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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8725 OF 2012

RAMCHANDRA  ..Appellant

Versus

REGIONAL MANAGER UNITED INDIA INSURANCE CO. LTD.       ..Respondent  

J U D G M E N T

GYAN SUDHA MISRA, J.

The  judgment  and  order  dated  17.4.2007  

passed by the High Court of  Karnataka  at Bangalore in  

M.F.A.No.  6711/2004  (MV)   is  the  subject  matter  of  

challenge in this appeal whereby the learned single Judge  

of  the  High  Court   was  pleased  to  allow  the  appeal  

preferred by the respondent No.1- United India Insurance  

Company  Ltd.  through  its  Regional  Manager   holding

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therein that the  liability of the respondent No.1-United  

India Insurance Company Ltd. (shortly referred to as ‘the  

Insurance Company’) to pay compensation is restricted to  

one under the Workmen’s Compensation Act, 1923 and  

the amount to  which the respondent No.1 herein will be  

liable to  pay  is Rs.32091/- (Rupees Thirty Two Thousand  

and Ninety One Only) and the balance amount will have  

to be borne by  the insured -owner of the vehicle who had  

been impleaded by the appellant/claimant as respondent  

No. 2  herein but was allowed to be deleted by this Court  

from  the  array  of  parties  at  the  risk  of  the  

appellant/claimant   herein.   The  High  Court   vide  its  

impugned  order  was  thus  pleased   to  hold  that  the  

liability  of  the  insurance  company/respondent  No.1  is  

restricted to the one under the Workmen’s Compensation  

Act,  1923  only and hence was not   liable to  pay any  

compensation under the Motor Vehicles Act, 1988.

2. The substantial question of law in this appeal  

therefore is confined to determination of the question as  

to whether the learned single  Judge of the High Court  

could have passed the impugned order  holding therein  

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that when the  labourer/employee is injured during the  

course  of  employment due to negligence of  the driver  

of the vehicle which caused the accident, then whether  

the  compensation  could   be  limited   to  the  amount  

admissible  under  the  Workmen’s  Compensation  Act  or  

compensation  would  also  be  payable  under  the  Motor  

Vehicles Act ?

The appellant/claimant has raised this question  relying  

specially  on the ratio  of  the  judgment  of  this  Court  in  

Suresh Chandra vs. State of U.P. & Anr. reported  in  

1996 ACJ 1 wherein this Hon’ble Court  has held that  

when the  labourer sustains injuries during the course  of  

his  employment due to negligence of the driver which  

met with an accident  and the claim is made under the  

Motor  Vehicles  Act,  the  compensation  could  not  be  

limited to the amount admissible under the Workmen’s  

Compensation Act.  

3. Relevant  factual  details  giving   rise  to  the  

aforesaid  question  in  this   appeal  disclose  that  the  

appellant/claimant   filed  a  claim  petition  claiming  

compensation for the injuries sustained by him in a road  

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traffic  accident  which took  place on 10.9.1996 about  

4.00 p.m. when the claimant was travelling in a Swaraj  

Mazda Matator  bearing registration No. KA-01-2337 as a  

cleaner.    According to  the case of  the   claimant,  the  

driver  of  the  vehicle  drove  the  same  in  a   rash  and  

negligent manner and when the  said vehicle came near  

Doddabande Crossing,  the vehicle  dashed  against  the  

lorry  bearing   registration  No.  TN-28B-8397  which  was  

parked on the road as a result of which the appellant who  

was travelling on the said vehicle as a cleaner sustained  

grievous  injuries.  The injured was, therefore,  taken for  

the   first  aid  treatment  at   Penukonda  Government  

Hospital  and  was  later  shifted   to  Victoria  Hospital,  

Bangalore as  an inpatient.   The 2nd respondent  in this  

appeal was Mr. S. Sathyamurthy who   admittedly  is the  

owner  of  the vehicle  Swaraj Mazda  and the said vehicle  

was insured  with the 1st respondent herein the United  

India Insurance Company Ltd.   Hence, the claimant  laid  

claim  against  both  the  respondents  before  the  Motor  

Accident Claims Tribunal  and Court of Small Causes at  

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Bangalore wherein he urged that the  respondents are  

liable to pay just and adequate compensation.    

4. The  respondent  No.1-  insurance  company  

appeared and filed objections contending therein that the  

vehicle was being driven without  a valid and effective  

driving license  in contravention of the provisions of the  

Act  due  to  which  the  insurance  company  was  not  

required  to  pay  any  compensation.   It  was  further  

contended  by the insurance company that the vehicle in  

question is a passenger carrying vehicle  and the policy  

of insurance issued was only an act coverage in which the  

claimant appellant was proceeding as a cleaner.  Hence  

the policy  of insurance  issued  by the respondent  does  

not cover the risk  of the  cleaner as per  Section 147 of  

the  Motor  Vehicles  Act  since  the  policy  of  insurance  

covering the accident vehicle  being an act of coverage  

does  not  cover  the  risk  of   the  cleaner;  hence  the  

respondent  insurance  company   was  not  liable  to  pay  

compensation.   The  respondent  -insurance  company,  

therefore,  sought dismissal of the claim petition.   

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5. The respondent No.2/the owner of the vehicle  

herein although was served with the notice, he failed to  

appear   before  the  tribunal  and  hence  the  matter  

proceeded  only  against  the  respondent  –  insurance  

company.   

6. The  Motor   Accident  Claims  Tribunal   on  a  

scrutiny  and  analysis  of  the  evidence   led  by  the  

contesting parties, was pleased to record a finding  that  

the appellant/claimant was travelling in the Matadar van  

and the accident took place due to rash and negligent  

driving  of the said van by  its driver due to which the  

appellant  herein   sustained grievous  injuries.   On the  

basis  of the evidence  it was further recorded that the  

appellant sustained fracture  of right shaft femur.  He was  

an inpatient at Victoria Hospital for a period of one and a  

half month wherein his leg was operated and  rod was  

fixed  to the fractured bone, head injury  was sutured and  

treated conservatively.  After discharge, he also had to  

undergo follow up treatment  by  visiting  the hospital for  

a  period  of  one year  once  in  15  days  a  month     as  

advised by the doctors.   The tribunal on an assessment  

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of the injury sustained  by the claimant and the expenses  

incurred on the treatment was pleased to hold  that the  

claimant was entitled to a sum of Rs.1,42,800/- towards  

compensation.    

7. Since  the  quantum  of  compensation  is  not  

under challenge in this appeal, it is inessential to go into  

the  details  of  the  nature  of  injury  and  the  amount  

awarded to  the  claimant.   In  addition,  the  plea  of  the  

insurance  company  that  the  driver  was  not  holding  a  

valid license had also been rejected by the tribunal which  

finding is  not  under challenge and hence it  is  equally  

inessential  to deal with this aspect.        

8. The   principal  ground  of  challenge   at  the  

instance of the respondent-insurance company was that  

the    appellant  was  travelling  in  a  matador  van  as  a  

cleaner; hence  his remedy was to claim compensation  

under the Workmen’s Compensation Act and the tribunal  

had  no  jurisdiction  to  entertain  the  claim  filed  by  the  

cleaner.   

9. However, the tribunal referred to the law laid  

down by the full Bench of the Karnataka High Court in the  

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case  of  Karnataka  State  Road  Transport  

Corporation and Ors.  Vs. R. Maheshwari  and Ors.  

reported in ILR 2003 Kar 3562,   wherein it was held that  

the insurer  shall  be liable to  indemnify   the person or  

classes of persons  specified  in the policy  in respect of  

any  liability  which the  policy purports to cover even in  

proceedings  under the Motor Vehicles Act without such  

liability  having been first determined or adjudged under  

the Workmen’s Compensation Act.  In view of the ratio of  

this decision, the tribunal was pleased to hold that the  

respondent-insurance company being the insurer   was  

liable   to  pay  compensation.   The  claim  petition  

consequently was allowed in part awarding compensation  

of Rs. 1,42,800/- together with costs and interest at 6 per  

cent  per annum from the date of filing of claim petition  

till  the  date  of  payment  against  the  respondent  –  

insurance company and  respondent-insured/owner of the  

vehicle  jointly  and severally.  However, the respondent-

insurance company  being  the  insurer of the offending  

vehicle, it was  ordered to pay the entire compensation  

awarded.  

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10. The  respondent-insurance  company  assailed  

the judgment and order of the tribunal  by filing a first  

appeal bearing  MFA No.6711/2004 in the High Court of  

Karnataka at Bangalore wherein the learned single Judge  

recorded  that  the  only  grievance   of  the  appellant-

insurance  company  was  that  while  allowing  the  claim  

petition, the first respondent/claimant had put the entire  

burden  on the appellant  to satisfy the amount of Rs.  

1,42,800/-  which  was  awarded  to  the  claimant.  The  

counsel representing the  insurance company  submitted  

before the High Court that it was not in dispute that the  

claimant was travelling as a cleaner in the matador van in  

question  and,  therefore,   the  liability  of  the  appellant  

ought  to  have  been  restricted  under  the  Workmen’s  

Compensation Act.   As such, the  order of the tribunal  

could not be  sustained in law to the extent of liability  

over  and  above  the  liability  under  the  Workmen’s  

Compensation Act.   

11. The learned single Judge  of the High Court  almost  

summarily allowed the appeal as he was of the view that  

the claimant having been a cleaner in the matador van  

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insured with the appellant herein, the liability could not  

have  been  over  and  above   the  liability   under  the  

Workmen’s Compensation Act.  The learned single Judge  

in  support  of  his  view   relied  upon  the  judgment  and  

order  reported  in  the  case  of   National  Insurance  

Company  Ltd.  Vs.  Lagamanna  &  Ors.  reported  in  

2007 ACJ 50.  The learned single Judge  recorded that  

the Division Bench in  the said decision had held  that  

when no cover premium is  paid to cover larger liability,  

the liability of the insurance company will be restricted to  

the one under the Workmen’s Compensation Act.   It was,  

therefore,  held that in the light of  such  settled position  

of law, the tribunal  could not have put the entire liability  

on the appellant.   The learned single  Judge,  therefore,  

directed that the liability  of the insurance company was  

restricted to one under the Workmen’s Compensation Act  

which would be Rs.32,091/- and the balance  will have to  

be shouldered by the insured/owner of the vehicle.  It was  

further ordered that  the rate of interest  will be as per  

order  of the Motor Accident Claims Tribunal.  The appeal  

was allowed to  this  extent  but  a  further  direction  was  

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given  that  if  excess  amount  had  been  deposited,  the  

same will be refunded to the insurance company.  

12. Since, the insured/owner of the vehicle  had  never  

appeared either before the tribunal or the High Court, the  

claimant-appellant  felt  aggrieved  and  has,  therefore,  

come  up  in  appeal  before  this  court  assailing  the  

judgment  and  order  of  the  High  Court   wherein  the  

directions recorded hereinabove is under challenge.

13. Learned  counsel   for  the  appellant/claimant   in  

substance contended that  the High Court  ought not  to  

have passed the impugned order in view of the ratio of  

the judgment and order passed by this Court in  Suresh  

Chandra vs.  State of U.P. & Anr. reported in 1996 ACJ  

1  wherein this Hon’ble Court  has held  that when the  

labourers sustain injuries  during  the  course  of  his  

employment due to the negligence of the driver  and the  

claim   is  made  under   the  Motor  Vehicles  Act,  the  

compensation   could  not  be  limited  to  the  amount  

admissible   under  the  Workmen’s  Compensation  Act.  

Therefore, it was submitted that the impugned order  is  

liable to be set aside  by this Court.   The counsel  had  

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further  submitted  that  the  tribunal   was  justified   and  

rightly  directed  the  respondent-insurance  company   to  

pay  the compensation  together with costs and interest  

at 6 per cent per  annum from the date  of petition to the  

date  of   payment  and  the  first  respondent/insurance  

company  being the insurer of the vehicle  was rightly  

directed to pay the entire  compensation.  The learned  

single Judge was thus in error in allowing  the appeal of  

the respondent insurance company in part which is fit to  

be struck down  as illegal and invalid.

14. Learned  counsel  representing   the   insurance  

company  repelled   the  arguments   advanced  by  the  

counsel  for  the  claimant/appellant   and  essentially  

submitted that the liability of the insurance company to  

pay   compensation  to  the  claimant  cleaner  who  was  

injured  during  the  course   of  employment  due  to  

negligence of the driver  would not be entitled to claim  

compensation  under  the  Motor  Vehicles  Act  but  his  

compensation  would  be  limited   to  the  amount  

admissible   under  the   Workmen’s  Compensation  Act.  

Learned  counsel   while   elaborating   his  submission  

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however  yielded   to  the  extent  that  although  the  

insurance  company  may  be  held  liable   to  pay  

compensation under the Motor Vehicles Act beyond what  

is admissible  under Workmen’s Compensation Act,  the  

same would  be  payable  provided the  insured/owner  of  

the vehicle had paid higher premium to cover the liability  

of its employees and only then the insurance company  

would  be  liable   to  pay   the  compensation    to  the  

employees  over  and  above   the  liability  under  the  

Workmen’s Compensation Act.  In absence of payment of  

cover premium, the liability  of insurance company will be  

restricted only to the one  which is  payable under the  

Workmen’s  Compensation  Act.    It  was,  therefore,  

submittedthat the High Court was correct in allowing the  

appeal  of  the  insurance  company  by  restricting   its  

liability to Rs. 32,091/- only and  rightly ordered refund of  

the amount  by the claimant/appellant which has been  

assailed by the claimant herein.    

15. In  support  of  his  submission,  counsel  for  the  

insurance company has invited the attention of this Court  

to  the  case  of   National Insurance  Company vs.  

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Prembai Patel & Ors., reported in (2005) 6 SCC 172.  In  

this  matter,  the  claim  petition  had  been  filed  by  the  

respondent/claimant 3 to  6 claiming  compensation for  

the death of one  Sunder Singh who was an employee of  

the  insured/owner   of  the  vehicle  who  died  in  the  

accident   in  course  of  his  employment  and  a  claim  

petition  was  filed   claiming   compensation  under  the  

Motor Vehicles Act.  The main question which arose for  

consideration  in  the  said  appeal  was  whether  the  

appellant/insurance company was liable to pay the entire  

amount of compensation awarded to the  claimants or its  

liability   was  restricted   to  that  which  was  prescribed  

under  the  Workmen’s  Compensation  Act.   The learned  

Judges in this matter observed  as under:

“The  insurance  policy  being in the  nature of a contract,  it  is  permissible  for  an  owner  to  take  such  a  policy  wherein the  entire liability  in respect of the death  of or  bodily injury to any such employee as is described   in  sub clauses (a) or (b) or (c)  of the proviso 1 to Section  147  (1)(b)  of  the  Motor  Vehicles  Act  may  be fastened  upon the insurance company and the insurance company  may become liable to satisfy the entire award.  However,  for  this  purpose,  the owner must take a policy of  that  particular  kind  for  which  he  may  be  required  to   pay  additional premium  and the policy  must clearly  show  that  the  liability  of  the  insurance  company  in  case  of  death  of  or  bodily  injury  in  the  aforesaid  kind  of  

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employee  is  not  restricted  to  that  provided  under  the  Workmen’s  Compensation  Act  and  is  either  more  or  unlimited depending upon the quantum of premium paid  and the terms of  the policy.”  

The  learned  Judges  in  this  ruling  held  that  this  

interpretation is in consonance with the view expressed  

by  a  Constitution  Bench     in  New India  Assurance  

Company  Ltd.  vs.   C.M. Jaya  &  Ors.,   reported  in  

(2002)  2  SCC  278  wherein  while  interpreting   the  

provisions  of  Section  95  (2)  of  the  Motor  Vehicles  Act  

1939, the Court held as under in para 10 of the report :-

“……………………The  liability  could  be   statutory  or  contractual.   A statutory liability cannot be more  than  what is required under the statute itself.  However, there  is  nothing  in  Section  95  of  the  Act    prohibiting   the  parties  from  contracting  to  create  unlimited  or  higher  liability  to cover wider risk.  In such an event, the insurer  is bound  by the terms  of the contract  as specified  in  the policy in regard to unlimited   or higher liability as the  case may be.   In the absence of such  a term or clause in  the  policy,   pursuant   to  the  contract  of  insurance,  a  limited statutory  liability cannot be expanded  to make it  unlimited   or  higher.   If  it  is   so  done,  it  amounts  to  rewriting the statute  or the contract of insurance  which  is not permissible.”  

Several  other  authorities  were also relied upon which  

were rendered in  New India Assurance  Co.  Ltd. vs.  

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Shanti Bai  & Ors.  (1995) 2  SCC 539 and  Amrit  Lal  

Sood vs. Kaushalya Devi Thapar & Ors., (1998) 3 SCC  

744  wherein it was held that in case of  insurance policy  

not  taking  any  higher  liability  by  accepting  a  higher  

premium, the liability of the insurance company is neither  

unlimited  nor  higher  than  the  statutory  liability  fixed  

under Section 95 (2) of the Motor Vehicles Act 1939.  It  

was further laid down that it  is open to the insured to  

make  payment  of  additional  higher  premium  and  get  

higher risk covered  in respect of 3rd party also.  But in  

the absence  of any such clause in the insurance policy,  

the liability of the insurer  cannot be unlimited in respect  

of 3rd party and it is limited only to the statutory liability.  

16. The learned Judges therefore held that in case the  

owner of the vehicle  wants the  liability of the insurance  

company in respect of  death of or  bodily injury to any  

such employee as is described in clauses (a) or (b) or (c)  

of proviso (i) to Section 147  (1) (b), the same  should not  

be restricted to that under the Workmen’s Compensation  

Act  but should be more  or unlimited, but he must take  

such a policy by making payment of extra premium and  

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the policy  should also contain a clause to that  effect.  

However, where the policy  mentions  “a policy for Act  

Liability”  or “Act Liability”, the liability  of the insurance  

company  qua the employees as aforesaid would not be  

unlimited but would  be limited to that arising under the  

Workmen’s Compensation Act.   The learned Judges were,  

therefore,  pleased  to  hold  that   the   liability  of  the  

insurance  company   to  satisfy   the  award  would  be  

restricted  to  that  arising  under  the  Workmen’s  

Compensation Act and the owner of the vehicle was held  

liable  to satisfy the  remaining  portion  of the award.  

17. A perusal of the aforesaid  judgment  and order of  

this Court  thus  indicate that this Court has clearly held  

that  the  liability   to  pay  compensation  in   respect  of  

death  or  bodily  injury   to  an  employee  should  not  be  

restricted to that   under  the Workmen’s Compensation  

Act  but  should  be  more  or  unlimited.   However,  the  

determination would depend whether a policy has been  

taken by the vehicle owner by  making payment  of extra  

premium and whether  the policy also contains a clause  

to that effect.   

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18. Thus  in  so  far  as  the  view of  the  High  Court   is  

concerned to the extent that the compensation  would be  

restricted to be paid  only to the extent which is payable  

under  the  Workmen’s  Compensation  Act  by  making  a  

sweeping generalisation, the same is clearly contrary to  

the view taken by this Court even in the judgment and  

order on which reliance has been placed by the counsel  

for the respondent-insurance company as it is  sufficiently  

clear  and unambiguously  laid down which is  recorded  

hereinbefore  that  the   compensation   payable  to   the  

employee  cannot  be  restricted   merely  under  the  

Workmen’s  Compensation  Act  and it  can  be expanded  

provided the contractual document which is the policy of  

insurance  incorporates  such  clause  regarding  the  

premium to be paid taking into account the nature of the  

policy.

19. In the light of the aforesaid  legal position, it is clear  

that the High Court was not correct in holding that the  

claimant/appellant  was not entitled to any compensation  

over  and  above  the  liability  under  the  Workmen’s  

Compensation Act and hence the direction issued by the  

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High  Court  that  the  appellant/insurance  company,  

respondent herein, will be liable to pay only Rs. 32091/-  

and  the  balance  will  have  to  be   shouldered  by  the  

insured/owner of the  vehicle is fit to be struck down as  

invalid as the High Court had failed to examine the nature  

and clauses of the policy which was not produced even  

before the Tribunal.   

20. The   claimant/appellant  is  surely  entitled  to  the  

amount of compensation over and above the Workmen’s  

Compensation Act in  view of the ratio  of  the decisions  

referred to hereinbefore.    The rider   no doubt  is that  

the  statutory  liability  cannot  be  more  than  what  is  

required under the statute under Section 95 of the Motor  

Vehicles  Act  which  cannot  bind  the  parties  or  prohibit  

them  from contracting  or  creating  unlimited  or  higher  

liability to cover wider risk and the insured is  bound  by  

the terms of the contract specified in the policy in regard  

to  unlimited  or  higher  liability    as  the  case  may  be.  

Thus, it is although correct that limited statutory  liability  

cannot be extended to make it  unlimited or higher,  it is  

also manifestly  clear  that  insofar  as the entitlement of  

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the  claimant/deceased  cleaner  of  the   vehicle  is  

concerned,  the  same  cannot  be  restricted  to  the  

compensation  under  the  Workmen’s  Compensation  Act  

and is entitled to compensation even  under the Motor  

Vehicles  Act  which  will  depend  upon  the   terms  and  

conditions of the policy of insurance.   

21. From this legal position it is also equally clear that in  

the  instant  matter  insofar  as  the  entitlement  of  the  

claimant  to  the  compensation under  the  Motor  Vehicle  

Act is concerned, the right of the claimant is not affected.  

However,  the respondent/insurance company  had filed  

an appeal in the High Court contending that the order of  

the Tribunal could not be sustained in law to the extent of  

liability over and above the liability under the Workmen’s  

Compensation Act and on this point  the contention of the  

appellant/company has been accepted by the High Court  

overlooking the more important fact that the Respondent  

insurer  company  had  neither  produced  the  policy  of  

insurance before the High Court nor led any evidence to  

establish that as per terms and conditions of policy extra  

premium  had not been paid.

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22.  The question, therefore, is whether the amount of  

compensation could rightly be apportioned between the  

insurer/insurance company and the insured/owner of the  

vehicle.   However,  the   owner  of  the  vehicle  had  not  

appeared before the tribunal  but the insurance company  

allowed the matter to be proceeded before the tribunal  

and  when the  respondent/insurance company filed  an  

appeal in the High Court, the insured/owner of the vehicle  

once  again  failed  to  appear  but  the  Respondent-  

Insurance Company did not pursue for  his  appearance.  

The  High  Court,  however,  further  overlooked  that  the  

apportionment of the amount of compensation between  

the owner of  the vehicle  and the insurance company  

was an inter se dispute between insurance company and  

the  insured/owner  of  the  vehicle  and,  therefore,   the  

order due to non-appearance of the insured/owner of the  

vehicle could not have been passed to the detriment of  

the claimant as the claimant  in any case is entitled to the  

amount of compensation determined by the tribunal.  If  

the insurance company acquiesced with the situation and  

allowed the proceeding to continue even in absence of  

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the  insured/owner  of   the vehicle  who has been held  

liable to pay the amount even though the insured might  

have  been  liable  to  pay  higher  premium,  the  

consequence of the same obviously will have to be borne  

by the insurance company and the claimant cannot be  

made to suffer.  

23. Hence,   at  the  stage  of  appeal  before  the  High  

Court, we find no legal justification for the High Court to  

leave it  open to  the insurance company to  realize  the  

amount of compensation beyond  Rs.32,091/-  from the  

insured/owner  as  the  plea  of  the  respondent/insurance  

company althrough   was that the claimant  is not entitled  

to any compensation beyond  the  extent of liability under  

the  Workmen’s  Compensation  Act  and  the  

respondent/insurance  company  had  not  taken  the  

alternative plea  either before the tribunal  or  the High  

Court  that  in  case  the  claimant  is  held  entitled  to  

compensation beyond  the extent of liability under the  

Workmen’s  Compensation  Act,  the  same   was  not  

payable  as  no  extra  premium  was  paid  by  the  

insured/owner  under  the  policy  of  insurance.   The  

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insurance company had failed to raise any plea before  

the  courts  below i.e.  either  the  Motor  Accident  Claims  

Tribunal or the High Court and it did not even contend  

that  in  case   the  claimant   is  entitled   to  any  

compensation  beyond  what   was  payable  under  the  

Workmen’s  Compensation  Act,  it  is  the  insured  owner  

who was liable to pay as it  had no contractual liability  

since the  insured/owner of the vehicle had not  paid any  

extra premium.  Thus, this plea was never put to test or  

gone into by the Motor Accident Claims Tribunal since the  

insurance company neither  took this  plea nor  adduced  

any evidence to that effect so as to give a cause to the  

High Court to accept this plea of the insurance company  

straight away at the appellate stage.   

24. Consequently,  the  High  Court’s  view  impliedly  

holding that the  claimant/appellant was not entitled to  

any compensation under the Motor Vehicles Act beyond  

the entitlement under the Workmen’s Compensation Act  

so  as  to  leave  it  open  to  the  Respondent/Insurance  

Company to realise it from the owner of the vehicle at the  

belated stage of appeal before the High Court when the  

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respondent/insurance company had failed even to urge  

the  alternative  plea  regarding  non-payment  of  extra  

premium  by  the  owner  of  the  vehicle  and  had  even  

reconciled to the fact that the owner of the vehicle had  

failed to appear in spite of service of notice, is not fit to  

be sustained.   

25. At this stage, we deem it appropriate to take note of  

an  important  step  which  the  insurance  company  

generally  fail  to  take  and  that  is  related  to  non  

appearance of the owner of the vehicle in spite of service  

of  notice.   The  insurance  companies  although  contend  

before the Motor Accident Claims Tribunal  and even at  

the appeal stage that it is the owner of the vehicle which  

is liable to bear a part or the entire liability of making the  

payment of compensation to the claimant in view of the  

nature of  policy,  or  even due to invalid  licence by the  

driver of the owner of the vehicle, the insurance company  

fails  to  lead  any  evidence  to  establish  as  to  how  the  

owner and not the insurance company is liable to pay the  

compensation  and even submits  to  non appearance of  

the  owner  of  the  vehicle  whose appearance is  vital  in  

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view of inter se contest between the owner of the vehicle  

and the insurance company.  In absence of the owner of  

the vehicle, when the Motor Accident Claims Tribunal or  

the High Court leaves it open to the insurance company  

subsequently to realise the amount from the owner of the  

vehicle by instituting a fresh proceeding in view of the  

ratio  of  the case of  General Manager,  Kerala State  

Road  Transport Corporation,  Trivandrum Vs.  

Sussama Thomas, (1994) 2 SCC 176, it gives rise to a  

fresh proceeding between the owner and the insurance  

company  putting  unnecessary  burden  on  the  Motor  

Accident Claims Tribunal to try the issue all over again.  

In  fact,  if  the  insurance  company  were  to  succeed  in  

establishing  by  leading  cogent  evidence  at  the  initial  

stage itself before the Tribunal that it is the owner of the  

vehicle which is liable to pay even if the evidence is ex  

parte in nature, it would at least facilitate the issue in the  

subsequent  proceeding  when  the  insurer  initiates  

proceeding  for  realising  the  amount  from  the  

owner/insured.   But  in  absence  of  such  evidence,  the  

insurer/companies are a loser and enures advantage to  

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the  owner  who  happens  to  gain  by  choosing  not  to  

appear.   The Insurance Companies  would  fair  better  if  

they were to address this issue before the Tribunal itself  

instead of becoming wiser at the stage of appeal.  What  

is wished to be emphasized is that if the owner chooses  

not  to  appear  before  the  Tribunal  although  his  

appearance is necessary in a given case, the insurance  

company would do well instead of acquiescing with their  

absence to their detriment giving an upper edge to the  

owner at their own peril.

26. In the instant matter, we have noted that the High  

Court  although  had  granted  liberty  to  the  insurance  

company to realise the amount from the owner of  the  

vehicle, it failed to record expressly that the respondent  

insurance  company  shall  pay  the  amount  to  the  

appellant/claimant  determined  by  the  Motor  Accident  

Claims Tribunal although impliedly the High Court has not  

denied  the  amount  to  the  claimant/appellant.   But  in  

absence  of  a  categorical  direction  to  the  

respondent/insurance company to pay the entire amount  

to  the  appellant  as  determined  by  the  Motor  Accident  

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Claims  Tribunal,  the  appellant  is  bound  to  confront  

impediments  in  realizing  the  amount.   Hence,  the  

direction of the High Court is clarified to the extent by  

recording that  the respondent/insurance company shall  

pay the balance amount also beyond Rs.32,091/- along  

with interest to the Claimant expeditiously but not later  

than a period of six weeks from the date of receipt of this  

order.   

27. We are , thus,  pleased to hold that the judgment  

and order of the High Court which impliedly held that the  

employee/claimant  is  entitled  to  compensation  only  

under the Workmens’ Compensation Act and not under  

the Motor Vehicle’s Act  stands set aside and the liberty  

granted to the Respondent/Insurance Company to realise  

the  amount  from  the  owner  without  a  corresponding  

direction  to  the  Respondent/Insurance company to  pay  

the  amount  to  the  Claimant/Appellant  making  the  

appellant liable to realise it from the owner of the vehicle  

stands modified as indicated hereinbefore.  The appeal  

accordingly is  allowed but we refrain from making any  

order as to costs.  

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………………………………..J (G.S. Singhvi)

………………………………..J (Gyan Sudha Misra)

New Delhi, August 2, 2013

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