Ushabai and Others vs Yusufali and Another

N.K. Mody, J.—Being aggrieved by the order dated 6.6.2003 passed by the Commissioner for Workmen''s Compensation (Labour Court), Indore, in Case No. 37 of 2001 WCF, whereby the claim petition filed by the Appellants u/s 10 of the Workmen''s Compensation Act, 1923 (hereinafter referred as ''the Act of 1923'') was allowed and the compensation of Rs. 3,94,120 was awarded without any interest, the present appeal has been filed.

Short facts of the case are that the Appellants who are the legal representatives of the deceased Ramesh Chandra Rathore, filed a claim petition before the learned court below on 4.6.2001 alleging that the deceased Ramesh Chandra Rathore was in employment of Respondent No. 1 and was murdered during the course of employment on 19.4.2001 with the result he died on 25.4.2001. It was alleged that Respondent No. 1 is the owner of autorickshaw bearing registration No. CPM 1229 and is in a transport business. The said auto was insured with the Respondent No. 2. It was alleged that the deceased was working as driver on the said auto. Further case of the Appellants was that deceased was earning Rs. 4,000 per month. It was alleged that on 19.4.2001 deceased was assaulted with the result he passed away. It was prayed that compensation be awarded. The claim petition was contested by Respondents on various grounds. After framing of issues and recording of evidence, the learned court below allowed the claim petition and awarded the compensation as stated above without interest, against which the present appeal has been filed.

The question involved in the appeal is as under:

Whether the Appellants are entitled for interest/penalty on the awarded amount of compensation under the provisions of Workmen''s Compensation Act, if yes, then at what rate?

The learned Counsel for the Appellants submits that the impugned order is illegal to the extent as no interest has been awarded. The learned Counsel submits that Sub-clause (a) of Sub-section (3) of Section 4A deals with interest, which lays down that the interest shall be payable at the rate of 12 per cent per annum. While Clause (b) of Sub-section (3) of Section 4A of the Act deals with a situation where the employer commits default in payment of compensation due. Learned Counsel submits that as per Sub-clause (b) of Sub-section (3) of Section 4A if the Commissioner is of the opinion that there was no justification for delay may direct that the employer shall in addition to the amount of interest thereon pay a further sum not exceeding 50 per cent by way of penalty. Learned Counsel submits that it was a case where without any reason the amount of compensation was withheld by the employer but in spite of that no interest has been awarded by the learned court below, that too without assigning any reason while the Appellants were entitled for penalty as well. For this contention reliance is placed on a decision in the matter of Oriental Insurance Co. Ltd. Vs. Subhash Barman and Another, , wherein Gauhati High Court has held that in a case where insurance company neither pleaded nor could show any exclusion clause in insurance policy, the insurance company is liable for interest on compensation u/s 4-A(3)(a) of the Act. Further reliance is placed on a decision in the matter of Kamla Chaturvedi Vs. National Insurance Co. and Others, , wherein the accident in question arose on account of vehicular accident and the provisions of Motor Vehicles Act were applicable, the Hon''ble Supreme Court observed that after going through the policy of insurance, court is of the view that no such exception to payment of interest by insurance company is stipulated. Learned Counsel for the Appellants submits that in the matter of New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya and Another, , wherein policy expressly excluded interest and penalty imposed on insured employer on account of his failure to comply with the requirement of the Act, Hon''ble Apex Court held that the amount of interest and penalty is payable by employer. The learned Counsel submits that this was not the situation existing in the present appeal, hence the appeal filed by the Appellants be allowed and the interest and penalty be awarded.

Learned Counsel for the Respondent No. 2 submits that learned court below has rightly not awarded interest on the compensation. It is submitted that since substantial amount of compensation has been awarded, therefore, the appeal has no force and the same be dismissed.

From perusal of the record it appears that the policy is not on record. However, it has not been disputed by the Respondent No. 2 that offending vehicle was insured. In the matter of New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya and Another, , the Hon''ble Apex Court has observed that in a case insurer had not undertaken the liability for interest and penalty, but had undertaken to indemnify the employer only to reimburse the compensation the employer was liable to pay among other things under the Workmen''s Compensation Act. Unless one is in a position to void the exclusion clause concerning liability for interest and penalty imposed on the insured on account of his failure to comply with the requirements of the Workmen''s Compensation Act, the insurer cannot be made liable to the insured for those amounts.

Since in the present case the policy has not been filed, no evidence is led by the Respondent No. 2 to the effect that the insurance company is not liable for payment of interest and penalty as had undertaken to indemnify the employer only for reimbursement of the liability was liable to pay among other things under the Act, therefore, there was no justification on the part of the court below in not awarding the interest.

In view of this, appeal filed by the Appellants is allowed. The Appellants are entitled for interest at the rate of 12 per cent per annum after a month from the date of adjudication u/s 4-A(3)(a) of the Act. So far as the period from the date of application till adjudication is concerned, keeping in view the law laid down in the case of Oriental Insurance Co. Ltd. v. Mohd. Nasir 2009 ACJ 2742 (SC), the Appellants shall be entitled for the interest at the rate of 7.5 per cent per annum.

With the aforesaid, appeal stands disposed of.