Oriental Insurance Co. Ltd. Vs. Chandra Panigrahi (Smt.) and ors. - Court Judgment

A. Pasayat, J.

1. The Oriental Insurance Company Limited (hereinafter referred to as the 'insurer') calls in question legality of an award made by the Second Motor Accidents Claims Tribunal, Southern Division, Berhampur (in short, the 'Tribunal'). A sum of Rs. 45,000/- has been awarded as compensation by the Tribunal to the legal representatives (hereinafter referred to as the 'claimants')'of one Krupasindhu Panigrahi (hereinafter referred to as the 'deceased'), who lost his life in an accident on March 28, 1983. The insurer has been directed to pay the award along with interest at the rate of 6% from the date of award till realisation, if paid within a period of three months from the date of award. A default rate of interest at the rate of 12% was stipulated in case of non-payment within the stipulated period. Interest from the date of claim was denied, as the Tribunal felt that the proceeding was prolonged on account of careless attitude of the claimants. A cross-objection has been filed by the claimants seeking for modification of the award and for a direction to pay interest from the date of claim.

2. Since the factual position as asserted by the claimants is not disputed by the contesting parties in this appeal it is not necessary to set out the same in detail. Essentially it is as follows :

On March 28, 1983 at about 10 a.m. deceased was employed as a cleaner of truck bearing No. O. R. G. 3736 belonging to Iswar Chandra Pradhan (hereinafter referred to as the 'owner'), and was travelling in the said vehicle, when it met with an accident at Taptapanighat on the Berhampur-Mohana road, due to rash and negligent driving by the driver. The vehicle first dashed against the parapet wall of a culvert, and thereafter capsized causing instantaneous death of the deceased. At the time of death deceased was aged about 45 years, and was earning Rs. 600/- per month. A claim of Rs. 75,000/- was made under Section 110-A of the Motor Vehicles Act, 1939 (in short, 'the Act'). In the proceeding before the Tribunal both the owner, and Banabasi Gouda, driver of the vehicle were impleaded. Owner filed written statement denying its liability to pay compensation. Insurer also filed a separate written statement. On evaluation of evidence adduced Tribunal came to hold that the accident took place on account of rash and negligent driving of the vehicle, the deceased was engaged as a cleaner, he was aged 45 years and was getting Rs. 600/- per month. Treating the deceased as a workman under the Workmen's Compensation Act, 1923 (hereinafter referred to as the 'Workmen's Act') entitlement of the claimants was determined at Rs. 39,909.60 and it was rounded up to Rs. 40,000/-. Additionally a sum of Rs. 5,000/- was added towards consortium, and total compensation was worked out at Rs. 45,000/-.

3. In support of the appeal, following points have been urged by learned counsel for the insurer.

(i) Quantification of compensation as done by the Tribunal is irrational. In any event, whatever be the amount of award, the liability of the insurer cannot exceed the amount payable under the Workmen's Act.

(ii) The Tribunal committed a faux pas by working out compensation on the basis of Schedule IV of Workmen's Act, which came into force with effect from July 1, 1984. The said Schedule has no application to an accident which occurred prior to July 1-1984.

(iii) Default rate of interest as stipulated by the Tribunal is contrary to a decision of this Court in The Oriental Insurance Company Limited v. Harapriya Nayak and Ors. : 1994 (I) O.L.R. 88.

In support of the cross-objection, the learned counsel has submitted that delay in disposal cannot be solely attributed to the claimants. Therefore, denial of interest from the date of claim is improper.

4. Section 95 of the Act so far as it is relevant reads as follows :--

'95. 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) x x x

(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;

(it) 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 lability 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 his 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 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,

Explanation -- For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.

(2) Subject to the proviso to Sub-section (1), a policy of insurance referred to in Sub-section, (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:--

(a) save as provided in Clause (b), the amount of liability incurred:

(b) In respect of damage to any property of a third party, a limit of rupees six thousand :

Provided that any policy of insurance issued with any limits liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.

XXX

Section 95 prescribes the liabilities that should be covered by policy to be .taken in terms of Section 94 of the Act. Section 94 requires that the vehicle must be covered by insurance policy before it can be used in a public place. Section 95 in addition to prescribing the liabilities that should be covered by policy also provides for the limit of liability of the insurer and the liabilities which are not required to be covered by the policy. It lays down the requirements which are required to be complied with by policy of insurance issued in relation to use of a particular vehicle. They are (1) the policy must specify the persons or classes of persons who are insured with respect to their liability to third parties; (2) the policy must specify the extent of liability which must extend to the extent specified in Sub-section (2); and (3) the liability which may be incurred by the specified person or classes of persons in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle insured in a public place. (See New Asiatic Insurance Co. v. Pessumal : A.I.R. 1964 S.C. 1736). The saving clause in proviso (i) of Sub-section (1) provides for compulsory insurance in favour of three classes of employees for liability arising under the Workmen's Compensation Act. They are (i) an employee driving a vehicle; (ii) conductors and ticket examiners in case of public services vehicles; and (iii) an employee carried in a goods vehicle. With the provisos and exceptions therefrom Clause (b) specifies what are the liabilities that may be incurred in respect of the death or bodily injury to a person arising out of the use of the vehicle which must be covered by insurance for due compliance with the requirement of Chapter XI. Employees other than the driver, the conductor or ticket checker of a public service vehicle and the employees carried in a goods vehicle have to be covered by insurance if they are carried as passengers for hire or reward or by reason of or in pursuance of a contract of employment. Proviso to Sub-section (1) carves out an exception in regard to liability in respect of death or bodily injury to an employee in course of his employment, or arising out of such employment other than a liability arising under Workmen's Act when such employee is either engaged in driving the vehicle or engaged in the case of a public service vehicle as a conductor of the vehicle or in examining tickets in the vehicle or being in the case of a goods vehicle carried in the vehicle. In such cases, policy need not cover the risk except to the extent the liability arises under the Workmen's Act. The Explanation to Sub-section (1) of Section 95 of the Act expressly provides for exclusion of liabilities arising otherwise than under the Workmen's Act from the purview of the 'Act policy'. This is clear from the expression 'other than' occurring in proviso (1). This means that the 'Act policy' must cover the liability which would arise under the Workmen's Act. Whatever limitations are incorporated in Sub-section (2) of Section 95, they are all subject to the proviso to the explanation in Sub-section (1). In other words, Sub-section (2) is subject to the proviso directing that the policy shall cover the liability arising under the Workmen's Act. Though option regarding choosing forum for compensation is given in Section 110-AA of the Act, the liability of the insurer is limited to that arising under the Workmen's Act in respect of death or injury to workman. It is clearly stated that the compensation may be claimed under either the Act or the Workmen's Act, but, not under both. Clause (a) to Sub-section (2) of Section 95 of the Act also clarifies the position. This clause while laying down the limit of compensation payable, says that such maximum limit shall include the liability, if any, arising under the Workmen's Act. This reference is clearly indicative of the position that the 'Act policy' shall cover the liability arising in respect of death or injury to a workman as defined in the Workmen's Act.

5. As observed by this Court in Orissa State Road Transport Corporation v. Shankar Sahu : 1989 A.C.J. 867, a claimant who is a workman or a legal represenative of a workman has choice to approach either the Commissioner under the Workmen's Act, or the Tribunal under the Act. When he approaches the Tribunal under the Act the quantum of compensation available to him would not be limited to that which would be available under the Workmen's Act. However, insurer would be liable to the extent of compensation payable under the Workmen's Act and owner would be liable to pay the balance. Similar view has been expressed by this Court in The Oriental Fire and General Insurance Company Ltd. v. Labani Sahoo : 31 (1989) O.J.D. (Civil) 166, and Oriental Insurance Co. Ltd. v. Guru Charan Soren and Anr. : A.I.R. 1991 Orissa 294.

6. The next question is the just quantum awardable. The Tribunal has held that the deceased was earning Rs. 600/- per month, and was aged about 45 years. This position is not disputed. Keeping in view the principles laid down by the Apex Court in regard to appropriate multiplier to be adopted, in The General Manager, Kerala State Road Transport Corporation, Trivandrum v. Ms. Susamma Thomas and Ors. (S.L.P. (Civil) No. 9583 of 1992 disposed of on January 6, 1993), the compensation payable to the claimants is assessed to be Rs. 30,000/-.

7. The further question is what would be the extent of liability of the insurer. It is clear from the Tribunal's order that Schedule IV to Workmen's Act has formed the basis of quantification made by it. The said schedule has undergone changes from time to time. By Workmen's Compensation (Amendment) Act, 1976 (Indian Parliament Act No. 65 of 1976) a new schedule was substituted in place of the earlier one. In the said schedule compensation for death in certain cases was indicated. Where the income is within a range of Rs. 600/- to Rs. 700/-, the amount of compensation for death was fixed at Rs. 23, 100/ -. With effect from July 1, 1984, by Act 22 of 1984 a new Schedule IV was substituted. In place of lump sum quantum of compensation in case of permanent disablement and death, age and a multiplying factor were introduced, which were to be considered along with forty percent of the monthly wages. Since the death in the instant case was prior to July 1, 1984, the schedule introduced by Act 65 of 1976 was applicable, and not the schedule introduced with effect from July 1, 1984. Therefore, the liability of the insurer is limited to Rs. 23,100/-. Liability in respect of the balance is that of the owner.

8. Coming to the cross-objection filed by the claimants, it is seen that Tribunal refused to award interest till the date of award on the ground that there was prolongation of proceeding on account of laches on the part of the claimants. I find that the claim petition was filed on September 27, 1983. The application was rejected on January 24, 1985 as the claimants did not take necessary steps. The application was restored on February 22, 1985. It was again rejected on September 27, 1985. The application to restore the petition was rejected on July 28, 1986. A petition for restoration was filed on August 13, 1986, and the application was restored on June 2, 1987. During other periods adjournments on several dates were not solely on the motion made by the claimants, and sometimes on account of Tribunal's difficulties.

9. As rightly contended by the learned counsel for the insurer, the stipulation of default rate of interest is not supportable in law. However, in my considered opinion 9% interest per annum would be appropriate. Therefore, I direct that the claimants shall be entitled to interest at the rate of 9% from the date of claim excluding the periods (i) from January 24, 1985 to February 22, 1985, and (ii) from September 22, 1985 to June 2, 1987. Out of the compensation amount and interest thereon, a sum of Rs. 20,000/- be kept in fixed deposits in a nationalised bank in the name of Srimati Chandra Panigrahi, and Rs. 2000/- each in the names of other claimants, i.e., Narasingh, Prahallad, Simanchal, Rajendra, Dibakar, and Sudarsan. The term of fixed deposits shall not be less than five years, and no loan or advance shall be permitted against the fixed deposits without leave of the Tribunal. On a motion being made before it and on being satisfied that genuine cause exists for permitting withdrawal, necessary permission may be granted by the Tribunal.

The miscellaneous appeal and the cross-objection are accordingly disposed off.