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2007 DIGILAW 479 (UTT)

SUGWASH MOVERS PVT. LTD. v. PREM SINGH BISHT

2007-09-06

RAJESH TANDON

body2007
JUDGMENT Hon’ble Rajesh Tandon, J. Heard Sri Alok Singh, Sr. Advocate assisted by Sri D. Barthwal counsel for the appellant, Sri Vikas Pandey, Advocate counsel for respondent no. 2,5 & 6 and Sri V.K. Kohli Sr. Advocate assisted by Sri I.P. Kohli counsel for the respondent no. 4 2. Present appeal has been preferred against the judgment and award dated 15.2.2005 passed by the Commissioner, Workmen’s Compensation, Dehradun. 3. Claimant respondent no. 1 filed a claim petition under Workmen Compensation Act, for the grant of compensation on account of death of the son of the claimant in a motor vehicle accident. According to the claimant his son Manoj Singh Bisht was employed as driver on truck No. U.P. 02-D-5865. At the time of accident his age was 27 years and he was getting Rs. 4,000/- as monthly salary. The truck was insured with the New India Assurance Company. 4. Respondent no. 2 in his written statement has admitted the alleged accident. It was submitted that the deceased was his employee and was getting Rs. 4,000/- per month as salary. The truck was validly insured with the New India Assurance Company. The driver had valid driving licence and the insurance company is liable to pay compensation, if any, to the claimant. 5. The Claimant has filed his affidavit and has proved the allegations made in the claim petition. 6. The Workmen’s Compensation Commissioner after considering the evidence on record awarded a sum of Rs. 2,87,187/- as compensation, along with interest at the rate of 9% per annum quantified to Rs. 77,397/-. It has been observed that the truck was insured with the New India Assurance Co. and the insurance company has held liable to pay compensation to the claimant. However, the amount of interest was directed to be paid by the owner of the truck. 7. Feeling aggrieved, the owner of the truck M/S Sugwas Movers Pvt. Ltd. has preferred the present appeal. 8. Counsel for the appellant has submitted that the liability of interest cannot be fastened on the insured in view of the findings of the Apex Court in the case L.R. Ferro Alloys Ltd; vs. Mahavir, (2002) 9 SCC 450. It has been held by the Apex Court that the interest is payable by the insurance company while the penalty in default of payment of the amount within a month, is payable by the employer. It has been held by the Apex Court that the interest is payable by the insurance company while the penalty in default of payment of the amount within a month, is payable by the employer. The Apex Court has observed as under: The only contention put forth before us is that the entire liability including penalty and interest will have to be reimbursed by the insurance company and this aspect has not been examined by the learned Single Judge in the High Court and needs examination at our hands. In Ved Prakash Garg v. Premi Devi, 1977 (8) SCC 1 this Court after examining the entire scheme of the Act held that payment of interest and penaly are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment of that amount within one month. Therefore, claim for compensation along with interest will have to be made good jointly by the insurance company with the insured employer. But, so far as the penalty imposed on the insured employer is on account of his personal fault the insurance company cannot be made liable to reimburse penalty imposed on the employer. Hence the compensation with interest is payable by the insurance company but not penalty. Following the said decision and for the reasons stated therein, we modify the order made by the High Court to that extent. 9. A Division Bench of this High Court in this case The New India Assurance Company Ltd. vs. Smt. Meera Devi and another, 2006 (1) U.D. 278, on the dictum of Apex Court in the case L.R. Ferro Alloys Ltd. (supra) has held that compensation with interest is payable by the insurer but not the penalty. 10. I have considered the aforesaid submission and perused the insurance policy, there is nothing in the policy, which excludes the liability of insurance company with regard to ‘Interest’. In the present case there is no exclusion clause in the policy and as such interest part cannot be excluded while awarding compensation to the claimant. 11. So far as the rate of interest is concerned the trial Court has erred in fixing the rate of interest. In the present case there is no exclusion clause in the policy and as such interest part cannot be excluded while awarding compensation to the claimant. 11. So far as the rate of interest is concerned the trial Court has erred in fixing the rate of interest. The relevant provisions under Section 4(3) of the Workmen’s Compensation Act is quoted below: (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 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 percent 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 as 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 bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934). 3[(3A) The interest payable under sub-section (3) shall be paid to the workman or his dependent, as the case may be, and the penalty shall be credited to the State Government.]] 12. In view of the-above statutory provision, in the present case the rate of interest is to be fixed @ 12% per annum. Thus the rate of interest is modified to 12% instead of 9% per annum. 13. The appellant is absolved from making payment of interest amount. However, respondent no. 4 the New India Assurance Company is directed to pay compensation and interest thereon @ 12% per annum from the date of accident till actual payment. Consequently, the appeal is allowed. 14. No order as to costs.