Allahabad High Court
National Insurance Company Ltd. vs Smt. Awadh Rani & Others on 10 May, 2013
Bench: Rajes Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD
?Court No. - 5
Case :- FIRST APPEAL FROM ORDER No. - 1130 of 1992
Petitioner :- National Insurance Company Ltd.
Respondent :- Smt. Awadh Rani & Others
Petitioner Counsel :- A.K.Sinha
Hon'ble Rajes Kumar,J.
Heard Sri A.K. Sinha, learned counsel for the appellant. No one appears on behalf of the respondents despite the notice being sent.
The short submission of learned counsel for the appellant is that by the impugned order a sum of Rs.29,196/- has been levied towards penalty and the appellant has been held liable to pay the same. He submitted that under Section 4A of the Workmen's Compensation Act, 1923 (hereinafter referred to as the "Act"), the penalty cannot be levied without giving reasonable opportunity to the employer to show cause, as contemplated under the proviso of Section 4A (3) of the Act, while, from perusal of the order, it is apparent that no notice has been issued. He further submitted that the penalty is leviable on the employer for committing default and the insurer is only liable to indemnify the amount of compensation and not the penalty.
Reliance is placed on on the decision of the Apex Court in the case of Ved Prakash Garg and others Vs. Premi Devi and others, reported in 1998 (1) T.A.C. 215.
I find substance in the argument of learned counsel for the appellant.
Section 4A of the Act reads as follows:
"4A. Compensation to be paid when due and penalty for default.- (1) Compensation under section 4 shall be paid as soon as it falls due.
(2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim.
(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall--
(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent. per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due; and
(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent. of such amount by way of penalty:
Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.
Explanation.-For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
(3A) The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependent, as the case may be.
Sub-section (3) (b) of Section 4A of the Act provides that if in the opinion of Commissioner, there is no justification for the delay, he may direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent. of such amount by way of penalty. The proviso provides that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. Therefore, before levy of penalty it is mandatory to issue show cause notice and give a reasonable opportunity to the employer and further finding is to be recorded that there is no justification for the delay. In the present case, from perusal of the order, it is apparent that neither any show cause notice has been given nor any reasonable opportunity has been given and further no finding has been recorded that there is no justification for the delay. Therefore, levy of penalty is not sustainable.
Further in the case of Ved Prakash Garg and others Vs. Premi Devi and others (supra) the Apex Court has held that Insurance Company will be liable to meet the claim for compensation along with interest as imposed on the insured employer by the Workmen's Commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4-A sub-section (3) (a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen's Commissioner under Section 4-A (3) (b) is concerned, however, the Insurance Company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone. Therefore, the direction by the Commissioner to the appellant to pay the amount of penalty is wholly unjustified.
No other argument has been raised.
In the result, the appeal is allowed in part. The amount of penalty levied under Section 4A of the Act for Rs.29,196/- is hereby set aside. However, other part of the order dated 4.9.2012 passed by the Workmen's Compensation Commissioner and Assistant Labour Commissioner, U.P., Kanpur in W.C. Case No. 30 of 1984 shall remain intact.
Order Date :- 10.5.2013
OP
