Jharkhand High Court
Unknown vs Car Chasis Carriers on 2 September, 2025
Author: Gautam Kumar Choudhary
Bench: Gautam Kumar Choudhary
2025:JHHC:26697
IN THE HIGH COURT OF JHARKHAND AT RANCHI
M. A. No. 11 of 2013
1(a) Iimtiyaz Khan, S/o Late Ishtiaque Khan, R/o Village-Jainnagar, P.O.&
P.S.-Jainnagar, Dist.-Koderma
1(b) Reshma Khatoon, W/o Md. Sartaj Khan, R/o of 297 Bhadodih, P.O.-
Jhumri Tilaiya, P.S.-Tilaiya, Dist.-Koderma .... .... Appellants
Versus
1. Car Chasis Carriers, 18 Muktaram Babu Street, P.O.-18 Muktaram Babu
Street, P.S.-Bara Bazar, Kolkatta-700007, West Bengal
2. Bharati Axa General Insurance Company Limited, 49, Sakharam Ganesh
Dauskar Sarani, P.O.-49, Sakharam Ganesh Dauskar Sarani,
P.S.Bhowanipur, Kolkata .... .... Respondents
-----
CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY
-----
For the Appellants : Mr. Awnish Shankar, Advocate
For the Insurance Co. : Mr. Bibhash Sinha, Advocate
-----
Oral Order
18 / Dated : 02.09.2025
1. The claimants are in appeal before this Court under Section 30 of the
Workmen Compensation Act, 1923 for enhancement of compensation
awarded in W.C. Case No. 33/2011, whereby and whereunder, a
compensation of Rs.3,04,711.50 with interest at the rate of 9% per
annum has been awarded in favour of the claimants under Section 3 of
the Workmen Compensation Act, 1923.
2. The facts are not in dispute that the deceased Sartaj Khan died in an
accident on 22.01.2010 while driving a Trailor/Truck bearing
Registration No. NL 01/D- 4205 which was under the insurance cover
of respondent no. 2 at the relevant time of accident.
3. This appeal has been preferred on the ground that mandate of Section
4A of the Workmen Compensation Act, has not been followed for
paying the provisional compensation within a month of accident.
Therefore, the Employer was liable to pay penalty.
4. Learned Labour Court has noted in para-16 that the accident took
place on 21.01.2010, and no compensation was immediately paid by
the employer in terms of Section 3 of the Act. In this view of the
matter, the employer was liable to pay penalty.
5. It is further argued that learned Labour Court fell in error while
awarding the interest at the rate of 9% per annum which should have
been 12% per annum as per Section 4A (3)(a). On the question
2025:JHHC:26697
whether the Insurance Company can be saddled with the liability to
pay penalty, reliance is placed on a judgment passed by the High Court
of Delhi in FAO 158/2021 CM Appeal 20234-20235/2021, wherein it
has been held that the Insurance Company will be liable to pay
compensation towards penalty. Further, no amount has been paid under
the head of Funeral Charge.
6. Learned counsel for the Insurance Company has submitted that so far
as the penalty part is concerned, for that the Insurance Company is not
held liable, as the statutory liability to pay provisional compensation
was on the owner of the vehicle to pay the compensation within a
month of the order. Thus, for the laches on the part of the owner to pay
provisional compensation, liability cannot be fixed on insurer of
vehicle. Further, there cannot be any agreement in violation of the
statutory provision which fixes the liability to pay the provisional
compensation on the owner. Therefore, the penalty for the default is to
be paid by the owner and not by the insurer of the said vehicle. In this
regard, reliance is place on LR Ferro Alloys Ltd. Vs. Mahavir Mahto
& Anr. (2002) 9 SCC 450, wherein it has been held that the penalty
was on account of personal fault, for which the Insurance Company
cannot be made liable to reimburse penalty imposed on the employer.
7. Having considered the submissions advanced on behalf of both sides
and the authoritative pronouncement of the Hon'ble Apex Court with
regard to personal liability of the owner to pay the compensation
amount, it is difficult to agree to the proposition of law strongly
canvassed on behalf of the appellant that the Insurance Company can
be made liable to pay penalty for.
8. However, for better appreciation Section 4A is extracted below which
has specific provision for imposing penalty on the employer which
reads as under:
"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
2025:JHHC:26697
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."
9. From the above provision of law, it is apparent that before the owner
can be saddled with liability to pay the penalty amount, a show cause
has to be served by the learned Labour Court, and if the owner is
unable to explain the reason for delay in payment of compensation, in
that circumstance, the penalty can be inflicted upon him. In the present
case, the records do not suggest that the issue of penalty was raised or
show cause was served on the employer.
10. Under the circumstance, at the appellate stage, it will not meet the ends
of justice to inflict penalty, that too when the hearing of this appeal is
proceeded ex-parte against the employer of the vehicle.
11. So far, the claim of interest and the funeral expenses are concerned, it
has merit and consequently, the award is modified to the extent that the
principal compensation amount as awarded by the Labour Court along
with funeral expenses of Rs.25,000/- and interest at the rate of 12% on
the total compensation amount from the date of accident till the date of
payment. The Insurance Company will pay the excess amount after the
same is calculated by the Labour/Executing Court.
This Misc. Appeal is accordingly, partly allowed.
Since the awarded compensation amount has been paid, learned
Labour Court will work out the interest part and the same will be paid
by the Insurance Company along with funeral expense within a month
of this order.
Pending I.A., if any, stands disposed of.
(Gautam Kumar Choudhary, J.)
AKT/Satendra
