Bombay High Court Partly Allows Insurer's Appeal in Employee's Compensation Insurance Dispute — Security Guard Not Covered by Private Contract Policy. Insurer Not Liable to Pay Compensation as Policy Covered Only Cleaners and Supervisors, and Pay and Recovery Principle Under Section 147 of Motor Vehicles Act, 1988 Not Applicable to Independent Private Insurance Contract Under Employee's Compensation Act, 1923.

Case Note & Summary

The judgment under review arose from a first appeal filed before the Bombay High Court at Aurangabad by an insurance company challenging an award of the Commissioner for Employee's Compensation, Parbhani. The dispute pertained to a claim under the Employee's Compensation Act, 1923 following the death of a security guard employed by a transporter establishment. The dependents of the deceased had originally filed proceedings against the employer and the insurer, alleging that the death occurred when an iron rod fell on the deceased while he was on duty. The Commissioner allowed the claim, directing both the employer and insurer to pay compensation of Rs.6,77,760 with interest at 12 per cent per annum. The insurer preferred the appeal contending that the employees compensation policy issued by it did not cover the risk of a security guard, as the policy schedule covered only cleaners and supervisors. After hearing the parties, the High Court framed a substantial question of law as to whether the risk of the deceased was covered under the policy, making the insurer liable jointly and severally with the employer. The insurer relied on the policy document and oral evidence of its employee to show that the categories of covered employees did not include security guards. The claimants argued that the policy's first category, which included domestic servants and attendants, could be broadly interpreted to include a security guard, and alternatively sought a pay and recovery order since the insurer had already deposited the amount. The court examined the insurance policy placed at Exhibit-31 and found that the trade description of the establishment was 'Transporter', and the policy schedule covered 23 cleaners at Rs.8,000 per month, 23 cleaners at Rs.20,000 per month, and four supervisors at Rs.15,000 per month. The pleadings and evidence affidavit confirmed that the deceased was employed as a security guard. The court held that the terms of an insurance contract, being a private contract between insurer and employer, must be strictly construed, and there was no scope to include a security guard within the restricted categories. The substantial question was answered in the negative. On the alternative claim of pay and recovery, the claimants relied on a Punjab and Haryana High Court decision and a Supreme Court decision in Baljit Kaur, but the court distinguished those cases on the ground that the principle of pay and recovery emanated from the statutory insurance cover under Section 147 of the Motor Vehicles Act, 1988, which applied to employees of vehicle owners. In the present case, however, the policy was an independent private contract and the employer was not under a statutory obligation to insure its employees. Consequently, the principle of pay and recovery could not be extended. The High Court partly allowed the appeal and modified the award, directing the employer alone to pay the compensation of Rs.6,77,760 with 12 per cent interest from the date of accident till realization within two months to the first claimant, and also held the employer liable for penalty of Rs.3,38,880 with 12 per cent interest from the date of accident till realization. The claim against the insurance company was dismissed, and the amount deposited by the insurer was ordered to be refunded after eight weeks.

Headnote

Issue of Consideration

Final Decision

First Appeal partly allowed. The judgment and award dated 18.12.2023 was modified: respondent no.6 employer Inderjit Singh s/o Baljit Singh Bal shall pay compensation of Rs.6,77,760 with 12% interest per annum from date of accident till realization within two months to respondent no.1 Kuntabai; respondent no.6 also liable to pay penalty of Rs.3,38,880 with 12% interest from date of accident till realization. Claim against insurer New India Assurance Company Limited dismissed; amount deposited by insurer to be refunded after eight weeks.

Law Points