Karnataka High Court
The New India Assurance Co Ltd vs Smt. Kalamma on 18 February, 2026
NC: 2026:KHC:10034
MFA No. 2408 of 2018
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF FEBRUARY, 2026
BEFORE
THE HON'BLE MS. JUSTICE TARA VITASTA GANJU
MISCELLANEOUS FIRST APPEAL NO. 2408 OF 2018 (WC)
BETWEEN:
THE NEW INDIA ASSURANCE CO LTD.,
BRANCH OFFICE: 1ST FLOOR,
TUMUR SHOPPING COMPLEX,
B.H.ROAD, TUMKUR.
REPRSENTED BY DIVISIONAL OFFICE-XII,
MAYUR COMPLEX, KIADB MAIN ROAD,
PEENYA, BANGALORE-560 058.
REP. BY ITS DIVISIONAL MANAGER.
...APPELLANT
AND:
1. SMT. KALAMMA
AGED ABOUT 26 YEARS,
W/O LATE PARUSAPPA @ PARASHURAM,
2. KUM. HULUGAMMA
AGED ABOUT 07 YEARS,
D/O LATE PARUSAPPA @ PARASHURAM,
SINCE MINOR REPRESENTED BY
NATURAL GUARDIAN/MOTHER,
SMT.KALAMMA
3. SRI. RAMAPPA
AGED ABOUT 54 YEARS,
S/O SRI.HULIGEPPA,
THE RESPONDENTS NO.1 TO 3 ARE
R/AT KALAPURA VILLAGE,
KUDLIGI TALUK,
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NC: 2026:KHC:10034
MFA No. 2408 of 2018
HC-KAR
BELLARI DISTRICT-586 101.
NOW ALL ARE RESIDING AT
M/S. FAIR GRANITES AND ASSOCIATES,
PANDITANAHALLI VILLAGE,
DEVARAYAPATNA POST,
TUMKUR TALUK AND DISTRICT-572 101.
4. SRI. K.M.ABDUL KHADAR
AGED ABOUT 59 YEARS,
S/O LATE MOHAMMED,
R/AT M/S. FAIR GRANITES & ASSOCIATES,
PANDITANAHALLI VILLAGE,
DEVARAYAPATNA POST,
TUMKUR TALUK AND DISTRICT-572 101.
...RESPONDENTS
((BY SRI. RAVISHANKAR.C.R., ADVOCATE - FOR APPELLANT)
(R1 TO R4 ARE PLACED EX-PARTE V/O/DTD:29.03.2023)
***
THIS MFA IS FILED U/S.30(1) OF THE EMPLOYEES
COMPENSATION ACT, AGAINST THE JUDGMENT AND AWARD
DT.01.08.2016 PASSED IN ECA NO.36/2014 ON THE FILE OF
THE 2ND ADDITIONAL SENIOR CIVIL JUDGE & MACT, TUMAKURU,
AWARDING COMPENSATION OF RS.8,73,880/- WITH INTEREST
AT 12% P.A. FROM THE DATE OF THE ACCIDENT FROM
RESPONDENTS TILL REALIZATION.
THIS MFA COMING ON FOR FINAL HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU
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NC: 2026:KHC:10034
MFA No. 2408 of 2018
HC-KAR
ORAL JUDGMENT
I.A.No.1/2018 & I.A.No.2/2018
1. I.A.No.1/2018 is filed by the appellant/Insurance Company seeking condonation of delay of 521 days in filing the appeal.
2. For the reasons stated in the affidavit accompanying the application, I.A.No.1/2018 is allowed. The delay of 521 days in filing the appeal is condoned.
3. The learned counsel for the appellant/Insurance Company seeks to rely upon I.A.No.2/2018 in this behalf to say that the entire issue would rest on the Insurance policy. However, it is contended that since the Panel Advocate had not filed the insurance policy before the learned Trial Court, he has placed the same before this Court, in an application under Order XLI Rule 27 read with Section 151 of the Code of Civil Procedure, 1908, being I.A.No.2/2018.
4. The record reflects that since there was no appearance on behalf of the respondents, the respondents were proceeded with ex-parte by order dated 29.03.2023 passed -3- NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR by this Court. No objections have been filed by any party to this application. Given the issue involved, this policy is necessary and relevant for the adjudication of the present appeal. Accordingly, and for the reasons stated in the affidavit accompanying the application, I.A.No.2/2018 is allowed. The appellant is permitted to produce the certified copy of the insurance policy. The same is taken on record. MFA No.2408/2018
5. The present appeal seeks to challenge a Judgment and Award dated 01.08.2016, in E.C.A.No.36/2014, passed by the learned II Additional Senior Civil Judge and MACT at Tumakuru, (hereinafter referred to as 'Impugned Award'). The claim petition under Section 10(2) of the Workmen's Compensation Act, 1923 (hereinafter referred to as the "E.C.Act") has been partly allowed and the compensation in a sum of ₹8,73,880/- has been awarded in favour of the respondent Nos.1 to 3/claimant Nos.1 to 3. With interest at the rate of 12% per annum. -4-
NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR
6. As stated above, the respondent Nos.1 to 4 are placed ex-parte, by an order of this Court dated 29.03.2023.
7. The brief facts are that, one Parusappa @ Parashuram, aged about 23 years, was a workman employed with respondent No.4 in a Crusher Unit, situated at Sy.No.9 of Panditanahalli, Devarayapatna, Tumkur Taluk, on a monthly salary of Rs.8,000/-. On 14.11.2012, while he was pulling broken stones from top of the hill to load the same to the vehicle, he lost control and fell down from the top of the hill. As a result, he sustained multiple injuries to his head, hand, leg and vital parts of his body. Immediately, he was shifted to Sridevi Hospital, Tumkur, where he took treatment as an in-patient. However, on the same day, at 5:15 p.m., while under treatment, he succumbed to his injuries in the Hospital. On account of his death, his dependents filed a claim petition, seeking compensation.
8. It was the case of the claimants that the deceased was earning a monthly salary of Rs.8,000/- and was contributing -5- NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR to the income of the family and after the accident, the respondent Nos.1 to 3/claimants have been facing severe financial difficulties. Hence a claim was filed.
9. The matter was contested by the respondent No.4/owner as well as the Appellant/Insurance Company before the learned Tribunal and several defences were raised. However, there was no dispute that the deceased was employed by the respondent No.4/owner.
10. On the basis of the pleadings of the parties, the learned Tribunal framed the following issues:
"1. Whether the Petitioners prove that they are legal heirs of deceased Parashirma @ Parasappa S/o. Ramappa?
2. Whether the petitioners prove that the deceased Parashirma @ Parasppa S/o. Ramappa was employee under Respondent No.1?
3. Whether the petitioners prove that deceased Parashirma @ Parasappa S/o. Ramappa succumbed to injuries in an accident/mishap that occurred on 14.11.2012 at Sy.No.9, Pandithanahalli, Devarayapatna, Tumkur Taluk?
4. Whether the petitioners prove that deceased Parashirma @ Parasappa died in the accident that occurred in the course of employment?
5. What is the quantum of compensation petitioner is entitled to and from whom?-6-
NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR
6. What Order or Award?"
11. After examining the evidence of the parties, the learned Tribunal awarded compensation in a sum of Rs.8,73,880/- along with interest at the rate of 12% p.a. from the date of the accident. The learned Tribunal also held that the appellant/Insurance Company is liable to pay the compensation amount with interest.
12. Learned counsel for the appellant/Insurance Company submits that he is not challenging the quantum of the compensation awarded and his challenge is only on one aspect. He submits that the appellant/Insurance Company cannot be made jointly liable to pay the interest awarded by the learned Trial Court in terms of the contract between the appellant and respondent No.4/employer in terms of which, this amount is to be paid by the employer/respondent No.4. In this behalf, reliance is placed by learned counsel for the appellant/Insurance Company on the following judgment of the Supreme Court as well as the Division Bench of this Court:
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR
i) The New India Assurance Co.,Ltd., v.
Harshadbhai Amruth Bhai Modhiya and another1
ii) The Oriental Insurance Co., Ltd, v. Raju and Others.2
13. The substantial question of law that arises in the present case is:
"Whether the Court below is justified in fixing the liability to pay interest on the compensation awarded on the appellant Insurance Company?"
14. The learned counsel for the appellant/Insurance Company submits that the insurance policy [workmen compensation policy] dated 25.02.2012 is a policy which provides for an exclusion. It is contended that unlike policies under the Motor Vehicles Act, which are compulsory, the insurer and insured can contract to exclude interest or penalty and that such contract has been entered into.
15. This Court has examined the policy which forms part of contract between the appellant and respondent No.4. The policy, while being in the name of the respondent No. 4, does set out that, in the case of personal injury by accident 1 (2006) 5 SCC 192 2 1992 SCC OnLine Kar 294 -8- NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR or death arising out of the cause of employment, the insured shall be liable to pay for such injury under law, but subject to terms and exceptions contained herein the policy itself. The Policy also provides for an exclusion of the interest and penalty on any such claims. The relevant extract of the policy is set out below:
"NOW THIS POLICY WITNESSETH that if any time during the period of insurance any employee in the insured's immediate service shall sustain personal injury by accident or disease arising out of and in the course of his employment by the insured in the Business and if the Insured shall be liable to pay compensation for such injury either under the Laws (s) set out in the Schedule or at Common Law then subject to the terms exception and conditions contained herein or endorsed hereon the Company will indemnify the Insured against all sums for which the insured shall be so liable and will in addition be responsible for all costs and expenses incurred with its consent in defending any claim for such compensation.
PROVIDED ALWAYS that in the event of any changes in the law(s) or the substitution of other legislation thereof this policy shall remain in force but the liability of the Company shall be limited to such sum as the Company would have been liable to pay if the Law (s) had remained unaltered.
Law(s)
1. The Workmen's Compensation Act, 1923 and subsequent amendments of the said Act, prior to the date of the issue of Policy. 2. The Fatal Accidents Act, 1855.-9-
NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR It is hereby understood and agreed that the Workmen's Compensation (Amendment) Acts, of 1959 (8 of 1959, and 1962 (64 of 1962) and 1976 (65 of 1976) and 1984 (22 of 1984) and 1995 (30 of 1995) and 2000 (46 of 2000) and deemed to be added to the Laws set out in the Schedule to the Policy.
Provided that the Insurance granted hereunder is not extended to include:
(i) any interest and/or penalty imposed on the Insured on account of his/her failure to comply with the requirements laid down under the W. C. Act. 1923 and
(ii) any compensation payable on account of occupational diseases listed in part 'C' of schedule III of the W.C. Act, 1923"
[Emphasis supplied]
16. The learned counsel for the appellant/Insurance Company submits that the issue involved in the present case is the subject matter of a decision of this Court in the case of The New India Assurance Co. Ltd. Vs. Smt. Kalamma and others3.
17. This Court, in Smt. Kalamma's case, while examining as to this aspect of the matter, had passed the following directions:
"10. The learned counsel for the appellant/ Insurance Company has also taken us through the 3 M.F.A.No.6064/2018 - Order dt.06.02.2026
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR Insurance Policy (Workmen Compensation Policy), dated 26.07.2016, and its clauses to submit that the policy of insurance is a private policy and unlike the policies in the case of the Motor Vehicles Act, 1988, which provide for compulsory third party policies, this particular policy provides for an exclusion, wherein, the interest or penalty would not be applicable to the account of the insurer, but to the owner of the policy."
xxx xxx xxx "12. The policies of this nature have been interpreted time and again by the Courts. The Supreme Court in the case of Harshadbhai Amrutbhai Modhiya's case, while interpreting this issue, has relied on a judgment of LR Ferro Alloys Ltd.,4 as well as a judgment of PJ Narayan v. Union of India,5 to set out that, the liability including penalty and interest would not be paid for by the Insurance Company, but by the owner himself. The relevant extract of the judgment in the case of Harshadbhai Amrutbhai Modhiya's case is set out below:
"14. By reason of the provisions of the Act, an employer is not statutorily liable to enter into a contract of insurance. Where, however, a contract of insurance is entered into by and between the employer and the insurer, the insurer shall be liable to indemnify the employer. The insurer, however, unlike under the provisions of the Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-à-vis the insurer.
xxx xxx xxx
16. In Ved Prakash Garg [(1997) 8 SCC 1] this Court undoubtedly held that in terms of the contract of insurance entered into by and between the employer and the insurer under the provisions of the Motor Vehicles Act, 1988, which would also apply in a given case to the claim under the provisions of the Workmen's Compensation Act, the insurer would also be liable for payment of interest stating: (SCC p. 15, paras 12-13) 4 (2002) 9 SCC 450 5 (2006) 5 SCC 200
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR "A conjoint reading of these provisions in the insurance policy shows that the insurance company insured the employer owners of the insured motor vehicles against all liabilities arising under the Workmen's Compensation Act for which statutory coverage was required under Section 95 of the Motor Vehicles Act, 1939 which is analogous to Section 147 of the present Motor Vehicles Act noted earlier. Section 149 deals with 'Duty of insurers to satisfy judgments and awards against persons insured in respect of third-party risks.' The moot question is whether the insurance coverage as available to the insured employer owners of the motor vehicles in relation to their liabilities under the Workmen's Compensation Act on account of motor accident injuries caused to their workmen would include additional statutory liability foisted on the insured employers under Section 4-A(3) of the Compensation Act.
The question posed for our consideration is required to be resolved in the light of the aforesaid statutory schemes of the two interacting Acts. It is not in dispute and cannot be disputed that the respondent-insurance companies concerned will be statutorily as well as contractually liable to make good the claims for compensation arising out of the employers' liability computed as per the provisions of the Compensation Act. The short question is whether the phrase "liability arising under the Compensation Act" as employed by the proviso to sub-section (1) of Section 147 of the Motor Vehicles Act and as found in proviso to clause (i) of sub-section (1) of Section II of the insurance policy, would cover only the principal amount of compensation as computed by the Workmen's Commissioner under the Compensation Act and made payable by the insured employer or whether it could also include interest and penalty as imposed on the insured employer under contingencies contemplated by Section 4-A(3)(a) and (b) of the Compensation Act."
17. Yet again in L.R. Ferro Alloys Ltd. this Court opined that if an amount of compensation is not deposited within a
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR period of one month, the insurance company shall be liable to reimburse the owner only the amount of compensation with interest therefrom but not the penalty imposed on the insured employer for default of payment of amount stating: (SCC pp. 451-52. para
5) "5. The only contention put forth before us is that the entire liability including penalty and interest will have to be reimbursed by the insurance company and this aspect has not been examined by the learned Single Judge in the High Court and needs examination at our hands. In Ved Prakash Garg v. Premi Devi this Court after examining the entire scheme of the Act held that payment of interest and penalty are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment of that amount within one month. Therefore, claim for compensation along with interest will have to be made good jointly by the insurance company with the insured employer. But, so far as the penalty imposed on the insured employer is on account of his personal fault the insurance company cannot be made liable to reimburse the penalty imposed on the employer. Hence the compensation with interest is payable by the insurance company but not penalty. Following the said decision and for the reasons stated therein, we modify the order made by the High Court to that extent. The appeal is allowed in part accordingly."
18. We are, in this case, not concerned with a case where an accident has occurred by use of a motor vehicle in respect whereof the contract of insurance would be governed by the provisions of the Motor Vehicles Act. 1988.
19. As indicated hereinbefore, a contract of insurance is governed by the provisions of the Insurance Act. Unless the said contract is governed by the provisions of a statute, the parties are free to enter into a contract as for their own volition. The Act does not contain a provision like Section 147 of the Motor Vehicles Act. Where a statute does not provide for a compulsory insurance or the extent thereof, it will bear repetition to state that the parties are free to
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR choose their own terms of contract. In that view of the matter, contracting out, so far as reimbursement of amount of interest is concerned, in our opinion, is not prohibited by a statute.
20. The views taken by us find support from a recent judgment of this Court in P.J. Narayan v. Union of India wherein it was held: (SCC р. 200. para 1) "This writ petition is for the purposes of directing the insurance company to delete the clause in the insurance policy which provides that in cases of compensation under the Workmen's Compensation Act, 1923, the insurance company will not be liable to pay interest. We see no substance in the writ petition. There is no statutory liability on the insurance company. The statutory liability under the Workmen's Compensation Act is on the employer. An insurance is a matter of contract between the insurance company and the insured. It is always open to the insurance company to refuse to insure. Similarly, they are entitled to provide by contract that they will not take on liability for interest. In the absence of any statute to that effect, insurance companies cannot be forced by courts to take on liabilities which they do not want to take on. The writ petition is dismissed. No-order-as-to costs."
[Emphasis supplied]
13. The Division Bench of this Court in the Raju's case, has taken a similar view. The relevant paragraphs are set out below:
"4. On a careful consideration of the award as well as the coverage found in the policy issued under the Act in favour of the insured, it is seen that the liability of indemnifying the insured as to imposition of interest of penalty is expressly excluded. The last sentence of the condition imposed reads as follows:--
"It is hereby understood and agreed that the cover provided under the policy shall not extend to indemnify the Insured/Insureds in respects of any interest and/or penalty which may be imposed on him/them on account of his/their failure to comply
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR with the requirements laid down under the Workmen's Compensation Act, 1923 and subsequent amendments of the said Act."
6. The submission is, that so long as there is a contract between the parties, the insurer undertakes only to indemnify compensation that may be awardable in favour of a workman in the event of his being injured or his death. In the instant case, the submission is that when there is a condition by which the liability of the insurer is excluded as to the payment of interest awardable, the Commissioner ought not to have imposed interest on the amount determined as compensation. Sri Shankar, learned Counsel for appellant also brought to our notice the view taken by this Court in a similar matter arising in M.F.A. No. 1626 of 1987* disposed of on 31st October, 1988. It is seen from a perusal of the Judgment of the Division Bench that referring to the material terms of the policy, it was held that the insurer cannot be made liable to pay interest and penalty on the compensation which may be fixed for the death or injury of the employee whose risk is insured. Thus, the Division Bench held in that appeal that it was an error on the part of the Commissioner to have fixed liability on the insurer respecting the interest and penalty payable by the insurer as compensation to his employer. Thus the appeal of the insurer came to be allowed setting aside the imposition of penalty and interest imposed on them."
[Emphasis supplied]
18. It is not in dispute that the deceased died during the course of his employment and that he is liable to be paid compensation by the appellant/Insurance company. However, the challenge is only of interest thereon.
19. In view of the settled position of law and the judgment passed by this Court in Smt. Kalamma's case, this Court
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR modifies the Judgment and Award passed by the learned Tribunal in the following manner:
(i) The award of compensation of Rs.8,73,880/- along with interest from the date of the accident [14.11.2012] till realisation is not disturbed.
(ii) The liability for the principal amount of Rs.8,73,880/-, however, shall be on the appellant/Insurance Company, while the liability for the interest of 12% p.a., shall be on the respondent No.4/ employer.
(iii) Let a decree be drawn up in terms of the modified award.
(iv) The respondent No.4/employer shall deposit the amounts payable as interest at 12% p.a. on the compensation amount within eight weeks from today.
(v) The Registry is directed to ensure that a copy of the judgment passed today is sent to each of the respondents by registered mail/speed post.
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NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR
(vi) The appellant/Insurance Company shall file an appropriate application before the Tribunal to withdraw the excess amounts deposited, in terms of the judgment passed by this Court, once the deposit by the Respondent No.4 / employer is made.
20. The appeal is disposed of in the aforegoing terms. All pending applications stand closed. Digitally signed by TARA VITASTA GANJU Location: HIGH COURT
Sd/-
OF KARNTAKA(TARA VITASTA GANJU) JUDGE BMV* / KS List No.: 1 Sl No.: 25
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