Himachal Pradesh High Court

New India Assurance Company Ltd vs Smt. Kamla Devi (Since Deceased) on 17 November, 2022

Bench: Ajay Mohan Goel

        IN THE HIGH Court OF HIMACHAL PRADESH, SHIMLA

                                             FAO No.4115 of 2013
                                             Decided on: 17.11.2022




                                                                          .

    New India Assurance Company Ltd.                         ...Appellant.
                   Versus





    Smt. Kamla Devi (since deceased)
    through LRs. Sh. Nek Ram & others                        ... Respondents.





    Coram
    The Hon'ble Mr. Justice Ajay Mohan Goel, Judge.
    Whether approved for reporting?1 Yes

    For the appellant:   Mr. B.M. Chauhan, Senior

                         Advocate, with Mr. M.S. Katoch,
                         Advocate.
    For the respondents: Mr. Vipin Pandit, Advocate, for
                         respondents No.1(a) to 1 (f).



                         Mr. Sanjeev Bhushan, Senior
                         Advocate, with Mr. Rajesh
                         Kumar,       Advocate,        for




                         respondent No.2.





    Ajay Mohan Goel, J (Oral)

By way of this appeal, the appellant has

challenged the order dated 01.03.2013, passed by the Court

of learned Commissioner, Employee's Compensation, Solan,

District Solan, H.P., in WCA No.51/2 of 2011, titled Smt.

Kamla Devi Versus Mrs. Kamlesh Thaur & another, in

Whether reporters of the local papers may be allowed to see the judgment?

terms whereof, the claim petition filed by the claimant

under Section 22 of the Workman's Compensation Act was

allowed by learned Commissioner by awarding an amount

of Rs.4,23, 580/ with interest @ 12% per annum w.e.f.

12.07.2015, i.e. one month from the date of accident till the

deposit of the amount. Learned Commissioner further

ordered that the order be complied with by the Insurance

Company with which the offending vehicle was insured

within one month as from the date of the order, failing

which it would liable to pay penalty and interest thereupon.

This appeal was admitted on 16.09.2013 on the following

substantial question of law:

"1. Whether the learned Commissioner exercising the powers of the Employee's Compensation Act,

1923 has wrongly saddled the Insurance Company with penalty in case of their failure to deposit the compensation amount?"

2. Leaned Senior Counsel appearing for the

appellant has argued that the order passed by learned

Commissioner, in terms whereof, it has been directed that

in the event of failure of the Insurance Company complying

the directions passed by learned Commissioner within one

month as from the date of passing of the order, it will be

liable to pay a penalty as also interest, is perverse order and

not sustainable in the eyes of law, for the reason that the

very factum of interest being levied for noncompliance of

the order takes care of the interest of the other party and in

these circumstances, the imposition of the penalty also is

totally unsustainable and bad in law. Learned Senior

Counsel has drawn the attention of the Court to the

judgment of Hon'ble Supreme Court in Ved Prakash Garg

Versus Premi Devi, (1997) 8 Supreme Court Cases 1 and

L.R. Ferro Alloys Ltd. Versus Mahavir Mahto and Another,

(2002) 9 Supreme Court Cases 450 and by relying upon

these judgments, he submitted that imposition of penalty by

learned Commissioner on default on the part of the

Insurance Company in making good the order within one

month is liable to be quashed and set aside as interest of the

claimant is duly protected by imposing payment of interest

in the event of noncompliance of the order. Accordingly, a

prayer has been made that the appeal be allowed and the

order passed by leaned Commissioner, to the extent penalty

stands imposed upon the Insurance Company in the event

of default in compliance of the order within one month as

from the date of passing of the order, be set aside.

I have heard learned counsel for the parties and

have gone through the impugned order as well as the

judgments being relied upon by learned Senior Counsel for

the appellant.

4. This Court is of the considered view that as from

the date when the order was announced by learned

Commissioner, the grant of one month's time to the

Insurance Company to comply with said order was a

prudent direction given by learned Commissioner, as it

gave reasonable time to the Insurance Company to comply

with the order. The order passed by learned Commissioner

to the extent, it has ordered that the Insurance Company

would be liable to pay interest in the event of non

compliance of the order within one month from the date of

passing of it can also not be faulted with, because once

learned Commissioner had passed the order, the Insurance

Company was duty bound to comply the same subject to its

legal rights. However, once interest stood imposed for non

compliance of the direction, the imposition of the penalty

also is not sustainable in the eyes of law. In fact, the scheme

of the Act per se does not confers any such power upon

learned Commissioner that after passing of the award, in

the event of the same not being complied by the Insurance

Company, besides levying interest, penalty can also be

imposed.

5. Hon'ble Supreme Court in Ved Prakash Garg

Versus Premi Devi, (1997) 8 Supreme Court Cases 1, has

been pleased to hold that if ultimately the Commissioner

after giving reasonable opportunity to the employer to show

cause takes the view that there is no justification for delay

on the part of insured employer and because of his

unjustified delay and due to his own personal fault he is

held responsible for the delay, then penalty would get

imposed on him, i.e. the employer. That would add further a

sum upto 50% on the principal amount by way of penalty to

be made good by the defaulting employer. Hon'ble Supreme

Court further held that so far as this penalty amount is

concerned, it cannot be said that it automatically flows from

the main liability incurred by the insured employee under

the Workmen's Compensation Act. To that extent such

penalty amount as imposed upon the insured employer

would get out of the sweep of the term 'liablility incurred'

by the insured employer as contemplated by the proviso to

Section 147 (1) (b) of the Motor Vehicles Act as well as by

the terms of the Insurance Policy. Hon'ble Supreme Court

further held that on the aforesaid interpretation of these

two statutory schemes, the conclusion becomes inevitable

that when an employee suffers from a motor accident injury

while on duty on the motor vehicle belonging to the insured

employer, the claim for compensation payable under the

Compensation Act alongwith interest thereupon, if any, as

imposed by learned Commissioner of the Compensation Act

will have to be made good by the Insurance Company jointly

with the insured employer. But so far as the amount of

penalty imposed upon the insured employer is concerned,

that is on account of personal fault of the insured not

backed up by any justifiable cause, the Insurance Company

therefore, cannot be made liable to reimburse that part of

the penalty amount imposed on the employer.

6. Similarly, in L.R. Ferro Alloys Ltd. Versus

Mahavir Mahto and Another, (2002) 9 Supreme Court Cases

450, Hon'ble Supreme Court has held as under:

" 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 and Ors., 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 Insurance Company cannot be made liable to reimburse 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."

7. Thus, if Hon'ble Supreme Court has laid down

the law that even the statutory "penalty" cannot be shifted

upon the Insurance Company, then but natural, default in

compliance of the final order passed by learned