Partly allowed

New India Assurance Company Limited v. Adambhai Harunbhai Node (Claimant)

Gujarat HC22 Jun 2018FA/823/2006

Case brief

AI extract

What is this about?

In this first appeal under the Workmen Compensation Act, the High Court of Gujarat allowed the appellant insurance company's challenge to the quantum of penalty. The court held that while the employer is jointly and severally liable for the workforce's injury, the insurance company is exempt from paying the penalty imposed on the employer for delayed deposit and interest on that penalty, though it

What did the court decide?

Impugned award modified; Insurance Company exonerated from paying penalty and interest on penalty; liable for compensation, interest on compensation, medical expenditure, costs, and stamp duty.

New India Assurance Company Limited Vs… — Pension and Retirement Benefits | Gujarat HC (2018)

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C/FA/823/2006 JUDGMENT

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/FIRST APPEAL NO. 823 of 2006

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FOR APPROVAL AND SIGNATURE:

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HONOURABLE MR.JUSTICE S.G. SHAH

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

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2 To be referred to the Reporter or not ?

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3 Whether their Lordships wish to see the fair copy of the judgment ?

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4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

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NEW INDIA ASSURANCE COMPANY LIMITED

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Versus

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ADAMBHAI HARUNBHAI NODE (CLAIMANT)

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Appearance:

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MR SANDIP C SHAH(792) for the PETITIONER(s) No. 1 MR DK CHAUDHARI(5361) for the RESPONDENT(s) No. 1,2

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CORAM: HONOURABLE MR.JUSTICE S.G. SHAH

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Date : 22/06/2018

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ORAL JUDGMENT

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Heard learned advocates Mr.Sandip C. Shah for the petitioner and Mr.D.K.Chaudhari for the respondents. Perused the record.

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Page 1 of 6

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C/FA/823/2006 JUDGMENT

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The appellant herein is original opponent No.2 in an application being Application No.12 of 2004 under Workmen Compensation Act before the Commissioner wherein by impugned judgment and order dated 01.10.2005, the Commissioner has awarded an amount of Rs.5,37,600/towards compensation with 50% interest on penalty and 9% interest and also Rs.500/- towards cost of the litigation and Rs.1200/- towards stamp of such claim petition to be recovered from employer being opponent No.1 and present appellant being opponent No.2.

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It is undisputed fact that original claimant was serving as a Driver on vehicle owned by the opponent no.1 who was insured by the opponent no.2 i.e. present appellant. It is also undisputed fact that claimant has received grievous injuries while he was on duty as a driver on Truck being registration No.GJ-07 T-5255 owned by the opponent no.1 and insured by the opponent no.2. Therefore, claimant has preferred M.A.C.P. claiming compensation of Rs.5,37,600 wherein after trial, Commissioner has passed award as aforesaid.

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The appellant - Insurance Company has challenged such award in this appeal on various grounds i.e. quantum of compensation, their liability and also against an award of penalty and interest upon them. However, perusal on record, I do not find any reason or substance so as to interfere with findings by the Commissioner so far as liability to pay compensation by the original opponents are concerned so also an amount of compensation, since, it is based upon evidence available on record and calculation as per the Workman Compensation Act. Therefore, there is less chance

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Page 2 of 6

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C/FA/823/2006 JUDGMENT

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to interfere with the award so far as quantum of compensation is concerned. However, there is substance in the appeal when it is pleaded that Insurance Company is not liable to pay the amount of penalty which is imposed by the impugned award against them. In support of such submissions, learned advocate Mr.Sandip Shah for the appellant – Insurance Company relied upon following judgments:-

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in the case of Ved Prakash Garg. V/s. Premi Devi and others reported in AIR 1997 SC 3854 and,

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in the case of L.R.Ferro Alloys Ltd. V/s. Mahavir Mahto and Another reported in (2002) 9 SCC 450

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The sum and substance of both the above decisions is to the effect that so far penalty amount is concerned, it cannot be said that it is automatically arising from the main liability incurred by the insured under the Workmen Compensation Act. Whereas with reference to liability of Insurance Company, it is categorically held that so far as amount of penalty imposed on the insured employer under contingencies contemplated by Section 4 - A (3) (b) of the Workmen Compensation Act at the relevant time is concerned as that is on account of personal fault of the insured and not backed up by any justifiable cause, the insurance company cannot be made liable to reimburse that part of award that is amount of penalty imposed on the employer. It is clarified that such liability is to be bound by the employer because of his own fault and negligence and thereby, employer has to born entire burden of the amount of penalty with the interest thereon, if imposed by the Commissioner. Such fact is followed in the later judgment in the year 2002.

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Page 3 of 6

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C/FA/823/2006 JUDGMENT

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As against that learned advocate for the respondents is relying upon the following decisions:-

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in the case of the Oriental Insurance Company Ltd. V/s. Siby George and Ors. reported in 2012 12 SCC 540 and 2. in the case of Jaya Biswal and others V/s. Branch Manager, IFFCO TOKIO General Insurance Company Limiter and another reported in AIR 2016 SC 956

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Both these judgments are mainly relying upon the decision in the case of Pratap Narain Singh V/s.Shrinivas Sabata reported in AIR 1976 SC 222 and Kerala State Electricity Board V/s. Valsala K. reported in AIR 1999 SC 3502.

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Perusal of such judgments makes it clear that though the decision in the Pratap Narain Singh (Supra) and Valsala (Supra) are by the larger bench and though, as observed in the case of Siby George (Supra), it overrules in the decision, in the case of Oriental Insurance Company Limited V/s. Mohd. Nasir and Anr. reported in (2009) 6 SCC 280 and National Insurance Company Ltd. V/s. Mubasir Ahmed and Anr. reported in (2007) 2 SCC 349, practically, the judgment by the larger benches are dealing with the liability of the employer only and not insurance company. Thereby, there is distinguishable facts and circumstances, in as much as, liability of the insurance company like present appellant is solely based upon the contract of insurance between the insured and insurer and it is not based upon the statutory liability imposed upon the employer under the Act. This is what preciously held and decided by the Hon'ble Supreme Court. Such decision was relied upon and referred by the appellant i.e. Ved

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Page 4 of 6

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C/FA/823/2006 JUDGMENT

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Prakash and Mahavir (Supra). Therefore, so far as amount of penalty imposed upon the employer by the Commissioner under the Act is concerned, such penalty is solely because of the fact that employer has failed to deposit the amount of compensation in prescribed period of time before the commissioner and therefore, commissioner is entitled and empowered to impose penalty upon the employer. However, liability of the Insurance Company is to reimburse employer for his liability of compensation and thereby, in absence of specific contract to that effect, when penalty is imposed because of non depositing the amount of compensation in time by the employer, such liability cannot be imposed upon Insurance Company as held in the case of Ved Prakash (supra) and Mahavir (supra). However, so far as interest of principle amount of compensation is concerned, in all above referred decision, the Hon'ble Supreme Court has confirmed that insurance company has to pay interest upon their amount of compensation but neither penalty nor interest on such penalty.

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In view of above facts and circumstances as well as legal proposition discussed hereinabove, this appeal is partly allowed whereby the impugned award dated 01.10.2005 is modified only to the effect that now liability to pay compensation with interest + amount of medical expenditure + cost of the claim petition + Court fees stamp, rest upon both the opponent jointly and severally with the interest of 12%; whereas award of 50% penalty is modified so as to restrict the liability to pay such penalty upon original opponent no.1 i.e. employer only and thereby, Insurance

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Page 5 of 6

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C/FA/823/2006 JUDGMENT

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Company is exonerated from making payment of penalty and interest thereon, if at all, it is awarded.

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It is made clear that operative order of the impugned award is missing about the liability of the employer, which may be purely a clerical error or mistake and therefore, it is made clear that opponent no.1 - owner of the vehicle in question is jointly and severally liable for the entire award.

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(S.G. SHAH, J)

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VARSHA DESAI

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Page 6 of 6

New India Assurance Company Limited v. Adambhai Harunbhai Node (Claimant)

Case brief

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New India Assurance Company Limited v. Adambhai Harunbhai Node (Claimant)

Case brief

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