Research › Search › Judgment

Himachal Pradesh High Court · body

2019 DIGILAW 1176 (HP)

Oriental Insurance Company Ltd. v. Neena Devi

2019-08-16

SANDEEP SHARMA

body2019
JUDGMENT : Sandeep Sharma, J. Since both the above captioned appeals arise out of same order, same are being taken up together, for disposal by way of this common judgment. 2. Instant appeals under Sections 30 & 30(1)(aa) of the Workmen Compensation Act, lay challenge to order dated 22.3.2010, passed by learned Commissioner under Workman Compensation Act, Rampur Bushahr, District Shimla, Himachal Pradesh, in case No.7/2006, titled as Smt. Neena Devi and others versus Smt. Subhadra Devi and another, whereby learned Court below held respondents/claimants No. 1 to 6 entitled to compensation to the tune of Rs.5,30,556/- alongwith interest at the rate of 12% per annum. 3. Briefly stated facts, as emerge from the record are that respondents No. 1 to 6 (hereinafter referred to as the claimants) filed a petition under Section 22 of the Workmen Compensation Act (for short 'Act') in the Court of learned Commissioner under Workmen Compensation Act, Rampur Bushahr, District Shimla, H.P., being legal representatives/dependents of deceased Gopal Singh, who unfortunately died on 26.3.2005 while driving vehicle bearing registration No. HP-63-0793 (Swaraj Mazda). The claimants alleged that deceased Gopal Singh died during the course of employment and as such, they are entitled to compensation to the tune of Rs. 11,00,000/- being his legal representatives/dependents. The claimants averred that deceased Gopal Singh was engaged as a driver in the ill-fated vehicle by respondent No.7, Smt. Subhadra Devi (appellant in FAO No.329 of 2010), who used to pay a sum of Rs. 5000/-, as monthly wages to the deceased Gopal Singh. Record reveals that at first instance claimants filed a petition in the Court of learned Motor Accident Claims Tribunal, Rampur, but same was ultimately dismissed as withdrawn. 4. Petition, as referred hereinabove, came to be opposed on behalf of the respondents (appellant herein) on the ground that deceased was not having valid driving licence and he was only being paid a sum of Rs.3000/- per month. Appellant-Insurance Company (hereinafter referred to as 'Insurance Company'), specifically alleged that deceased Gopal Singh was not employed as driver by the employer in vehicle No. HP-63- 0793 and petition has been filed in collusion with respondent No.7(appellant in FAO No.329 of 2010), with a view to extract money. 5. Learned Court below on the basis of the totality of evidence led on record by the respective parties, held claimants entitled to compensation to the tune of Rs.2,96,400/-. 5. Learned Court below on the basis of the totality of evidence led on record by the respective parties, held claimants entitled to compensation to the tune of Rs.2,96,400/-. Learned Court below also held claimants entitled for interest for a period from 26.3.2005 to 26.4.2010, amounting to Rs. 1,74,876/- in terms of Section 4(A) sub section 3(b) of the Act. Learned Court below also held respondent No.7 (employerappellant in FAO No.329 of 2010) liable to pay penalty at the rate of 20% i.e. Rs. 59,280/- , in total a sum of Rs. 5,30,556/- came to be awarded in favour of the claimants. 6. Being aggrieved and dissatisfied with the aforesaid order dated 22.3.2010, both the appellant-Insurance Company and respondent No.7, Smt. Subhadra Devi filed two separate appeals bearing FAO No.150 of 2010 and FAO No.329 of 2010. Appellant- Insurance Company has come before this Court on a very precise ground that since a sum of Rs. 3 lacs was deposited on 28.4.2009 in terms of compromise arrived inter se parties, learned Court below ought not have granted interest, if any, beyond 28.4.2009, whereas respondent No.7 by way of separate appeal bearing FAO No.329 of 2010, has alleged/raised ground that since there was no breach or willful violation of law on the part of the owner, learned Court below ought not have held her liable to pay amount of penalty. She has further raised a ground that learned Court below ought to have given specific ground/reason for awarding penalty and as such, impugned order, which is totally non-speaking qua this aspect of the mater, deserves to be modified/remanded back to that extent. She has further stated that learned Court below has awarded amount of penalty against the appellant without giving any notice or opportunity of being heard and as such, matter may be remanded back with the direction to the learned Court below to afford an opportunity of being heard before levying penalty, if any, as contained under Section 4(A) of the Act. 7. FAO No.150 of 2010 was admitted on 27.10.2010 on the following substantial questions of law:- "1. Whether liability of payment of interest on compensation amount under the Workmen's Compensation Act arises only "when due" towards compensation is determined by the prescribed authority under the Act?. 2. 7. FAO No.150 of 2010 was admitted on 27.10.2010 on the following substantial questions of law:- "1. Whether liability of payment of interest on compensation amount under the Workmen's Compensation Act arises only "when due" towards compensation is determined by the prescribed authority under the Act?. 2. Whether the amount of Rs.3 lacs deposited on 28.4.2009 by the insurance company towards the amount due was required to be taken into consideration while determining the interest liability under the Act? 8. Similarly, FAO No.239 of 2010 was admitted on 27.10.2010 on the following substantial questions of law:- 1. Whether the grant of penalty against the appellant without giving any finding or the reason in the award is sustainable?. 2. Whether order of the learned Commissioner, Workmen Compensation awarding penalty against the Owner of the vehicle without giving any notice or opportunity of being heard on this point, is not in violation of natural justice?. 3. Whether the learned Commissioner, Workmen Compensation has erred in law in awarding penalty in favour of the claimant, when there is neither any pleading nor any issue is framed to that extent?. 4. Whether the appellant is entitled to file and maintain the present appeal under Section 30(1)(aa) of the Workmen Compensation Act without filing certificate of deposit of award amount before the Commissioner alongwith the appeal?." 9. Having heard learned counsel representing the parties and perused the material available on record, especially receipts issued by the Commissioner, Under Workmen Compensation/SDM, Rampur Bushahr (available at page No.11 of the paper book), this Court is in agreement with Mr. Ishan Sharma, Advocate that since a sum of Rs. 3 lacs was deposited on 28.4.2009, learned Court below while awarding interest in terms of Section 4(A) of the Act, ought not to have held claimants entitled for interest beyond 28.4.2009. It is quite apparent from the receipts placed on record that sum of Rs. 3 lacs came to be deposited in the Office of the Commissioner under Workmen Compensation/ SDM, Rampur Bushahr by way of Demand Draft No.192290, dated 23.5.2009 and as such, learned Court below fell in error while determining interest. As per Section 4(a) of the Act, compensation was required to be paid/deposited as soon as it fell due. 3 lacs came to be deposited in the Office of the Commissioner under Workmen Compensation/ SDM, Rampur Bushahr by way of Demand Draft No.192290, dated 23.5.2009 and as such, learned Court below fell in error while determining interest. As per Section 4(a) of the Act, compensation was required to be paid/deposited as soon as it fell due. In the case at hand, alleged accident occurred on 26.3.2005, meaning thereby amount in terms of Section 4 of the Act, was to be deposited by employer/insurer on or before 26.4.2005, but in the case at hand admittedly amount qua the compensation, if any, in terms of Section 4 of the Act, came to be deposited by the appellant-insurance Company being insurer of vehicle owned by respondent No.7 (appellant in FAO No.329 of 2010) on 28.4.2009 and as such, learned Court below rightly held claimants entitled to the interest qua the delayed deposit, but certainly that could not be beyond 28.4.2009 when sum of Rs. 3 lacs was deposited by the Insurance Company in terms of compromise arrived inter se parties, which fact is quite evident from the receipts placed on record. 10. Accordingly, in view of the above, order dated 22.3.2010 passed by the learned Commissioner needs to be modified and accordingly, it is ordered that claimants shall be entitled to the interest w.e.f. 26.4.2005 up to 28.4.2009. In view of the above, compensation amount as awarded by the learned Commissioner, is re-calculated and determined as under:- 1 Completed year of age on he last birthday of the Workman immediately proceeding the date on which the compensation fell due 35 years 2 Relevant factor to calculate compensation. 197.6 3 Wages of Workman Rs. 3000/- 4 Compensation amount due 197.6x3000=Rs.2,96, 400/- 5 Penalty @ 20% Rs.59,280/- 6 Interest @ 12% per annum Rs. 35,568/- 7 Date of accident 26.3.2005 8 Due date 26.4.2005 9 Interest of 4 years i.e. 26.4.2005 to 28.4.2009 35568x4= Rs.1,42,272/- 10 Total compensation due to claimants 4+5+9 Rs2,96,400+59280+1,42,272 =Rs4,97,952/- 11. As far as pleas raised by respondent No.7 (appellant in FAO N0.329 of 2010) are concerned, this Court having carefully perused Section 4(A) and 3(b) of the Act, is not in agreement with Sh. Raman Sethi, learned counsel representing respondent No.7- appellant that learned Court below could not levy penalty upon respondent No.7- appellant. As far as pleas raised by respondent No.7 (appellant in FAO N0.329 of 2010) are concerned, this Court having carefully perused Section 4(A) and 3(b) of the Act, is not in agreement with Sh. Raman Sethi, learned counsel representing respondent No.7- appellant that learned Court below could not levy penalty upon respondent No.7- appellant. Bare perusal of Section 4(A)3(b) of the Act, suggests that if there is no justification for the delay, employer would be liable to pay sum not exceeding 50% of such amount in addition to the amount of arrears and interest by way of penalty. 12. True, it is that proviso to aforesaid provision of law suggests that order for the penalty would not be passed under Clause (b) without giving a reasonable opportunity to the employer to show cause why it not be passed, but in the case at hand, it is not in dispute that impugned order came to be passed in the presence of respondent No7 (appellant in FAO No.329 of 2010), who in so many words admitted the claim of the claimants, especially by admitting the fact that she used to pay sum of Rs. 3000/- to the deceased as monthly wages. Factum with regard to accident and unfortunate death of deceased Gopal Singh never came to be refuted by respondent No.7-appellant. Needless to say, as per scheme of the Act, especially Section 4 and 4(A) of the Act, which deals with awarding of compensation with penalty, no separate proceedings, if any, are/were required to be initiated either by the claimants or by the Court while determining penalty in terms of Section 4(A)3(b) of the Act, rather issue with regard to penalty is /was required to be considered and decided in the petition filed by the claimants under Section 22 of the Act, seeking therein compensation on account of death of deceased. There is nothing on record suggestive of the fact that plausible explanation, if any, ever came to be rendered on record by respondent No.7 for delay in payment of compensation, which otherwise as per Section 4 and 4(A) of the Act is/ was required to be paid as soon as it fell due. There is nothing on record suggestive of the fact that plausible explanation, if any, ever came to be rendered on record by respondent No.7 for delay in payment of compensation, which otherwise as per Section 4 and 4(A) of the Act is/ was required to be paid as soon as it fell due. Since factum with regard to the accident, wherein deceased Gopal Singh died, was very much in the knowledge of respondent No.7, she ought to have taken steps for depositing the amount in terms of aforesaid provisions contained in the Act. Similarly, this Court is of the view that since full opportunity to participate in the proceedings filed on behalf of the claimants came to be afforded to respondent No.7-appellant, she cannot be permitted to raise the plea at this stage that learned Court below ought to have granted opportunity of being heard or should have issued show cause notice prior to determining the penalty in view of Section 4(3)(b) of the Act. Substantial questions of law, as referred hereinabove, are decided accordingly. 13. This Court does not find any force in the arguments of Mr. Raman Sethi, learned counsel representing respondent No.7 (appellant in FAO No.329 of 2010) that it is the insurer, who is liable to pay penalty. Penalty is not a part and parcel of the legal liability of the insurer to compensate his employee and since the insurer is under contractual obligation to indemnify the employer for his legal liability the insurer is not liable to pay the penalty. As regards the issue of payment of penaltyis concerned, the Hon'ble Supreme Court in Ved Prakash Garg vs. Premi Devi and Others, 1998 (1) ACJ 1, after examining the entire scheme of the Workmen's Compensation Act, has held that payment of interest and penalty are two distinct liabilities arising under the Workmen Compensation Act; penalty is not a part and parcel of the legal liability of the employer to compensate his employee and since the insurer is under contractual obligation to indemnify the employer for his legal liability the insurer is not liable to pay the penalty. So far as the amount of penalty imposed on the insured employer under contingencies contemplated by Section 4-A(3) (a) and (b) of the Act is concerned as that is on account of personal fault of the insured not backed up by any justifiable cause, the Insurance Company cannot be made liable to reimburse that part of the penalty amount imposed on the employer and liability to pay interest is part and parcel of legal liability of the employer to pay compensation upon default of payment of that amount within one month. The relevant para of the aforesaid judgment is read as under:- “14. On a conjoint operation of the relevant schemes of the aforesaid twin Acts, in our view, there is no escape from the conclusion that the insurance companies will be liable to make good not only the principal amounts of compensation payable by insured employers but also interest thereon, if ordered by the Commissioner to be paid by the insured employers. Reason for this conclusion is obvious. As we have noted earlier the liability to pay compensation under the Workmen's Compensation Act gets foisted on the employer provided it is shown that the workman concerned suffered from personal injury, fatal or otherwise, by any motor accident arising out of and in the course of his employment. such an accident is also covered by the statutory coverage contemplated by Section 147 of the Motor Vehicles Act read with the identical provisions under the very contracts of insurance reflected by the Policy which would made the insurance company liable to cover all such claims for compensation for which statutory liability is imposed on the employer under Section 3 read with Section 4A of the Compensation Act. All these provisions represent a well- knit scheme for computing the statutory liability of the employers in cases of such accidents to their workmen. All these provisions represent a well- knit scheme for computing the statutory liability of the employers in cases of such accidents to their workmen. As we have seen earlier while discussing the scheme of Section 4A of the Compensation Act the legislative intent is clearly discernible that once compensation falls due and within one month it is not paid by the employer then as per Section 4A(3)(a) interest at the permissible rate gets added to the said principal amount of compensation as the claimants would stand deprived of their legally due compensation for a period beyond one month which is statutorily granted to the employer concerned to make good his liability for the benefit of the claimants whose bread-winner might have either been seriously injured or might have lost his life. Thus so far as interest is concerned it is almost automatic once default, on the part of the employer in paying the compensation due, takes place beyond the permissible limit of one month. No element of penalty is involved therein. It is a statutory elongation of the liability of the employer to make good the principal amount of compensation within permissible time limit during which interest may not run but otherwise liability of paying interest on delayed compensation will ipso facto follows. Even though the Commissioner under these circumstances can impose a further liability on the employer under circumstances and within limits contemplated by Section 4A(3)(a) still the liability to pay interest on the principal amount under the said provision remains a part and parcel of the statutory liability which is legally liable to be discharged by the insured employer. Consequently such imposition of interest on the principal amount would certainly partake the character of the legal liability of the insured employer to pay the compensation amount with due interest as imposed upon him under the Compensation Act. Thus the principal amount as well as the interest made payable thereon would remain part and parcel of the legal liability of the insured to be discharged under the Compensation Act and not dehors it. Thus the principal amount as well as the interest made payable thereon would remain part and parcel of the legal liability of the insured to be discharged under the Compensation Act and not dehors it. It, therefore, cannot be said by the insurance company that when it is statutorily and even contractually liable to reimburse the employer qua his statutory liability to pay compensation to the claimants in case of such motor accidents to his workmen, the interest on the principal amount which almost automatically gets foisted upon him once the compensation amount is not paid within one month from the date it fell due, would not be a part f the insured liability of the employer. No question of justification by the insured employer for the delay in such circumstances would arise for consideration. It is of course true that one month's period as contemplated under section 4A(3) may start running for the purpose of attracting interest under sub-clause (a) thereof in case where provisional payment becomes due. But when the employer does not accept his liability as a whole under circumstances enumerated by us earlier then section 4A(2) would not get attracted and one month's period would start running from the date on which due compensation payable by the employer is adjudicated upon by the Commissioner and in either case the Commissioner would be justified in directing payment of interest in such contingencies not only from the date of the award but also from the date of the accident concerned. Such an order passed by the Commissioner would remain perfectly justified on the scheme of Section 4A(3)(a) of the Compensation Act. But similar consequence will not follow in case where additional amount is added to the principal amount of compensation by way of penalty to be levied on the employer under circumstances contemplated by Section 4A(3)(b) of the Compensation Act after issuing show cause notice to the employer concerned who will have reasonable opportunity to show cause why on account of some justification on his part for the delay n payment of the compensation amount he is not liable for this penalty. However if ultimately the Commissioner after giving reasonable opportunity to the employer to show cause takes the view that there is no justification for such delay on the part of the insured employer and because of his unjustified delay and due to his own personal fault he is held responsible for the delay, then the penalty would get imposed on him. That would add a further sum upto 50% on the principal amount by way of penalty to be made good by the defaulting employer. So far as this penalty amount is concerned it cannot be said that it automatically flows from the main liability incurred by the insured employer under the Workmen's Compensation Act. To that extent such penalty amount as imposed upon the insured employer would get out of the sweep of the term 'liability incurred' by the insured employer as contemplated by the proviso to Section 147(1)(b) of the Motor Vehicle Act as well as by the terms of the Insurance Policy found in provisos (b) and (c) to sub-section (1) of section II thereof. On the aforesaid interpretation of these tow statutory schemes, therefore, the conclusion becomes inevitable that when an employee suffers from a motor accident injury while on duty on the motor vehicle belonging to the insured employer, the claim for compensation payable under the Compensation Act along with interest thereon, if any, as imposed by the Commissioner Section 3 and 4A(3)(a) of the Compensation Act will have to be made good by the insurance company jointly with the insured employer. But so far as the amount of penalty imposed on the insured employer under contingencies contemplated by Section 4A(3)(b) is concerned as that is on account of personal fault of the insured not backed up by any justifiable cause, the insurance company cannot be made liable to reimburse that part of the penalty amount imposed on the employer. The latter because of his own fault and negligence will have to bear the entire burden of the said penalty amount with proportionate interest thereon if imposed by the Workmen's Commissioner.” (emphasis supplied) 14. The latter because of his own fault and negligence will have to bear the entire burden of the said penalty amount with proportionate interest thereon if imposed by the Workmen's Commissioner.” (emphasis supplied) 14. It is apparent from the aforesaid exposition of law that though claim for compensation payable under the Workmen's Compensation Act alongwith interest thereon is required to be made good by the Insurance Company jointly with the insured employer, but, Insurance Company cannot be made liable to reimburse the amount of penalty imposed upon the employer. 15. Consequently, in view of the above, appeal bearing FAO No.150 of 2010 filed by the appellant-Insurance Company is allowed and order dated 22.3.2010 passed by the learned Commissioner is modified to the aforesaid extent only. Appeal bearing FAO No.329 of 2010 filed by respondent No.7-appellant Smt. Subhadra Devi is dismissed being devoid any merit. Excess amount, if any, deposited by the appellant-Insurance company, may be refunded after adjusting the proportionate interest towards the compensation awarded by this Court. Similarly, amount of compensation as directed by this Court may be released in favour of the claimants strictly as per their shares, which have been otherwise defined in the award passed by the learned Court below. Appeals stand disposed of, so also pending applications, if any. Copy of this judgment be placed on the case file of FAO No.329 of 2010.