ORIENTAL INSURANCE CO LTD vs DILIP R PRAJAPATI & ANR.

Heard learned advocate Mr. Mitesh L. Rangras for the appellant. Nobody is present for the respondent No.2 though duly served, whereas,

respondent No.1 though served has remained absent throughout the proceedings. Perused the record. The appellant - Insurance Company has challenged the judgment and award dated 10.9.1993 by the Commissioner under the Workmen''s Compensation Act, Ahmedabad in W..C. Application No.52 of 1988. By such impugned judgment, the Commissioner has awarded an amount of Rs.20,269/- towards compensation for the injuries received by the original claimant - respondent No.1 herein while serving in Printing Press of his employer - respondent No.2. Since respondent No.2 has insured his liability under the Act with the appellant by contract of insurance, the Commissioner has directed the appellant - Insurance Company to pay such amount of compensation. However, the Commissioner has also awarded and thereby directed the appellant to pay 25% amount of compensation towards penalty, which comes to Rs.5,067/- and also awarded 6% interest on both the amounts i.e. principal amount so also on amount of penalty aggregating Rs.25,336/-.

The appellant - Insurance Company has challenged the award mainly for its liability to pay penalty and interest only because the award of principal amount of compensation is practically as per the statute where there is little scope to deviate from the calculation to arrive at quantum of compensation that may be payable to the victim or his heirs under the Workmen''s Compensation Act .

It may be appropriate to refer the decision of Hon''ble Supreme Court of India in the case of Ved Prakash Garg Vs. Premi Devi reported in AIR 1997 SC 3854 and also the decision in the case of Kashibhai Rambhai Patel Vs. Shanabhai Somabhai Parmar & Ors. reported in 2000 AIR SCW 4932.

In both the above decisions, Hon''ble the Supreme Court of India has categorically confirmed that the Insurance Company is not liable to pay penalty u/ss.4(A)(3)(B) of the Workmen''s Compensation Act .

The appellant is also relying upon the decision of this Court in the case of Gautam Transport, Bhavnagar Vs. Jituben Huseinbhai reported in 1989 ACJ 589 and also the decision in the case of Radhabehn, Wd./o. Narasibhai S. Patel & Ors. Vs. Mulji Kanji Dhord & Ors. reported in 1992(2) GLH 528.

However, the liability in respect of interest could be burdened on the Insurance Company considering the provisions of Section 4(A)(3)(A) of the Act. Since the judgment in Ved Prakash Garg (supra) is explaining the legal position in detail and it is holding the field throughout the period, whereby, there is no other view taken by any other Court thereafter, such judgment is to be relied upon without any objection.

In view of such facts and circumstances, the

law is well settled whereby the Insurance Company cannot be held liable to make payment of penalty.

It is also settled legal position that interest cannot be awarded on the amount of penalty and therefore, award is modified to that extent also. Thereby, interest is payable only on principal amount of Rs.20,269.80. It cannot be ignored that the contract of insurance in the form of workmen''s insurance policy also specifically provides that-

"It is hereby understood and agreed that the cover provided under this Policy shall not extend to indemnify the Insured/Insureds in respect of any interest and/or penalty which may be imposed on him/them on account of his/their failure to comply with the requirements laid down under the Workmen''s Compensation Act, 1923 and subsequent amendements of the said Act."

The appeal is partly allowed; whereby, the impugned judgment and order is modified only to the effect that the Insurance Company shall not be liable to pay the amount of penalty. However, though the impugned award is modified, when the Insurance Company has already deposited the total amount of compensation as awarded by the Commissioner, it would not be appropriate to restrain the claimant to get the benefit of such amount and thereby, to refund the amount to the appellant - Insurance Company. However, the Insurance Company would be entitled to recover

the same from its insured directly by executing this award. For the purpose, the award is modified in following terms.

If the Insurance Company has made the payment of penalty, then such amount can be recovered from the respondent No.6 - employer directly by way of execution proceedings.

In view of the above, the present First Appeal is partly allowed and is disposed of in above terms.