1988 PLP 185 (PLC)

This revision is directed against the judgment/decree dated 5‑10‑1981 passed by the learned IVth Additional District Judge, Karachi in Civil Appeal No.306 of 1978 reversing the judgment/decree passed by the learned XVIth Civil Judge, Karachi on 10‑5‑1978.

2. The brief facts leading to the filing of the above revision are that section 10‑B of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter referred to as the Ordinance) provides that the employer shall have all the permanent employees .employed by him insured against natural death and disability and death and injury arising out of contingencies not covered by the Workmen's Compensation Act, 1923 (VIII of 1923) or the Provincial Employees' Social Security Ordinance, 1965. It also provides that in case of failure on the part of employer, he shall be liable. It appears that in pursuance of the above statutory obligations the present applicant obtained an insurance policy effective w.e.f. 20th June, 1972 from Messrs Habib Insurance Company Limited (life business). It seems that one of the applicant's permanent workman Ali Gohar expired on 27‑6‑1972. The applicant lodged a claim for the payment of the Group Insurance amount, namely, Rs.12,000 with the respondent which is the successor of Messrs Habib Insurance Company Ltd. in respect of life business after nationalisation on 19th March, 1972. The above demand was resisted by the respondent and, therefore, the applicant filed Suit No.1083 of 1974 for the recovery Of the above sum of Rs. 12,

000. The above suit was resisted by the respondent. On the basis of the pleadings of the parties, five issues were framed by the learned trim Court. The applicant examined P.W. Muhammad Iqbal Qureshi, their sales officer, whereas the respondent examined D.W.1 Norman Fernandes of the Group Insurance Department. A large number of documents were produced, namely, the correspondence relating to the Group Insurance Policy and the correspondence relating to the claim. The learned Civil Judge after hearing the parties by her judgment/decree dated 10‑5‑1978 decreed the suit. The respondent being aggrieved by the above judgment/ decree filed aforesaid Civil Appeal No.306 of 1978, which was allowed and as observed hereinabove, the judgment/decree of the learned trial Court was set aside. The applicant being aggrieved by the above judgment/decree has filed the present revision.

3. In support of the above revision Mr. Shaikh Haider, learned counsel for the applicant has urged as under:‑ (i) That since the Group Insurance Policy in question was obtained in terms of section 10‑B of the Standing Orders Ordinance and as Ali Gohar was a permanent employee on the day when the above policy was issued, the respondents were obliged to pay the above amount of Rs.12,000; and that the learned appellate Court had erred in reversing the judgment/decree of the learned trial Court; (ii) That a term of the policy in conflict with the above provisions of section 10‑B of the Standing Orders Ordinance cannot be enforced or relied upon by the respondent. (iii) That factually the learned appellate Court has placed reliance wrongly on para with the caption "employees insured" as the instant case was governed by the preceding para under the caption "eligibility"; (iv) That since the object of section 10‑B of the Standing Order Ordinance is to provide benefit to the legal heirs of a deceased permanent employee, such construction should be placed to the above provision of law and to the insurance policy ‑as to advance the above object.

4. On the other hand Mr. Ibrahim Pfishori, learned counsel for the respondent has submitted as follows: (i) That the rights and obligations inter se between the applicant and the respondent are to be governed by the policy. (ii) That the fact that Ali Gohar is not covered by the policy would not absolve the applicant from their statutory liability under the above section 10‑B of the Standing Orders Ordinance. (iii) That the learned appellate Court has rightly placed reliance on the para with the caption "employees insured".

5. In order to appreciate the above contentions of the learned counsel for the parties, it may be pertinent to quote here in below section 10‑B of the Standing Order Ordinance which reads as follows: "10‑B. Compulsory Group Insurance.‑(1) The employer shall have all the permanent workmen employed by him insured against natural death and disability and death and injury arising out of contingencies not covered by the Workmen's Compensation Act, 1923 (VIII of 1923), or the Provincial Employees Social Security Ordinance, 1965 (W. P. Ordinance No. X of 1965). (2) The employer shall in all cases be responsible for the payment of the amount of premia and for all administrative arrangements whether carried out by himself or through an insurance company. (3) The amount for which each workman shall be insured shall not be less than the amount of compensation specified in Schedule IV to the Workmen's Compensation Act, 1923 (VIII of 1923). (4) Where the employer fails to have a permanent workman employed by him insured in the manner laid down in clauses (1),(2) and (3) and such workman suffers death or injury arising out of contingencies mentioned in clause (1) the employer shall pay, in the case of death, to the heirs of such workman; or in the case of injury to the workman, such sum of money as would have been payable by the insurance company had such workman been insured. (5) All claims of a workman or his heirs for recovery of money under clause (4) shall be settled in the same manner as is provided for the determination and recovery of compensation under the Workmen's Compensation Act, 1923 (VIII of 1923)."

6. A perusal of the above, quoted section indicates that it obliges an employer to get his permanent workmen insured against the natural death and disability and death and injury arising out of contingencies not covered by the Workmen's Compensation Act, 1923 or by the Provincial Employees' Social Security Ordinance, 1965. It also obliges the employer to pay the premium in respect of the Group Insurance and to make all administrative arrangements. It further provided that the amount for which each workman shall be insured shall not be less than the amount of compensation specified in Schedule I V to the Workmen's Compensation Act, 1923. It may be noticed that it also provided that in case the employer fails to have a permanent workman employed by him insured in the manner provided therein, he renders himself personally liable for the risk which is intended to be governed by the above section. It also provides that all the claims of workman or his heirs for recovery of money under clause (iv) are to be settled in the same manner as provided for the determination and the recovery of compensation under the Workmen's Compensation Act, 1923. The above section does not make any distinction as to the commencement of the liability in relation to a permanent employee. In other words, it does not provide that the Group Insurance will not be effective in relation to the permanent workmen who were not on active duty.

7. Adverting to the first submission of the learned counsel for the parties it may be observed that it is an admitted position that Ali Gohar was a permanent employee of the applicant on the date when the above policy was obtained and was to commence. It also seems to be an admitted position that the applicant had obtained the policy in terms of section 10‑B of the Standing Orders Ordinance, and the name of Ali Gohar was included in the list of the permanent employees furnished by the applicant to the respondents for covering the risk. In this regard reference may be made to Ext. 6 which is a letter of M/s. Habib Insurance Company Ltd. life business dated 12th June, 1972 the para 1 of which reads as follows:‑‑ "M/s. Central Mechanical Engineering Co. Ltd, Karachi. Dear Sirs, 12th June, 1972. Re: Compulsory Group Insurance. Thank you for sending us the list of your employees to be covered under compulsory group insurance vide Section 10‑B of the Labour Laws (Amendment) Ordinance, 1972. We shall be pleased to provide the necessary coverage in conformity with the Schedule IV of the Workmen's Compensation Act. All active permanent monthly paid employees of your organization of 18 years of age and over, but who have not attained the age of 60 years, of either sex are entitled to be covered under the scheme. Please note that your 13 employees who are 60 years have not been included in the scheme. The total sum assured for 214 eligible employees whose particulars have been received, calculated according to the new Labour Laws is as follows: Sum assured for death risk Rs. 23,23,000 Sum assured for personal accident Rs. 31,61,000 Total sum assured Rs. 54,84,000 A perusal of the above‑quoted para indicate that the respondent had issued the policy in terms of section 10‑B as amended by Amending Ordinance of 1972 and covered the risk of 214 employees and charged, the premium in respect thereof. The list of the employees is also B produced and the name of Ali Gohar was shown at page 7 at serial No.13. It is, therefore, evident that the policy covered him. However, the respondent has repudiated their liability on the basis of the aforesaid clause (iv) caption "employees insured". It may be pertinent to reproduce the two relevant clauses of the above policy which reads as follows: "ELIGIBILITY The term employee or workman shall be deemed to refer to any regular full time, permanent Employees of the Policy‑holder who is regularly working in an established job or position in a territory designated by the policy‑holder and accepted by the Insurer to be covered under the provisions of the Group Policy. For the purpose of determining eligibility, any person employed by the policy‑holder to do any skilled or unskilled, manual or clerical labour for hire or reward, who has been engaged on work of permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months in the same or another occupation with the policy‑holder including breaks due to sickness, accident, leave, lock‑out, strike (not being an illegal strike or lock‑out) or involuntary closure of the establishment, will be regarded as regular, full time and permanent employee. The classes of the employees eligible for insurance under this Policy are as set forth below; All employees drawing salary upto Rs.500 per month in the service of the policy‑holder on the effective date of this policy shall be eligible on such date, provided they have not reached their sixtieth birthday. Subsequent new employees who have not reached their sixtieth birthday shall be eligible on the date coinciding with the completion of probationary period with the policy‑holder on a full time permanent basis. EMPLOYEES INSURED Each employee eligible for insurance under this policy shall become insured on the date he becomes eligible, provided that, in any instance when an employee is not actively at work on full time on the date he would become insured in accordance with the above provisions, the commencement of the employees insurance shall be deferred until return to active work on full time."

9. It has been held by the learned appellate Court that in view of the above‑quoted clause under the caption "employees insured" the policy did not cover Ali Gohar as he was on sick leave on 16th June, 1972 i.e. on the date when the above policy had commenced. Whereas, the case of the applicant is that the above clause governs the case of a workman who is not a permanent workman for the reason that three months probationary period has not expired and the same expired on a day when he is on sick leave.

10. A perusal of the quoted clause under the caption "eligible" indicates that the term employee or workman covers all full time permanent employees and include skilled or unskilled, manual or clerical labour for hire or reward who has been engaged on work of permanent nature likely to last more than nine months and has satisfactorily completed a probationary period of three months, in the same or another occupation with the policy‑holder and this period of three months will include breaks due to sickness, accident, leave, lock‑out, strike but not illegal strike or lock‑out. It also indicates that only those workmen are covered who draw salary upto Rs.500. Ali Gohar in the instant case was drawing Rs.228 per month. Prima facie, he is covered by the above clause. The question which requires consideration is, whether he is also covered by the above second quoted clause under caption "employees insured" which provides that eligible for insurance under the policy would become insured on the date he becomes eligible provided that in any instance when an employee is not actively at work on full time on the date he would become insured in accordance with the above provisions, the commencement of the employees insurance shall be deferred until return to active work on full time. In my view, two constructions of the above clause are possible, one which has been found favour with the learned trial Court and the other which has been found favour with the learned appellate Court. I am inclined to hold that the view taken by the learned trial Court is more in consonance with the spirit and the object of the provisions of section 10‑B of the Standing Orders Ordinance and the same should have been preferred. As pointed out hereinabove, under Section 10‑B the only requirement is that a workman should be a permanent workman. There is no requirement that he should be on the active duty on a particular date. It may again be Pointed out that the respondent has issued policy in terms of the above section 10‑B which is evident from the above‑quoted Para to Ext.6. I am of the view that after having agreed to issue the policy In terms of section 10‑B and after having charged the premium for the workmen listed, which included Ali Gohar, it was not open to the respondent to have relied upon the above clause which allegedly excluded their liability. I am also inclined to hold that the above‑quoted clause relied upon by the learned appellate Court is applicable to those workmen, who were not permanent employees on the date of the commencement of the policy and, therefore were not eligible under the above‑quoted first clause and they had become eligible after the commencement of policy because of the expiry of the requisite probationary period on a day when they were not on active duty.

11. Another aspect of the matter is that even it is to be conceded that the above‑quoted second clause excluded the case of a permanent workman who was on sick leave on the day of the commencement of the policy, in that event the above clause would be in conflict with section 10‑B of the Standing Orders Ordinance and, therefore, would not be enforceable through a Court of law.

12. Mr. Shaikh Haider in furtherance of his above submissions has referred to the following judgments: (i) Ghulam Mustafa v. Trevor A Robertson P L D 1966 Kar. 271 in which a Division Bench of the erstwhile High Court of West Pakistan while dealing with the liability under the Motor Vehicle Act, 1939, inter alia, observed that in view of the statutory amount fixed under section 95 namely, Rs.20,000 it was not open to the insurance company to have provided a lesser amount for covering the risk under the Motor Vehicles Act. (ii) E.A. Evans v. Muhammad Ashraf P L D 1964 SC

536. In the above case the Hon'ble Supreme Court while construing section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 held that the protection provided under the above provision could not have been contracted out by the tenant and such clause would be void being against public policy. (iii) Muhammad Siddique v. Sind Labour Appellate Tribunal P L D 1979 Kar. 560 in which a Division Bench of this Court while construing the provisions in question, namely, section 10‑B of the Standing Orders Ordinance held that it is being beneficial provision the rule of beneficial construction is to be applied while construing the same.

13. The view which I am inclined to take in fact is supported by the above judgments relied upon by Mr. Shaikh Haider. The object of section 10‑B seems to be to provide financial assistance inter alia, in case of natural death of a permanent workman to his legal heirs. The above object will be defeated in case an insurance company is allowed to avoid the liability on a technical ground after having issued an insurance policy in terms of section 10‑B and after having received the premium in respect of permanent workman who might be on leave.

14. Mr. Ibrahim Pishori, learned counsel for the respondent has vehemently submitted that factually the workmen are not affected by the clause in question as in any case they will get the amount from the employer in terms of the above section 10‑B even if it is to be held that the above‑quoted section excludes the liability of the respondent. The above submission over looks the fact that there may be many cases in which the employers may not be financially sound to pay even the meagre amount of Rs.12,

000. An insurance policy is obtained to ensure the payment in respect of risk covered by the insurance policy. The policy was issued to cover the risk inter alia, F of natural death of the permanent workmen employed at the relevant time by the applicant. The eventuality mentioned in the policy namely, natural death, had happened Ali Gohar expired after the commencement of the policy and, therefore, the respondent was liable to pay under the policy.

15. For the aforesaid reason, I allow the above revision and set aside the judgment/decree of the appellate Court and restore the judgment/decree of the trial Court. However, there will be no order as to costs. A.A. /C‑32/K Revision allowed.