Gujarat High Court

New India Assurance Co. Ltd vs Malaya Parida on 14 June, 2024

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     C/FA/1891/2007                               JUDGMENT DATED: 14/06/2024

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                      R/FIRST APPEAL NO. 1891 of 2007


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE DEVAN M. DESAI

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1    Whether Reporters of Local Papers may be allowed                    No
     to see the judgment ?

2    To be referred to the Reporter or not ?                             No

3    Whether their Lordships wish to see the fair copy                   No
     of the judgment ?

4    Whether this case involves a substantial question                   No
     of law as to the interpretation of the Constitution
     of India or any order made thereunder ?

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                      NEW INDIA ASSURANCE CO. LTD.
                                  Versus
                         MALAYA PARIDA & ANR.
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Appearance:
MR KV GADHIA(319) for the Appellant(s) No. 1
MR HB SINGH(2073) for the Defendant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 2
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    CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI

                              Date : 14/06/2024

                             ORAL JUDGMENT

1. This appeal is filed under Section 30 of the Workmen

Compensation Act, 1923. The appellant has challenged the

judgment and award passed by the learned Workmen

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Compensation Commissioner, Labour Court Gandhidham-

Kachchh in Workmen Compensation (Non-Fatal) No.7 of 2003

on 12.05.2006, whereby the application of the claimant came to

be allowed by directing the Insurance Company to pay an

amount of Rs.3,74,364/- as compensation from the date of

accident i.e. 29.12.2002 till realization with 12% interest. It was

further directed that an amount of Rs.1,87,182/- as penalty to be

paid to the claimants. Opponent No.1 was exonerated from the

liability of compensation, interest and penalty.

2. Being aggrieved and dissatisfied with the impugned

judgment and award, the Insurance Company has filed the

present First Appeal.

4. Brief facts of the case are as under:-

4.1. The respondent No.2 was insured with the appellant vide

Workmen Compensation Policy No.211600/41/02/00/91 for the

period between 11.12.2002 to 10.12.2003. The original claimant

was working as a casual worker and while performing his duties

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of loading and unloading timber logs, on 29.12.2002, the timber

dashed with knee, resultantly, the claimant sustained injuries on

left leg and other part of the body. The claimant was admitted in

the hospital and the Orthopedic Surgeon Dr. Hemang Patel

performed surgery and amputated left leg of the claimant from

knee. The claimant claimed compensation by claiming

permanent disablement and loss of 100% earning capacity. The

claimant was earning Rs.3,000/- per month as salary. The

claimant was aged about 30 years on the date of accident.

5. Heard learned advocate for the appellant-Insurance

Company. Learned advocate for the appellant has placed on

record the copy of policy which is taken on record.

6. Learned advocate for the Insurance Company has

submitted that the challenge in the present First Appeal is

against the assessment of disablement, awarding of interest and

penalty on the Insurance Company. It is further submitted that

Insurance Company cannot be saddled with the liability of

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interest and penalty as envisaged in the Employee's

Compensation Act, 1923. Learned advocate for the appellant has

placed reliance upon Section 3 of the said Act and submitted

that in the case of personal injury to the employee arising out of

any accident during the course of employment, the liability to

pay compensation is on the employer. It is further submitted that

as per the terms and conditions of the policy, the liability of

interest and penalty cannot be shifted on the shoulder of

Insurance Company. It is further submitted that the liability of

interest and penalty ought to have been on the shoulder of the

employer.

6.1. During the course of submission before this Court, it is

further pointed out by the learned advocate for the Insurance

Company that at the time admission of the appeal, the Insurance

Company has deposited the entire amount of compensation

along with interest and penalty. However, the principle amount

of compensation has been disbursed to the original claimant and

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so far as the amount under the interest and penalty is concerned,

the same has been deposited in the form of a Fixed Deposit

Receipt (FDR).

6.2. It is further submitted that vide letter dated 18.01.2003, the

employer informed the appellant-Insurance Company about the

accident. However, the employer did not file any relevant

documents such as claim form and other documents. In absence

of relevant material documents, the Insurance Company could

not process the claim for want of documents.

6.3. In support of his submission, learned advocate for the

appellant has placed reliance upon the decision in the case of

New India Assurance Co. Ltd. vs. Hiralal Gomaji Moriya

reported in 2011 II CLR 21 and has submitted that in view of

the settled position of law, the Insurance Company cannot be

saddled with the liability of interest and penalty under the

Workmen Compensation Policy.

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7. I have considered the submissions and the record and

proceedings placed before this Court. So far as the disability

aspect is concerned, the original claimant has produced

certificate of Orthopedic Surgeon Dr. Hemang Patel Exhibit-20

who has assessed the disability of the claimant. The medical

report issued by the appellant Insurance Company at Exhibit-19

also indicates that the percentage of loss of earning capacity

resulting out of the injury, is assessed at 80%. When the medical

report of Insurance Company has assessed the disability at 80%

and in absence of any other cogent and convincing evidence

with regard to the assessment of the disability, the learned

Commissioner has assessed the disability at 100%. If the said

medical report at Exhibit-19 also indicates the exact portion of

amputation above the knee. As per the clause No.17, amputation

below hip with stump not exceeding (12.70 cms) in length

measured from tip of great trochanter. Percentage of loss of

earning capacity assessed at 80% and the said percentage of loss

of earning capacity has been assessed by the Insurance

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Company in its medical report at Exhibit-19. Hence, it is an

undisputed fact which is culled out from the Exhibit-19 medical

report that the medial team of Insurance Company has also

assessed at earning loss of capacity at 80%. In absence of any

medical evidence led by the applicant of assessing the disability

at 100%, the learned Commissioner has overlooked Exhibit-19

while assessing the disability.

8. The next question which has been raised by the learned

advocate for the Insurance Company with regard to the liability

of interest and penalty. This issue of awarding interest and

liability of Insurance Company is no more res integra in the

decision of New India Assurance Co. Ltd. Vs. Harshadbhai

Amrutbhai Modhiya and Another, reported in 2006 AIR SCW

2352. The said decision has been discussed by the Coordinate

Bench of this Court in the case of New India Assurance Co.

Ltd. vs. Hiralal Gomaji Moriya (supra), wherein the Bench has

observed in para Nos.10, 11 and 13 which are reproduced

hereinbelow:-

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10 Thus, the law is settled on this aspect that the statutory liability under the Workmen's Compensation Act is on the employer and unless a separate clause included for the liability of interest, the Insurance Company. is not liable to make payment of interest especially in case where the accident is not related to a motor vehicle accident.

11. Now corning to the question of penalty is concerned, the observation made by the Apex Court in the case of Ved Prakash Garg v. Premi Devi and others, reported in (1997) 8 SCC 1 is relevant. In that case the Apex 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 penalty imposed on employer. Hence the compensation with interest is payable by the insurance company but not penalty.

12. Thus, the Insurance Company is not liable to make the payment of penalty. As regards the interest liability as held in the case of Ved Prakash (supra) is concerned, the same was distinguished on facts. In the said case it was a case where an accident has occurred by use of motor vehicle in respect whereof the contract of insurance would be governed by the provisions of the Motor Vehicles Act, 1988. Therefore, the Insurance Company was held liable.

13. The above proposition has been laid down in the case of New India Assurance Co. Ltd v. Harshadbhai Amrutbhai Modhiya and Another, reported in 2006 AIR SCW 2352. Para

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24 of the said decision reads 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 a 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

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contract Construing the contract involved here it is clear that the insurer has specifically excluded any liability for interest or penalty under the Workmen's Compen-sation Act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under the Workmen's Compen- sation 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.".

9. Considering the material on record, I am of the view that

the judgment and award passed by the learned Workmen

Compensation Commissioner, Labour Court Gandhidham-

Kachchh in Workmen Compensation (Non-Fatal) No.7 of 2003

on 12.05.2006 is required to be modified to the following extent:

(1) The percentage of loss of earning capacity is assessed at 80% instead of 100% which has been assessed by the learned Commissioner.

(2) The appellant Insurance Company is exonerated from the

liability of interest and penalty.

(3) The opponent No.1 present respondent No.2 is liable for

interest and penalty. The original claimant shall be entitled to interest

and penalty from the respondent No.2.

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(4) The modified calculation of compensation is as under:-