Gujarat High Court
Oriental Insurance Company Liimited vs Dineshbhai Arshibhai Vaada on 26 September, 2025
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C/FA/3616/2019 JUDGMENT DATED: 26/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3616 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
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ORIENTAL INSURANCE COMPANY LIIMITED
Versus
DINESHBHAI ARSHIBHAI VAADA & ORS.
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Appearance:
MR MITESH L RANGRAS(3324) for the Appellant(s) No. 1
MR MANOJ SHRIMALI(2331) for the Defendant(s) No. 2
MR SAMIR B GOHIL(5718) for the Defendant(s) No. 1
RULE SERVED for the Defendant(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 26/09/2025
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 07.05.2015 passed by
learned Commissioner for Workmen Compensation Act and
Judge, Labour Court, Junagadh (hereinafter be referred to as the
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"learned Commissioner") in Workmen Non-Fatal Compensation
Application No. 37 of 2004, whereby the learned Commissioner
has allowed the said application and awarded compensation of
Rs.3,81,222/- in favour of the original applicant along with
interest and penalty.
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. On 20.07.2003 while he
was on duty, during flooring of soda ash in the factory of
respondent No.2, the running machine, the belt of the machine
was broken and the claimant sustained serious fractures over the
whole body and sustained severe injuries on head. That
respondent No.1 fell down on the spot and became unconscious
and was first treated at Bhavsinhji Hospital, Porbandar then at
Irwin Hospital, Jamnagar and as the condition of respondent No.1
seemed to be critical, he was taken to Rajkot Gokul Hospital
where he was treated by Dr.Prakash Modha. The respondent
No.1 has been treated as an indoor patient for four months and
has also undergone an operation due to a head injury and he has
lost ability to speak in the voice box permanently and has
permanent loss in the hands and feet due to the injury and he
was bedridden.
2.1 Thereafter, the original claimant filed application before the
learned Commissioner. The original opponent No.1 has not filed
the written statement, whereas, original opponent No.2 -
appellant herein has filed the written statement before the
learned Commissioner at Exhibit 11. After considering the
pleadings of both the sides, the learned Commissioner has
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framed the issues at Exhibit 24.
2.2 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 application and awarded an
amount of Rs.3,81,222/- 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 learned counsel for the appellant and learned
counsel for respondent - claimant.
3.1 Learned counsel for the appellant, has submitted that the
learned Commissioner has committed a jurisdictional error,
which raises a substantial question of law and, therefore, the
appeal is maintainable.
3.2 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 9% 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.
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3.3 So far as the liability to pay interest is concerned, Mr.
Rangras, 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 an interest. He has also relied upon
the order dated 19.09.2025 passed by this Court in First Appeal
No. 4218 of 2009.
3.4 Learned counsel for the appellant has also submitted 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. Learned counsel for the respondent - claimant has
submitted that the learned Commissioner has not committed any
error of facts and law in passing the impugned judgment and
award and in awarding the compensation along with the interest
and penalty. Learned counsel for the claimant has submitted that
the appeal being meritless deserves to be dismissed.
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
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serious error in fastening the liability of interest upon appellant -
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.
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
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
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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 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
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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 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."
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 the order with regard to the interest at
the rate of 9% 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 07.05.2015 passed by the learned
Commissioner in Workmen's Compensation Application No. 37 of
2004 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 unaltered.
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11. At this stage, 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. It is open for the claimant to file appropriate
application to execute the order with regard to the interest and
penalty and the same shall be decided in accordance with law.
The record and proceedings, if received, the same shall be
transmitted to the concerned learned Commissioner forthwith.
(HEMANT M. PRACHCHHAK,J)
V.R. PANCHAL
