TMI Blog2020 (4) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... accident would be covered by IMT-5. Whether the expression employment is to be construed widely or narrowly - if widely construed, a person may be said to employed by an employer even if he is not a regular employee of the employer? - HELD THAT:- The wider meaning that has been canvassed for by the insurance company cannot possibly be given, given the language immediately before, namely, in the course of , thereby indicating that the employment can only be that of a person regularly employed by the employer. Even otherwise, assuming that there is an ambiguity or doubt, the contra proferentum Rule referred to hereinabove, must be applied, thus making it clear that such employment refers only to regular employees of the Institute, which, as we have seen hereinabove, Dr. Alpesh Gandhi was certainly not. Appeal allowed. - CIVIL APPEAL NO. 2235 OF 2020 (ARISING OUT OF SLP (CIVIL) NO. 1170 OF 2019) - - - Dated:- 15-4-2020 - ROHINTON FALI NARIMAN AND S. RAVINDRA BHAT, JJ. For the Appellant : O.P. Bhadani and Vikas Kochar, Advs. For the Respondent : S.L. Gupta, Gunjan Sharma, Ashutosh Sharma, Mata Prasad Singh, Ranjana R. Singh, Kuldeep Singh Tomar, S.S. Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent amendments of the said Act and engaged in and upon the service of the insured at the time such injury is sustained whilst mounting into dismounting from or travelling in but not driving the motor car and caused by violent accidental external and visible means which independently of any other cause shall within three calendar months of the occurrence of such injury result in: Scale of Compensation a) Death only 100% b) Total and irrecoverable loss of: i) Sight of both eyes or of the actual loss by physical separation of the two entire hands or two entire feet or of one entire hand and one entire food or of such loss of one eye and such loss of one entire hand or of one entire foot 100% ii) Use of two hands or two feet, or of one hand and one foot or of such loss of sight of one eye and such loss of use of one hand or one foot. 100% c) Total and irrecoverable loss of: i) the sight of one eye or the actual loss by physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above compensations are in addition to the Honorarium as stated at Clause II above; b. That the Patients Hospitalized under AIG's care will have to be visited by AIG for the post-operative care. IV. TIME DEVOTION AND DUTIES: That the AIG will be devoting full time to the REIN to cater to the following: i. The examination of OPD patients both in the morning and the afternoon sessions; ii. The Operations of paying as well as non-paying Patients as per the schedules fixed by the Institute Management; iii. The emergency cases of all natures; iv. Attending the routine as well as special Diagnostic and Operative Camps as finalized by the competent authority of the Institute; v. Participation in the R D activities programmed and planned by the R D Department of the Institute; vi. Presenting research papers at the National and International Medical Conferences on behalf of the R D Department of the Institute upon authorization by the competent authority of the Institute; vii. Training of junior doctors and other paramedical staff of the Institute to make them competent enough to handle the cases independently. viii. Any other assignment that mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er No. 10795 dtd. 03-04-1995 automatically becomes null and void. 5. The Appellants filed a petition Under Section 166 of the Motor Vehicles Act, 1988, being MACP No. 1326 of 1997, against the driver, the Respondent No. 3 and the Respondent No. 1, in which they claimed compensation for the death of Dr. Alpesh I. Gandhi at INR 1 crore. The petition stated that Dr. Gandhi was 28 years old at the time of his death and was earning a monthly income of INR 13,000. 6. Despite being served, the Respondent No. 2 and the Respondent No. 3 chose to remain absent before the Tribunal. The Respondent No. 1 filed its written statement where it denied the material averments made by the Appellants and, in addition, submitted that the deceased being an employee of the hospital was not covered for death or injury arising out of and in the course of his employment, thereby excluding the liability of the insurance company altogether in the case. The Tribunal framed the following issues and answered them as follows: 1. Whether the applicants prove that the deceased died due to the rash and negligent driving on the part of the driver, opponent No. 1 of the vehicle involved in the accident? 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Indian Motor Tariffs dated 01.08.1989, by which the maximum cover for policies of the kind involved in this case to third persons where the premium paid is INR 25 per person, in addition to the premium paid for the policy, the capital sum insured per person would only be INR 50,000. Thus, the liability of the Insurance Company was pegged to INR 50,000, the liability of the Respondent No. 2 and the Respondent No. 3 being for the balance amount. 9. The vexed question that arises for consideration is as to whether Dr. Alpesh Gandhi could have been said to have been in the employ of the Respondent No. 3 on the date of the accident, as a result of which the limitation of liability provision in favour of the Respondent No. 1 as set out hereinabove would kick in. 10. Shri Vikas Kochar, learned Counsel appearing on behalf of the Appellants, has taken us through the contract between Dr. Gandhi and the Respondent No. 3 and has emphasised that the contract is one for services, and that an honorarium of INR 4000 per month is paid. Further, Dr. Gandhi will not be entitled to any financial benefits as might be applicable to other regular employees so far as the leave Rules are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latter case, the master can order or require what is to be done, in the former case, he can not only order or require what is to be done, but also how it shall be done. After referring to a number of English judgments, the Court then held, giving the example of a ship's master, a chauffeur, and a reporter on the staff of a newspaper as against a ship's pilot, a taxi man and a newspaper contributor, that the test would be whether work is done as an integral part of the business of the employer, in which case it would be a contract of service, or whether it was done as an accessory to such business, in which case it would be a contract for service. Other tests that were laid down were as to whether the master had the power to select the servant, whether he paid wages or other remuneration, whether the master had the right to control the method of doing the work, and whether the master had the right to suspend or dismiss the employee. Ultimately, the true test, according to the judgment, was held to be as follows: The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractors. The court then hedged its decision by stating that it was not intended to lay down that under no circumstances can a Sattedar be considered to be a worker within the meaning of the Factories Act. Ultimately, everything depends on the terms of the contract entered into between such person and the employer. 14. In Birdhichand Sharma v. First Civil Judge (1961) 3 SCR 24, this Court found on facts that the persons employed in a bidi factory, who could work at the time they chose, on a piece-rated basis, the caveat being that if they came after mid-day they were not allowed to work, even though the factory closed at 7 PM, that such persons were workers under the Factories Act. The earlier two judgments of this Court were discussed and emphasis was laid on the fact that the persons who were employed had to work within the factory premises and had to report to work before mid-day. Further, the right of control was extended to mean that so long as there is some amount of supervision by the management, inasmuch as the management has the right to reject the bidis prepared if they do not come up to the proper standard, would indicate that such persons would be workers. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision over the details of Pandurang's work. He could not control his hours of work. He could not control his days of work. Pandurang was free to absent himself and was free to go to the factory at any time and to leave it at any time according to his will. The Appellant could not insist on any particular minimum quantity of bidis to be turned out per day. He could not control the time spent by Pandurang on the rolling of a bidi or a number of bidis. The work of rolling bidis may be a simple work and may require no particular supervision and direction during the process of manufacture. But there is nothing on record to show that any such direction could be given. xxx xxx xxx It is true, as contended for the State, that persons engaged to roll bidis on job work basis could be workers, but only such persons would be workers who work regularly at the factory and are paid for the work turned out during their regular employment on the basis of the work done. Piece-rate workers can be workers within the definition of 'worker' in the Act, but they must be regular workers and not workers who come and work according to their sweet will. It is also true, as urged for the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith and that they assumed no responsibility for the bidi workers who had to look to the intermediary for what was payable to them for rolling the bidis. The earlier judgments of this Court were referred to. After applying the tests laid down in the said judgments, this Court found: There is in our opinion little doubt that this system has been evolved to avoid Regulations under the Factories Act. Further there is also no doubt from whatever terms of agreement are available on the record that the so-called independent contractors have really no independence at all. As the appeal court has pointed out they are impecunious persons who could hardly afford to have factories of their own. Some of them are even ex-employees of the Appellants. The contract is practically one-sided in that the proprietor can at his choice supply the raw materials or refuse to do so, the so-called contractor having no right to insist upon the supply of raw materials to him. The so-called independent contractor is even bound not to employ more than nine persons in his so-called factory. The sale of raw materials to the so-called independent contractor and resale by him of the manufactured bidis is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the worker and the nature of the work. When cloth is given for stitching to a worker after it has been cut, the worker is told how he should stitch it. If he does not stitch it according to the instruction, the employer rejects the work and he generally asks the worker to restitch the same. When the work is not done by a worker according to the instructions, generally no further work would be given to him. If a worker does not want to go for work to the shop on a day, he does not make any application for leave, nor is there any obligation on his part to inform the employer that he will not attend for work on that day. If there is no work, the employee is free to leave the shop before the shop closes. Almost all the workers work in the shop. Some workers are allowed to take cloth for stitching to their homes on certain days. But this is done always with the permission of the proprietor of the shop. The machines installed in the shop belong to the proprietor of the shop and the premises and the shop in which the work is carried on also belong to him. After referring to several judgments of this Court, the Court then referred to judgments of the English and American Courts as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t operation . xxx xxx xxx 25. In Market Investigations Ltd. v. Minister of Social Security [(1968) 3 All ER 732] the Court said: I think it is fair to say that there was at one time a school of thought according to which the extent and degree of the control which B. was entitled to exercise over A. in the performance of the work would be a decisive factor. However, it has for long been apparent that an analysis of the extent and degree of such control is not in itself decisive. 26. It is in its application to skilled and particularly professional work that control test in its traditional form has really broken down. It has been said that in interpreting Control as meaning the power to direct how the servant should do his work, the Court has been applying a concept suited to a past age. This distinction (viz., between telling a servant what to do and telling him how to do it) was based upon the social conditions of an earlier age; it assumed that the employer of labour was able to direct and instruct the labourer as to the technical methods he should use in performing his work. In a mainly agricultural society and even in the earlier stages of the Industrial Revolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though an important one [See Argent v. Minister of Social Security and Anr. (1968) 1 WLR 1749 at 1759]. Ultimately, the Court found that two important considerations clinched the issue in favour of deciding that the persons employed were employed wholly or principally in connection with the business of the shop. First and foremost, machines on which sewing took place were supplied by the proprietor of the shop. And, secondly, supervision and control in tailoring business terms would include the right to reject substandard work. These factors were held to outweigh the fact that such persons did not have to work exclusively for the owner of the shop as also that they are not obliged to work for the full day. 18. In Hussainbhai v. Alath Factory Thezhilali Union (1978) 4 SCC 257, this Court was confronted with persons who are engaged to make ropes from within a factory which manufactured ropes. What was argued before the Court was that the workmen were not the employer's workmen but only the contractor's workmen. The question that came up for consideration was whether they are workmen within the meaning of Section 2(s) of the Industrial Disputes Act. The test applied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself, an effective degree of supervision and control, so as to render a finding that such persons are employees within the meaning of Section 2 of the said Act. 21. In Indian Banks Assn. v. Workmen of Syndicate Bank (2001) 3 SCC 36, this Court after referring to Silver Jubilee (supra) found that Deposit Collectors employed by specified banks were entitled to be treated as workmen. The court held: 26. We also cannot accept the submission that the banks have no control over the Deposit Collectors. Undoubtedly, the Deposit Collectors are free to regulate their own hours of work, but that is because of the nature of the work itself. It would be impossible to fix working hours for such Deposit Collectors because they have to go to various depositors. This would have to be done at the convenience of the depositors and at such times as required by the depositors. If this is so, then no time can be fixed for such work. However, there is control inasmuch as the Deposit Collectors have to bring the collections and deposit the same in the banks by the very next day. They have then to fill in various forms, accounts, registers and passbooks. They also have to do such other clerical wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occupation. 10. No bar to carry on any avocation or occupation. Therefore, the jewel appraisers are not employees of the Bank. 23. At this stage, it is important to advert to a fairly recent judgment of the English Court of Appeal in E v. English Province of Our Lady of Charity and Anr. 2012 EWCA Civ 938. In the aforesaid case, a question arose as to whether the Roman Catholic Church would be vicariously liable in a claim brought for damages alleging that a lady, when she had been resident in a children's home operated by a Roman Catholic order of nuns, had been sexually abused by a priest appointed by the diocesan bishop. Under the sub-heading The hallmarks of the relationship of employer and employee the court referred to various earlier English judgments and the tests laid down as follows: 64. I indicated early on at para 21, vicarious liability tended to depend on the difference between employee and independent contractor. If, as I believe, it is necessary to attempt to capture the essence of what it is that makes a man an employee, I must examine those differences in more detail. Generally speaking, an employee works under the superv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave changed so control has become an unrealistic guide. It may have been more meaningful when work was done by labourers under the direction of employers who had the same or greater technical skills than their workmen. Now that one is frequently dealing with a professional person or a person of some particular skill and experience, for example a brain surgeon, there can be no question of the employer telling him how to do his work for in truth the skilled person is engaged for the very reason that he possesses skills which the employer lacks. The emphasis placed on control has thus been reduced. As Roskill J said in Argent v. Minister of Social Security [1968] 1 WLR 1749, 1758- 1759: in the earlier cases it seems to have been suggested that the most important test, if not the all-important test, was the extent of the control exercised by the employer over the servant. If one goes back to some of the cases in the first decade of this century, one sees that that was regarded almost as the conclusive test. But it is also clear that as one watches the development of the law in the first 60 years of this century and particularly the development of the law in the last 15 or 20 years i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a contract for services. If the answer is no , then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict Rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.' 68. To much the same effect is an earlier Privy Council case, Montreal v. Montreal Locomotive Works Ltd. [1947] 1 DLR 161, where Lord Wright said, at p 169: In earlier cases a single test, such as the presence or absence of control, was often relied on to determine whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonably foreseeable. 24. A conspectus of all the aforesaid judgments would show that in a society which has moved away from being a simple agrarian society to a complex modern society in the computer age, the earlier simple test of control, whether or not actually exercised, has now yielded more complex tests in order to decide complex matters which would have factors both for and against the contract being a contract of service as against a contract for service. The early 'control of the employer' test in the sense of controlling not just the work that is given but the manner in which it is to be done obviously breaks down when it comes to professionals who may be employed. A variety of cases come in between cases which are crystal clear-for example, a master in a school who is employed like other employees of the school and who gives music lessons as part of his employment, as against an independent professional piano player who gives music lessons to persons who visit her premises. Equally, a variety of cases arise between a ship's master, a chauffeur and a staff reporter, as against a ship's pilot, a taxi driver and a contributor to a newspaper, in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a balancing act weighing all relevant factors which point in one direction as against those which point in the opposite direction to arrive at the correct conclusion on the facts of each case. 25. Given the fact that this balancing process may often not yield a clear result in hybrid situations, the context in which a finding is to be made assumes great importance. Thus, 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, as was done in Dharangadhara (supra), Birdhichand (supra), D.C. Dewan (supra), Silver Jubilee (supra), Hussainbhai (supra), Shining Tailors (supra), P.M. Patel (supra), and Indian Banks (supra). 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. 26. Looked at in this light, let us now examine the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Conduct Rules of the Institute as invoked from time to time and as applicable to regular employees of the Institute. (iv) That in the event of a proven case of indiscipline or breach of trust, the Institute reserves a right to terminate the contract at any time without giving any compensation whatsoever. 28. If the aforesaid factors are weighed in the scales, it is clear that the factors which make the contract one for service outweigh the factors which would point in the opposite direction. First and foremost, the intention of the parties is to be gathered from the terms of the contract. The terms of the contract make it clear that the contract is one for service, and that with effect from the date on which the contract begins, Dr. Gandhi shall no longer remain as a regular employee of the Institute, making it clear that his services are now no longer as a regular employee but as an independent professional. Secondly, the remuneration is described as honorarium, and consistent with the position that Dr. Gandhi is an independent professional working in the Institute in his own right, he gets a share of the spoils as has been pointed out hereinabove. Thirdly, he enters into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity or doubt. 30. This judgment has been cited with approval in United India Insurance Co. Ltd. v. Pushpalaya Printers (2004) 3 SCC 694 as follows: 6. The only point that arises for consideration is whether the word impact contained in Clause 5 of the insurance policy covers the damage caused to the building and machinery due to driving of the bulldozer on the road close to the building. It is evident from the terms of the insurance policy that the property was insured as against destruction or damage to whole or part. The Appellant Company agreed to pay towards destruction or damage to the property insured to the extent of its liability on account of various happenings. In the present case both the parties relied on Clause 5 of the insurance policy. Clause 5 is also subject to exclusions contained in the insurance policy. That a damage caused to the building or machinery on account of driving of vehicle on the road close to the building is not excluded. Clause 5 speaks of impact by any rail/road vehicle or animal. If the Appellant Company wanted to exclude any damage or destruction caused on account of driving of vehicle on the road close to the building, it could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1966) 3 SCR 500] has expressed that (AIR p. 1649, para 11) in a contract of insurance there is requirement of uberrima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem, that is, against the company in case of ambiguity or doubt. 31. Likewise, in Export Credit Guarantee Corporation of India Ltd. v. Garg Sons International (2014) 1 SCC 686, this Court held: 11. The insured cannot claim anything more than what is covered by the insurance policy. The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely. The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in mind that the Rule of contra proferentem does not apply in case of commercial contract, for the reason that a Clause in a commercial contract is bilateral and has mutually been agreed upon. (Vide Oriental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the Rule has no application. 33. In Industrial Promotion Investment Corpn. of Orissa Ltd. v. New India Assurance Co. Ltd. (2016) 15 SCC 315, this Court referred to the contra proferentum Rule as follows: 10. We proceed to deal with the submission made by the counsel for the Appellant regarding the Rule of contra proferentem. The Common Law Rule of construction verba chartarum fortius accipiuntur contra proferentem means that ambiguity in the wording of the policy is to be resolved against the party who prepared it. MacGillivray on Insurance Law [Legh-Jones, Longmore et al (Eds.), MacGillivray on Insurance Law (9th Edn., Sweet and Maxwell, London 1997) at p. 280.] deals with the Rule of contra proferentem as follows: The contra proferentem Rule of construction arises only where there is a wording employed by those drafting the Clause which leaves the court unable to decide by ordinary principles of interpretation which of two meanings is the right one. 'One must not use the Rule to create the ambiguity - one must find the ambiguity first.' The words should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cident would be covered by IMT-5. We see no reason to disturb this finding. The inapplicability of endorsement IMT-16, as additional premium had not been paid would, therefore, make no difference on the facts of this case. Section-II, entitled liability to third parties in the insurance policy dated 17.04.1997 set out hereinabove exempts the insurance company from the death of a person carried in a motor car where such death arises out of and in the course of the employment of such person by the insurer. The question that arises before us is as to whether the expression employment is to be construed widely or narrowly - if widely construed, a person may be said to employed by an employer even if he is not a regular employee of the employer. However, the wider meaning that has been canvassed for by the insurance company cannot possibly be given, given the language immediately before, namely, in the course of , thereby indicating that the employment can only be that of a person regularly employed by the employer. Even otherwise, assuming that there is an ambiguity or doubt, the contra proferentum Rule referred to hereinabove, must be applied, thus making it clear that such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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