An insurer not liable under the policy must pay compensation and recover it from the vehicle owner.

The appellant, employed as a hamali on the respondent-owner’s tractor-trailer, was injured when the vehicle met with an accident on 22 June 2010.

He claimed compensation under Section 22 of the Workmen’s Compensation Act, 1923, now the Employees’ Compensation Act.

The Tribunal partly allowed the claim, awarding Rs.2,48,842 with interest at 12% per annum and directing the owner to pay.

On appeal under Section 30(1), the appellant challenged the monthly wage used to calculate compensation, the age-related factor, and the Tribunal’s decision to absolve the insurer.

1. Whether the Tribunal erred in calculating compensation using monthly wages of Rs.4,500 instead of Rs.8,000 and in applying the relevant age factor under Schedule IV.

2. Whether the insurer should be directed to pay the compensation to the claimant and recover it from the tractor owner, despite being absolved of ultimate liability.

Under the Employees’ Compensation Act, compensation for the relevant disability is calculated by applying 60% of monthly wages, the applicable Schedule IV factor for the employee’s age, and the assessed percentage of loss of earning capacity.

The Court relied on the Government notification dated 31 May 2010, which it held required monthly wages to be taken as Rs.8,000 for this accident.

It also applied V. Renganathan v. Branch Manager, United India Insurance Co. Ltd., which held that, in comparable circumstances, an insurer could be directed to pay compensation to the claimant and recover it from the vehicle owner, even where the insurer was not ultimately liable.

The Court also referred to the Karnataka High Court’s decision in United India Insurance Co. Ltd. v. Narayanaswamy.

The accident occurred in 2010, and the Court held that the applicable notification required the monthly wage to be taken as Rs.8,000, rather than the Rs.4,500 used by the Tribunal.

Applying 60% of that wage, the accepted 30% disability, and the Schedule IV factor of 225.22, the Court recalculated disability compensation as Rs.3,24,317.

Adding medical expenses of Rs.66,592 produced total compensation of Rs.3,90,909, an enhancement of Rs.1,42,067.

On insurer liability, the Court applied Renganathan and Narayanaswamy to direct the insurer to pay the compensation, while preserving its right to recover the amount from the owner.

The award was modified to enhance compensation by Rs.1,42,067, with interest at 12% per annum, subject to the exclusion of interest on the enhanced amount for the 578-day delay in filing the appeal.

The insurer was directed to pay the enhanced compensation within eight weeks, with liberty to recover it from the owner.

The balance of the Tribunal’s award remained undisturbed.