Case Number:  Civil Appeal Nos. 7220-7221 of 2011

Judges Name: Hon’ble Judges Sanjay Kishan Kaul J, Aniruddha Bose J, Krishna Murari J.

Order dated: 23.09.2020

Facts of the Case:

• The first respondent herein, met with an accident on 20.5.1999 while driving a truck owned by the appellant herein, under whom he was gainfully employed. The consequence for the first respondent was 20 per cent permanent disability. The first respondent herein filed a petition under the Workmen’s Compensation Act, 1923 (hereinafter referred to as ‘the Compensation Act’) before the Commissioner, Sadar, Bilaspur on 17.2.1999 seeking compensation of an amount of Rs.5,00,000/-, impleading the appellant and second respondent herein – the insurance company which had insured the vehicle.
• These proceedings resulted in an award by the Commissioner on 8.12.2004 granting Rs. 94,464/- for the injuries suffered and Rs.67,313/- towards medical expenses of the first respondent. The amounts awarded were to carry interest @ 9 per cent per annum from the date of filing of the application till the date of payment. The compensation amount was mulled on to the second respondent as insurer, while the interest was directed to be paid by the appellant herein.
• The parties to the proceedings all filed appeals aggrieved by different aspects of the award. An intrinsic part of the consideration by the High Court was the issue raised about the validity of the driving licence of the first respondent at the time of the accident. The driving licence was endorsed by the Superintendent of R&LA Office, Udaipur but the licence expired on 6.9.1996 and there was no endorsement for renewal thereafter. Thus, the first respondent was driving the vehicle as the driver of the appellant herein for almost three years without the licence being renewed.
• The aforesaid aspect of the non-validity of the driving licence weighed with the High Court while passing the impugned judgment dated 3.3.2009, absolving the insurance company of any liability and fastening the same upon the appellant herein on account of there being a material breach of the insurance policy.
• The High Court, after the aforesaid finding took note of Section 4 of the Compensation Act, more specifically the following aspect: “4. Amount of compensation – (1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely:-

(a) Where death results from the injury An amount equal to fifty per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or An amount of eighty thousand, whichever is more;

(b) Where permanent total disability results from the injury An amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or An amount of ninety thousand rupees, whichever is more.

Explanation I.– For the purposes of clause (a) and clause (b),” relevant factor”, in relation to a workman means the factor specified in the second column of Schedule IV against the entry in the first column of that Schedule specifying the number of years which are the same as the completed years of the age of the workman on his last birthday immediately preceding the date on which the compensation fell due.”

On consideration of the aforesaid provision, the High Court opined that there was no provision under the Compensation Act for payment of medical expenditure incurred by the claimant for treatment. The accident having taken place in the year 1999, the monthly wages stated to be Rs.4,500/-, it was found that the maximum amount of wages permissible under the Compensation Act for determining the compensation could be Rs.2,000/-. Compensation was liable to be paid within thirty (30) days of the accident and the owner could have recovered the amount from the insurer if ultimately it was established that the insurer was liable to have indemnified the insured.

The High court absolved the insurance company of any liability on account of there being a material breach of the insurance policy as the driver’s driving license had expired at the relevant time. Aggrieved by such order, Beli Ram appealed to the Supreme Court against the order passed by High Court.

Issue:

Whether in case if the driving license has expired, the insurance company is absolved of its liability?

Supreme Court held:

• The Supreme court had observed the judgments National Insurance Co. Ltd. vs Swaran Singh and Ors, (2004) 3 SCC 297 and Nirmala Kothari vs United Insurance Company Limited, (2020) 4 SCC 49 and it held that liability for compensation cannot be fastened on an insurance company when the driver of a vehicle involved in an accident does not have a valid driving license. The Supreme court observed that when an employer employs a driver, he has to take reasonable care to see that his employee gets his license renewed within time. The court held that, when the driver did not renew his license, the insurance employee cannot be held liable unless the owner proved that he had either checked the driving license or had given instructions to his driver to get his driving license renewed on expiry and dismissed the appeal.