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2000 DIGILAW 100 (ORI)

NEW INDIA ASSURANCE CO, LTD. v. NIRANJAN SADANGI

2000-02-25

P.K.MISRA

body2000
P. K. MISRA, J. ( 1 ) THE insurer has filed this appeal against the order of the Workmen's compensation Commissioner, Berhampur (in short 'the Commissioner' ). ( 2 ) THE thrust of the appeal is against the direction of the Commissioner regarding payment of Rs. 44,374 towards penalty and Rs. 887. 48 towards interest. However, at the time of hearing of the appeal, the learned counsel for the appellant fairly submitted that the direction regarding payment of interest by the insurer is not being disputed and the same shall be complied with by the insurance company. Learned counsel has, however, vehemently submitted that the direction regarding payment of penalty by the insurance company is not justified and the penalty, if any, is to be paid by the owner. ( 3 ) THE contention of the counsel for the appellant regarding the liability of the insurer to pay the interest while claiming exemption from paying the penalty is obviously based on the decision in Ved prakash Garg v. Premi Devi, 1998 ACJ 1 (SC ). In the aforesaid decision of the Supreme court, the question as to whether the insurer is liable to reimburse the amount of interest and penalty under section 4-A of the Workmen's Compensation Act, 1923 (hereinafter referred to as 'the Act') was considered and it was observed:"19. As a result of the aforesaid discussion it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words the insurance company will be liable to meet the claim for compensation along with interest as imposed on the insured employer by the Workmen's Commissioner under the Compensation Act on the conjoint operation of section 3 and section 4-A, sub-section (3) (a) of the compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen's Commissioner under section 4-A (3) (b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen's Commissioner under section 4-A (3) (b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone. " ( 4 ) IN view of the aforesaid decision, there cannot be any doubt that while the insurer is liable to pay the compensation amount including interest, if any, it is not liable to pay penalty imposed by the Commissioner and such liability remains a personal liability of the employer. ( 5 ) THE Full Bench decision of Orissa high Court in Divisional Manager, New india Assurance Co. Ltd. v. Biswanath barman, 1997 ACJ 78 (Orissa), to the effect that insurer is not liable to pay interest must be taken to have been impliedly overruled so far as the liability to pay interest is concerned. ( 6 ) LEARNED counsel for the claimants-respondents, however, placed reliance on the decision of the Orissa High Court in regional Manager, Oriental Insurance Co. Ltd. v. Basanti Maharana, 1999 (2) TAG 156 (Orissa) and contended that the insurer is also liable to pay penalty imposed under section 4-A of the Act. It is doubtful if the aforesaid decision can be of any assistance to the claimants-respondents. Firstly, in view of the observation in the supreme Court decision in Ved Prakash garg v. Premi Devi, 1998 ACJ 1 (SC), to the following effect:"14. . . . But so far as the amount of penalty imposed on the insured employer under contingencies contemplated by section 4-A (3) (b) is concerned as that is on account of personal fault of the insurer not backed up by any justifiable cause, the insurance company cannot be made liable to reimburse that part of the penalty amount imposed on the employer. The latter because of his own fault and negligence will have to bear the entire burden of the said penalty amount with proportionate interest thereon if imposed by the Workmen's Commissioner. "the views expressed in the aforesaid decision of Orissa High Court can no longer be said to be good law. Secondly, the aforesaid decision proceeded specifically on the basis of specific clause contained in the policy of insurance. "the views expressed in the aforesaid decision of Orissa High Court can no longer be said to be good law. Secondly, the aforesaid decision proceeded specifically on the basis of specific clause contained in the policy of insurance. In the present case, there is nothing on record to indicate that in fact, the insurer had undertaken any wider liability making itself liable to reimburse the penalty payable by the employer under section 4-A of the Act. ( 7 ) EVEN though the insurer is not liable to pay the penalty imposed under section 4-A of the Act, the question remains as to whether the owner-respondent No. 3 who has remained absent in spite of service of notice should be directed to pay the penalty. ( 8 ) SECTION 4-A (3) before it was amended contemplated that in case of default by the employer in paying the compensation due under the Act, the Commissioner was empowered to impose penalty not exceeding fifty per cent of the amount due if there was no justification for such delay. It is evident that before imposing penalty, the Commissioner even under the provision contained in section 4-A (3) prior to amendment was required to come to a conclusion that there was no justification for the delay and obviously such a conclusion can be arrived only after giving opportunity of hearing to the employer. Such position has become clear after the amendment effected by Act 30 of 1995 which now contemplates that before directing payment of penalty, reasonable opportunity shall be given to the employer to show cause as to why penalty should not be imposed. In the present case, it appears that in the judgment dated 28. 12. 94 itself the Commissioner directed for payment of compensation by the insurer with further direction that penalty shall be charged if the compensation amount is not paid within one month. A perusal of the subsequent order-sheet indicates that on the basis of the application of the claimants, the commissioner issued notice to the insurer and thereafter by order dated 29. 11. 1995, the Commissioner directed the insurer to pay the penalty. The employer was never called upon to show cause as to why the penalty should not be imposed on him. 11. 1995, the Commissioner directed the insurer to pay the penalty. The employer was never called upon to show cause as to why the penalty should not be imposed on him. As such, the direction regarding payment of penalty by the insurer should not be made applicable to the employer without giving him an opportunity of showing cause. ( 9 ) THE next question is as to whether the matter should be remanded to the commissioner to reconsider the question of payment of penalty by the employer after giving him adequate opportunity of showing cause, as contemplated in section 4-A (3) of the Act. It appears that under the unamended provisions, penalty imposed was being paid to the claimant. As per the provision contained in section 4-A (3-A), it is now clear that interest payable under sub-section (3) of section 4-A is payable to the workman or his dependant, but penalty is to be credited to the State government. There was not vested right of the workman or his dependant to claim payment of penalty as a substantive right. The amended provision as included in section 4-A (3-A) shall be applicable to all pending proceedings and the penalty if any, imposed after the introduction of sub-section (3-A) shall be credited to the state Government. Since the claimants-respondents would not be benefited even if a fresh proceeding is initiated, it would not be in the interest of justice to direct initiation of any proceeding for imposing penalty as contemplated in section 4-A of the Act as against the employer. ( 10 ) SUBJECT to the aforesaid direction, the misc. appeal is allowed in part. There will be no order as to costs. Appeal partly allowed.