MANU/AP/1439/2013

Equivalent Citation: I(2014)ACC429(AP), 2013(5)ALD351

IN THE HIGH COURT OF ANDHRA PRADESH AT HYDERABAD

Civil Miscellaneous Appeal No. 2876 of 2002

Decided On: 12.07.2013

Appellants: K. Sarveswara Rao

Vs.
Respondent: Kakaraparthi Anjali Devi, Kakaraparthi Parameswaramma and The
Oriental Insurance Co. Ltd.

Hon'ble Judges/Coram:
P. Naveen Rao, J.

Counsels:
For Appellant/Petitioner/Plaintiff: Sri Kananda Rao

For Respondents/Defendant: Sri T.S. Rayalu, Counsel for Respondents 1 & 2 and Sri
Kota Subba Rao, Counsel for Respondent No. 3

Case Note:
Motor Vehicles - Award of compensation - Motor Vehicles Act, 1988 (the Act) -
Whether Appellant was entitled for award of compensation or not - Held,
principle that was deducible from precedents cited at bar and other precedents
was policy of insurance was a contract between insured and insurer and
obligations flowing there from depends upon terms and conditions
incorporated in policy - Unless there was express coverage to class of persons
insurer was not liable to indemnify insured - In view of principle of law
enunciated in precedents, provisions of Section 147 of the Act and terms of
insurance policy - Appeal dismissed.

JUDGMENT

P. Naveen Rao, J.

1. This appeal is filed by the owner of the passenger transport vehicle(Bus), first
Opposite Party in W.C. No. 7 of 2002, which met with an accident on 27.12.2001
aggrieved by the order of the Commissioner for Workmen's Compensation
(Commissioner of Labour) Ongole (for short the Commissioner). Parties herein are
referred to as arrayed in the W.C. No. 7 of 2002. Late K. Rama Rao was employed by
the appellant as cleaner. He was assigned the duties of cleaner on bus bearing No. AP
27 U 1949. The bus was operating between Hyderabad and Ongole. On the night of
26.12.2001, the bus was returning to Ongole from Hyderabad. At about 4.30 AM on
27.12.2001, when the bus reached Maddipadu en route to Ongole, the driver drove the
bus at high speed, hit a goods transport vehicle parked on the road side in the same
direction and collided with another goods transport vehicle coming in the opposite
direction. In the said accident cleaner received grievous injuries which resulted in his
death on the same day. Crime No. 87 of 2001 was registered in Maddipadu police
station. No compensation was paid to the dependents of the deceased.

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2. Wife and mother of the deceased instituted W.C. No. 7 of 2002 on the file of the
Commissioner for Workmen's Compensation at Ongole (for short referred to as the
Commissioner) claiming compensation of Rupees two lakhs with interest at the rate of
12% per annum. Owner of the vehicle and Oriental Insurance Company were arrayed
as first and second opposite parties respectively.

3. The Commissioner framed six issues for consideration. Insofar as this appeal is
concerned, issue no. 6 is relevant. The issue framed reads as:

who are liable to pay the compensation?

4. The Commissioner held that the deceased was a workman and the accident occurred
during the course of employment. He determined the compensation payable as Rs.
2,07,507/-.

5. As with reference to issue number 6, the Insurance Company contested the claim on
the ground that the policy issued by the company on the crime vehicle covers 35
passengers and one driver only and policy does not cover cleaner of the vehicle. It was
contended that insofar as driver is concerned, he has filed a case in W.C. 11 of 2002
and the Insurance company accepted its liability to indemnify the owner on the
compensation awarded and accordingly paid the same and thus the Insurance company
has honoured its commitment as per the policy coverage. Therefore, the Insurance
Company claimed that it is not liable to indemnify the owner of the vehicle against the
deceased workman.

6. Accepting the contention of the Insurance company, the Commissioner fixed the
liability to pay the compensation determined only on the first opposite party.

7. Challenging the said order of the Commissioner to the extent of decision given by
him on issue no. 6, this appeal is filed by the first opposite party, owner of the crime
vehicle.

8. The issue that arises for consideration is whether Commissioner erred in discharging
the 2nd respondent from the liability to indemnify the appellant on the compensation
awarded to the dependants of deceased cleaner?

9. Learned counsels for appellant and respondent insurance company have confined
their submissions on this issue only.

10. Learned counsel for the appellant Sri Anand Rao contends that in terms of the
mandate given by Section 147 of the Motor Vehicles Act, 1988 (for short the Act,
1988), there is no requirement to cover the policy of insurance to a driver of a motor
transport vehicle as coverage of the motor transport vehicle would also include, as a
matter of course driver of the vehicle. In addition to the policy of insurance to cover the
passengers, owner of the vehicle paid a premium of Rs. 15/- and this premium should
cover any other employee other than driver and conductor of the owner, which in this
case include cleaner.

11. Opposing the said submission, learned counsel for the Insurance company Sri Kota
Subba Rao contends that as per Section 147 of the Act, 1988 to cover policy for a
driver, premium must be paid to the driver also and since only Rs. 15/- was paid, driver
alone is covered. Learned counsel contends that mandate of Section 147 of the Act,
1988 being clear, it should be applied strictly, more particularly when liability is
imposed flowing out of the contract of insurance.

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12. Chapter XI of the 1988 Act covers the subject of Insurance of Motor Vehicles
against third party risks. Section 146(1) mandates that no motor vehicle can ply in
public places unless the vehicle is covered by a valid insurance policy. Such a policy
may be comprehensive or only covering third parties or liability may be limited. The
mandatory requirements of such policy have been provided in Section 147 of the Act.

13. In the case on hand, insured has taken policy of insurance covering his passenger
transport vehicle. He has paid an additional premium of Rs. 15/-. Against this entry, it
is written as "Paid driver/Conductor/Workmen No. 1" The contrasting stands of insured
and insurer flow out of this entry. The insured contends that the entry covers 'cleaner'
as it is not necessary to pay separate premium to Driver of the vehicle, whereas the
insurer contends that additional premium paid covers only driver as only one additional
premium is paid as such premium has to be paid to cover the driver. In support of such
contrasting stands, reliance is placed on Section 147 of Motor Vehicle Act by both sides.
Section 147 reads as under:

147. 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) is issued by a person who is an authorised insurer; or

(b) insures the person or classes of persons specified in the policy

to the extent specified in sub-section (2)

(c) against any liability which may be incurred by him in request

of the death of or bodily [injury to any person, including owner of
the goods or his authorised representative carried in the vehicle]
(substituted by Act 54 of 1994, Sec. 46 for "injury to any person",
w.e.f. 14-11-1994) or damage to any property of a third party
caused by or arising out of the use of the vehicle in a public place;

(d) 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 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 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

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 (d) to cover any contractual liability.

14. Section 147 provides that there must be a policy of insurance against any liability
to a third party caused by or arising out of the use of the vehicle in a public place, and
against death or bodily injury to any passenger of a public service vehicle caused by or
arising out of the use of vehicle in a public place. The proviso clarifies that the policy
shall not be required to cover an employee of the insured, exception is the policy must
cover a liability arising under the Workmen's Compensation Act, 1923 in respect of the
death or bodily injury to an employee who is engaged in driving the vehicle or who
serves as a conductor in a public service vehicle or a representative of the owner of the
goods who travels in the vehicle carrying goods if it is a goods carriage.

15. Relying on the said provisions, learned counsel for appellant submits that no
separate premium is required to be paid to cover the driver of the bus and once an
insurance policy on passenger transport vehicle is taken insurance coverage
automatically extends to driver. It is thus contended that the additional premium of Rs.
15/- paid by him covered the cleaner of the vehicle. This is controverted by the learned
counsel for insurance company relying on terms of insurance policy.

16. It is for the employer to extend coverage to other employees, such as cleaner. It he
wishes to extend the coverage to other employees, he has to pay additional premium. If
he wishes to extend additional coverage to Driver, over and above Workmen's
Compensation Act liability, he must pay additional premium. Appellant has paid
additional premium of Rs. 15/- and this covers Driver only. Conditions of policy,
extracted hereunder also makes this clear:

IMT 18 LEGAL LIABILITY TO PAID DRIVER AND/OR CONDUCTOR EMPLOYED

IN CONNECTION WITH THE OPERATION OF MOTOR VEHICLE:

In consideration of the payment of an additional premium it is

hereby understood and agreed that notwithstanding anything
contained herein to the contrary the company shall indemnify the
insured against his legal liability as 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 whilst engaged
in the service of the insured in such occupation in connection with
the motor vehicle and will in addition be responsible for all costs
and expenses incurred with its written consent.

The premium having been calculated and paid while taking

insurance of the vehicle concerned at the rate of Rs. 15/- per
driver and/or conductor.

17. In support of their respective contentions, learned counsels have relied on plethora
of decisions.

18. In National Insurance Company Limited Vs. Prembai Patel and Others
MANU/SC/0295/2005 : 2005 ACJ 1323 : AIR 2005 SC 2337, the question for
consideration was whether the appellant Insurance company was liable to pay the
entire amount of compensation awarded to the claimants or liability is restricted to that
which is prescribed under the Workmen's Compensation Act. In the said case, the policy

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in issue was an 'Act policy' with coverage for 'act liability only'. The High Court held that
the legal representations of the deceased employee approached the Motor Accidents
Claims Tribunal for payment of compensation under Section 166 of the Motor Vehicles
Act and hence, the liability of the Insurance company is not limited. The Hon'ble
Supreme Court held that the said view of the High Court is not correct holding that the
policy taken by the owner of the vehicle being an 'act liability policy' the liability of the
insurance company be restricted to that arising under the Workmen's Compensation
Act.

19. In National Insurance Company Limited VS. Md. Abdul Rashid and Another
MANU/GH/0294/2011 : 2012 ACJ 1667, wherein an employee called handyman of the
offending vehicle owner died due to a motor vehicle accident. The insurance company
opposed the liability fixed on it by the Claims Tribunal on the ground that no extra
premium was paid to cover the risk of the handyman, therefore the Insurance company
is not liable. The Gowhati High Court held that statutory liability of the Insurance
company mentioned in the first proviso to clause (I) sub clause (c) to subsection 1 of
Section 147 of the Motor Vehicles Act, shall cover the risk of employees employed by
the owner of the offending vehicle in the course of employment of the offending vehicle
and affirmed the decision of the Claims Tribunal.

20. In Oriental Insurance Company Limited Vs. Thudi Mallamma and Others
MANU/AP/0707/2000 : 2000 (6) ALT 585, the issue was what is the liability of the
Insurance Company under the Workmen's Compensation Act. The Claims Tribunal
awarded compensation of Rs. 1,00,000/- which was challenged by the Insurance
company contending that claims are not entertained for compensation under the Motor
Vehicles Act but are entertained to seek compensation as per the formulae prescribed
under the Workmen's Compensation Act. Accepting the contention of the Insurance
company, this Court held that the Insurance company is liable to indemnify the owner
of the vehicle to the extent of the liability under the Workmen's Compensation Act,
which was determined at Rs. 49,915/- with interest at 12% per annum from the date of
filing of the petition and for the rest of the amount the owner of the vehicle was made
liable.

21. In Senior Divisional Manager, New India Assurance Company Limited Vs. K. Kiran
and Another MANU/AP/0424/2006 : 2007 ACJ 1153 the issue for consideration by this
Court was even though no extra premium was paid covering the risk of the cleaner,
whether the Insurance Company is liable to indemnify the owner of the vehicle for the
compensation awarded to the cleaner in a truck sustaining injuries when the truck met
with an accident. Following the decisions in PREMBAI PATEL (cited 5 supra) and THUDI
MALLAMMA (cited 1 supra) this Court held that the Insurance company is liable but that
liability is restricted to the liability flowing under the Workmen's Compensation Act and
owner of the vehicle has to bear the balance amount of the liability.

22. In Dudekula Salabee Vs. R. Siva Sankar Reddy and Another MANU/AP/0792/2007 :
2008 (1) ALD 161; the issue for consideration by this Court was, as a policy did not
cover the liability towards driver since stipulated premium was not paid, Insurance
company is not liable to reimburse the liability determined by the Claims Tribunal. It
was contended on behalf of the Insurance Company that unless premium of Rs. 15/-
was paid, policy would not cover the liability towards the driver. This Court framed the
following issue for consideration:

a) Whether it is necessary for the owner of a vehicle to pay any extra

premium to cover the liability towards a Driver of a vehicle.

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23. This Court at para 10 of the said judgment held that "......The liability arising under
the Workmen's Compensation Act, in respect of death or bodily injury towards a Driver
is statutory and mandatory and any basic policy would cover it. The insurer would not
be under obligation to pay any extra premium to cover the liability towards the Driver of
the vehicle". In para 12, it was further held that"......By no stretch of imagination, it can
be said that the insurer would not cover the liability towards the Driver, unless the
extra premium for covering the liability towards the owner-cum-driver is not paid.
Therefore, the contention advanced on behalf of the appellant cannot be accepted".

24. In Ramashray Singh Vs. New India Assurance Company Limited and Others
MANU/SC/0499/2003 : 2003 ACJ 1550 an employee called 'khalasi' died in a motor
accident. The Workmen Compensation Commissioner awarded compensation and fixed
the liability on the Insurance company on the ground that though there was no specific
coverage of Insurance policy on a 'khalasi', since the policy is a comprehensive policy,
the company was liable to indemnify the owner. The High Court reversed the decision of
the Commissioner and held that in the absence of any special contract between the
appellant and respondent, rights of the parties would govern by statute which did not
require the respondent to cover the liability in respect of an accident to a 'khalasi'. The
matter was carried in appeal and the Hon'ble Supreme Court held as under;

10... If the concerned employee is neither a driver nor conductor nor

examiner of tickets, the insured cannot claim that the employee would come
under the description of 'any person' or 'passenger'.

12... The exclusion of this clause in the proviso to Section 147(1)(b) of the
present Act bolsters our reasoning that employees other than the three
mentioned are not covered by Section 147(1)(b).

25. It was further held that even assuming that 'Khalasi' is to be equated as Conductor,
there is need to show that appellant had paid any additional premium to cover the risk
of injury to a conductor. It is held that the insurance policy only covers the person or
classes of persons specified in the policy. It was further held that "A comprehensive
policy merely means that the loss sustained by such person/persons will be payable up
to the insured amount irrespective of the actual loss suffered".

26. United India Insurance Company Limited, Nizamabad Vs. Mohammadi Begum and
Others MANU/AP/0567/2011 : 2011 (5) ALD 693 was a case of a cleaner travelling in a
bus died in an accident. On a claim made before the Claims Tribunal, compensation was
awarded and liability was fixed on the Insurance company, rejecting the contention of
the Insurance company that non-payment of the premium for the cleaner has no
relevance, since premium was paid for 35 passengers under a comprehensive policy
and only one person died due to injuries and no other passenger died, the insurer was
made liable. The insurance policy under consideration was covering 35 passengers plus
driver and legal liability to paid driver and/or conductor and for increased third party
property damage. With reference to the personal accident to driver, conductor and
cleaner, no premium was paid.

27. In the decision of this Court in New India Assurance Company Limited Vs Suraya
Bee MANU/AP/0259/2009 : 2009 (4) ALT 760 and in DUDEKULA SALABEE case (cited 7
supra), the contention of the insurance company was accepted holding that Insurance
company could not be held liable to indemnify the owner of the vehicle for the
compensation awarded for the death of a cleaner, as policy does not cover the cleaner.

28. In New India Assurance Company Limited Vs. Lodya Shankar and Another

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MANU/AP/0728/2003 : 2004 (3) ALD 400 vehicle involved was a goods vehicle, coolies
travelling in the said vehicle suffered injuries due to accident. The Insurance policy
under issue was covering driver and the cleaner and no premium was paid to cover the
risk of other employees or coolies being carried in the vehicle. It is thus held that "it is
well known that contract of insurance is but a contract of indemnity, and so the insurer
is liable only to the extent of the liability it undertakes". It was further held that "So,
unless the owner of the vehicle pays premium to cover the risk of the coolies being
transported in his lorry, the insurer cannot be made liable for payment of the
compensation due to them from their owner".

29. This Court in Gangala Raju and Others Vs. Rayavarapu Apparao and Others
MANU/AP/0932/2010 : 2011 ACJ 463; held as under:

A perusal of the policy shows that premium has been paid only for driver of
the tractor. As the premium does not cover the labourers, respondent no. 3,
insurance company is not liable to pay compensation for the death of the
deceased, who was, allegedly, a labourer travelling in the trailer.

30. The principle that is deducible from precedents cited at the bar and other
precedents is policy of insurance is a contract between insured and insurer and
obligations flowing there from depends upon the terms and conditions incorporated in
the policy. Unless there is express coverage to class of persons insurer is not liable to
indemnify the insured. In view of the principle of law enunciated in the above
precedents, the provisions of Section 147 of the Motor Vehicle Act, 1988 and the terms
of insurance policy (EX. A4/B1), I am of the opinion that the insurance company cannot
be fastened with liability to pay compensation as the owner did not pay premium to
cover the cleaner and the deceased was a cleaner. I therefore see no error in the
decision arrived at by the Commissioner. I see no merit in the contention of the counsel
for appellant and the appeal is dismissed. Sequel to the same miscellaneous petitions, if
any stand closed. No costs.

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