No Employer-Employee Proof, No Claim: Rajasthan HC Sets Aside Workmen's Compensation Award Against Insurer

Rajasthan High Court quashes a 2008 compensation award, holding that oral testimony alone cannot establish employer-employee relationship under the Workmen's Compensation Act, 1923.

The Rajasthan High Court, Bench at Jaipur, has quashed a compensation award of Rs 3,70,632/- granted by the Commissioner, Workmen's Compensation, Sikar, to the widow-mother of a deceased bus helper. Justice Ravi Chirania, sitting singly, held that the claimant had failed to establish the foundational requirement of any claim under the Workmen's Compensation Act, 1923 — proof of an employer-employee relationship between the deceased and the bus owner and operator. Without that proof, the Commissioner's award was found to be based on self-assumption and was set aside in its entirety. The connected appeal filed by the claimant for enhancement of compensation was dismissed as a consequence.

The Accident and the Claim Before the Commissioner

Shanti Devi, widow of Late Ram Kumar Sharma and resident of Gothara Bhukrana, Tehsil and District Sikar, filed a claim petition before the learned Commissioner, Workmen's Compensation, Sikar, in case WCA/F/36/05. She stated that her son Rakesh, aged 28 years, was employed as a Khalasi (helper) on bus bearing No. RJ-23/P-3211, owned by Padam Chand Jain and operated by Jain Travels, Bajaj Road, Sikar, at a salary of Rs 4,000/- per month.

On the night of 7 May 2005, Rakesh had slept on the roof of the bus while on duty to guard it. The next morning, 8 May 2005, he was found seriously injured near the vehicle. He was taken to a hospital in Sikar and then referred to Jaipur, where he died during treatment.

The Commissioner allowed the claim by judgment dated 2 April 2008. The Insurance Company — United India Insurance Co. Ltd. — was directed to pay Rs 3,70,632/- as compensation along with Rs 2,500/- towards funeral expenses, with interest at 9% per annum from the date of the accident, i.e., 8 May 2005. The Commissioner further directed that if the amount was not deposited within 30 days, interest would run at 12% per annum. The Insurance Company, the owner Padam Chand Jain, and the operator Jain Travels were held jointly and severally liable.

Two Appeals Before the High Court

Two appeals arose from the Commissioner's judgment. S.B. Civil Miscellaneous Appeal No. 3268/2008 was filed by United India Insurance Co. Ltd. under Section 30 of the Workmen's Compensation Act, 1923, challenging the award. S.B. Civil Miscellaneous Appeal No. 2546/2008 was filed by Shanti Devi seeking enhancement of the compensation awarded.

The Insurance Company raised two substantial questions of law: first, whether the Commissioner erred in awarding interest from the date of the accident when the employer-employee relationship itself was denied; and second, whether the Commissioner misdirected itself on the evidence in holding that the deceased was employed as a Khalasi on the bus of the owner and operator.

Both the owner-respondents and the Insurance Company had denied the employment from the outset of the claim proceedings. They stated that the deceased was never employed with them and that he was admitted to hospital purely on humanitarian grounds.

The Insurance Company's Case: No Documentary Proof of Employment

Mr. Pritam Bijlani, appearing for the appellant-Insurance Company, argued that the claimant had produced no documentary proof of employment — no salary register, no attendance record, and no other document — to establish that the deceased had worked with the respondents for 10 to 12 years, as claimed. The testimony of the claimant and two other witnesses was characterised as weak and unreliable in the absence of any supporting documentation.

Counsel submitted that compensation under the Act of 1923 is payable only where an employer-employee relationship exists. Without proof of that relationship, the claim petition was not maintainable at all.

On the question of interest, Mr. Bijlani submitted that under Section 4A(3) of the Act of 1923, interest is payable only if compensation is not paid within one month from the date it fell due. Where the employer denies liability, the amount does not fall due on the date of the incident but only after the Commissioner adjudicates the liability. Since the respondents had denied employment from the beginning, any compensation — if at all payable — became due only from the date of the Commissioner's judgment, i.e., 2 April 2008. The Insurance Company had in fact deposited Rs 4,62,403/- before the Commissioner on 2 May 2008, within one month of the judgment. Counsel therefore argued that no interest was payable from the date of the accident and that the deposited amount should be refunded.

The Claimant's Response: Oral Evidence and the Hospital Visit

Mr. Amit Singh Shekhawat, appearing for the respondent-claimant, submitted that the testimonies of Shanti Devi and two witnesses — Mukund Singh and Sukhveer Singh — were sufficient to prove that the deceased was employed as a Khalasi on the bus. He also relied on the police report (Exhibit A-2), which recorded that the temple priest had informed Padam Chand Jain about the incident. Counsel argued that the act of taking the deceased to hospital was not a humanitarian gesture but an acknowledgement of liability by the owner and operator.

Counsel for respondents Nos. 2 and 3, Mr. Tanmay Dhand, maintained that the claim was false and made only to extract compensation. He submitted that admitting the deceased to hospital and informing his family were purely humanitarian acts and could not create legal liability in the absence of any employer-employee relationship. He also submitted that the claimant had made a false statement about the deceased's income and that the award of Rs 4,23,580/- was perverse and based on no evidence.

How the High Court Reasoned

Justice Chirania began by noting the scope of an appeal under Section 30 of the Act of 1923: it lies to the High Court only on a substantial question of law, not on facts. The two questions raised by the Insurance Company were found to be inter-dependent and were treated as a single question — whether, in the absence of proof of an employer-employee relationship, the claim petition was maintainable and compensation could be awarded under the Act of 1923.

The Court examined the evidence of all three witnesses: Shanti Devi (the claimant and mother of the deceased), Mukund Singh, and Sukhveer Singh. It found that none of them was able to prove the deceased's employment by documentary or other cogent evidence. Shanti Devi stated that her son had worked for 10 to 12 years with the respondents but could not give any specific detail and produced no documentary evidence of wages paid or received.

The police report (Exhibit A-2) had also drawn its conclusion on employment from the statements of these same three witnesses. The Court held that the Commissioner had relied on this circular chain of evidence without any independent documentary support.

On the act of taking the deceased to hospital, the Court held plainly that humanitarian conduct cannot be treated as a basis to assume an employer-employee relationship. The Court observed that people often extend help to those in need around them, but such acts cannot create the legal relationship of employer and employee.

The Court also noted that if the deceased had genuinely worked for 10 to 12 years with the respondents, at least one co-worker from that period should have come forward to support the claim. None did. The Court concluded that the Commissioner's finding of employment was based entirely on self-assumption, with no document to support it.

Justice Chirania held that the claimant had failed to satisfy the first and basic requirement for a claim under the Act of 1923 — proof of employment. A claim under the Act can only be filed where an employer-employee relationship exists. Both substantial questions of law were answered in favour of the Insurance Company. The Commissioner was found to have committed a grave illegality in passing the award in violation of the provisions of the Act of 1923.

Outcome

S.B. Civil Miscellaneous Appeal No. 3268/2008, filed by United India Insurance Co. Ltd., was allowed. The Commissioner's judgment dated 2 April 2008 was quashed and set aside.

On the question of the deposited amount, the Court directed that 50% of the amount lying with the Commissioner be refunded to the appellant-Insurance Company in accordance with law. The remaining 50%, which had already been disbursed to the respondent-claimant Shanti Devi in terms of an order of the High Court dated 7 October 2009, was directed to be returned by her to the appellant within 60 days from the date of the order.

S.B. Civil Miscellaneous Appeal No. 2546/2008, filed by Shanti Devi for enhancement of compensation, was dismissed as a consequence of the Insurance Company's appeal being allowed. No order as to costs was made in either appeal. All pending applications in both appeals were disposed of, and the record of the court below was directed to be sent back forthwith.