JUDGMENT : K.M. Thaker, J. The appellant has brought under challenge an award dated 26/4/2002 passed in Workmen's Compensation Case No.8 of 1996 (Old No.13 of 1995) by the learned Commissioner of Workmen's Compensation, Nadiad appointed under the Workmen's Compensation Act, 1923 (hereinafter referred to as the Act) whereby learned Commissioner has awarded Rs. 1,06,900.80 towards the compensation payable under the Act. Learned Commissioner has also awarded additional compensation as penalty at the rate of 50% and interest as per the provisions under the Act. Aggrieved by the said direction and award, the appellant insurance company has preferred present appeal. 2. At the outset it is necessary to note that by order dated 16/12/2003 passed while admitting the appeal, the Division Bench (Coram: N.G. Nandi and D. P. Buch, J.J., as their lordships then were) has restricted the scope of appeal by limiting the challenge to the direction granting additional compensation and thereby imposing obligation to pay penalty to the tune of Rs. 54,450/-. Differently put, the challenge against the quantification of compensation amount and/or the liability to pay the compensation and/or against the interest portion have not been entertained and the Court restricted the appeal only against the direction requiring payment of penalty. Hence, in view of the said order dated 16/12/2003, the other directions are not required to be examined. 3. So far as the factual background is concerned, it comes out from the award that on 6/11/1994 the claimant was on duty and driving a Jeep bearing registration No. GJ-8-1166 from Borsad. While he was passing through the cross roads at Dharmaj, another vehicle (luxury bus) coming in excessive speed from opposite direction dashed with the vehicle driven by the applicant, as a result of which the applicant suffered serious injuries. The applicant lost consciousness and had to be removed to hospital. He had to undergo treatment as indoor and outdoor patient for long time. Since despite the injuries which he suffered on account of the accident which had arisen out of and in the course of employment any compensation was not paid, the claimant was compelled to file the Workmen's Compensation Case No.8 of 1996 claiming compensation under the Act along with interest and penalty. 4. The claimant asserted that opponent no.1/the vehicle in question was insured and the risk of the driver was also covered under the insurance. 4. The claimant asserted that opponent no.1/the vehicle in question was insured and the risk of the driver was also covered under the insurance. On behalf of the claimant various documents were produced on record and in view of the advocate's remark that the opponents had no objection if the documents placed on record were accepted and were duly exhibited, the said documents have been relied upon by the Commissioner. 5. Though notice of the proceedings was served to opponent no.1 (i.e. the employer) and despite the fact that advocate Mr.Patel had entered appearance, no one attended the proceedings on behalf of opponent no.1. On behalf of the opponent insurance company written statement was filed wherein the company disputed the averments with regard to the details of the accident and injury caused to the claimant. 6. The learned Commissioner framed as many as eight issues including the question as to whether there was employer and employee relationship between the claimant and opponent no.1 and whether the accident arose during the course of employment and also about the extent of permanent disablement. The learned Commissioner after examination of the evidence on record answered the issues in affirmative and as per the final order. The learned Commissioner concluded that the factum of accident was proved and the fact that the claimant had suffered injuries due to the accident was also proved. The learned Commissioner also accepted that at the relevant point of time the age of the claimant was 22 years and he was drawing salary of Rs. 800/- per month. 7. On the basis of the relevant facts, learned Commissioner came to the conclusion that the claimant was entitled for Rs. 1,06,900.80 towards the compensation. The learned Commissioner also found that the opponents had failed to justify the delay caused in depositing the compensation amount. Having concluded that the opponents caused unexplained delay in depositing/paying the compensation amount and also failed to justify the delay, the learned Commissioner also found that it was a fit case to direct the opponents to pay additional compensation towards penalty. Accordingly the learned Commissioner has directed the opponents to pay additional compensation at the rate of 50% towards penalty. The learned Commissioner has quantified the penalty amount at Rs. 54,450.40. 8. Accordingly the learned Commissioner has directed the opponents to pay additional compensation at the rate of 50% towards penalty. The learned Commissioner has quantified the penalty amount at Rs. 54,450.40. 8. As mentioned earlier, by order dated 16/12/2003, the Court has restricted the scope of appeal so far as the direction to pay additional compensation towards penalty is concerned. By virtue of separate order passed in the Civil Application No.8826 of 2002 on the same date i.e. on 16/12/2003, it was directed that the amount towards penalty be deposited and the deposited amount shall be invested. 9. Learned advocate Mr. Hakim for the opponent has submitted that the appellant insurance company had accordingly deposited the amount which has been invested as per the order. 10. When the appeal is taken up for hearing, learned advocate for the appellant is not present. 11. So far as the direction imposing the obligation of payment of penalty on insurance company is concerned, the legal position as regards the said issue is well settled and decided by catena of the judgments. If the employer causes delay in making payment of compensation amount or in depositing at least the undisputed part of compensation amount within one month from the date on which it falls due, then the employer becomes liable to pay additional compensation by way of penalty. However, so far as the provisions of the Act of 1923 is concerned, any statutory obligation is not cast on an insurance like under the Motor Vehicles Act to insure the vehicle/workman and that therefore in the cases where the employer takes out insurance policy and insures the workmen then in such cases the liability of the insurance company would be only in nature of contractual obligation. Hence, in such cases the parties to the contract will be at liberty to determine the conditions, obligations and restrictions of the policy-contract and there would not be any statutory obligations to be incorporated in the policy. 12. From the provisions it becomes clear that the obligation to pay compensation cast on the employer is an absolute obligation and when the employer commits default in discharging the obligation to pay or deposit the compensation amount within prescribed period, then additional liability to pay the penalty arises. 12. From the provisions it becomes clear that the obligation to pay compensation cast on the employer is an absolute obligation and when the employer commits default in discharging the obligation to pay or deposit the compensation amount within prescribed period, then additional liability to pay the penalty arises. The fact that the legislature has used the term penalty itself makes it clear that what is sought to be imposed and recovered is to be recovered from the employer as penal consequence for default. The said provision is made with a view to penalising the erring employer so as to ensure that the employer may not again commit similar default or ignore to discharge the obligation and to deter the employers from committing default and/or from taking the said obligation lightly or casually and from being indifferent. 13. From the provision prescribing penalty or from other related provisions it cannot be inferred or deduced that the legislative intent is to prescribe and provide for compulsory insurance to be taken out by the employer for covering employer's liability to pay penalty and/or interest or even compensation. 14. If the liability to pay the penalty is permitted to be shifted or transferred to third party or an outsider e.g. to the insurance company, then it would defeat the purpose of the provision. At this stage reference deserves to be made to the views expressed in Mecgregor on Damages, 15th Edition wherein views of Roulette J. have been reproduced, which read thus: "a law which imposes a punishment as distinguished from a payment of compensation is defeated by the punishment being passed on to another. The object sought to be secured by such a statute in the public interest is not that so much money shall be collected by way of fine but that a person who puts himself in such and such a position shall be punished by way of fine in order to make such persons prevent such things happening again, and I should have thought that the convicted person could obtain compensation in a Civil Court for the punishment inflicted upon him in the Criminal Court. (emphasis supplied) 15. Under the circumstances the statutory obligation of employer to pay penalty cannot be shifted and/or passed on to or permitted to be passed on to the insurance company. 16. (emphasis supplied) 15. Under the circumstances the statutory obligation of employer to pay penalty cannot be shifted and/or passed on to or permitted to be passed on to the insurance company. 16. It emerges from the record that the opponent no.1 has not challenged the award dated 26/4/2002 passed by the Commissioner in Workmen's Compensation Case No.8 of 1996 and has not disputed his liability including the liability for payment of penalty (which is joint and several with the insurance company). It is only the insurance company who has challenged the direction to pay penalty and has challenged the order making it also liable (jointly and severally with the employer) to pay the penalty amount. 17. So far as the direction imposing penalty and its quantification is concerned, no case for interference is made out. The facts and material on record establishes that the employer failed to explain and justify the default i.e. the delay caused in paying/depositing the compensation or establishing that the delay was not caused due to negligence or like reasons. Thus there is no error or illegality so far as the said direction is concerned. The only error is in making the insurance company also liable, jointly and severally with opponent no.1, to pay the penalty amount. The liability to pay penalty could not have been shifted to and placed on the shoulders of the opponent insurance company. The counsel for the insurance company has asserted that the insurance policy does not contain any provision requiring the company to pay interest and/or penalty and any additional premium has not been paid by the employer. Therefore in the facts of present case there is one more reason for not holding the insurance company liable to pay any amount towards penalty, i.e. in absence of any provision in the policy-contract in question, obliging the insurance company to discharge employer's liability, the insurance company cannot be said to have accepted such liability. For the aforesaid reasons the impugned directions deserve to be set aside and it would be the opponent no.1 alone who will have to discharge the liability and obligation to pay the amount towards penalty. Hence, the direction imposing obligation on the insurance company to pay penalty cannot be sustained. 18. For the aforesaid reasons the impugned directions deserve to be set aside and it would be the opponent no.1 alone who will have to discharge the liability and obligation to pay the amount towards penalty. Hence, the direction imposing obligation on the insurance company to pay penalty cannot be sustained. 18. However, so far as opponent no.2 insurance company is concerned in view of the settled legal position it has to be exonerated from the said liability and the impugned award deserves to be quashed and set aside to the said extent it imposes the liability to pay penalty amount on the insurance company. 19. The said direction is, therefore, set aside. It is clarified that the entire liability to pay the total penalty amount shall be of opponent no.1. It will be open to the claimant to execute the award in accordance with law against the opponent no.1 with regard to penalty amount also. 20. Since the amount towards compensation and interest has already been paid and are not under challenge, any direction with regard to the said payments are not required. The payment of compensation and interest is admitted by Mr. Hakim. 21. Accordingly the appeal is partly allowed. The award imposing the obligation on the insurance company to pay the penalty is set aside. With the aforesaid clarification, Rule is made absolute to the aforesaid extent. There shall be no order as to costs. 22. It comes out from the record that at the relevant point of time, the vehicle was requisitioned by opponent no.3. Under the circumstance it is also clarified that it is only the insurance company who is, by this order, exonerated from the liability to pay the penalty. Order accordingly.