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Allahabad High Court · body

2007 DIGILAW 628 (ALL)

National Insurance Company Ltd. v. Aditya Kumar

2007-03-15

R.K.RASTOGI

body2007
JUDGMENT : R.K. RASTOGI, J. 1. F.A.F.O. No. 156 of 1996 has been filed by the National Insurance Company Ltd. against judgment and order dated 25.5.1996 of the Workmen's Compensation Commissioner/District Magistrate, Kheri in Case No. 5/96/15/14 u/s 22 of the Workmen's Compensation Act and F.A.F.O. No. 157 of 1996 has been filed against judgment and order dated 25.5.1996 of Workmen's Compensation Commissioner/District Magistrate, Lakhimpur Kheri in Case No. 6/98/16/15 u/s 22 of the Workmen's Compensation Act. Since the legal point involved in both these appeals is a common point of law, I have heard both these appeals together and now I am deciding both of them by a common judgment. 2. The facts relevant for disposal of these appeals are that Man Bahadur nephew of Dhan Bahadur, respondent No. 2 in F.A.F.O. No. 156 of 1996 and Bachchu Singh husband of Smt. Omwati respondent No. 2 in F.A.F.O. No. 157 of 1996 were employed In a sugar factory situated at village Gaddiyana district Lakhimpur Kheri run by Aditya Kumar (respondent No. 1 in both the appeals). The factory was insured with the National Insurance Company, appellant in both these appeals. On 22.3.1990, during employment of the aforesaid two persons, a wall of the factory fell down due to heavy cyclone, and consequently Man Bahadur and Bachchu Singh died having been crushed below the wall. Hence, Dhan Bahadur filed Case No. 5/96/15/14 for recovery of compensation under the Workmen's Compensation Act and Smt. Omwati filed Case No. 6/98/ 16/15 under the same Act. The Workmen's Compensation Commissioner after hearing the parties awarded a sum of Rs. 34,705.60p. as compensation in the case filed by Dhan Bahadur and also allowed 25% penalty on this amount which came to Rs. 8,676.40p. It also granted interest on the amount of compensation from 22.3.1990 to 30.4.1996 at the rate of 6% per annum and also awarded Rs. 2,000 as costs; in all Rs. 55,874 and the National Insurance Company was ordered to pay this amount within a month from 25.5.1996, failing which the amount was to be recovered as arrears of land revenue. 3. In the case filed by Smt. Omwati the Commissioner granted Rs. 24,494.40p. as compensation and 25% penalty amounting to Rs. 6,123.60p. It also allowed interest from 22.3.1990 to 30.4.1996 at the rate of 6% per annum, which comes to Rs. 7,348 and Rs. 2,000 as costs; in all Rs. 3. In the case filed by Smt. Omwati the Commissioner granted Rs. 24,494.40p. as compensation and 25% penalty amounting to Rs. 6,123.60p. It also allowed interest from 22.3.1990 to 30.4.1996 at the rate of 6% per annum, which comes to Rs. 7,348 and Rs. 2,000 as costs; in all Rs. 39,996, and directed the National Insurance Company to pay the above amount within a month, failing which the same was to be realized as arrears of land revenue. 4. Aggrieved with these orders, the National Insurance Company has filed these two appeals. 5. I have heard learned Counsel for the appellant. 6. The respondents are represented through counsel, but none has appeared to contest the appeals on behalf of the respondents inspite of revision of the cause list. 7. The learned Counsel for the appellant made only one submission before me. He submitted that the insurance company had deposited entire amount of compensation and the amount of costs in both the compensation cases. He, however, contended that insurance company is not liable to pay the amount of penalty and interest, and it is to be borne by the owner of the factory and not by the insurance company, because there is no statutory liability of the insurance company to pay the amount of penalty and interest under the Workmen's Compensation Act unless and until there is stipulation in the insurance policy for payment of penalty and interest. He submitted that in the present case there was no stipulation in the insurance policy that the insurance company would be liable to pay the amount of penalty and interest. He referred to Section 4A(3) of the Workmen's Compensation Act, 1923, which reads as under: 4A(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. He referred to Section 4A(3) of the Workmen's Compensation Act, 1923, which reads as under: 4A(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 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). 8. The learned Counsel for the appellant cited before me a Full Bench ruling of Orissa High Court in Divisional Manager, New India Assurance Co. Ltd. and Ors. v. Biswanath Barman and Ors. 1997(2) TAC 226 (Ori), in which it has been held that u/s 4A(3) of the Workmen's Compensation Act the insurance company cannot be made liable for payment of interest and penalty in the absence of specific provision therefore in the Act and in the insurance policy. The same view was followed by Patna High Court in National Insurance Co. Ltd. v. Babu Ram Prasad and Ors. 1999 (1) TAC 637, and by the High Court of Bombay in New India Assurance Co. Ltd. v. Mohammad Yusuf Inamuddin Pijade and Ors. 2004 (3) TAC 227 and in Sohansingh Assasingh and Anr. v. S. Jasvant Singh Bisansingh and Anr. 2006 (1) TAC 624. The Hon'ble Apex Court has also approved this view in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya and Anr. 2006 (2) TAC 321. Ltd. v. Mohammad Yusuf Inamuddin Pijade and Ors. 2004 (3) TAC 227 and in Sohansingh Assasingh and Anr. v. S. Jasvant Singh Bisansingh and Anr. 2006 (1) TAC 624. The Hon'ble Apex Court has also approved this view in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya and Anr. 2006 (2) TAC 321. In this case also, insurance company was held not liable for payment of interest in the absence of statutory provision in the Workmen's Compensation Act and in the insurance policy and employer was directed to pay the amount of interest. 9. It is thus clear that the appellant is not liable to pay the amount of penalty and interest and the amount of penalty and interest is to be borne by the owner of the factory, Le., respondent No. 1 in both the cases. 10. Both the appeals in this way deserve to be allowed. 11. Both the appeals are allowed with costs which shall be borne by respondent No. 1. It is hereby ordered that the appellant is not liable to pay the amount of penalty and interest imposed by the Workmen's Compensation Commissioner vide the impugned judgment in claim cases and this amount of penalty and interest is to be borne by respondent No. 1, owner of the factory. 12. The learned Counsel for the appellant submitted that he had deposited a sum of Rs. 6,000 in both the Appeals No. 156 and 157 of 1996. Since the insurance company has been absolved from the liability to pay penalty and interest, the amount deposited by the appellant in both the appeals shall be; refunded to it (appellant).