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2014 DIGILAW 262 (RAJ)

Sharad Industrial Products v. Kishore Singh

2014-01-24

ALOK SHARMA

body2014
JUDGMENT 1. - A challenge in this appeal has been made to the judgment dated 15.06.2009, passed by the Employees' Compensation Commissioner, Sikar (hereinafter 'the Commissioner') whereby he allowed a claim petition filed by the respondent-claimant (hereinafter 'the claimant') and determined compensation payable to him for reason of injuries having been sustained in the course of employment with the appellant-employer-insured (hereinafter 'the insured') in a sum of Rs. 1,14,697/-. It was further directed that interest @ 9% p.a. from the date of filing of the application for compensation till 25.04.2008 when the respondent No.2, ICICI Lombard General Insurance Company was impleaded, would be paid by the insured and thereafter by the Insurance Company till the date of payment. The learned Commissioner also held that the insured would be liable to pay a penalty of Rs. 50,000/- to the claimant for non-payment of timely compensation due to him i.e. beyond the period of one month from the date it become due following the date of the accident i.e. 18.03.2007. 2. Mr. Ram Singh Rathore, appearing for the insured, has confined his challenge to the two points detailed hereinabove and no challenge has been made either to the issue of employment or compensation determined by the Commissioner. He has relied upon the judgment of the Hon'ble Gujarat High Court in the case of Oriental Insurance Co. Ltd. v. Aminaben Rahimbhai Kadiwala & Ors. [ 2003 ACJ 175 : (2001 AIHC 71 (Guj)] wherein the liability on account of interest on the compensation found payable by the Commissioner was fixed on the Insurance Company alone even though it was impleaded after the delay of ten years on the principle that the consequences of impleadment are that it relates back to the date of the presentation of the claim petition. It is submitted that in this view of the matter as the insured had a full cover with the Insurance Company for payment of compensation, there was no justification whatsoever for the Commissioner to bifurcate the liability on account of interest on the compensation found payable. He further submits that in terms of proviso to clause (b) of Sub-section 3 of Section 4A of the Employees' Compensation Act, 1923 (hereinafter 'the Act of 1923'), penalty was not liable to be levied without the employer being given a reasonable opportunity to show cause there-against. He further submits that in terms of proviso to clause (b) of Sub-section 3 of Section 4A of the Employees' Compensation Act, 1923 (hereinafter 'the Act of 1923'), penalty was not liable to be levied without the employer being given a reasonable opportunity to show cause there-against. Reliance has been made to the judgment of the Punjab and Haryana High Court in the case of Navdeep Agro Board v. National Insurance Co. Ltd. & Ors. [ 2011 ACJ 1036 : 2010 LabIC 841 (P & H)] , where it has been held that before levy of penalty on the employer for the alleged lethargy in the payment of compensation to the claimant, it is mandatory to first issue a show cause notice to the employer on whom the penalty is to be imposed. It is submitted that albeit the Insurance Company was party before the Commissioner yet no issue with regard to the levy of penalty on the compensation found was framed- consequent to which the insured had no opportunity to lead evidence to controvert his liability to pay penalty with requisite evidence by proving that there was no unreasonable delay on his part in payment of compensation. 3. Mr. Man Singh Chundawat, appearing for the Insurance Company, has submitted that the award of interest by the Commissioner was a matter of discretion and there was no conceivable reason as to why this Court should substitute the trial court's discretion with that of its own. It was submitted that interest is fundamentally a liability for withholding of payment otherwise legally due and where the opposite party Insurance Company was not impleaded in the claim petition in the first instance, it was not in its knowledge that any claim on the policy issued by it was pending before the Commissioner and consequently no payment could have been offered to the claimant by the Company. In this view of the matter, he submitted that the fixation of liability on account of interest on the opposite party Insurance Company only subsequent to its impleadment on 25.04.2008 should be upheld by this Court. Prior thereto interest liability should be on the insured as rightly held by the Commissioner. 4. None appears for the claimant in spite of service. 5. Heard the counsel for the parties and perused the impugned award dated 15.06.2009, passed by the Commissioner. 6. Prior thereto interest liability should be on the insured as rightly held by the Commissioner. 4. None appears for the claimant in spite of service. 5. Heard the counsel for the parties and perused the impugned award dated 15.06.2009, passed by the Commissioner. 6. It is not in dispute that the insured had a policy on the vehicle which was being used by the claimant at the time of accident on 18.03.2007. It is also not in dispute that the claimant was employed with the insured. For the injuries sustained by the claimant in the accident of 18.03.2007, he was therefore definitely entitled to compensation as determined by the Commissioner. I am however of the considered opinion that as the employer was insured in respect of the vehicle involved in the accident, the entire liability for the compensation and interest thereon was to be to the account of Insurance Company and there was no justification available with the Commissioner to bifurcate the liability of interest from the date of the application for compensation being filed till 25.04.2008 to the account of the insured-employer and only thereafter to the account of the Insurance Company. In my considered opinion, the impleadment of the Insurance Company on 25.04.2008 by way of an amendment would entail the relating back of the opposite party Insurance Company as a party effective the date of the filing of the claim petition as per the state of law consequent to empleadment of a party. The judgment of the Hon'ble Gujarat High in the case of Aminaben Rahimbhai Kadiwala (Supra) needs to be concurred with. Consequently, it is directed that the interest on the compensation found payable to the claimant was for the whole duration to be to the account of the opposite partythe Insurance Company. 7. As far as penalty levied on the insured is concerned, I am of the considered view that prior to levy of penalty for delayed payment of compensation to which an employee is entitled to under the Act of 1923, in terms of plain language of proviso to clause (b) of Sub-section 3 of Section 4A of the Act of 1923, it is mandatory that a show cause notice be issued to the employer requiring to show cause as to why penalty should not be levied upon him. Aside of the fact that in the instant case no such notice was issued to the employer, even in the claim petition no issue with regard to the payment of penalty was framed. Consequently, the insuredemployer was not put to notice on levy of penalty nor in a position at any point of time to set up his defence against its levy. This aspect of the matter, in my considered opinion, deserves to be therefore decided in favour of the insuredemployer and the matter remanded to the Commissioner for re-determination of the issue after hearing the insuredemployer. 8. It is made clear that the findings of the Commissioner on the question of employment of the claimant and his salary are final and the remand to the Commissioner for the purpose of determining of penalty in pursuance of this judgment shall have no bearing on the finality of the said issues. 9. The civil misc. appeal is accordingly disposed of. Stay application needs no address in view of the appeal itself being disposed of.Order accordingly. *******