J.B. Mehta, J.
1. The insurance company in the present petition challenges the order of the authority under the Workmen's Compensation Act determining compensation amount of Rs. 9800/- as payable to respondent No. 1 the driver and making that amount payable both by respondent No. 2 the owner of the motor vehicle in question as well as by the petitioner insurance company. Mr. Shah rightly did not challenge the relevant findings of fact which could never be characterised as perverse. The driver's pay was Rs. 125/- per month and the accident which took place on October 26, 1965 was found to have arisen out of and in the course of his employment. Mr. Shah also did not challenge the compensation amount which was fixed on the basis of the workman's injury in question. The only point which Mr. Shah raised was that an insurance company could never be made liable to pay any compensation and the Commissioner under the Workmen's Compensation Act had no jurisdiction to pass such order against the insurance company.
2. This important question which is raised by Mr. Shah can only be resolved by considering the scheme of the Workmen's Compensation Act, 1923, hereinafter referred to as 'the Act' and of the Motor Vehicles Act, 1939, where Chapter VIII has been introduced providing for insurance of motor vehicles against third party risk. It is true that when the 1923 Act enacted workmen's compensation scheme, there was no provision for any statutory insurance of the employer. That is why in that Act a workman is given a right to proceed against his employer, even though liability is an absolute liability and not fault based liability which is fastened on the employer, when the accident is arising out of and in the course of the employment. Section 3(1) has enacted that if such personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of that chapter. Section 3(5) further enacts that nothing herein contained shall be deemed to confer any right to compensation on a workman in respect of any injury if he has instituted in a Civil Court a suit for damages in respect of the injury against the employer or any other person, and no suit for damages shall be maintainable by a workman in any Court of law in respect of any injury:
(a) if he has instituted a claim to compensation in respect of the injury before a commissioner, or
(b) if an agreement has been come to between the workman and his employer providing for the payment of compensation in respect of the injury in accordance with the provisions of the Act,
Section 12 provides for cases where contract has been given for work which is ordinarily part of the trade or business of the principal employer. In such cases the principal employer having been made liable to pay compensation under the Act he is entitled to be indemnified by the contractor who was the immediate employer, and that is why if the question arises as to the right to and amount of any such indemnity, in default of an agreement, it is required to be settled by the Commissioner under Section 12(2). Section 13 provides for remedies of employer against a stranger, if a workman has recovered compensation in respect of any injury caused under circumstances creating a legal liability of some person other than the person by whom the compensation was paid to pay damages in respect thereof. Section 14 which is material provides as under:
14(1). Insolvency of employer:Where any employer has entered into a contract with any insurers in respect of any liability under this Act to any workman, then in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or if the employer is a company, in the event of company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in any law for the time being in force, relating to insolvency or the winding up of companies, be transferred to and vest in the workman, and upon any such transfer the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer, so however, that the insurers shall not be under any greater liability to the workman than they would have been under to the employer.
Section 19(1) provides as under:
(1) If any question arises in any proceedings under the Act as to the liability of any person to pay compensation (including any question as to whether a person injured is or is not a workman) or as to the amount or duration of compensation (including any question as to the nature or extent of disablement), the question shall, in default of agreement be settled by a Commissioner.
(2) No Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under the Act.
Under Section 31 the Commissioner can recover as arrears of land revenue any amount payable by any person under the Act.
3. From the aforesaid scheme it is clear that the Workmen's Compensation Scheme provides for an absolute liability of the employer in case of accidents arising out of and in the course of the employment of the workman. The workman under Section 3(5) has an alternative remedy to proceed in a Civil Court by way of negligence action or to proceed under the Act for recovering statutory compensation on the basis of absolute liability of the employer. Section 3(5) creates an embargo and no suit for damages shall be maintainable by a workman in a Court of law in respect of any injury if he had instituted a claim to compensator in respect of the injury before a Commissioner. That is why Section 19 creates the Commissioner as the sole authority to determine this absolute liability of the employer under the Act, and to enforce that liability incurred under the Act and Civil Court's jurisdiction is excluded in respect of this absolute liability of the employer.
4. Mr. Shah argued that Civil Court's jurisdiction is excluded by Section 19 and, therefore, that exclusion must be strictly construed. Mr. Shah also argued that it is only when the liability of the employer, which is absolute liability under the workman's compensation scheme has got to be determined, that the Commissioner is conferred with that jurisdiction and Civil Court's jurisdiction is excluded. If however a question arises as to the liability of any other person in this connection whether by way of indemnity or otherwise, the Commissioner's jurisdiction has not been created under the Act, and the Civil Court's jurisdiction is not excluded. Mr. Shah in this connection vehemently relied upon the fact that in 1923 when the Act was enacted the Legislature would never have any idea that the employee would be seeking remedy against an insurance company and that the insurance company would have its liability determined by the Commissioner. In this connection Section 19(1) must be properly read. Section 19(1) is wide enough to confer jurisdiction on the Commissioner to determine a question arising in any proceeding under the Act as to the liability of any person to pay compensation. It is not restricted only to determination of liability of employer to pay compensation. Of course, the liability is an absolute liability under the Workmen's Compensation Scheme which has to be determined by the Commissioner. But this liability may be of any person. Therefore, even persons who may have to pay indemnity or who are by a legislative fiction treated as in the same position as an employer would have their absolute liability determined only by the Commissioner and to that extent jurisdiction of the Civil Court under Section 19(2) shall be excluded. Such deeming fiction may arise under the Act or even by any subsequent Act. That would be only extending the jurisdiction of the Commissioner. This would not be because of filling up of any lacuna in the law by the Court, The Court would be only giving effect to the avowed intention of the legislation which has conferred so wide a jurisdiction on the Commissioner and has constituted him the sole authority to determine the question of absolute liability in accident cases when the accident arose out of and in the course of an employment of the workman. In case of a motor vehicle accident such a deeming fiction may arise because of the subsequent legislative scheme. Once the Parliament has legislated on this subject and has introduced statutory fiction in this Act, the Court can never lag behind the legislature by refusing to give effect to this statutory fiction so far as the 1923 Act is concerned. We earlier pointed out Sections 12, 13 and 14 where liability of persons other than the employer could be determined. In case of a on tractor who was the immediate employer, if the work was ordinarily part of the trade or business of the principal employer, it was the principal employer who would have to pay compensation under Section 12(1), and he could claim an indemnity which would be determined by the Commissioner under sec; 12(2). Section 13 also provides for an indemnity being determined when the employer has been made to pay compensation in respect of an injury caused under circumstances creating legal liability of some other person than the principal employer in question. Section 14 made provision in case of an insolvency of an employer by giving worker the right to proceed against the insurance company in respect of the liability ensured by the insurance company. Therefore, even though the insurance company may have entered into a contract with the employer, by reason of Section 14, the contract was given a statutory effect creating right in the workman of proceeding against the insurance company, and this liability can be determined by the Commissioner under the Act.
5. If, therefore, a compulsory statutory insurance even in respect of the employee risk has now been statutorily covered by the statutory insurance scheme by Chapter VIII, and the insurance company has in respect of such statutory insurance to satisfy the judgment obtained against the insured employer as if it were a judgment debtor as enacted in Section 96(1), that fiction would surely enable the Commissioner under the Workmen's Compensation Act to determine the question as to the liability of the insurance company to pay compensation as if it were the judgment debtor in the order determining this absolute liability by the Commissioner.
6. That is why we must now consider this statutory change introduced by Chapter VIII of the Motor Vehicles Act. Before the amendment made in 1956, the third party risk was really the road insurance risk and the employee risk was only voluntary unless notification was issued. After 19-56 amendment, Section 95(1) proviso has enacted that a policy shall be required to cover liability arising under the 1923 Act in respect of death or bodily injury of certain employees, which in proviso (1) Clause (a) in terms covers the driver of the vehicle. The other clauses of the proviso covers other employees like the conductor, ticket examiner, and persons carried in goods vehicle. In cases of all these employees who are specified in the proviso, this statutory policy is required to be taken under Section 94 as per the requirement and limitation laid down in Section 95. Not only the road insurance risk is covered but the employee risk is covered which would arise under the Act. There is further passenger risk which is provided in the second proviso. Therefore, in all such 'cases where a policy is statutorily required under Section 96 without which no person could use a vehicle in a public place under Section 94, the statutory insurance is not merely the road insurance where accident takes place to third parties and the risk is covered, but there is also a statutory insurance coverage so far as employee's risk under the Act arises in respect of specified employees, and even risk is covered in specified cases in respect of passengers carried in the vehicles, of course, this risk is as per the limitations laid down in Section 95(2). Section 95(5) which is material for our purpose, provides as under:
(5) Notwithstanding anything contained in any law, a person issuing a policy of insurance under (his section shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that persons or those classes of persons.
The non-obstaute clause is very material as it has been enacted on the same lines as in the English law to get over the difficulties which existed under the Insurance Act and by the law of contract, as was ably pointed out by Goddard J. In First Appeal No. 258 of 1967 (Jivanbhai Keshavbhai Pandya v. Yogendra Kuberram), decided on November 24/25, 1971, by the Division Bench consisting of myself and S.N. Patel J., I had exhaustively considered this; question in the light of two decisions of Goddard J. in Tattersall v. Drysdale 1935 (2) K.B. 174, and, Peters v. General Accident & Life Assurance Corporation Ltd. 1937 (4) A.E.R. 628. The English Road Traffic Act, 1930 and 1934 provided two separate provisions as in the case of Sections 95 and 96 of our Act. One was Section 10 under which it was necessary for the plaintiff to say that he has got judgment against the insured person because unless he got judgment against the insured person, he could not use the provisions of Road Traffic Act to enforce his rights. There was a second provision which started with a non-obstante clause 'notwithstanding anything in any enactment'. Goddard J. therefore pointed out that the effect of the non-obstante clause was to alter the law, in spite of the provisions of the general insurance or the Contract Act, by getting over the two difficulties which were existing as to the insurable interest and as to the absence of the name in the policy other than that of the assured. The effect of the non-obstante clause was that the insurers were to indemnify every one whom they have said that they would indemnify, in respect of the liability they have indicated. The Act was aimed at the protection of the public by providing that there should be a body of insurers behind every driver of a car. The driver's extension clause of this nature was common and universal. Parliament having known this fact, the Parliament must have enacted that if insurers say that they undertake the insurance of the person driving with the assured's permission, statutory effect should be given to their undertaking. Goddard J. also drew support from the Words Used in the section 'person Or classes of persons'. Therefore, Section 95(5) in our Act introduces this non-obstante clause as interpreted by us in the earlier decision to get over the difficulty in the general insurance law or the law of contract Or in any other law and the insurance company could no longer urge that it is not bound to indemnify the 'person or classes of persons' Specified in the policy in respect of any liability which policy purports to cover in the case of that person or those classes of persons. Our Legislature has also created Section 96 laying down the duty of the insurer to satisfy the judgment against the person insured hi third party risk. Section 96(1) provides that if after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy of Section 95(1) being a liability covered by the terms of the policy is obtained against any person insured by the policy, then, notwithstanding that the insurer may fee entitled to avoid or cancel of may have avoided or cancelled the policy, the insurer shall subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sure not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue ' of any enactment relating to interest on judgments. Section 96(2) provides that no sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceeding in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceeding is given shall be entitled to be made a party thereto and to defend the action on any of the grounds specified therein. Section 96(6) provides that no insurer to whom the notice referred to in Sub-section (2) or Sub-section (2A) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in Sub-section (1) or Sub-section (2A) otherwise than in the manner provided for in sub-section. Section 96 is therefore enacted in the widest terms laying down statutory duty of the insurer to satisfy the judgment obtained against the person insured. If therefore the statutory policy is there under Sections 94 and 95 of the Motor Vehicles Act which has not only undertaken the road insurance risk but also limited employer's liability risk under the Workmen's Compensation Act, in view of this compulsory scheme, the insurer would be bound to satisfy that judgment in respect of even this absolute liability under the Workmen's Compensation Act. What is material under Section 96(1) is the nature of the judgment obtained against the insurer that it must be judgment in respect of any liability which is required to be covered by a policy under Section 95(1)(b). The statutory requirement is not only of the Road Insurance risk. The statutory requirement is also of the employee risk arising out of the employer's liability under the Act or even of the passenger's risk. It may be that the liability under the Act may not be the negligence or fault based its liability but absolute liability, but that liability is statutory required to be insured by the policy under Section 95(1) in respect of such an employee like the driver. Therefore, Section 96(1) provides that in respect of such driver, the insurer would be liable to satisfy the judgment even in respect of the liability under the Workmen's Compensation Act to the extent provided therein and for that purpose Section 96(1) has enacted a statutory fiction that insurance company is to be treated as if it were a judgment debtor. No doubt the safeguard is also created for the benefit of the insurance company under Section 96(2) that before any such sum is payable by the insurer in respect of such judgment under the Workmen's Compensation Act, the insurer would have to be given a notice through the authority so that it can escape liability on the specified grounds. That is why Section 96(2) uses the term 'Court' in general and Section 96(1) uses the term 'judgment'. These two terms are applicable according to the nature of the liability and the nature of the forum. If it is the absolute liability under the Workmen's Compensation scheme, the judgment would be of the Commissioner; if it is fault based liability on the ground of negligence action, the judgment would be of the Motor Claims Tribunal created under the Motor Vehicles Act; or if no such Tribunal is created, it would be the Civil Court. Therefore, whichever may be the Court or authority which determined the liability of the insured in such Motor Vehicles accident, if the judgment is in respect of such liability which is required to be covered by the policy under Section 95(1), that judgment must be satisfied by the insurance company. In such a case Section 96(2) provides machinery as to how that authority which passes such a judgment against the insurer would permit the insurance company to escape from the liability. Therefore, it is obvious that Section 96(1), (2) and (6) ought to be read by the express mandate of the Parliament even into the Workmen's Compensation Scheme as the statutory insurance policy is required under Section 95(1)(b) in respect of certain employees as regards the liability arising under the Act of 1923, in respect of such motor vehicle accident. The scheme of Section 96 has been interpreted in British India General Insurance Co. Ltd. v. Capt. Itbar Singh : 1SCR168 . Their Lordships pointed out that apart from the statute the insurer had no right to be made a party to the action by the injured person against the insured, -causing the injury. Sub-section (2) of Section 96 however gives him the right to be made a party to the suit and to defend it. The right, therefore, was created by statute and its content necessarily depends on the provisions of the statute. Sub-section (2) clearly provided that an insurer made a defendant to the action was not entitled to take any defence which was not specified in it. When the grounds of defence had been specified, they could not be added to. The only manner of avoiding liability provided for in Sub-section (2) was through the defences therein mentioned. Therefore, when Sub-section (6) talked of avoiding liability in the manner provided in Sub-section (2), it necessarily referred to these defences. It could not be said that in enacting Sub-section (2) the legislature was contemplating only those defences which were based on the conditions of the policy. Their Lordships at page 1335 in terms mentioned that the statute had created a liability in the insurer to the injured person but the statute had also expressly confined the right to avoid that liability to certain grounds specified in it. It was not for the Court to add to those grounds and therefore to the statute for reasons of hardship. The insurer could reserve right under the policy to defend the action in the name of the assured and if he did so, all defences open to the assured could then be urged by him and there was no other defence claimed to be entitled to urge. Secondly, if he had been made to pay something which on the contract of the policy he was not bound to pay, he could under the proviso to Sub-section (3) and under Sub-section (4) recover it from the assured. Their Lordships in that context made the classic observation that in such a case the loss had to fall on someone and the statute had thought fit that it should be borne by the insurer. It was most equitable because the insurer, in the course of his business out of which he made profit, could arrange his business in such a way that in the net result he would never suffer loss. On the other hand, if the loss fell on the injured person it would be due to no fault of his; it would have been the loss suffered by him arising out of an incident in the happening of which he had no hand at all. After this categorical pronouncement Section 96 must be held to be statutory provision of indemnity by the insurance company to the person injured and the insurance company can escape liability only in the manner provided in Section 96(2) and in no other manner. Again in New Asiatic Assurance Co. Ltd. v. Pessumal : 7SCR867 where there was a comprehensive policy, with the permitted driver's extension clause, their Lordships in terms held that even though the company might not be statutorily liable to take such wider insurance policy, once it gave wider coverage, it became 'insurer' under Section 96(2) so far as that permitted driver Pessumal was concerned. At page 1739 their Lordships pointed that Chapter VIII made provision for insurance of the Vehicles against third party risk, i.e. its provisions ensured that third parties who suffered on account of the user of the motor vehicle would be able to get damages for injuries suffered and that their ability to get the damages would not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries. Their Lordships therefore pointed out that the provisions have to be construed in such a manner as to ensure the object of the enactment. At page 1741 their Lordships pointed out that the contract between the insured and the company might not provide for all the liabilities which the company had to undertake vis-a-vis to third parties, in view of the provisions of the Act. Once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act was not affected by any restrictive conditions in the policy. In view of this settled legal position, Sections 95(5) and 96 clearly enact a statutory indemnity for the benefit of the insured. The insurance company by statutory fiction has been made the judgment debtor even in respect of employer's liability risk undertaken in the policy required under Section 95(1)(b) There is no dispute in the present case that under Section 95(1)(b) this driver's risk had to be covered in the statutory policy. Therefore, this liability in the Workmen's Compensation Act having been undertaken by the insurance company, it was liable to satisfy the judgment. The authority had to give a notice of this proceeding under Section 96(2) to the insurance company so that it could escape liability on any of the relevant grounds. Of course, in the present case none of the relevant grounds was urged and insurance company, therefore, could not escape liability. Mr. Shah however wants to escape by arguing for the construction that even after the Parliament enacted this statutory fiction in Section 96(1) the liability is not altered so far as the Act is concerned, because such a specific amendment is not made in the Act.
7. Such amendment was never required to be specifically made in Section 19(1) of the Act because the language, as earlier pointed out, was wide enough to determine the question arising in any proceeding under that Act as to the liability of any person to pay compensation. The Civil Court's jurisdiction was in terms excluded under Section 19(2) in respect of any question required to be determined by the Commissioner or to enforce the liability incurred under the Act.
8. Mr. Shah vehemently argued that the liability in the present case has not arisen under the Act but only because of Section 96(2) of the Motor Vehicles Act. This contention is thoroughly misconceived. The liability is only the absolute liability arising under the Workmen's Compensation Act and that is the liability which can be determined only by the Commissioner under the Act. This liability can never be gone into either by the Motor Claims Tribunal or by the Civil Court, where only liability would be in a negligence action. Mr. Shah ignores the fact that Section 95(1)(b) in the first proviso has created statutory insurance even for the liability under the Act for this driver. Once the liability is one arising under the Act irrespective of the fact whether the insurance coverage flows from the provisions of the Motor Vehicles Act, the liability is accident liability which has to be determined only under the provisions of the Workmen's Compensation Act rather than by the competent authority under that Act. Therefore, it may happen that the provisions of the Act get extended by reason of the provisions of the Motor Vehicles Act because that particular category of accident has now a scheme of statutory insurance so that the employee's remedy is not made to depend on the financial capacity of his employer, but the insurance company would have the duty to satisfy such a judgment, as if it were a judgment debtor.
9. Mr. Shah in this connection vehemently relied upon the provisions of Section 110(b) of the Act which provides that in case of Motor Claims Tribunal, the Tribunal shall in its award specify the amount which shall be paid by the insurer. Mr. Shah forgets that the Claims Tribunals were created by the 1956 amendment while Sections 94 to 96 were already emoted much earlier. The expression 'Court', as we discussed earlier, in Section 96 would cover all the authorities, whether Civil Court or Motor Claims Tribunal or the Commissioner under the Workmen's Compensation Act. It may be that by way of abundant caution Section 110(b) makes clear provision requiring the Claims Tribunal to specify the amount which shall be paid by the insurer. That does not 'mean tat the authority under the Act would not be able to pass its order against the insurance company even though Section 96 covers such a case. The same result is effectively achieved by the statutory fiction created in Section 96(2) that the insurance company in such a case will be deemed as if it were a judgment debtor. Section 96(2) only provides for the procedure giving an opportunity to the insurance company to escape its liability. Mr. Shah in this connection further argued that the insurance company has a limited right of defence under Section 96(2). That is hardly relevant because in all motor accident cases, this is the position of the law, whether the liability is one under the Workmen's Compensation Act or one under the Road Traffic Insurance in a negligence action. Mr. Bhatt in this connection vehemently relied upon the decision of Asthana J. of the Allahabad High Court in Oriental Fire and General Insurance Co's case 1972 A.C.J. 127, where it was held that where the driver of a motor vehicle died in an accident, the Commissioner under the Workmen's Compensation Act had no jurisdiction to pass a decree against the insurance company. The learned Judge without considering elaborately the provisions of these two Acts merely proceeded on the footing that there was nothing in Section 96 that for the purposes of the Workmen's Compensation Act the insurer became the employer or stepped in the shoes of the employer. The learned Judge's attention was not drawn to the fact that under Section 95(1)(b) statutory insurance was required for such driver to cover the liability under the Act and Section 96(1) provided the aforesaid statutory fiction by which the insurance company was to be treated as the judgment debtor. Mr. Bhatt also relied on the decision of the Division Bench of the Jammu & Kashmir High Court in New Asiatic Insurance Co. v. Kulwanti Devi A.I.R. 1959 J. & K. 90, where the Division Bench has in terms held that under the Workmen's Compensation Act the insurance company could not be made liable. These observations are mere ipsi dixit of the learned Judges without any elaborate examination of the provisions of the Act and could not be pressed into service, especially when the whole scheme has now been explained by their Lordships of the Supreme Court. On the other hand Mr. Shelat rightly relied upon the decision of Naik J. of the Maharashtra High Court in British India General Insurance Co. Ltd. v. Sabanna Sabanna : AIR1967Bom416 , where the statutory fiction in Section 96(1) was taken into account and the learned Judge had held that the position of the insurer was that of the judgment debtor and, therefore, the question relating to the execution, discharge or satisfaction of the decree would be one falling under Section 47 of the C. P. Code. On that basis it was held that it was open to the insurance company to prefer an appeal against the order passed by the Workmen's Compensation Commissioner. This view is followed even by the High Court of Hariyana and Punjab by Mahajan J. in Oriental Fire and General Insurance Co's case, 1970 A.C.J. 401. We are in complete agreement with the ratio of these two decisions. Therefore, the commissioner in the present case was right in issuing notice to the insurance company before deciding on the liability of the insured employer. The insurance company did not offer any statutory defence and, therefore, the insurance company was made also liable for this amount payable to the injured employee. Therefore, this order of the Commissioner could never be challenged as being without jurisdiction.
10. In any event, in execution of the order against the insured employer, the Commissioner could enforce this liability against this insurance company under Section 31. Therefore, substantial justices has been done in this case as the insurance company has rightly deposited this amount before the Commissioner which liability it had statutorily undertaken in respect of this insured. As pointed by their Lordships this statutory insurance is for the benefit of this insured workman and, therefore, substantial justice has been done in the present case and even on that ground the insurance company would hardly have been able to justify any interference at the hands of this Court in the present petition.
In the result this petition fails and is dismissed. Rule is discharged with costs. Interim stay is vacated.