National Insurance Company Limited vs Vidyawati

Rakesh Garg, J.—Appellant-Insurance Company has challenged the order dated 31.08.1995 passed by the Commissioner, under the Workmen''s Compensation Act, 1923, Karnal, whereby, while awarding compensation and interest to the claimants, on account of death of Chander Kumar @ Ram Chander, an amount of Rs. 34,955 was also awarded as penalty u/s 4-A(3)(b) of the Workmen''s Compensation Act, 1923 (hereinafter referred to as, ''the Act'') and the appellant-Insurance Company was burdened with the liability to pay such penalty along with compensation and interest. In the instant appeal, learned counsel for the appellant has restricted his relief only to the extent of penalty amount. According to learned counsel for the appellant, the liability to pay penalty, under the provisions of the Act, is of the employer and the appellant-Insurance Company cannot be burdened with the said liability. In support of his case, learned counsel has relied upon Ved Prakash Garg Vs. Premi Devi and others, and on the basis of the aforesaid submissions, he has submitted that the following substantial question of law arises in this appeal for consideration:

Whether the appellant-Insurance Company can be burdened with the liability to pay penalty u/s 4-A(3)(b) of the Workmen''s Compensation Act, 1923?

At this stage, it may be noticed that the employer i.e. respondent No. 6 was served, however, hone appeared on his behalf and he was proceeded against ex-parte vide order dated 22.11.1996. It is further not in dispute that the amount of penalty was deposited by the Insurance Company before the Commissioner on 26.10.1995 and the same has been paid to the claimants.

At this stage, the observations of Hon''ble the Supreme Court in Ved Parkash Garg''s case (supra) may also be noticed, which read thus:

"As a result of the aforesaid discussion, it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the Punjab of Haryana High Court negative. In other words, the insurance company will be liable to meet the claim for compensation along with interest as imposed on the insured employer by the Workmen''s Commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4-A sub Section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen''s Commissioner u/s 4-A(3)(b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone."

In view of the aforesaid law laid down by Hon''ble the Apex Court, the question of law as raised in this appeal is answered in favour of the appellant-Insurance Company and it is held that liability to pay the penalty amount of Rs. 34,955 is of the employer i.e. respondent No. 6. Keeping in view facts and circumstances of the case, this appeal is allowed to the aforesaid extent with the observation that the appellant-Insurance Company is at liberty to recover the aforesaid amount of penalty from the employer i.e. respondent No. 6.