National Insurance Co. Ltd. vs Devi Chand and Others

Kuldip Singh, J.—The insurer of car No. HP-16-0321 has filed this appeal against the award dated 7.7.2004 passed by Commissioner, Under Workmen''s Compensation Act, Arki in case No. 2/2003.

The facts, in brief, are that respondents No. 1 and 2 parents of Vinod Kumar had filed claim petition before Commissioner, Under Workmen''s Compensation Act, 1923 (for short Act), claiming Rs. 10,00,000/- compensation on the grounds that their son Vinod Kumar was working as driver with respondent No. 3 and when he was driving car bearing registration No. HP-16-0321 from Darla to Kullu, the car rolled down into the Beas River near Khoti Nallah on 23.2.2003, he sustained injuries and died on the spot. The FIR No. 85 dated 23.2.2003 was also registered. The deceased was 24 years of age and was earning Rs. 4,000/- per month wages. The respondent No. 3 had the knowledge of the accident and death of Vinod Kumar inasmuch as she visited the respondents No. 1,2 for condolence. The car was insured with appellant.

The respondent No. 3 had contested the petition by filing reply and admitted that Vinod Kumar was her employee and was driving car and died but cause of death has been denied. The monthly wages of deceased were also admitted. It has also been admitted that she had the knowledge of the accident. The accident took place in the course of employment of Vinod Kumar with the respondent No. 3. The car was insured with appellant who is liable to pay the compensation.

The appellant also contested the petition by filing reply and took preliminary objections and denied that the car was insured with the appellant. In alternative it was pleaded that even if, the car was found to be insured with the appellant then the liability is of the insurer as per the policy. The deceased was not holding any valid and effective driving licence at the time of the accident. The vehicle was being used in contravention of conditions of the policy. The respondent No. 3 did not inform the appellant about the accident. On merits, appellant denied that the deceased was employed by respondent No. 1 as driver and was being paid wages Rs. 4000/- per month. The appellant denied the claim.

The respondents No. 1,2 filed rejoinder to the reply of insurer and re-asserted their case in the claim petition while denying the stand taken up by the insurer in the reply. The Commissioner had framed the following issues:

I. Whether the deceased was workman within the meaning of workman compensation Act? ..OPP

II. Whether the accident arose out of or in the course of deceased employment? ...OPP

III. Whether the amount of compensation claimed is due or any part of that amount? ...OPP

IV. Whether the respondents are liable to pay such compensation as is due or claimed? ..OPO

V. Relief.

The issues No. I and II were decided in favour of respondents No. 1 and 2, under issue No. III, the Commissioner has held that respondents No. 1,2 are entitled to amount as per operative part of the judgment. The Commissioner under issue No. IV has held that appellant and respondent No. 3 are liable to pay compensation jointly and severally. The claim is due to the respondents No. 1,2 from respondent No. 3 which in turn will be indemnified by appellant being the insurer of car No. HP-16-0321. The Commissioner ultimately has awarded Rs. 4,33,820/- to respondents No. 1,2 with the direction that since the amount was not paid within the stipulated period, the respondents No. 1,2 shall be eligible to get the interest at the rate of 12% per annum on the amount of compensation from the date of accident till the payment of compensation as assessed, the compensation amount along with interest be deposited within 30 days, failing which the respondents shall pay 30% of the assessed amount as penalty.

The appeal has been admitted on the following substantial question of law:

Whether liability to pay penalty and interest could be fastened on the Insurance Company or not?

Heard and perused the record. The Commissioner while deciding issue No. IV has held that the claim is due to respondents No. 1,2 claimants from respondent No. 3 employer who in turn will be indemnified by appellant-insurer. In the operative part of the order, the Commissioner has held that since the amount was not paid within the stipulated period, the respondents No. 1, 2 shall be eligible to get the interest at the rate of 12% per annum on the amount of compensation from the date of accident till the payment of compensation, the compensation amount alongwith interest be deposited within 30 days, failing which, the respondents shall pay 30% of the assessed amount as penalty.

The payment of interest and penalty under the Act is no more in resintegra in view of Ved Prakash Garg Vs. Premi Devi and others, and L.R. Ferro Alloys Ltd. Vs. Mahavir Mahto and Another, therefore, appellant-insurer is liable to pay the interest and not the penalty which shall be paid by respondent No. 3 to respondents No. 1,2. In view of clear position of law, in the present case the appellant shall pay the entire amount of compensation alongwith interest to respondents No. 1,2 except the amount of penalty which shall be exclusively paid by respondent No. 3 to respondents No. 1,2 and the impugned order to this extent is modified and the appeal is disposed of accordingly. No costs.