(O&M)National Insurance Co.Ltd. Vs Hawa Singh.

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FAO-1094-1999 (O&M)

[216] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH [1] FAO-10 9 4-1999 (O&M) Date of D ecision : 30.04.2026

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National I nsurance Company Limited …Appellant versus Hawa Si n gh and another ….Respondents [2] FAO-60 5 -2000 (O&M) Hawa Si n gh …Appellant versus

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M/s Dee p ak Woolen Mills, Village Koha n d, Tehsil an d District Karnal and another ….Respondents

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Coram : HON’BLE MR. JUSTICE PANKAJ JAIN

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Present: Mr. Amit Jaiswal, Advocate for the appellant in FAO-1094-1999 and for r e spondent No.2 in FAO-605-2000. None for the appellant in FA O -605-2000. Mr. Rajinder Goel, Advoca t e for respondent No.1. ****

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PANKAJ JAIN, J. (ORAL)

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[1] Claimant as well as Insuranc e Company is in appeal against the order da t ed 25.03.1999 passed by the Commissioner under Workm e n’s

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Compens a tion Act, 1923.

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[2] The workman-claimant fi l ed an application before the Commiss i oner seeking compensation on account of injury suffered by h im in an acc i dent arising out of and during t he course of employment. As per the work m an, he was employed with M/ s Deepak Woolen Mills to wor k on RAJNEESH SHARMA 2026.05.08 18:37 I agree to specified portions Reg mac h ine. On 09.10.1995, while he was on duty, his right arm cam e in of this document

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FAO-1094-1999 (O&M)

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threshing machine. While putting reg, his hand was crushed up to w r ist. Medical e xperts opined that he has suff e red disability to the extent of 6 5% permane n tly. He thus sought compe n sation for the injuries and the disablem e nt suffered by him. [3] The claim was contested b y the respondents. The empl o yer filed w r itten statements denying employer-employee relations h ip. Respond e nt No.2-Insurance Company d e nied liability to pay compensa t ion pleading t hat no notice regarding the acci d ent was served upon them. [4] The Commissioner, vi d e impugned order, awar d ed compens a tion of ₹ 1,12,402/- along with interest @ 6% per annum for the period c o mmencing from 30 days afte r the date of award till the dat e of actual re a lization. [5] FAO-605-2000 is at the b ehest of the workman see k ing enhance m ent of compensation. FA O -1094-1999 is at the behest of Insuranc e Company, disputing its liabilit y to pay compensation. [6] Mr. Amit Jaiswal, counsel for the Insurance Company, has assailed t h e order passed by the Commissioner by submitting that once the employer denied employer-employee rel a tionship, the Commissioner o u ght not have allowed the application filed b y the workman. He further sub m its that as p e r Part No.2 of Schedule I ap p ended to 1923 act, loss of a hand amounts t o 60% permanent disability an d thus the Commissioner ought not have aw a rded compensation to the wor k man taking his disability as 6 5 %. He furthe r submits that the cover note w a s issued at 4:30 PM on the dat e of accident. Accident occurred at the s a me time and thus the Insurance RAJNEESH SHARMA2026.05.08 18:37 Compan y cannot be held liable to indem n ify the employer. I agree to specified portions of this document

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FAO-1094-1999 (O&M)

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[7] Per contra, Mr. Goel, wo u ld submit that once the Insur a nce Compan y accepted the premium and iss u ed cover note, Insurance Comp a ny cannot b e absolved of its liability to inde m nify the employer. [8] Counsel for the claimant re l ies upon the judgment in ‘ Pratap Narain Singh Deo versus Srinivas Sabata ’, reported as 1976 (1) SCC 2 89, to submi t that a workman having lost his right hand has been rend e red crippled for his entire life. The Com m issioner ought to have asse s sed compens a tion on the basis of functional d isability suffered by the work m an. Further s u bmits that the interest has not been awarded as per the statu t ory mandate a nd no order qua penalty has be e n passed. [9] I have heard counsel for t h e parties and have carefully g o ne through r e cords of the case.

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[10] It stands proved on record t h at the workman lost his right h a nd in a mac h ine within the factory premis e s owned by respondent-emplo y er. Pure fin d ings of fact have been record e d by the Commissioner. In t h ese circumst a nces, this Court finds that the C ommissioner has rightly recor d ed findings o f fact in favour of the workma n .

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[11] The issue with respect to a ward of compensation taking i nto consider a tion, the functional disabilit y of the workman on the basi s of permane n t disability suffered by injured workman has been authoritati v ely laid dow n by the Supreme Court in ‘ Pratap Narain Singh Deo ’s c a se, ( supra ), o bserving as under:-

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“5. The expression "tota l disablement" has been def i ned in section 2(i) (1) of the Act as f ollows:"(1) "total disablement" me a ns such disablement, whether of a temporary or permanent nature, as incapacitates a workman fo r all

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RAJNEESH SHARMA 2026.05.08 18:37 I agree to specified portions of this document

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FAO-1094-1999 (O&M)

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work which he was capable of p erforming at the time of the acci d ent resulting in such disablement." It has not been disputed befor e us that the injury was of suc h a nature as to cause perma n ent disablement to the respondent, and the question for consideration is whether the disablement inca p acitated the respondent for all w ork which he was capable of perfo r ming at the time of the accident. The Commissioner has examined t h e question and recorded his fin d ing as follows:

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" The injured workman in thi s case is carpenter by profession.. . .By loss of the left hand above the e lbow, he has evidently been rend e red unfit for the work of carpente r as the work of carpentry canno t be done by one hand only."

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This is obviously a reasonable a nd correct finding.”

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[12] The same has been further f ollowed by Supreme Court in ‘ S. Suresh v ersus Oriental Insurance Company Limited and another’ , reported a s (2010) 13 SCC 777, observin g as under:-

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“8. In our view, the rati o of the said judgment is squa r ely applicable to the facts at hand. W e are of the opinion that on acc o unt of amputation of his right leg b e low knee, he is rendered unfit for the work of a driver,which he was p erforming at the time of the acci d ent resulting in the said disablemen t . Therefore, he has lost 100% o f his earning capacity as a lorry dri v er, more so, when he is disquali f ied from even getting a driving licen c e under the Motor Vehicles Act.”

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[13] In view thereof, this Court i s of the considered opinion that the Commiss i oner erred in awarding co mp ensation by merely taking i nto consider a tion the permanent disability a s assessed by the medical experts and igno r ing the functional disabilit y . The workman, who earns his livelihoo d by physical labour having lo s t his right hand has been rend e red RAJNEESH SHARMA 100% fu n ctionally disabled. Thus, th e compensation needs to be re2026.05.08 18:37 I agree to specified portions of this document

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FAO-1094-1999 (O&M)

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calculate d as under:-

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1000 x 60 / 100 x 192.14 = 1,15,284/-

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[14] Counsel for the Insurance C ompany is not in a position to dispute t h at the cover note was issue d at 04:30 PM by the Insur a nce Compan y . Thus, the contract of insura n ce was concluded at 4:30 PM on 09.10.19 9 5. It is nobody’s case that the a ccident occurred prior thereto. T he Insuranc e Company cannot be absol v ed of its liability to pay the compens a tion to indemnify the employ e r. Reference can be made t o 5 Judges Bench Judgment in ‘ General Assurance Society Limited ve r sus Chandmull Jain and another’, report e d as 1966 SCC OnLine SC 2 08, wherein t h e Supreme Court observed as u nder:-

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A contract of insurance is a s p ecies of commercial transactions had there is a well-established co m mercialpractice to send cover n o tes even prior to the completion of a proper proposal or while the proposal is being considere d or a policy is in preparation for delivery. A cover note is a tem p orary and limited agreement. It m ay be self-contained or it may in c orporate by reference the terms and conditions of the future policy. When the cover note incorporates the policy in this manner, it do e s not have to recite the term and conditions, but merely to refer to a particular standard policy. I f the proposal is for a standard pol i cy and the cover note refers to it, the assured is taken to have ac c epted the terms of that policy. The reference to the policy and its terms and conditions may be expressed in the proposal or t h e cover note or even in the letter of acceptance including the cove r note. The incorporation of the terms and conditions of the policy m ay also arise from a combinatio n of references, in two or more do c uments passing between the par t ies. Documents like the propos a l, cover note and the policy are commercial documents and to interpret them commercial habits and

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RAJNEESH SHARMA 2026.05.08 18:37 I agree to specified portions of this document

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FAO-1094-1999 (O&M)

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practice cannot altogether be ignored. During the time the c o ver note operates, the relations o f the parties are governed by its terms and conditions, if any, but mo r e usually by the terms and condit i ons of the policy bargained for an d to be issued. When this happens the terms of the policy are incipi e nt but after the period of tempo r ary cover, the relations are govern e d only by the terms and conditio n s of the policy unless insurance i s declined in the meantime. Dela y in issuing the policy makes no d if ference. The relations even then are governed by the future poli cy if the cover notes give sufficient indication that it would be so. I n other respects there is no differ e nce between a contract of insuran c e and any other contract except t hat in a contract of insurance the r e is a requirement of uberrima fi des i.e., good faith on the part of t h e assured and the contract is like ly to be construed contra proferent e m that is against the company in c ase of ambiguity or doubt. A c o ntract is formed when there is an unqualified acceptance of t he proposal. Acceptance may be expressed in writing or it may even be implied if the insurer acc e pts the premium and retains it. In the case of the assured, a positive act on his part by which he reco g nises or seeks to enforce the p o licy amounts to an affirmation of it . This position was clearly recogn i sed by the assured himself, becau s e he wrote, close upon the expir y of the time of the cover notes, th a t either a policy should be issue d to him before that period had e x pired or the cover note extende d in time. In interpreting documen t s relating to a contract of insura n ce, the duty of the court is to inter p ret the words in which the contra c t is expressed by the parties becau s e it is not for the court to make a n ew contract, however reasonabl e , if the parties have not mad e it themselves. Looking at the pro p osal, the letter of acceptance an d the cover notes, it is clear that a contract, of insurance under the standard policy for fire and e x tended to cover flood, cyclone, e tc., had come into being.”

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[15] The Commissioner howeve r erred in awarding 6% inte r est which is i n teeth of the statutory mandat e as contemplated under Section 4A RAJNEESH SHARMA 2026.05.08 18:37I agree to specified portions of the 1 9 23 Act. Thus, workman is h e ld entitled to interest @ 12% per of this document

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FAO-1094-1999 (O&M)

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annum f o r the period commencing fro m 30 days after the accident till the date of a c tual realization.

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[16] The workman is also held entitled for penalty which shal l be 30% of t h e awarded compensation alon g with interest. The liability to p ay the penal t y along with interest shall be b o rne by the employer.

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[17] With the aforesaid modifica t ions in the order, the appeals are

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disposed off.

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[18] All pending miscellaneou s application(s), if any, st a nds disposed o ff .

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[19] Photocopy of this order be p l aced on the file of connected ca s e.

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(PANKAJ JAIN) JUDGE

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30.04.20 2 6