The Uttarakhand High Court has held that an insurance company cannot be fastened with liability where the terms of an insurance policy are violated with the knowledge and consent of the employer. In such circumstances, the obligation to pay compensation rests with the employer.
Justice Pankaj Purohit granted relief to the insurer while directing that compensation be paid to the family of a deceased truck driver, bringing an end to a dispute that had remained pending for 17 years.
The case arose from a claim filed under the Employees’ Compensation Act by Bhakti Ram, whose 22-year-old son Manish Kumar was employed as a truck driver with Devbhoomi Construction Private Limited.
On March 20, 2009, the truck driven by the deceased fell into a deep gorge on the Rishikesh–Srinagar road, resulting in his death. The family sought compensation on the ground that they were financially dependent on him.
The employer admitted that the accident occurred during the course of employment but contended that since the vehicle was insured, the insurer was liable to satisfy the compensation.
The insurance company argued that the deceased did not hold a valid licence to drive a heavy motor vehicle. The Commissioner found that he possessed only a light motor vehicle licence and that permitting him to drive a truck amounted to negligence on the part of the employer.
On this basis, the Commissioner absolved the insurer of liability and fastened the entire compensation on the vehicle owner.
Upholding the Commissioner’s findings, the High Court observed that where policy conditions are breached with the knowledge or permission of the employer, the insurer cannot be held responsible. Relying on precedents of the Supreme Court, the Court held that such a violation disentitles the employer from shifting the liability to the insurance company.
The Court found the determination of compensation to be legally sound and declined to interfere with it.
The compensation was assessed at ₹4,48,000. With simple interest at eight per cent for two years and nine months, the total payable amount came to ₹5,46,560.
The Court directed that the entire amount, along with accrued interest and after adjusting any sums already paid, be released immediately to the claimant, Bhakti Ram.
