Gujarat High Court

Oriental Insurance Co. Ltd vs Legal Heirs Of Decd. Ratilal Damjibhai ... on 10 November, 2025

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                           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.
                      ==========================================================
                      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
                      ==========================================================

                        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

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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-

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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

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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.

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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.

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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

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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