AI Structured Summary
Not yet generated for this judgment
Judgment
The present appeal under section 30 of the Workmen''s Compensation Act, 1923, (for short, ''the WC Act'') is directed against the judgment and order dated 11th December 2012 passed by the Commissioner under the Workmen''s Compensation Act, Ahmedabad in Workmen''s Compensation (Fatal) Application No.2 of 2011 whereby the application preferred by the respondents nos.2 to 6 ? original claimants was allowed in part and the appellant and they were held entitled to recover a sum of Rs.3,15,820/- with interest at the rate of 12% per annum from the appellant-insurance company while respondent no.1 was directed to pay Rs.1,47,910 as penalty.
The present appeal, preferred by the appellant-insurance company requires consideration of the following question of law: "1. Whether the Commissioner could have directed the appellant to pay interest on the awarded compensation when there was no contract for payment of interest under the agreement of Workmen Compensation Policy between the appellant and respondent no.1?"
The facts giving rise to the present appeal are not many and move in a narrow compass. The deceased ? Hakubhai, who was the husband of respondent no.2, son of respondents nos.3 and 4 and father of the respondents nos.5 and 6 was working with respondent no.1. On the day of the accident i.e. on 9.11.2008 he was digging earth when a slab fell on him all of a sudden. He was buried under the soil and when he was removed from the pit and taken to the hospital, he was declared brought dead.
Respondent no.1 had taken WC Policy from the appellant-insurance company. Respondents nos.2 to 6 being the heirs and representatives of the deceased filed Workmen''s Compensation (Fatal) Application No.2 of 2011 before the Commissioner for Wokmen''s Compensation, Ahmedabad to recover compensation of Rs.10 lakhs from the appellant and respondent no.1. The Commissioner by the judgment and order dated 11th December 2012 held that the respondents nos.2 to 6 are entitled to recover a sum of Rs.3,15,820/- with interest at the rate of 12% per annum from the appellantinsurance company while respondent no.1 was directed to pay Rs.1,47,910 as penalty. The appellant insurance company being aggrieved and dissatisfied with the fastening of liable of payment of interest on the awarded compensation has preferred the present appeal.
I have heard Mr V.C. Thomas, learned advocate for Mr Vibhuti Nanavati, learned advocate for the appellantinsurance company and Mr H.S. Belsare, learned advocate for the respondent no.1. Despite service of notice, there is no appearance on behalf of Respondents nos.2 to 6.
The singular submission which is raised in the present appeal for ascertaining the fastening of the liability on the insurance company of payment of interest on the awarded amount of compensation is based on the decision of the Supreme Court in the case ofNew India Assurance Company Ltd. v. Harshadbhai Amrutbhai Modhiya, AIR 2006 SC 1926. Mr Thomas, learned advocate for the appellant has vehemently urged that in absence of a special contract between the insurance company and the insured ? respondent no.1 for payment of interest on the compensation, the Commissioner ought not to have fastened the liability on the appellant of payment of interest on the amount of compensation. He, therefore, urges that the appeal may be allowed and the appellant may be exonerated of the liability of making the payment of interest on the amount of compensation.
Mr Belsare, learned advocate for respondent no.1 has supported the impugned judgment and order of the Commissioner and urges that the appeal may be dismissed.
The Supreme Court in the case of Harshadbhai Amrutbhai Modhiya (supra) has held in paragraph 15 as under: "15. The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimize his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law." It is thus clear from the above proposition of law that the contract of insurance is governed by the provisions of the Insurance Act and the insured is required to pay premium which is to be calculated in the manner provided for therein. With a view to minimize his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters. The perusal of the insurance policy reveals that the policy is WC (General). The further perusal of the same makes it clear that there is no special contract between the appellant and respondent no.1 to cover the liability of payment of interest. I am, therefore, of the opinion that the Commissioner ought not to have fastened the liability of payment of interest at the rate of 12% on the appellant insurance company.
For the foregoing reasons, the question of law raised for consideration in this appeal needs to be answered in favour of the appellant-insurance company and the the insurance company needs to exonerated from its liability to pay the interest on the amount of compensation awarded in favour of respondents nos.2 to 6 under the impugned judgment and order of the Commissioner.
In the result, the appeal succeeds and is hereby allowed. The impugned judgment and order dated 11th December 2012 so far as it fastens the liability on the appellant insurance company of payment of interest on the awarded amount of compensation is hereby modified and the appellant insurance company is exonerated from the liability to pay interest on the awarded amount of compensation. However, it is made clear that respondents nos.2 to 6 are at liberty to recover the interest at the rate of 12% on the awarded compensation of Rs.3,15,820/- from respondent no.1 herein in terms of the impugned judgment and order. The excess amount of Rs.1,70,753/- deposited by the appellant insurance company is lying with the Commissioner and it is invested in cumulative fixed deposit. The Commissioner is directed to refund this amount to the appellant-insurance company with accrued interest thereon, if any.
Registry is directed to remit the Record & Proceedings to the court below forthwith.