First Appeal No.936 of 1999

2nd July, 2004

Petitioner Counsel: Mr. T. S. INGALE
Respondent Counsel: Mr. RAJESH P. BEHERE

Cases Cited:
B. V. Nagaraju Vs. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, (1996)4 SCC 647 [Para 3,6]
Nagashetty Vs. United India Insurance Co. Ltd., 2001(4) ALL MR 877 (S.C.)=2001(8) SCC 56 [Para 3]

JUDGMENT

JUDGMENT :- The short question involved in this Appeal is whether the Respondent No.2 Insurance Company can be absolved of payment of compensation under the Workmen's Compensation Act, 1923 (hereinafter referred to as "the Act") on the ground that the tractor and the trailer attached to it were being used to transport bricks. According to the Insurance Company, if the tractor and the trailer which they had insured was used for transportation of bricks they were not bound to pay any compensation as there was a breach of the terms of the insurance policy.

2. The facts are not in dispute. The Appellants' son Sunil was employed by Respondent No.1 as a driver on the tractor which was insured by the Respondent No.2 Insurance Company. The deceased met with an accident while driving the tractor. Since Respondent No.1 did not pay any compensation under the Act, the Appellants filed a claim under the Act. The claim has been decided in favour of the Appellants on 22nd December, 1998. However, the Commissioner for Workmen's Compensation was of the view that the Insurance Company should be absolved of the liability of payment of compensation since there was a breach of the stipulations of the policy.

3. Mr. Ingale, learned Advocate for the Appellants, submits that this observation of the Commissioner and the findings drawn by him that the Insurance Company should be absolved of the liability is without any basis. He submits that there is no dispute that the tractor was insured and that Respondent No.1 was paying premium on the trailer attached to the tractor as well. He submits that in such a case it was not proper on the part of the Commissioner to absolve the Insurance Company. He places reliance on the case of B. V. Nagaraju Vs. Oriental Insurance Co. Ltd., Divisional Officer, Hassan, (1996)4 SCC 647 and Nagashetty Vs. United India Insurance Co. Ltd. and others, 2001(8) SCC 56 : [2001(4) ALL MR 877 (S.C.)].

4. Mr. Behere, learned Advocate for Respondent No.2 Insurance Company, has reiterated what has been submitted before the Commissioner, that there was a breach of the policy in view of the fact that the tractor and trailer attached were being used for transportation of bricks. He urges that the Commissioner having disallowed the claim against Respondent No.2 on the ground that the tractor was not being used for agricultural purposes, the Award is correct. Mr. Behere further submits that the Insurance Company is not primarily liable under the provisions of the Act and, therefore, it is Respondent No.1 who is liable to pay the compensation.

5. The basic question as to whether there has been a breach of the policy can be answered only if the clauses of the Policy are considered. On a perusal of the Policy and the cover note, I find there is nothing to suggest that the tractor or the trailer were to be used only for agricultural purposes. Therefore, the inference drawn by the Commissioner that there has been a breach of the terms of the policy because the tractor was used for transporting bricks is incorrect. The reliance placed by the Commissioner on the certificate issued by the Regional Transport Officer, Kolhapur does not advance the case of Respondent No.2 any further. This certificate merely states that the tractor which is used for agricultural purposes only does not require a permit. This certificate cannot lead to an inference that there is a breach of the insurance policy merely because of the transportation of bricks. The certificate cannot bind the contract or govern the contract between the Insurance Company and the insurer in respect of tractor and the trolley. When there is no clause at all in the policy stipulating that the tractor can be used only for agricultural purposes, the policy must cover the tractor and the trailer used for all purposes, whether agricultural or non-agricultural.

6. As held by the Apex Court in the case of Nagashetty (supra), a tractor having a trailer attached to it can also be covered by an insurance policy. The tractor does not cease to be a motor vehicle only because a trailer is attached to it and some goods are transported. It does not become a goods vehicle. If the driver has a valid driving licence, the Insurance Company is liable. In the case of B. V. Nagaraju (supra), the Apex Court has held that there is a need to read down the terms of the Insurance Policy; if there was a mere irregularity, there should not be total repudiation of the Insurance. The Apex Court, therefore, has held that the insurance policy must be read in a manner that would ensure the objects of the policy were satisfied rather than to deny indemnification unless there were some factors which contributed to the causing of the accident.

7. In the present case, it cannot be said that there is a breach since there is no clause in the policy which shows that the tractor and the trailer attached could only be used for agricultural purposes. Therefore, Respondent No.2 is jointly and severally liable with Respondent No.1 to pay the compensation together with interest awarded thereon.

8. The Appellants have also claimed penalty since the amount was not deposited immediately after it fell due. There is no dispute about the amount of compensation claimed. Neither was this amount nor was any other amount deposited by the employer or for that matter by the Insurance Company in Court. Therefore, there is no reason why the Commissioner should have denied payment of penalty. The Commissioner has merely on the basis of the fact that the claim had been submitted by the employer to the Insurance Company has held that it would not be proper to inflict any penalty. There is nothing on record to show when the claim was submitted nor is there anything to show whether the employer pursued the claim. In these circumstances, it was not proper for the Commissioner to deny the claim for penalty.

9. For the foregoing reasons, Appeal allowed. Respondent No.2 Insurance Company to pay to the Appellants and/or deposit the amount of compensation as awarded and interest thereon within eight weeks from today as admittedly these amounts have not been paid by Respondent No.1. In the event the amount is deposited, the Appellants are permitted to withdraw the same together with accrued interest. In case these amounts have already been deposited in Court, the Appellants may withdraw the same together with interest accrued. The penalty quantified at 50% of the compensation is payable by Respondent No.1 within eight weeks from today.

10. Appeal disposed of accordingly. No order as to costs.

11. Parties to act on an authenticated copy of this judgment.

Appeal allowed.