The Supreme court of India on Wednesday upheld the decision of MACT which made the Insurance company liable for the compensation to the claimant and set aside the order issued by Gujarat high court in the matter of Motor Vehicle Accident happened 20 years ago.
The case was heard by the division bench comprising of Justice Rohinton Fali Nariman & Justice S. Ravindra Bhat who observed that by applying the contra proferentum rule held that “employment” refers only to regular employees of the Institute and not the one who are irregular or resigned.
Brief facts of the case are that on 9th of June, 1997 the husband of the appellant who was a surgeon, was travelling in a mini-bus that was owned by the RotaryEye Institute, Navsari, the second Respondent. The mini-bus had been driven with excessive speed as a result of which the driver of the mini-bus lost control and the vehicle turned turtle. The husband of Appellant was seriously injured andultimately succumbed to his injuries. It was said that the Rotary Eye Institute, Navsari had entered into a comprehensive Insurance Policy from the First Respondent“New India Assurance Company Limited” in which section 2 mentioned about“Liability to third parties”. Also, the husband of the Appellant, had enteredinto a contract for services as an Honorary Ophthalmic Surgeon at the Institute.
The Appellants then filed a petition under Section 166 of the Motor VehiclesAct, 1988, against the driver, the other Respondents Eye Institute and the Insurance company before the MACT which held that the contract was a contract for service, as a result of which the deceased could not have been held to have been in the employment of the Respondent Institute and made all the respondents jointly liable to pay the amount as calculated after considering the annual income of the deceased along with Consortium expenses and Funeral expenses with interest at 8% per annum.
Then, an appeal was preferred before the Gujarat High Court which came to the opposite conclusion, stating that since the contract was a contract of service,the Insurance Company could not be held liable except to the amount as per the Regulation 27 of the General Regulations of the Indian Motor Tariffs.
The only question before the Supreme court was that whether the deceased can be said to be employed by the Institute or has only entered into a contract for services with the Rotary Eye Institute as an independent professional.
Appellant’s counsel said that the contract between the deceased and the Institute was one for services, and that an honorarium per month was paid. Further, the deceased will not be entitled to any financial benefits as might be applicable to other regular employees so far as the leave rules are concerned, making it clear that deceased is not, therefore, a regular employee of the Rotary Eye Institute.
The counsel appearing for the respondent insurance company in agreement with the High Court Judgement said that the contract is one “of service” and not “for service”.
The Court observed that, if the context is one of a beneficial legislation being applied to weaker sections of society, the balance tilts in favour of declaring the contract to be one of service. On the other hand, where the context is that of legislation other than beneficial legislation or only in the realm of contract, and the context of that legislation or contract would point in the direction of the relationship being a contract for service then, other things being equal, the context may then tilt the balance in favour of the contract being construed to be one which is for service.
The court held that the exemptions of liability clauses in insurance contracts are to be construed in the case of ambiguity contra proferentum. It further added that as the deceased did not come within the scope of the Workmen’s Compensation Act, compensation payable due to his death in a motor accident would be covered by IMT-5, a premium paid to the insurance company by the Institute.
Thus, the Supreme Court while allowing the appeal set aside the judgment of the High Court and restore that of the Motor Accident Claims Tribunal which says that full amount should be paid by respondent Insurance Company to the Appellant.
-India Legal Bureau