemed to  

have been transferred to the new owner and the policy will not lapse  

even if the intimation as required under Section 103 of the M.V. Act is  

not given to the insurer, hence the impugned order passed by the  

High Court is contrary to law. In support of this contention, learned  

counsel for the appellant has relied upon a judgment of this Court in  

G. Govindan Vs. New India Assurance Co.     Ltd.   (1999) 3 SCC 754.

11.  Learned counsel  has  also  brought  to  our  notice  a  relevant  

portion from the ‘Schedule  of  Premium’ of  the insurance policy,  a  

copy of which is available on record as Annexure P-1., which reads  

thus:

B.

Add:

LIABILITY TO PUBLIC RISK Liability to Trailor

for L.L. to persons employed in Connection with the operation and/ or loading of vehicle (IMT 19)

Rs. 120-00 Rs.   87-00

   Rs.  15-00

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Add: for increased third party property damage limits. Section II-I(ii) upto Rs. Unltd. IMT 70

TOTAL PREMIUM (A +B)

Rs.  75-00

  Rs. 1318-00

12. On the other hand, learned counsel for the National Insurance  

Company, mainly contended that unless it is proved by evidence  that  

the vehicle has been transferred in the name of Jeeva Rathna Setty,  

the deeming provision of Section 157 of the M.V. Act would not be  

applicable.   In  the  absence of  such  evidence  on  record  the  High  

Court has rightly absolved the Insurance Company from the liability  

and  the  order  passed  by  the  High  Court  does  not  require  any  

interference from this Court.

13. The counsel for the Insurance Company of course contended  

that as per their records, on the date of accident, the vehicle was  

registered in the name of Gangadhara. Hence in the absence of a  

valid proof that the ownership of the vehicle has been transferred in  

the  name of  Jeeva  Ratna  Setty,  the  benefits  of  insurance  policy  

cannot be given to Jeeva Ratna Setty. However,  the said contention  

is contrary to record. A specific finding by the Commissioner to this  

effect in his order dated 28th February, 2003 reads thus:

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“The 4th respondent had stated that  on the date of  the  accident,  this  vehicle  was  in  the  name  of  Sh.  Gangadhara.  But  the  applicants  have  proved  the  said  statement as false through documents and on the date of  the  accident,  the  vehicle  was  in  the  name  of  the  Respondent No.1.”  

14. In view of the above finding, it  can be discerned that on the  

date of accident, the ownership of the tractor stood transferred from  

Gangadhara to Jeeva Ratna Setty. In addition to that, a perusal of the  

‘Schedule  of  Premium’  extracted  above shows that  an  amount  of  

Rs.15-00 has been paid as premium “for L.L. to persons employed in  

connection with the operation and/or loading of vehicle (IMT 19)”.

15.    In view of the above discussion we are of the considered view  

that as on the date of accident, the deceased workman was in the  

course of  employment  of  Jeeva Rathna Setty  in  whose name the  

ownership of the vehicle stood transferred  and the said vehicle was  

covered  under  a  valid  insurance  policy,  the  High Court  ought  not  

have  simply  brushed  aside  the  decision  of   the  Commissioner  

fastening joint liability on the Insurance Company in the light of the  

deeming provision contained in Section 157 (1) of the M.V. Act.   

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16.     For the foregoing reasons, we allow this appeal, set aside the  

impugned  judgment  passed  by  the  High  Court  and  restore  the  

judgment of the trial Court.

17.     There shall, however, be no order as to costs.

…………………………………………CJI. (P. SATHASIVAM)

……………………………………………J. (S.A. BOBDE)

……………………………………………J. (N.V. RAMANA)

NEW DELHI, APRIL 07, 2014  

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