Allowed

S.Suresh v. Tmt.T.Selvam

Madras HC10 Jan 2014CMA/3721/2012

Case brief

AI extract

What is this about?

The Madras High Court allowed an appeal against an award directing the employer to pay interest. It held that deposit of interest is not a condition for appeal and that the insurance company, not the employer, is liable to pay the accrued interest under the policy.

What did the court decide?

The order directing the appellant/employer to pay interest alone is set aside; the 5th respondent insurance company is directed to pay interest.

S.Suresh Vs Tmt.T.Selvam — Contract and Commercial Disputes | Madras HC (2014)

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HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 10.01.2014

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CORAM :

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THE HONOURABLE Mr.JUSTICE G.M. AKBAR ALI

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Civil Miscellaneous Appeal No.3721 of 2012 and M.P.No.1 of 2012

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S. Suresh .. Appellant / R1
vs
1. Tmt. T. Selvam
2. T. Senthil
3. T. Ramesh
4. Tmt.Maheswari
5. The New India Assurance Co Ltd
494, D.P. Road,
R.S. Puram,
Coimbatore-2
.. Respondents / Petitioners
1 to 4 and R2

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Civil Miscellaneous Appeals filed under Section 30 of the Workmen Compensation Act against the award dated 11.6.2012 in W.C.No.41 of 2011 on the file of the Commissioner of the Workmen Compensation-cumthe Deputy Commissioner of Labour, Coimbatore-18

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For Appellant : Mr.N. Subbarayalu For R.5 : Mr.S. Manohar R.1 : No appearance

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JUDGMENT

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Civil Miscellaneous Appeals filed against the award dated 11.6.2012 in W.C.No.41 of 2011 on the file of the Commissioner of the Workmen Compensation-cum-the Deputy Commissioner of Labour, Coimbatore-18.

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The substantial question of law which arises in this appeal is that whether the owner of the vehicle is liable to pay interest on the compensation amount awarded under the Workmen's Compensation Act.

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https://hcservices.ecourts.gov.in/hcservices/

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The brief facts of the case is as follows:

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The respondents 1 to 4 filed a claim petition before the Commissioner of the Workmen Compensation-cum-the Deputy Commissioner of Labour, Coimbatore, claiming compensation for the death of one Thirumoorthy, who was employed as a driver under the appellant. The vehicle was insured with the 5^th respondent Insurance Company.

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The claim was contested by the Insurance Company in all aspects. However, the Deputy Commissioner of Labour found that the accident had occurred during the course of employment causing the death of the employee under the appellant and found that the vehicle was insured with the 5^th respondent and directed the Insurance company to pay a sum of Rs.2,25,274/-. An interest was awarded at 12% p.a to be calculated from thirty days after the accident till the date payment of the award amount.

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The learned Commissioner relied on the judgment rendered in 2004 ACJ 452 (P.J. Narayan vs Union of India and others) and directed the appellant employer to pay the interest part alone, against which, the present appeal.

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Mr.N. Subbarayulu, learned counsel for the appellant submitted that the Deputy Commissioner of Labour was wrong in applying the proposition laid down in P.J.Narayan's case cited supra. The learned counsel also submitted that the compensation awarded by the Commissioner is payable along with interest and the insured is indemnified on the contract of insurance. Therefore, the insurer alone is liable to pay the interest.

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On the other hand, Mr.S. Manohar, learned counsel for the 5^th respondent raised a preliminary objection that the appellant has not deposited the interest amount before preferring the appeal and therefore the appeal itself is not maintainable under Sec.30(1)(a) of Workmen's Compensation Act.

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The learned counsel relied on a decision reported in 2006 ACJ 2393 (New India Assurance Co Ltd vs Neeru Dabur and others), wherein a Division Bench of Allahabad High Court held that the deposit is prerequisite for preferring an appeal”.

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He also relied on a decision reported in 2006 (5) SCC 200 (P.J. Narayan vs Union of India and others), wherein the Hon'ble Supreme Court has dismissed a writ petition which is filed for the purpose of directing the Insuranace Company to delete the clause in the insurance policy which provides that in cases of compensation under the W.C.Act the insurance company will not be liable to pay interest. This decision was followed by the Deputy Commissioner of Labour and thereby directed the appellant to pay the interest.

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https://hcservices.ecourts.gov.in/hcservices/

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Mr.N. Subbarayulu relied on a decision reported in 2008 LLR 910 (M/s Indo Aromatic Pvt Ltd vs Smt.Sarvesh Devi and Others), 2008 ACJ 1212 (New India Assurance Co Ltd vs Gondia Devi and Others) and 1992 1 LLJ 61 (M/s Kap Steel Ltd and Smt. R. Sasikala). The learned counsel pointed out that deposit of amount of interest or penalty is not condition precedent for preferring an appeal.

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Heard and perused the materials available on record.

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As as far the preliminary objection is concerned, this court is of the view that deposit of amount of interest or penalty is not a condition precedent for preferring an appeal. In 1992 1 LLJ 61 (M/s Kap Steel Ltd and Smt. R. Sasikala), a Division bench of Karnataka High Court has held thus:

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“6. The learned counsel for the appellant is right in his submission that as the appeal preferred was only against the interest and penalty imposed under S.4-A of the Act, the condition of depositing the amount prescribed under the third proviso to S.30(1) of the Act was not attracted as this appeal does not fall under Cl.(a) of S.30(1) but falls under Cl.(aa) of the said section. In the result, we answer the second question as follows:

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Depositing of the amount of interest or penalty imposed under S.4-A of the Act in addition to the compensation awarded or otherwise is not a condition for preferring an appeal under S.30(1) of the Act.”

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In 2008 LLR 910 (M/s Indo Aromatic Pvt Ltd vs Smt.Sarvesh Devi and Others), a division bench of Allahabad High Court has also held

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“5. The provision clearly segregates interest or penalty from the principal sum. Embargo is available only with clause (a) under sub-section (1) of the Section. Therefore, our considered opinion is that for the purposes of preferring an appeal statutory deposit of the amount means principal sum not interest or penalty. Hence, the appeal cannot be said to be not maintainable on that score. Law is to be read as it is, not by adding any alien object not contemplated thereunder.

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https://hcservices.ecourts.gov.in/hcservices/

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In 2008 ACJ 1212 (New India Assurance Co Ltd vs Gondia Devi and Others), the High Court of Patna has held

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“3. The third proviso to sub-section (1) of section 30 of the Act, however, does not apply to an appeal to be preferred against an order awarding interest or penalty under the Act.

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In the instant case, while the award for compensation was passed, interest payable under the Act as well as the penalty had been separately quantified. There is no dispute that in the memorandum of appeal filed before this court, although it was urged that the entire award must go for the reasons indicated in the grounds taken in the memorandum of appeal, it was also indicated that the appellant has no obligation to pay interest and penalty as awarded. Therefore, insofar as that ground is concerned, the appellant wanted to prefer an appeal in terms of the right conferred by clause (aa) of sub-section (1) of section 30 of the Act, to which the third proviso to sub-section (1) of section 30 of the Act will not apply.

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In those circumstances, the best course should have been to delete all the grounds in the appeal and to confine the appeal only to clause (aa) of sub-section (1) of section 30 of the Act and to make it absolutely clear that the appeal was not against the order awarding compensation but is only confined to the order awarding interest and penalty under the Act.”

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As far as fastening the liability on the Insurance company only to an extent of compensation and directing the employer/insured to pay the interest is concerned, the Commissioner of Labour is wrong in applying the decision rendered in P.G.Narayan's case (2006) 5 SCC 300 In the above said case law, the one paragraph order reads as follows:

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“This writ petition is for the purpose of directing the insurance company to delete the clause in the insurance policy which provides that in cases of compensation under the Workmen's Compensation Act, 1923, the insurance

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https://hcservices.ecourts.gov.in/hcservices/

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company will not be liable to pay interest. We see no substance in the writ petition. There is no statutory liability on the insurance company. The statutory liability under the Workmen's Compensation Act is on the employer. An insurance is a matter of contract between the insurance company and the insured. It is always open to the insurance company to refuse to insure. Similarly, they are entitled to provide by contract that they will not take on liability for interest. In the absence of any statute to that effect, insurance companies cannot be forced by courts to take on liabilities which they do not want to take on. The writ petition is dismissed. No order as to costs”.

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A perusal of the order would show that a writ petition was filed for the purpose of directing the insurance company to delete the clause regarding the liability to pay interest. Therefore, the said decision is not applicable unless the Insurance company proves that the policy of insurance stipulates that they are not liable to pay interest. They have not produced the policy either before the Commissioner or before this Court. Therefore, the 5^th respondent Insurance company is liable to pay the accrued interest to be calculated thirty days after the accident till the date of payment on the compensation of Rs.2,25,274/-. The substantial question of law is ordered accordingly.

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In the result, the civil miscellaneous appeal is allowed and the order passed by the Deputy Commissioner of Labour, Coimbatore-18 in W.C.No.41 of 2011 dated 11.6.2012 directing the appellant/1^st respondent to pay the interest alone is set aside and the 5^th respondent Insurance company is directed to pay interest as per the order. No costs. Consequently, connected MP is closed.

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It is submitted that the amount has already been deposited and the interest amount, which they are entitled, may be permitted to be withdrawn.

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Sd/ Asst. Registrar. //true copy//

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Sub Asst. Registrar.

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https://hcservices.ecourts.gov.in/hcservices/

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The Commissioner Workmen Compensation-cumthe Deputy Commissioner of Labour, Coimbatore-18.

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+1 cc to Mr. N. Subbarayalu, Advocate, SR. No.1616 +1 cc to Mr. S. Manohar, Advocate, SR. No.2044

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C.M.A.No.3721 of 2012

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ksj (co) rnk/27.1.14

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https://hcservices.ecourts.gov.in/hcservices/

S.Suresh v. Tmt.T.Selvam

Case brief

What is this about?

What did the court decide?

S.Suresh v. Tmt.T.Selvam

Case brief

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