ORDER 1. Heard. 2. The appellant/insurance-Company has preferred this appeal against the order dated 16.06.1998 passed in W.C.Case No.3/1989 (NF) by the Commissioner for Workmen's Compensation, Labour Court, Raipur (hereinafter referred to as `the lower Court') whereby while awarding compensation of Rs.36,747/-, for permanent disablement suffered by the workmen/respondent No.1-Budharuram Banjare due to accident arising out of and in course of his employment, the lower Court has imposed the liability upon the insurance-Company for payment of penalty as well as interest on the amount of compensation of Rs.36,747/- awarded to the claimant. 3. Shri N.K.Agrawal, learned Senior Advocate for the appellant/insurance company conceded that in view of the dictum of the Apex Court in New India Assurance Co. Ltd. vs. Ram Dayal and others, 1990 (II) ACJ 545 since the insurance policy did not contain the exact time from which it commenced to operate, it became operative from the previous midnight of the date of insurance. The liability of the appellant/insurance company to pay compensation under the Workmen's Compensation Act, 1923 (henceforth `the Act, 1923') is also not in dispute. 4. The only question that arises for determination in this appeal is as follows: "Whether the Commissioner for Workmen's Compensation could award penalty and interest against the insurance company under the provisions of Workmen's Compensation Act, 1923?" 5. Learned Senior Advocate for the appellant/insurance company placed the copy of the insurance policy on record which contains the following terms : ".... that the Insurance granted hereunder is not extended to include : Interest and/or penalty imposed on the Insured on account of his/their failure to comply with the requirements laid down under the W.C. Act 1923 ...." Placing reliance on New India Assurance Co. Ltd. vs. Harshadbhai Amrutbhai Modhiya and another, (2006) 5 SCC 192 learned Senior Advocate for the appellant/insurance company argued that liability of the insurance-Company arises out of a contract with the employer and is not a statutory liability under the Act, 1923 and, therefore, the appellant/insurer was not liable to pay interest or the penalty which ought to have been recovered solely from the employer. So far as the compensation of Rs.36,747/- is concerned, learned counsel for the appellant submitted that the same has been deposited with the lower Court at the time of filing of this appeal. 6. No one had appeared on behalf of the respondents. 7. So far as the compensation of Rs.36,747/- is concerned, learned counsel for the appellant submitted that the same has been deposited with the lower Court at the time of filing of this appeal. 6. No one had appeared on behalf of the respondents. 7. I have considered the arguments advanced by the learned counsel for the appellant. Section 4A of the Act, 1923 reads as under: "4A. Compensation to be paid when due and penalty for default.--- (1) Compensation under section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, (underlined by me) and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (3) Where any employer is in default in paying the compensation due under this Act within one month (underlined by me) from the date it fell due, the Commissioner shall --- (a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due; and (b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears , and interest thereon pay a further sum not exceeding fifty per cent of such amount by way of penalty; Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. Explanation.--- For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the reserve Bank of India Act, 1934 (2 of 1934). Explanation.--- For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the reserve Bank of India Act, 1934 (2 of 1934). (3A) The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependant, as the case may be." A reading of the above provision clearly goes to show that liability for payment of compensation under sub- section (2) and in default to pay interest and penalty under sub-section (3) is a statutory liability and rests solely on the employer. So far as the liability of the insurance-Company is concerned, it arises out of a contract of insurance entered into between the employer and the insurer. The employer is not statutorily required to enter into a contract of insurance. A contract of insurance covered by the provision of Insurance Act would depend upon volition of the parties. In the present case, the policy placed on record by the appellant/insurer clearly goes to show that under the contract between the employer and the insurance-Company the insurer had clearly excluded the liability to pay interest and penalty under the Act, 1923. 8. In New India Assurance Co. Ltd. vs. Harshadbhai Amrutbhai Modhiya and another (supra), the appellant/insurer had established before the Apex Court that in terms of the insurance contract, it was not liable to pay any interest or penalty on the award sum. Disputing that position, the respondents contended that in any case the insured was liable. The Apex Court held as under: "In Workmen's Compensation Act, there are no provisions corresponding to those in the Motor Vehicles Act, insisting on the insurer covering the entire liability arising out of an award towards compensation to a third party arising out of a motor accident. Neither in the Act nor in any other there is any provision which stands in the way of an insurance company and 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. Therefore, 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. Therefore, 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 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. Construing the contract involved here it is clear that the 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 the Workmen's Compensation Act." 9. It is pertinent to note that the appellant/insurance-Company had specifically pleaded before the lower Court that it was not liable for payment of interest or penalty. The lower Court did not record any finding as to whether under the terms of the contract with the employer, the appellant/insurer also undertook the liability for any interest and/or penalty imposed on the employer/insured on account of his/her failure to comply with the requirements laid down under the Act, 1923. 10. In view of the specific exclusion of the insurer from the liability to pay interest or penalty under the Act, 1923 under the policy of insurance the insurance- Company could not be saddled with the liability to pay interest and penalty under clauses (a) and (b) of sub- section (3) of Section 4A of the Act, 1923. It is also pertinent to note that the lower Court, after awarding a compensation of Rs.36,747/- jointly and severally against the appellant/insurer and the employer, did not give a specific direction that the penalty and interest shall be recoverable from the appellant/insurer. Relevant paragraph 22 is quoted as under: 11. In the result, the appeal is allowed. The appellant/insurer shall not be liable for payment of penalty or interest as awarded by the lower Court, which liability is solely of the employer.