Allowed

National Insurance Co. v. Smt. Sushila Devi & Ors.

Punjab & Haryana HC5 Apr 2013FAO/580/1989

Case brief

AI extract

What is this about?

The High Court allowed the appeal filed by the National Insurance Company Limited against an order imposing penalty for default in payment of workmen's compensation. The court held that penalty under the Workmen's Compensation Act, 1923 is the liability of the employer only, not the insurer, and directed repeal of the penalty clause imposed on the insurer.

What did the court decide?

Appeal allowed; penalty directed to be imposed upon the employer instead of the Insurance Company; any amount already paid by insurer may be recovered.

National Insurance Co. Vs Smt. Sushila… — Writ and Judicial Review | Punjab & Haryana HC (2013)

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FAO No.580 of 1989 (O&M)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

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FAO No.580 of 1989 (O&M) Date of Decision: 05.04.2013

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National Insurance Company Limited ....Appellant

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Versus

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Smt. Sushila Devi and others

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....Respondents

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BEFORE :- HON'BLE MRS. JUSTICE DAYA CHAUDHARY

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Present:Mr. R.C. Kapoor, Advocate for the appellant.

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None for the respondents.

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DAYA CHAUDHARY, J.

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Claimants filed a claim petition before the Commissioner under the Workmen’s Compensation Act, 1923 (here-in-after referred to as `the Act’) on account of accident which resulted into death of Vijay Shanker. Claimants are widow of deceased and two minor children. The claim petition was allowed vide Order dated 26.12.1988. An amount of compensation was awarded to the tune of Rs.73,195/- which was to be paid within a period of one month. The claimants were also held entitled to simple interest in addition to amount of compensation @ 10% p.a on awarded amount of compensation w.e.f. 15.02.1988 till its realization. The respondents were also held liable to pay penalty @ 30%.

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The Insurance Company has filed the present appeal before this Court to challenge the award passed by the Commissioner to the extent of penalty only.

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Learned counsel for the appellant submits that there is no

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FAO No.580 of 1989 (O&M)

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provision under the Act for imposing any penalty upon the Insurance Company as the penalty is to be imposed upon the employer only as the liability under the Act is of the employer. The award passed by the Commissioner is contrary to the provisions of Section 4-A of the Act.

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Mr. Aseem Aggarwal, Advocate represented the respondents but he was neither present on the last date of hearing nor today. However, the appeal being of the year 1989, cannot be adjourned further, hence, I have left with no other option except to decide the appeal.

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I have heard the arguments of learned counsel for the appellant and have also perused the impugned award as well as other documents on the file.

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The delay in filing the appeal is condoned as per grounds mentioned in the application.

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Admittedly, claimant-respondents are the dependents of the deceased Vijay Shanker who met with an accident which resulted into his death. Vijay Shanker deceased was employee of M/s Utility Engineers (I) Limited, Malpura, Dharuhera, District Mohindergarh and was drawing salary @ Rs.849/- p.m at the time of accident. He died during the course of employment while working in Air Conditioning and Refrigeration Section , which was covered under the Insurance Policy issued by National Insurance Company Limited i.e the present appellant. He died at the age of 26. The claim petition was filed by widow of deceased as well as two minor children. The same was allowed by the Commissioner, Gurgaon vide award dated 26.12.1988 and the claimants were granted compensation along with interest and penalty as mentioned in the award. The Insurance Company is appellant before this Court to challenge the award of compensation to the extent of penalty only. Learned counsel for the appellant submits that the penalty cannot be imposed upon the Insurance

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FAO No.580 of 1989 (O&M)

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Company as it is the liability of the employer only. Section 3 of the Act is relevant in the present case which is reproduced as under :-

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“Section 3(1) – If personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of this Chapter.”

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As per Section 3(1) of the Act, in case, any injury is caused to a workman by an accident arising out of or in the course of his employment, the employer shall be liable to pay compensation in accordance with provisions of the Act. Admittedly, the employer is liable to pay compensation. In case, there is a default in payment of compensation within a period of one month from the date it fell due, the Commissioner is empowered to direct for granting interest as well as penalty. The penalty should not exceed 50% of the amount of compensation and the same is to be recovered from the employer. The provision of Section 4-A of the Act is relevant and the same is reproduced as under :-

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“ Section 4-A – Compensation to be paid, when due and penalty for default. – (1) Compensation under Section 4 shall be paid as soon as it falls due.

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(2) xxx xxx xxx

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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 Commissioner shall

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(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

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FAO No.580 of 1989 (O&M)

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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 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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As per provisions, in case, the employer does not accept the liability of compensation, he is under obligation to make provisional payment and the same is to be deposited with the Commissioner or to be paid to the Workman and in case, there is a default in payment of compensation within a period of one month, then the employer can be directed by the Commissioner to grant interest on the awarded amount. In case, in the opinion of the Commissioner, there is no justification for delay, then the penalty is to be imposed upon the employer which should not exceed 50% of the amount awarded.

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As per Section 10(1) of the Act, no claim of compensation shall be entertained by the Commissioner unless notice of the accident has been given. As per provisions of sub-section (3) of Section 4-A of the Act, Clause (a) is with regard to interest and Clause (b) provides imposition of penalty. Although before imposing penalty, the Commissioner is required to give the employer a reasonable opportunity to show cause as to why the penalty should not be imposed. In case, the Commissioner comes to the conclusion that the payment of amount was not paid without any justification, then the penalty can be imposed upon the employer.

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Four Judges’ Bench of Hon’ble the Apex Court in case Pratap Narain Singh Deo vs Shrinivas Sabata 1976(1) SCC 289 had held that the employer becomes liable to pay compensation as soon as the personal injury is caused to the workman by accident arising out of and in the course

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FAO No.580 of 1989 (O&M)

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of his employment. The relevant date for determination of rate of compensation is the date of accident and not the date of decision of the claim petition.

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In the present case, the liability of interest and penalty has been imposed upon the Insurance Company and it has been stated in the impugned award that the principal employer is only liable to pay compensation and he can recover the said compensation through civil suit. The award passed by the Commissioner is contrary to the provisions of the Act, whereas, the penalty is to be imposed upon the employer only. Accordingly, there is a merit in the contention raised by learned counsel for the appellant and the appeal is accordingly allowed. The penalty is directed to be imposed upon the employer and not upon the Insurance Company. However, in case, any amount has been paid by the Insurance Company, the same can be recovered.

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Allowed. No order as to cost.

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(DAYA CHAUDHARY) JUDGE

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05.04.2013 gurpreet

National Insurance Co. v. Smt. Sushila Devi & Ors.

Case brief

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National Insurance Co. v. Smt. Sushila Devi & Ors.

Case brief

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