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Madhya Pradesh High Court · body

2006 DIGILAW 817 (MP)

RANNO DEVI v. SURENDRA KUMAR

2006-07-06

P.K.JAISWAL

body2006
JAISWAL, J. ( 1 ) THIS appeal is filed by the claimant under section 30 of the Workmen's Compensation Act, 1923 (for short 'the Act') challenging the award dated 29. 3. 1999 passed by the Commissioner for workmen's Compensation, Circle 2, Gwalior in case No. 33 of 1992 W. C. A. (Fatal ). ( 2 ) BRIEF facts of the case are that one ashwani Kumar who was working as a labourer with the respondent No. 1 and working in truck No. MKH 7869 died on 16. 4. 1991 in an accident occurred during the course of employment. The appellant-claimant is mother of deceased. She filed an application for compensation before the commissioner, Workmen's Compensation. The Commissioner by the impugned award has awarded an amount of Rs. 90,640 as compensation plus penalty of 50 per cent of the amount for delayed payment under section 4-A (3) of the Act and interest at the rate of 6 per cent per annum. The learned Commissioner directed the insurance company, respondent No. 2 herein, to pay the amount of compensation only and in respect of amount of penalty and interest, learned Commissioner directed the owner of the vehicle, respondent No. 1, to pay the amount of penalty amounting to Rs. 45,000 and interest on Rs. 90,640 at the rate of 6 per cent per annum from the date of accident till its realisation and exonerated the insurance company from paying the said amount of penalty and interest. Appellant is partly aggrieved by the impugned award, by which insurance company, respondent no. 2, was exonerated from payment of penalty and interest. ( 3 ) LEARNED counsel for the appellant contended that under section 4-A of the act the amount has to be deposited within 30 days from the date of accident and in case amount has not been deposited then under section 4-A (3) of the Act the respondents are liable to pay penalty of 50 per cent of the amount along with interest at the rate of 6 per cent per annum. Section 4-A (3) reads as under: "section 4-A (3): Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty. " Sub-section (3) of section 4-A provides for payment of interest if the compensation is not paid within one month from the date it fell due, if the Commissioner does not consider the delay to be justified. ( 4 ) APPEAL was admitted on 1. 11. 1999 without framing any substantial question of law as required under first proviso to sub-section (1) of section 30 of the Act. After hearing the preliminary arguments the following substantial question of law is framed: "whether insurance company is statutorily liable to pay the interest under section 4-A (3) of the Workmen's Compensation Act, 1923?" ( 5 ) THE learned counsel for the appellant submits that there is no condition in the policy, Exh. D1, regarding non-payment of interest and, therefore, insurance company is also liable to pay the interest on delayed payment of compensation under section 4-A (3) of the Act and learned commissioner committed error in exonerating insurance company from payment of interest. ( 6 ) ON the other hand, Mr. B. N. Malhotra, learned counsel for the insurance company submits that there is no condition regarding payment of interest in Exh. Dl and, therefore, there is no statutory liability under the terms and conditions of the contract to pay the interest under sub-section (3) of section 4-A of the Act. Learned counsel for the appellant has relied upon the decision of the Apex Court in the case of Ved Prakash Garg v. Premi Devi, 1998 acj 1 (SC), wherein the Apex Court has held that the insurance company is not liable to pay the amount of penalty for late payment of the amount of compensation and it is the liability of the owner to deposit the amount of penalty. ( 7 ) IN the case of P. J. Narayan v. Union of India, 2004 ACJ 452 (SC), Apex Court has held that there is no statutory liability on the insurance company to pay interest. The statutory liability under Workmen's compensation Act is on the employer. An insurance is a matter of contract between the insurance company and the insured. It is always open to the insurance company to refuse to insure. Similarly, they are entitled to provide by contract that they will not take on liability for interest. In the absence of any statute to that effect, insurance company cannot be forced by courts to take on liabilities which they do not want to take on. In the year 2006 the question whether insurance company is statutorily liable to pay interest under the Workmen's Compensation Act, 1923 or not again came up for consideration before the Apex Court. ( 8 ) THE Apex Court in the case of New india Assurance Co. Ltd. v. Harshadbhai amrutbhai Modhiya, 2006 ACJ 1699 (SC), has held that as per terms and conditions of the contract between the employer and insurer it is clear that the insurer has specifically excluded any liability for interest or penalty under Workmen's Compensation act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under the workmen's Compensation Act. The Apex court in the case of P. J. Narayan, 2004 acj 452 (SC), has held that the insurance company is not statutorily liable for payment of interest on the amount of compensation and it is the liability of the employer to pay the interest. In case of P. J. Narayan (supra) there was a clause in the insurance policy that insurance company will not be liable to pay interest and the Apex Court has held that the said condition in the policy is valid and in the light of the said condition in the policy the Supreme Court held that the insurance company is not liable to pay the amount of interest. ( 9 ) IN the case of National Insurance co. Ltd. v. Keshav Bahadur, 2004 ACJ 648 (SC), the Supreme Court has held that insurance company is not liable to pay interest in default of payment of the amount. ( 9 ) IN the case of National Insurance co. Ltd. v. Keshav Bahadur, 2004 ACJ 648 (SC), the Supreme Court has held that insurance company is not liable to pay interest in default of payment of the amount. ( 10 ) THE question involved in this appeal was considered by this court in the case of new India Assurance Co. Ltd. v. Pancham singh, 2007 ACJ 486 (MP ). This court after perusing the insurance policy held that there is a condition in the policy that the insurance company shall not be liable to pay the interest on the amount of compensation awarded by the Commissioner under Workmen's Compensation Act. ( 11 ) LEARNED counsel for the insurance company Mr. B. N. Malhotra contended that the terms and conditions of the policy in the case of Pancham Singh's case, 2007 acj 486 (MP) and the terms and conditions of the policy in the present case are similar and identical and the law laid down by this court in the case of Pancham Singh (supra) will be fully applicable in the present case and he also submits that present facts and circumstances of the case are fully covered by the judgment of the Apex court in the case of P. J. Narayan, 2004 acj 452 (SC), in which the Apex Court has held that in absence of any statute to that effect, regarding payment of interest insurance company shall not be liable to pay the interest on the amount of compensation and they cannot be forced by courts to take on liability which they do not want to take on, then the insurance company is not liable for the same. ( 12 ) IN the Workmen's Compensation act there are no provisions corresponding to those in Motor Vehicles Act, insisting on the insurer covering the entire liability arising out of an award for compensation to a third party arising out of a motor accident. The insured entering into a contract confining the obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. The obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. The obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the motor Vehicles Act the Workmen's Compensation Act does not confer a right on the claimant for compensation under that act to claim the payment of compensation in its entirety from the insurer himself. The entitlement of the claimant under the workmen's Compensation Act is to claim the compensation from the employer. As between the employer and the insurer, the rights and obligations would depend upon the terms of the insurance contract. As per exh. D1 the terms and conditions of the insurance policy there is no such provision by which interest is payable by the insurance company. Thus, it is clear that insurer has specifically excluded any liability for interest or penalty under the Workmen's compensation Act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under Workmen's Compensation Act. ( 13 ) IN view of the above, the substantial question of law is decided against appellant by holding that the insurance company is not liable for payment of interest under section 4-A (3) of the Act and learned commissioner, Workmen's Compensation has not committed any error by directing the owner of the offending vehicle, respondent No. 1, to pay interest and penalty on the amount of compensation and the appeal filed by the appellant has no merit and is accordingly dismissed but, without any order as to costs. Appeal dismissed. .