Research › Search › Judgment

Madhya Pradesh High Court · body

2006 DIGILAW 914 (MP)

Mamta Travels v. Dhanu Raikwar

2006-07-27

ARUN MISHRA, R.S.JHA

body2006
Judgment ( 1. ) THIS appeal has been preferred by the owner aggrieved by an order dated 31. 1. 2004 passed by the Commissioner for Workmens Compensation, labour Court, Satna in Case No. 23/w. C. Act Non-Fatal of 2002. ( 2. ) THE facts of the case are that Dhanu raikwar was employed as driver by Mamta travels. On 9. 1. 2002 while he was driving the bus No. MP 19-D 2837, it turned turtle, owing to which driver sustained serious injuries and incurred 100 per cent disability. Learned Commissioner for Workmens compensation has awarded compensation of Rs. 3,03,880. Penalty of Rs. 10,000 has been fastened upon the owner, Mamta travels. Liability of interest has also been saddled on the owner. Insurer has been exonerated from making the payment of penalty and interest. Consequently, this appeal has been preferred by the owner submitting that liability ought to have been fastened on the insurer as intimation was given well in advance to the insurer and insurer has made the payment towards damage of the vehicle which occurred in the accident in question. Consequently, finding recorded by the Commissioner for workmens Compensation that insurer was not informed timely by the owner as to the accident is incorrect, hence, the liability to make payment of penalty and interest be saddled upon the insurer also. ( 3. ) MR. H. C. Kohli, learned counsel for appellant owner, has submitted that considering the policy which did not exclude the liability of the insurer for payment of penalty and interest under the Workmens compensation Act; there was no contracting out of the aforesaid liability. On the other hand, the premium was realised by the insurer to cover the risk of the driver, owner and two workmen, thus, the liability ought to have been saddled apart from owner on insurer also to make payment of penalty and interest. He has further submitted that timely information was given, consequently payment of damage to the vehicle was made by the insurer, thus, the order passed by the Commissioner for workmens Compensation exonerating insurer from payment of penalty and interest be set aside. ( 4. ) MR. V. S. Choudhary, learned counsel for respondent No. 1, has submitted that insurer ought to have been saddled with the liability to make the payment of penalty and interest apart from compensation. ( 5. ) MR. ( 4. ) MR. V. S. Choudhary, learned counsel for respondent No. 1, has submitted that insurer ought to have been saddled with the liability to make the payment of penalty and interest apart from compensation. ( 5. ) MR. N. S. Ruprah, the learned counsel appearing with Mr. Ajay Gupta for the respondent No. 2, has submitted that in the light of the decision of Apex Court in New india Assurance Co. Ltd. v. Harshadbhai amrutbhai Modhiya, 2006 ACJ 1699 (SC), there is statutory liability under Workmens compensation Act on the insurer to make the payment of compensation only, until unless it is provided in the policy specifically that liability for penalty and interest is also to be borne by the insurer, insurer cannot be held liable to make the payment of penalty and interest under Workmens compensation Act; apart from that finding, it has been recorded that intimation was not given of the accident by the owner so that the amount could have been paid timely by the insurer to the workman, hence, liability of payment of interest cannot be fastened upon the insurer. Even otherwise, penalty has to be paid by owner. ( 6. ) FIRST question for consideration is whether intimation was given timely by the owner to the insurer or not? It is clear from the document filed along with the application under Order 41, rule 27, Civil procedure Code, which document we take on record in the interest of justice, a communication has been filed which reflects with respect to damage caused to the vehicle in accident in question; the insurer has paid the compensation, thus, it is clear that insurer was informed well in time of the accident. We set aside the finding of the commissioner for Workmens Compensation. As this fact of accident was in the knowledge of the insurer due to that payment of damage to the vehicle was made, thus, in our opinion, the insurer had the knowledge of the accident and sustaining of the injuries by the workman. ( 7. ) COMING to the question whether the insurer can be saddled with the liability to pay interest, terms of the policy assume significance. No doubt about it there is difference between the scheme of Motor vehicles Act and the Workmens Compensation Act, 1923. ( 7. ) COMING to the question whether the insurer can be saddled with the liability to pay interest, terms of the policy assume significance. No doubt about it there is difference between the scheme of Motor vehicles Act and the Workmens Compensation Act, 1923. Section 17 of the Workmen s Compensation Act provides that it is permissible to contract out certain liability except the liability with respect to the compensation which is payable under the Act, any relinquishment by workman of any right of compensation from the employer for personal injury arising out of or in the course of the employment, is not permissible, so far as it purports to remove or reduce the liability of any person to pay compensation under the Act. The Supreme court in Harshadbhai Amrutbhai Modhiyas case, 2006 ACT 1699 (SC), has held that what is of significance in such a case, what are the terms of contract, the terms of the contract reached in the aforesaid case were noted by the Apex Court thus: " (4) However, therein a proviso has been added which reads as under: provided that the insurance granted hereunder is not extended to include: (i) any interest and/or penalty imposed on the insured on account of his/her failure to comply with the requirements laid down under the Workmens Compensation Act, 1923; and (ii) any compensation payable on account of occupational diseases listed in part c of Schedule HI of the Workmens Compensation Act, 1923. " Thereafter their Lordships considered the matter in the light of the aforesaid conditions contained under the policy in which the liability of interest was clearly contracted out. The Apex Court held thus: " (15) The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimise his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law. With a view to minimise his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law. (20) The views taken by us find support from a recent judgment of this court in p. J. Narayan v. Union of India, 2004 acj 452 (SC), wherein it was held: (1) This writ petition is for the purpose of directing insurance company to delete the clause in the insurance policy which provides that in case of compensation under the Workmens Compensation act, 1923, the insurance company will not be liable to pay interest. We see no substance in the writ petition. There is no statutory liability on the insurance company. The statutory liability under the Workmens 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 the 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. The writ petition is dismissed. No order as to costs. " It is clear from the policy in the instant case that there is no contracting out of the liability to make the payment of interest. On the contrary, we find that premium has been realised by the insurer to cover the risk of owner, driver and two workmen. ( 8. ) COMING to the question of penalty the Apex Court in L. R. Ferror Alloys Ltd, v. Mahavir Mahto, 2001 ACJ 645 (SC), has laid down that payment of penalty and interest are two distinct liabilities arising under the Act; while liability to pay interest is part and parcel of legal liability to pay compensation, default of payment of that amount within one month, therefore, the claim for compensation along with interest will have to be made good jointly by the insurance company with insured employee but so far as to the penalty, the liability is on the insured. The decision of ved Prakash Garg v. Premi Devi, 1998 acj 1 (SC), which lays down the law to the same effect has been followed by the apex Court in New India Assurance Co. Ltd. v. Shiv Singh, 2000 ACJ 1434 (SC ). It has been held thus: " (4) The only question raised before us by the learned counsel for the appellant is that the Workmens Compensation commissioner could not have held the insurance company liable for payment of the amount of penalty under section 4-A (3) of the Workmens Compensation Act. This question was considered by this court in Ved Prakash Garg v. Premi Devi, 1998 ACJ 1 (SC) and it was held: (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 Workmens Compensation Commissioner under the workmen s Compensation Act on the conjoint operation of section 3 and section 4-A, sub-section (3) (a) of the Workmens compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmens Compensation 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. " ( 9. ) THUS, in our view the liability for penalty remains upon the owner as it was his liability which he was required to fulfil, he did not make the payment of compensation to the workman which he could have recovered from insurer, thus, penalty has to be borne by the owner. In Ved Prakash gargs case, 1998 ACJ 1 (SC), the liability was saddled upon the insurer to make the payment of penalty apart from the interest, order regarding penalty was set aside, thus in our opinion, the liability for interest has to be borne jointly and severally by the owner and insurer; penalty has to be paid by the owner. ( 10. ) RESULTANTLY, the appeal is allowed in part. Parties to bear their own costs as incurred. Appeal partly allowed.