Gujarat High Court
New India Assurance Company Ltd vs Chandubhai Maganbhai Bariya on 19 September, 2025
NEUTRAL CITATION
C/FA/4218/2009 JUDGMENT DATED: 19/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4218 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-
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Approved for Reporting Yes No
No
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NEW INDIA ASSURANCE COMPANY LTD
Versus
CHANDUBHAI MAGANBHAI BARIYA & ANR.
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Appearance:
MR KV GADHIA(319) for the Appellant(s) No. 1
MR MK PATEL(633) for the Appellant(s) No. 1
MR YOGI K GADHIA(5913) for the Appellant(s) No. 1
MR DG SHUKLA(1998) for the Defendant(s) No. 2
MR DN PANDYA(545) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 19/09/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant-Insurance Corporation under Section 30 of the Workmen's Compensation Act against the judgment and award dated 26.09.2007 passed by learned Workmen's Compensation Commissioner, Vadodara (hereinafter be referred to as the "learned Commissioner") in Workmen's Compensation Application No. 93 of 1997, whereby the learned Page 1 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined Commissioner has allowed the said application and awarded compensation of Rs.1,60,475/- along with simple interest and penalty in favour of original applicant.
2. The facts giving rise to present appeal are that the original claimant-respondent No.1 herein was working with the original opponent No.1-respondent No.2 herein- Ranki Construction Company, Vadodara as a labourer. On 21.7.1996 while he was greasing the cement mixer machine his right hand got stuck in the machine and he received serious injuries on right hand elbow and other parts of the body.
2.1 Thereafter, the original claimant filed W.C. Application before the learned Commissioner being W.C. Application No.93 of 1997.
2.2 The Respondent has filed a written statement before the Learned Commissioner at Exh.30. After considering the pleadings of both the sides, the Learned Commissioner has framed the issues at Exhibit 24 which read as under:-
1. Whether there existed a relationship of employer and employee between the applicant (workman) and opponent No. 1?
2. Whether the applicant sustained an accident during the course of his employment?Page 2 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025
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3. If yes, what percentage of permanent disability has the workman suffered on account of the injuries?
4. What were the monthly wages and age of the workman at the time of the accident?
5. Whether the applicant is entitled to receive compensation from the opponents? If yes, what amount?
6. Whether the applicant is entitled to recover penalty, interest, and costs from the opponents in addition to compensation?
7. What final order?
2.3 Learned Commissioner has answered all the issues accordingly and after considering the facts of the case and after considering the oral as well as the documentary, the Learned Commissioner has partly allowed the W.C. Application and awarded an amount of Rs.1,60,475/- in favour of the original applicant along with interest and penalty.
2.4 Being aggrieved and dissatisfied with the impugned judgment and award passed by the learned Commissioner, the appellant-Insurance Company has preferred present appeal.
3. Heard Mr. Gadhia, learned counsel for the appellant and Mr.D.G. Shukla, learned counsel for respondent No.2.
3.1 Mr. Gadhia, learned counsel for the appellant, has Page 3 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined submitted that the Learned Commissioner has committed a jurisdictional error, which raises a substantial question of law, and therefore, the appeal is maintainable. Hence, the present appeal is required to be decided on merits, as it involves a substantial question of law.
3.2 Mr. Gadhia, learned counsel for the appellant, further submitted that the Learned Commissioner has committed a serious error of law in fastening the liability to pay interest at the rate of 12% for a different period as mentioned in the operative order. He has submitted that such an order is absolutely illegal, unjust, and arbitrary, particularly when the impugned policy under the Workmen's Compensation Act was placed on record. He has submitted that without considering the said facts, the Learned Commissioner has wrongly fastened the liability upon the present appellant.
3.3 So far as the liability to pay interest is concerned, Mr. Gadhia, learned counsel for the appellant has submitted that in view of the decision of the Hon'ble Apex Court in the case of New India Assurance Co. Ltd. vs. Harshadbhai Amrutbhai Modhiya, reported in (2006) 5 SCC 192, the insurance company is not liable to pay any interest.
3.4 Learned counsel for the appellant has also contended that even the original claimant had filed a review Page 4 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined application challenging the award on the ground of interest and in the said application the Learned Commissioner observed that none of the respondents had remained present at the time of hearing of the review application, and therefore, after considering the submission, the Court recorded its order. While rejecting the review application, the court observed that the court had already been passed order after due consideration, and hence, the application for review did not deserve to be entertained and accordingly, the same came to be dismissed on 10.09.2008.
3.5 Learned counsel for the appellant urges before the Court that present appeal may be allowed and the impugned judgment and award passed by the learned Commissioner may be set aside or appropriately modified.
4. On the other hand, Mr. D.G. Shukla, learned counsel appearing on behalf of respondent No. 2 herein - original opponent No. 1, has contended that the applicant - original claimant is not entitled to claim any interest from respondent No. 2, as no documentary evidence was produced before the learned Commissioner, nor was any evidence led by the applicant in support of such claim 4.1 Mr. Shukla, learned counsel for respondent No. 2, has submitted that in his cross-examination, the original applicant admitted that he had not produced any relevant Page 5 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined documentary evidence, and therefore, respondent No. 2 was not liable. Of course, the respondent No.2 has not challenged the impugned judgment and award; however, Mr. Shukla, learned counsel for respondent No. 2 has contended that, in view of the findings recorded by the Learned Commissioner, respondent No. 2 cannot be held liable to pay interest and impugned judgment and award passed by the learned Commissioner is just and proper and no interference is required to be made in the said order.
5. I have considered the facts of the case and relevant material produced on record. I have also gone through the record and proceedings vis a vis the impugned judgment and award passed by the learned Commissioner.
6. Having heard the learned counsels for the respective parties and upon careful perusal of the material on record, it is apparent that the Learned Commissioner has committed a serious error in fastening the liability of interest upon respondent No. 2 - Insurance Company. The claimant himself, in his cross-examination, has candidly admitted that no documentary evidence was produced to substantiate the claim of interest. Even otherwise, except for bare assertions, no cogent or convincing evidence was brought on record to justify such liability being imposed on the Insurance Company.
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7. It is further significant to note that the claimant had also preferred a review application before the Learned Commissioner on the ground of interest. However, the said application was dismissed after due consideration, with a specific finding that the operative order was passed after appreciating the submissions made, and therefore, no case for review was made out. Such finding further fortifies the position that no independent liability could have been imposed upon the Insurance Company towards interest.
8. So far as interest is concerned, it is appropriate to refer the observations made by the Hon'ble Apex Court in case of Harshadbhai Modhiya (supra) which read as under:-
"23. The law relating to contracts of insurance is part of the general law of contract. So said Roskill Lord Justice in Cehave vs. Bremer ([1976] Q.B. 44). This view was approved by Lord Wilberforce in Reardon Smith vs. Hanson-Tangen (1976 [1 WLR] 989, wherein he said "it is desirable that the same legal principles should apply to the law of contract as a whole and that different principles should not apply to the different branches of that law". A contract of insurance is to be construed in the first place from the terms used in it, which terms are themselves to be understood in their primary, natural, ordinary and popular sense. (See Colinvaux's Law of Insurance 7th Edition paragraph 2-01). A policy of insurance has therefore to be construed like any other contract. On a construction of the contract in question it is clear that the insurer had not undertaken the liability for interest and penalty, but had undertaken to Page 7 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined 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 of 1923, the insurer cannot be made liable to the insured for those amounts.
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 Page 8 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined insurer has specifically excluded any liability for 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\ 027 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."
9. Considering the facts of the present case and in view of the observations made by the Hon'ble Apex Court in the above-referred decision, I am of the opinion that the present appeal deserves to be partly allowed. The observation made by the Learned Commissioner in paragraph No. 3 of the operative order with regard to the interest at the rate of 12% for different periods is hereby modified, and the same shall be borne by the original opponent No. 1 and not by the present appellant - Insurance Company.
10. The present appeal is hereby partly allowed. The impugned judgment and award dated 26.09.2007 passed by the Learned Commissioner in Workmen's Compensation Application No. 93 of 1997 is hereby modified to the extent that the appellant - Insurance Company shall not be liable to pay any interest, and the liability to pay interest shall rest upon the original opponent No. 1. The rest of the impugned judgment and award passed by the Learned Commissioner shall remain Page 9 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025 NEUTRAL CITATION C/FA/4218/2009 JUDGMENT DATED: 19/09/2025 undefined unaltered.
11. At this stage, Mr. Gadhia, learned counsel for the appellant submits that the appellant-Insurance Company has deposited the amount of interest before the learned Commissioner and therefore, the same may be refunded to the appellant-Insurance Company.
12. In view of the above submission, the amount of interest deposited by the appellant Insurance Company shall be refunded to the present appellant-Insurance Company after verifying the bank details of the appellant and after following due procedure, through RTGS/NEFT, The record and proceedings, if received, the same shall be transmitted to the concerned learned Commissioner forthwith.
Sd/-
(HEMANT M. PRACHCHHAK,J) SURESH SOLANKI Page 10 of 10 Uploaded by SURESH SOLANKI(HC00208) on Mon Sep 22 2025 Downloaded on : Mon Sep 22 22:54:27 IST 2025