UNITED INDIA INSURANCE CO LTD  Vs VEERBAL & ANR -Judgment by Delhi High Court

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on : 12th December, 2023
Judgment pronounced on : 30th January, 2024
+ FAO 599/2016 & CM APPL. 47257/2016 & CM APPL.
47258/2016
UNITED INDIA INSURANCE CO LTD ….. Appellant
Through: Mr. Pankaj Gupta & Ms.
Suman Bagga, Advocates
versus
VEERBAL & ANR ….. Respondents
Through: None.
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T

1. This present appeal is preferred by the Appellant/Insurance
Company in terms of Section 30 of the Employee”s Compensation
Act, 19231 assailing the impugned order dated 06.05.2016 passed by
the learned Employee”s Compensation Commissioner2, in case No.
CWC/CD/32/143 titled as �Sh. Veerbal vs. Sh. Ravi Katiyal & Anr.”,
whereby the claim for compensation filed by the claimant/respondent
No.1 was allowed and the liability to pay the compensation has been
fastened on the appellant/Insurance Company with liberty to initiate

1 EC Act
2 Commissioner
3 Claim Application

appropriate proceedings to recover the amount of compensation paid
to the employer i.e., respondent No. 2 in the instant appeal.

FACTUAL BACKGROUND:

2. Briefly stating, it was the case of the claimants that
Sh.Veerbal/claimant was employed with Respondent No.1/Sh. Ravi
Katyal as a driver on the vehicle bearing No.MH-12-CH-2855 (Tata
LP 1510 Bus) owned by respondent No.1. That on 10.01.2014, the
claimant was on his regular duty for respondent No.1 in Prime
Industries located in Sidcul, Haridwar, Uttarakhand. He was to pick up
the labourers for night-shift duty in the factory. At about 6:30 P.M.,
when the driver was boarding the bus, the loose handle of the driver”s
side door of the bus suddenly broke and he fell down from the bus
with his hip hitting the ground, as a consequence of which he
sustained grievous injuries to his hip bone. He was rushed to Cosmos
hospital in Premnagar, Moradabad, UP, where he was admitted and
undertook treatment. He finally got discharged from the hospital on
19.01.2014.
3. Respondent No.1/employer4 in his written statements stated that
the claimant/driver was employed with him on his vehicle and he met
with an accident while being posted as a driver on the said vehicle.
The Insurance Company/respondent No.2 on the other hand, disputed
the assertions of the claimants in their written statements stating that

4 Section 2(1)(e) EC Act, �employer� includes anybody of persons whether incorporated or not
and any managing agent of an employer and the legal representative of a deceased employer, and,
when the services of a2[employee] are temporarily lent or let on hire to another person by the
person with whom the 2[employee] has entered into a contract of service or apprenticeship, means-
such other person while the 2[employee] is working for him.

no cause of action took place and no injury was caused to the driver as
there was no employer�employee5 relationship. But the insurance
company admitted to the fact that the vehicle was insured with them
vide policy No. 250786/31/13/02/00000143 for the period from
27.07.2013 to 26.07.2014.

5 Section 2(dd)(c) EC Act – a person recruited as driver, helper, mechanic, cleaner or in any other
capacity in connection with a motor vehicle.

4. Based on the pleadings, the learned commissioner framed the
following issues for consideration :
i. Whether accident was caused to the applicant out of and during the
course of employment ?
ii. If so, what amount of injury compensation the applicant is entitled
to ?
iii. Relief, if any ?

PROCEEDINGS BEFORE THE COMMISSIONER AND
IMPUGNED ORDER:

5. During the course of proceedings before the commissioner, it
was admitted by respondent No.1/owner that the claimant/driver was
employed with him and he met with an accident while he was on duty.
The commissioner held that there was an employer-employee
relationship. The germane observations regarding Issue No. 1 have
been reproduced as under :

�8. The response of employer was that the injury to the
applicant was caused out of and during the course of employment.
In the written statement filed by respondent No. 1 admitted the
factum of employment and accident and injury was caused while
the applicant was on duty. He came and appeared in the court. He
gave statement and in his testimony before the court he
categorically admitted that the injury to the applicant was caused
when he was on duty. In the given situation the counsel for

applicant relied on the judgment of the Hon’ble Supreme Court in
the case titled as T. S. Shylaja vs. Oriental Insurance Co. – cited
2014 AG 480. Given the above, I am in agreement that the injury
to the applicant was caused out of and during the course of
employment. The said issue is decided in favour of the applicant
and against the respondent/s.�

6. The wage of the driver was taken at Rs. 8000/- as notified by
the Ministry of Labour, Government of India with effect from
31.05.2010 by the commissioner. Further, after taking into
consideration the claim application along with the documents of the
Medical Disablement Board and Election Identity Card, the age of the
driver was taken to be 56 years. The certificate issued by the Medical
Board, Aruna Asaf Ali hospital, New Delhi, assessed 26% physical
disability. The commissioner relying on Pratap Narain Singh Deo
vs. Srinivas Sabata and Another6 and S. Suresh vs. Oriental
Insurance Co. Ltd.7, held that there is a �loss of earning capacity in
total�. Observations of the impugned order regarding Issue Nos. 2 & 3
are as under:

6 (1976) 1 SCC 289
7 (2010) 13 SCC 777

�10. The Workman was a driver by profession and it has been
claimed that he has become totally disabled. A certificate to that
effect has been issued by the Medical Board, ArunaAsaf All Govt.
Hospital, New Delhi whereby he has been assessed 26% physically
disabled. In the medical disability certificate injury has been shown
in his lower right limb and the condition of the petitioner is not
going to improve in future. Though, his physical disablement has
been assessed partial, but as the applicant was driver by profession
and as per law laid down by the Hon’ble Supreme Court in the case
titled as -PratapNarain Singh Dev vs. SrinivasSabata -1976 ACJ
141, with the said injury applicant cannot drive a vehicle even
otherwise as has been stated in the case titled as – S. Suresh v.
Oriental Insurance Co. Ltd. (Supreme Court of India) 487 (ACJ
2010) he cannot be permitted to drive a vehicle.�

7. Based on the aforementioned observations, the commissioner
granted a compensation of Rs.6,33,360/- (Six Lakhs Thirty Three
Thousand Three Hundred Sixty Only) to the claimant along with
simple interest @12% per annum. Further, during the course of
proceedings, it was admitted by respondent No.1 and respondent No.2
that the vehicle in question was insured by the company and that the
insurance company had charged an additional premium under the EC
Act, which makes respondent No.2/insurance company liable to
indemnify respondent No.1/employer. The relevant observations of
the impugned order are reproduced below :

�11. The applicant is also entitled to simple interest @ 12% per
annum from 30 days after the accident as per Section 4A till the
date of deposit. The applicant is entitled to the injury compensation
from respondent No.l. Further, as the Respondent No. 1 has stated
that he had taken an insurance coverage and the said fact has been
admitted by respondent No. 2 stating that the vehicle was insured
with them and they had charged additional premium under the
Employees Compensation Act, 1923. In view that respondent No. 2
is liable to indemnify respondent No. 1 and they are liable to pay
whatever liability is fastened on respondent No. 1.�
�12. The respondent No. 2 is directed to deposit the above
amount of injury compensation alongwith interest with this court
within 30 days from the date of this order. However, respondent
No. 2 is given liberty to initiate proceeding to recover the said
amount from respondent No. 1. In case respondent No. 2 fails to
deposit the injury compensation within 30 days the same shall be
recovered as arrears of land revenue.�

8. Accordingly, holding Issues Nos. 2 & 3 against the respondents/
insurance company and in favour of the claimants, the claim
application was disposed of. The impugned order is assailed by the
appellant/United India Insurance primarily on the ground that there
was a breach of policy terms and conditions on the part of the

registered owner/insured and the Learned Commissioner ought to
have granted an opportunity to the insurance company to lead
evidence on this issue; and that the learned Commissioner failed to
appreciate that the copies of the relevant documents in the nature of
permit, fitness certificate & RC were not provided despite service of
notice under Order XII Rule 8 C.P.C. Further, the appellant contends
that the interest of 12% p.a. granted by the commissioner is wrong in
law. Based on the aforementioned grounds, the appellant has preferred
this appeal before this court.

ANALYSIS AND DECISION:

9. I have given my thoughtful consideration to the submissions
advanced by learned counsels for the rival parties at the Bar. I have
gone through the relevant records of this case as also the case-laws
cited at the Bar.
10. First things first, the appellant/Insurance Company is not
assailing the quantum of compensation awarded by the learned
Commissioner, Employees” Compensation. There is no challenge and,
very rightly so, to the disposition that since respondent No.1/workman
was employed as a driver, the physical disability suffered by him is
such that he has been rendered out of the reckoning or unable to get
employment as a driver, and therefore, the loss of earning capacity has
been rightly adjudicated @ 100% by the commissioner.
11. The main grievance espoused by learned counsel appearing for
the appellant/Insurance Company was with regard to the non-
submission of the copies of the relevant documents viz., permit and
fitness certificate of the offending vehicle by respondent

No.2/registered owner/insured. It is pertinent to mention here that the
written statement was filed on behalf of respondent No.2/Insurance
Company in April, 2015, and evidently, a preliminary objection was
taken vide paragraph (9) that the aforesaid documents viz. copies of
the permit, RC and fitness certificate have not been supplied by
respondent No.1/registered owner till that date.
12. It is also significant to note that RW-1/Ravi Katyal, the
registered owner of the offending vehicle, was examined in the Court
on 21.02.2016 on which date, he produced the permit as well as the
fitness certificate of the offending/insured vehicle which are marked
as Ex.R-1/1 and Ex.R-1/2 without any objection. There was no
prodding in the cross-examination of RW-1/Ravi Katyal that the said
permit and/or the fitness certificate was forged and fabricated in any
manner. There was no suggestion to witness that he was served with
any notice under Order XII Rule 8 CPC for production of such
relevant documents either.
13. On a perusal of the cross-examination conducted by the then
learned counsel for the respondent No.2/Insurance Company, rather a
case was sought to be made out that no accident had occurred and the
claimant/driver was not even on duty on the date of incident. It goes
without saying that no documents were placed on record so as to show
that any notice under Order XII Rule 8 CPC was served upon
respondent No.1/registered owner. Be that as it may, serving of such
notice in summary proceedings is inconsequential since it is evident
from the record that the information about the incident was given to
the appellant/Insurance Company soon after the incident. The claim in

this case was filed on 21.11.2014 and as pointed out above, the written
statement was filed by the appellant/Insurance Company in April,
2015 and lastly, the present appeal was filed on 24.11.2016.
14. In view of the said history of long litigation, the plea taken by
learned counsel for the appellant/Insurance Company that non-supply
of such documents has irreparably prejudiced their case is not
fathomable. It goes without saying that the appellant/Insurance
Company was well-aware about the registration number, chassis and
the engine number of the offending vehicle and exercising due
diligence, they could have easily ascertained whether or not any
permit and fitness certificate were existing. Be that as it may, even
after the cross-examination of RW-1 in the court on 21.02.2016, they
had sufficient time to verify the above said documents. A new plea has
been taken in the appeal that such documents were false and fabricated
without any further detail, which can”t be accepted.
15. In view of the above discussion, the learned Commissioner,
Employees” Compensation, adopted the right course in giving an
option to the appellant/Insurance Company to seek recovery of
amount of compensation paid with interest, by filing independent
proceedings rather than giving the Insurance Company the recovery
rights in the same proceedings. I don”t see how the decision in
National Insurance Co. Ltd. v. Swaran Singh & Ors.8, helps the
case of the appellant/Insurance Company. It was a case where the
Supreme Court was considering the issues concerning the want of a
driving license or having the driving license available for plying a

8 (2004) 3 SCC 297

different kind of vehicle other than the one which was involved in the
accident and in such circumstances, the issues were answered as
follows:

�Summary of findings
110. The summary of our findings to the various issues as
raised in these petitions is as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing
compulsory insurance of vehicles against third-party risks is a
social welfare legislation to extend relief by compensation to
victims of accidents caused by use of motor vehicles. The
provisions of compulsory insurance coverage of all vehicles are
with this paramount object and the provisions of the Act have to be
so interpreted as to effectuate the said object.
(ii) An insurer is entitled to raise a defence in a claim petition
filed under Section 163-A or Section 166 of the Motor Vehicles
Act, 1988, inter alia, in terms of Section 149(2)(a)(ii) of the said
Act.
(iii) The breach of policy condition e.g. disqualification of the
driver or invalid driving licence of the driver, as contained in sub-
section (2)(a)(ii) of Section 149, has to be proved to have been
committed by the insured for avoiding liability by the insurer. Mere
absence, fake or invalid driving licence or disqualification of the
driver for driving at the relevant time, are not in themselves
defences available to the insurer against either the insured or the
third parties. To avoid its liability towards the insured, the insurer
has to prove that the insured was guilty of negligence and failed to
exercise reasonable care in the matter of fulfilling the condition of
the policy regarding use of vehicles by a duly licensed driver or
one who was not disqualified to drive at the relevant time.
(iv) Insurance companies, however, with a view to avoid their
liability must not only establish the available defence(s) raised in
the said proceedings but must also establish �breach� on the part of
the owner of the vehicle; the burden of proof wherefor would be on
them.
(v) The court cannot lay down any criteria as to how the said
burden would be discharged, inasmuch as the same would depend
upon the facts and circumstances of each case.

(vi) Even where the insurer is able to prove breach on the part
of the insured concerning the policy condition regarding holding of
a valid licence by the driver or his qualification to drive during the
relevant period, the insurer would not be allowed to avoid its

liability towards the insured unless the said breach or breaches on
the condition of driving licence is/are so fundamental as are found
to have contributed to the cause of the accident. The Tribunals in
interpreting the policy conditions would apply �the rule of main
purpose� and the concept of �fundamental breach� to allow
defences available to the insurer under Section 149(2) of the Act.
(vii) The question, as to whether the owner has taken
reasonable care to find out as to whether the driving licence
produced by the driver (a fake one or otherwise), does not fulfil the
requirements of law or not will have to be determined in each case.
(viii) If a vehicle at the time of accident was driven by a person
having a learner’s licence, the insurance companies would be liable
to satisfy the decree.
(ix) The Claims Tribunal constituted under Section 165 read
with Section 168 is empowered to adjudicate all claims in respect
of the accidents involving death or of bodily injury or damage to
property of third party arising in use of motor vehicle. The said
power of the Tribunal is not restricted to decide the claims inter se
between claimant or claimants on one side and insured, insurer and
driver on the other. In the course of adjudicating the claim for
compensation and to decide the availability of defence or defences
to the insurer, the Tribunal has necessarily the power and
jurisdiction to decide disputes inter se between the insurer and the
insured. The decision rendered on the claims and disputes inter se
between the insurer and insured in the course of adjudication of
claim for compensation by the claimants and the award made
thereon is enforceable and executable in the same manner as
provided in Section 174 of the Act for enforcement and execution
of the award in favour of the claimants.�

16. The long and short of the aforesaid discussions is that the
appellant/Insurance Company has failed to show that there was a
fundamental breach of the terms of insurance policy on the part of
respondent No.1/registered owner/insured so as to warrant giving
them independent recovery rights. At the cost of repetition, there is
shown no fundamental breach of terms and conditions of the insurance
policy. As far as the interest is concerned, there is no hard and fast
rule that the interest should be allowed @ 9% and not @ 12%, and in
the instant matter, the Commissioner, Employees” Compensation,

rather granted a reasonable interest rate on the amount of
compensation payable after 30 days of the accident keeping in mind
the nature of injuries, agony and pain suffered by the claimant.
17. In view of the foregoing discussions, this Court finds no merit
in the present appeal. The impugned order passed by learned
Commissioner, Employees” Compensation, does not suffer from any
illegality, perversity or incorrect approach in law. The appeal is
accordingly dismissed.
18. The pending applications also stands disposed of.

DHARMESH SHARMA, J.
JANUARY 30, 2024
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