SUSHILABEN INDRAVADAN GANDHI & ANR. versus THE NEW INDIA ASSURANCE COMPANY LIMITED & ORS.

Citation: [2020] 9 S.C.R. 32 · Decided: 15-04-2020 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

cites 12 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
32
SUPREME COURT REPORTS
[2020] 9 S.C.R.
SUSHILABEN INDRAVADAN GANDHI & ANR.
v.
THE NEW INDIA ASSURANCE COMPANY
 LIMITED & ORS.
(Civil Appeal No. 2235 of 2020)
APRIL 15, 2020
[R. F. NARIMAN AND S. RAVINDRA BHAT, JJ.]
Motor Vehicles Act, 1988: s.166 – Comprehensive Private Car
‘B’ Policy – Fatal accident – A surgeon working in respondent no.3
hospital was travelling in a bus owned by the hospital which met
with an accident due to rash and negligent driving of the driver of
the bus – The surgeon was seriously injured and ultimately
succumbed to his injuries – Claim for compensation by his wife –
The policy contained a clause that the insurance company would
not be liable where death or injury arose out of and in the course
of employment of such person by the insured – Insurance company
denied the claim on the ground that the deceased surgeon was an
employee of the hospital, thereby excluding the liability of insurance
company – Tribunal held that the contract was a contract for service
as a result of which the deceased could not have been held to be in
the employment of respondent no.3 and insurance company was
liable – However, High Court held that since the contract was a
contract of service, the insurance company could not be held liable
– Whether the surgeon could have been said to be the employee of
respondent no.3 on the date of accident as a result of which the
limitation of liability provision in favour of insurance company would
kick in – Held: The intention of the parties is to be gathered from
the terms of the contract – The contract between the surgeon and
the hospital was for three years extendable only by mutual consent
and his remuneration was described as honorarium – The terms of
the contract was one for service, and that with effect from the date
on which the contract begins, the surgeon would no longer remain
as a regular employee of the hospital, making it clear that his services
were no longer be as a regular employee but as an independent
professional – Also, there was endorsement IMT-5 which provided
personal accidental cover to unnamed passengers other than the
insured and his paid driver or cleaner – Additional premium was
[2020] 9 S.C.R. 32
32
A
B
C
D
E
F
G
H
33
paid for endorsement IMT which would, therefore, be applicable in
the facts of this case, the deceased being one such unnamed
passenger –  High Court’s order is set aside and the order of tribunal
is restored.
Allowing the appeal, the Court
HELD: 1. The intention of the parties is to be gathered
from the terms of the contract. The terms of the contract makes
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. Thirdly, he enters
into the agreement on equal terms as the agreement is for three
years, extendable only by mutual consent of both the parties.
Fourthly, his services cannot be terminated in the usual manner
of the other regular employees of the Institute but are terminable
on either side by notice. The fact that Dr. Gandhi must devote
his entire attention to the Institute would not necessarily lead to
the conclusion that de hors all other factors the contract is one of
service. Equally important is the fact that it is necessary to state
Dr. Gandhi will be governed by the Conduct Rules and by the
Leave Rules of the Institute, but by no other Rules and even
though the Leave Rules apply to Dr. Gandhi, since he is not a
regular employee, he is not entitled to any financial benefit as
might be applicable to other regular employees. Equally,
arbitration of disputes between Dr. Gandhi and the Institute being
referred to the Managing Committee of the Institute would show
that they have entered into the contract not as master and servant
but as employer and independent professional. A conspectus of
all the above would certainly lead to the conclusion, applying the
economic reality test, that the contract entered into between the
parties is one between an Institute and an independent
professional. Even otherwise, it is well-settled that exemption of
liability clauses in insuranc

Excerpt shown. Read the full judgment & AI analysis in Lexace.