Liability of Insurer to Indemnify Owner for Deceased Labourer Under Paid IMT-29 Premium

On November 28, 2014, the deceased, Jagdishbhai Kanjibhai Padhiyar, was working as a labourer on a tractor-trailer owned by the appellant.

While the deceased was standing behind the vehicle, the driver reversed negligently, causing fatal injuries.

The Motor Accident Claims Tribunal (Main), Anand, in MACP No. 76/2015, awarded Rs. 7,17,900/- to the claimants.

The Tribunal applied the principle of "pay and recover," directing the insurance company (Respondent No. 2) to pay the claimants first and then recover the amount from the owner (Appellant).

The appellant challenged this specific direction, asserting that the risk was fully covered under the policy.

1. Whether the learned Tribunal erred in passing a "pay and recover" order despite the insurance company collecting additional premium to cover employees under IMT-29.

2. Whether the insurance company is solely liable to satisfy the award without a right of recovery from the owner.

The court applied the principles governing Motor Insurance contracts and the Indian Motor Tariffs (IMT).

IMT-29, which provides for the payment of additional premium to cover the legal liability of employees (such as labourers) arising out of and in the course of employment.

The court also relied on the evidentiary principle that the burden of proof lies on the insurer to establish a breach of policy terms to escape liability.

The Court examined the insurance policy (Exh. 39) and the evidence of the claimant (Exh. 23). The evidence established that the deceased was working as a labourer on the tractor-trailer at the time of the accident.

Crucially, the schedule of premium revealed that the insurance company had charged an additional premium of Rs. 50/- specifically to cover the risk of employees under IMT-29.

Since the vehicle was under a "package policy" and specific premium for employees was paid, the risk of the deceased labourer was contractually covered.

Furthermore, the Court noted that the insurance company failed to examine any witnesses or lead evidence to prove any violation of the policy's terms and conditions.

Consequently, there was no legal basis for the Tribunal to treat the case as a policy violation warranting a "pay and recover" direction.

The impugned judgment was modified to direct Respondent No. 2 (Insurance Company) to deposit the compensation amount with 9% interest within six weeks. Upon deposit, the Tribunal is directed to disburse the amount to the original claimants.

Consistent with this, the connected Civil Application for stay was disposed of as infructuous.