Iimtiyaz Khan Vs Car Chasis Carriers and Anr.

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2025:JHHC:26697

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IN THE HIGH COURT OF JHARKHAND AT RANCHI M. A. No. 11 of 2013

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1(a) Iimtiyaz Khan, S/o Late Ishtiaque Khan, R/o Village-Jainnagar, P.O.& P.S.-Jainnagar, Dist.-Koderma

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1(b) Reshma Khatoon, W/o Md. Sartaj Khan, R/o of 297 Bhadodih, P.O.Jhumri Tilaiya, P.S.-Tilaiya, Dist.-Koderma .... …. Appellants

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Versus

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Car Chasis Carriers, 18 Muktaram Babu Street, P.O.-18 Muktaram Babu Street, P.S.-Bara Bazar, Kolkatta-700007, West Bengal

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Bharati Axa General Insurance Company Limited, 49, Sakharam Ganesh Dauskar Sarani, P.O.-49, Sakharam Ganesh Dauskar Sarani, P.S.Bhowanipur, Kolkata .... .... Respondents

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CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY

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For the Appellants : Mr. Awnish Shankar, Advocate For the Insurance Co. : Mr. Bibhash Sinha, Advocate

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Oral Order

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18 / Dated : 02.09.2025

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The claimants are in appeal before this Court under Section 30 of the Workmen Compensation Act, 1923 for enhancement of compensation awarded in W.C. Case No. 33/2011, whereby and whereunder, a compensation of Rs.3,04,711.50 with interest at the rate of 9% per annum has been awarded in favour of the claimants under Section 3 of the Workmen Compensation Act, 1923.

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The facts are not in dispute that the deceased Sartaj Khan died in an accident on 22.01.2010 while driving a Trailor/Truck bearing Registration No. NL 01/D- 4205 which was under the insurance cover of respondent no. 2 at the relevant time of accident.

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This appeal has been preferred on the ground that mandate of Section 4A of the Workmen Compensation Act, has not been followed for paying the provisional compensation within a month of accident. Therefore, the Employer was liable to pay penalty.

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Learned Labour Court has noted in para-16 that the accident took place on 21.01.2010, and no compensation was immediately paid by the employer in terms of Section 3 of the Act. In this view of the matter, the employer was liable to pay penalty.

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It is further argued that learned Labour Court fell in error while awarding the interest at the rate of 9% per annum which should have been 12% per annum as per Section 4A (3)(a). On the question

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2025:JHHC:26697

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whether the Insurance Company can be saddled with the liability to pay penalty, reliance is placed on a judgment passed by the High Court of Delhi in FAO 158/2021 CM Appeal 20234-20235/2021, wherein it has been held that the Insurance Company will be liable to pay compensation towards penalty. Further, no amount has been paid under the head of Funeral Charge.

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Learned counsel for the Insurance Company has submitted that so far as the penalty part is concerned, for that the Insurance Company is not held liable, as the statutory liability to pay provisional compensation was on the owner of the vehicle to pay the compensation within a month of the order. Thus, for the laches on the part of the owner to pay provisional compensation, liability cannot be fixed on insurer of vehicle. Further, there cannot be any agreement in violation of the statutory provision which fixes the liability to pay the provisional compensation on the owner. Therefore, the penalty for the default is to be paid by the owner and not by the insurer of the said vehicle. In this regard, reliance is place on LR Ferro Alloys Ltd. Vs. Mahavir Mahto & Anr . (2002) 9 SCC 450, wherein it has been held that the penalty was on account of personal fault, for which the Insurance Company cannot be made liable to reimburse penalty imposed on the employer.

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Having considered the submissions advanced on behalf of both sides and the authoritative pronouncement of the Hon’ble Apex Court with regard to personal liability of the owner to pay the compensation amount, it is difficult to agree to the proposition of law strongly canvassed on behalf of the appellant that the Insurance Company can be made liable to pay penalty for.

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However, for better appreciation Section 4A is extracted below which has specific provision for imposing penalty on the employer which reads as under:

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“4A. Compensation to be paid when due and penalty for default -

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(1) Compensation under section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim.

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(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

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2025:JHHC:26697

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

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(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:

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Provided that an order for the payment of penalty shall not be

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passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. ”

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From the above provision of law, it is apparent that before the owner can be saddled with liability to pay the penalty amount, a show cause has to be served by the learned Labour Court, and if the owner is unable to explain the reason for delay in payment of compensation, in that circumstance, the penalty can be inflicted upon him. In the present case, the records do not suggest that the issue of penalty was raised or show cause was served on the employer.

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Under the circumstance, at the appellate stage, it will not meet the ends of justice to inflict penalty, that too when the hearing of this appeal is proceeded ex-parte against the employer of the vehicle.

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So far, the claim of interest and the funeral expenses are concerned, it has merit and consequently, the award is modified to the extent that the principal compensation amount as awarded by the Labour Court along with funeral expenses of Rs.25,000/- and interest at the rate of 12% on the total compensation amount from the date of accident till the date of payment. The Insurance Company will pay the excess amount after the same is calculated by the Labour/Executing Court.

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This Misc. Appeal is accordingly, partly allowed.

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Since the awarded compensation amount has been paid, learned

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Labour Court will work out the interest part and the same will be paid by the Insurance Company along with funeral expense within a month of this order.

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Pending I.A., if any, stands disposed of.

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(Gautam Kumar Choudhary, J.)

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AKT/Satendra

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Iimtiyaz Khan v. Car Chasis Carriers and Anr.

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Iimtiyaz Khan v. Car Chasis Carriers and Anr.

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