Gujarat High Court
Oriental Insurance Co. Ltd vs Legal Heirs Of Decd. Ratilal Damjibhai ... on 10 November, 2025
NEUTRAL CITATION
C/FA/1730/2008 JUDGMENT DATED: 10/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1730 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DEVAN M. DESAI
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Approved for Reporting Yes No
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ORIENTAL INSURANCE CO. LTD.
Versus
LEGAL HEIRS OF DECD. RATILAL DAMJIBHAI PARMAR & ORS.
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Appearance:
MR MITESH L RANGRAS(3324) for the Appellant(s) No. 1
MR HARSHAD K PATEL(2844) for the Defendant(s) No. 1.1,1.2,1.3,1.4
SERVED BY AFFIX. (R) for the Defendant(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 10/11/2025
ORAL JUDGMENT
1. This Appeal is filed by appellant - Insurance Company under Section 30 of the Workmen's Compensation Act, 1923 challenging judgment and award dated 01.02.2007 passed by Labour Court, Kachchh in W.C. (F) Application No.64 of 2000.
2. Heard learned advocate Mr.Mitesh Rangras for Page 1 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025 NEUTRAL CITATION C/FA/1730/2008 JUDGMENT DATED: 10/11/2025 undefined appellant - original opponent No.2 - Insurance Company. Learned advocate Mr.H.K.Patel for respondents remained absent. Though served, none appears for respondent No.2
3. Brief facts are as under:-
3.1 The claimants-legal representatives of deceased-
Ratilal Damjibhai Parmar filed a claim application seeking compensation from original opponent No.1-employer and opponent No.2- Insurance Company.
3.2 It is the case of claimants that the deceased was under employment of opponent No.1 as shipping boat repair mechanic. On 09.06.1998, during the course of employment, deceased along with three other persons, was lost in a cyclone in sea. The employer-opponent No.1 did not pay the compensation within stipulated time. Resultantly, claimants filed a claim application under the Workmen's Compensation Act. Though served, employer- Page 2 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025
NEUTRAL CITATION C/FA/1730/2008 JUDGMENT DATED: 10/11/2025 undefined opponent No.1 did not file Written Statement. Opponent No.2 - Insurance Company appeared and filed Written Statement at Ex.10 and challenged the claim application. After considering the evidence on record, learned Labour Court partly allowed the claim application and directed the opponents to pay compensation of Rs.1,28,330/- with interest at 12% per annum and penalty @ of 50%. 3.3 Being aggrieved and dissatisfied with the impugned judgment and award, appellant - Insurance Company is before this Court.
4. Learned advocate for the appellant has contended that the learned Labour Court has committed an error by ignoring admitted fact that the policy in question was a Group Personal Accident Policy in favour of insured- opponent No.2 herein. It is further submitted that no policy was issued covering the risk under the Workmen's Page 3 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025 NEUTRAL CITATION C/FA/1730/2008 JUDGMENT DATED: 10/11/2025 undefined Compensation Act. Therefore, the order directing the appellant to pay interest and penalty to claimants is illegal and unjustified.
4.1 Learned advocate for the appellant has placed reliance upon the decision of New India Assurance Company Ltd. Vs. Harshadbhai Amrutbhai Modhiya reported in (2006) 5 SCC 192 and contended that, in absence of a contract of Insurance under the Workmen's Compensation Act, the Insurance Company cannot be held liable for interest and penalty. It is further submitted that respondent No.2 herein, being the employer is required to be saddled with the liability of interest and penalty. However, at this stage, learned advocate for the appellant contended that the appellant is restricting its challenge only with regard to the imposing liability for interest upon appellant. So far as the question of imposing of penalty is concerned, the Insurance Company is foregoing its challenge. Page 4 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025
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5. I have considered the submissions of learned advocate for the appellant and also perused the record and proceedings. It appears that the policy in question was admittedly a Group Personal Accident Policy. It is also an admitted fact coming out on record that the appellant had not issued any policy covering the risk under Workmen's Compensation Act. The claim of claimants is under the provisions of Workmen's Compensation Act. The limited question which is under consideration is with regard to the liability for interest. The question of imposing of penalty is not required to be gone into the present case as the appellant has accepted the liability of payment of penalty to the claimants. During the course of submissions, it has been submitted by learned advocate for the appellant that the appellant is also not questioning the assessment at compensation of Rs.1,28,330/- awarded to the claimants. Page 5 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025
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6. The law on the question of imposing interest upon the Insurance Company under the cases of Workmen's Compensation Act is also well settled. In the case of New India Assurance Company Ltd. Vs. Harshadbhai Amrutbhai Modhiya reported in (2006) 5 SCC 192. In paragraph No.24, the Hon'ble Apex Court has observed as under:-
"24. Section 17 of the Workmen's Compensation Act voids only a contract or agreement whereby a workman relinquishes any right of compensation from the employer for personal injury arising out of or in the course of the employment and insofar as it purports to remove or reduce the liability of any person to pay compensation under the Act. As my learned brother has noticed, in the Workmen's Compensation Act, there are no provisions corresponding to those in the Motor Vehicles Act, insisting on the insurer covering the entire liability arising out of an award towards compensation to a third party arising out of a motor accident. It is not brought to our notice that there is any other law enacted which stands in the way of an insurance company and the insured entering into a contract confining the obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. In this situation, the obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the Motor Vehicles Act the Workmen's Compensation Act, does not confer a right on the claimant for compensation under that Act to claim the payment of compensation in its entirety from the insurer himself. The entitlement of the claimant under the Workmen's Compensation Act is to claim the compensation from the employer. As between the employer and the insurer, the rights and obligations would depend upon the terms of the insurance contract. Construing the contract involved here it is clear that the insurer has specifically excluded any liability for Page 6 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025 NEUTRAL CITATION C/FA/1730/2008 JUDGMENT DATED: 10/11/2025 undefined interest or penalty under the Workmen's Compensation Act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under the Workmen's Compensation Act. The High Court was, therefore, not correct in holding that the appellant insurance company, is also liable to pay the interest on the amount of compensation awarded by the Commissioner. The workman has to recover it from the employer."
7. While discussing the question of liability for interest and penalty under the Workmen's Compensation Act, the Hon'ble Apex Court has observed that when the contract of Insurance Company expressly excludes the liability of interest and penalty under the Workmen's Compensation Act, the Insurance Company cannot be held liable for interest and penalty.
In the present case as observed earlier that the policy issued covering the risk is not under Workmen's Compensation Act and same is issued covering risk under the Group Personal Accident Policy. Therefore, in my view, the Insurance Company cannot be saddled with the liability of interest.
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8. In view of the aforesaid discussion, judgment and award dated 01.02.2007 passed by learned Labour Court, Kachchh in W.C. (F) Application No.64 of 2000 is required to be modified by excluding the Insurance Company - appellant from the liability to pay interest to the claimants. The amount of compensation along with interest @ 12% p.a. shall be recovered by claimants from the employer - opponent No.1. So far as imposition of penalty is concerned, the same remains unaltered.
The appellant is entitled to refund interest amount, if any, deposited before the learned Labour Court concerned. The learned Labour Court shall refund the said amount of interest to the appellant after following due procedure.
9. In view of the above, present First Appeal is partly allowed to the aforesaid extent and stands disposed Page 8 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025 NEUTRAL CITATION C/FA/1730/2008 JUDGMENT DATED: 10/11/2025 undefined of accordingly. No order as to costs. Record and proceedings, if any, be sent back to the concerned Court forthwith.
(D. M. DESAI,J) MANOJ Page 9 of 9 Uploaded by MANOJ KUMAR(HC01092) on Wed Nov 12 2025 Downloaded on : Wed Nov 12 21:35:52 IST 2025