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Karnataka High Court
The New India Assurance Co. Ltd vs Sri. K. Ramraj on 8 December, 2025
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MFA No. 886 of 2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE DR. JUSTICE K.MANMADHA RAO
MISCELLANEOUS FIRST APPEAL NO.886 OF 2018 (WC)
BETWEEN:
THE NEW INDIA ASSURANCE CO. LTD.,
REDG. & H.O NEW INDIA ASSURANCE BUILDING
NO.87, MAHATMA GANDHI ROAD,
FORT, BOMBAY-400 001.
REPRESENTED BY REGIONAL OFFICE
NO.2-B, UNITY BUILDING ANNEX,
MISSION ROAD, BANGALORE-560 027
REPRESENTED BY ITS MANAGER.
...APPELLANT
(BY SRI. RAVISHANKAR C.R., ADVOCATE)
AND:
1. SRI. K. RAMRAJ
AGED ABOUT 25 YEARS
S/O LATE KUPPA @ KUPPAN
R/O MELSAPPLI VILLAGE
POLUR TALUK
TIRVANNAMALAI DISTRICT
TAMIL NADU STATE-606 905.
2. SRI C.V. MITHRAN
AGED ABOUT 77 YEARS
S/O LATE C.KRISHNAN
DEERA ESTATE
HOROOR POST
SUNTICOPPA
SOMWARPET TLAUK
KODAGU-571 211.
...RESPONDENTS
(BY SRI. K.G.MAREGOWDA, ADVOCATE FOR R1;
SRI. S. CHETAN NAG, ADVOCATE FOR R2)
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MFA No. 886 of 2018
THIS MISCELLANEOUS FIRST APPEAL IS FILED U/S 30(1)
OF EMPLOYEES COMPENSATION ACT, PRAYING TO CALL FOR
RECORDS IN ECA NO.10/2016 ON THE FILE OF SENIOR CIVIL
JUDGE AND COMMISSIONER FOR WORKMEN COMPENSATION,
KODAGU, MADIKERI, PERUSE THE SAME AND SET-
ASIDE/MODIFY THE JUDGMENT AND ORDER DATED
28.10.2017 AND EXONERATE THE LIABILITY TO PAY
COMPENSATION IN RESPECT OF FUNERAL EXPENSES OF
RS.15,000/- AND INTEREST ON THE ENTIRE COMPENSATION
AMOUNT FIXED ON THE APPELLANT INSURANCE COMPANY
AND PASS SUCH OTHER ORDERS AS DEEMED FIT IN THE
CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTICE
AND EQUITY.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 07.11.2025 AND COMING ON FOR
PRONOUNCEMENT THIS DAY, JUDGMENT WAS DELIVERED
THEREIN AS UNDER:
CORAM: HON'BLE DR. JUSTICE K.MANMADHA RAO
CAV JUDGMENT
This appeal is filed by the claimant under Section
30(1) of Employees Compensation Act, 1924 (hereinafter
referred to as "the ECA Act" for short) challenging the
Judgment and Award dated 28.10.2017 passed by the
Senior Civil Judge and Commissioner for workmen
Compensation, Madikeri (hereinafter referred to as "the
Commissioner") in ECA No.10/2016.
2. The facts leading to the filing of this appeal are
as follows:
On 19.03.2015, while the deceased was working on a
temporary basis in Deera Estate and was assigned the
work of picking pepper, he came into contact with an
electric wire passing through the estate and died due to
electrocution on the same day. The accident occurred
during the course and out of employment, resulting in his
death. Consequently, the claimant filed ECA No.10/2016,
seeking compensation under the Workmen's
Compensation Act. The Commissioner has partly allowed
the appeal with cost and awarded a sum of Rs.4,42,160/-
with interest at the rate of 12% p.a., from one month
after the date of accident till realization and held the
employer and Insurance Company liable to pay the
compensation.
3. It is contended by the learned counsel for the
appellant/Insurance Company that the Commissioner by
its judgment and award dated 28-10-2017, accepted the
contention of respondent No.1 and exonerated the
employer and erroneously fastened the entire liability on
the Insurance Company, awarding a merger sum of
Rs.4,42,160/- with 12% interest per annum. It is further
contended that the appellant is a contract basis employee,
as such the liability is limited and restricted to the terms
and conditions of the policy. Further, the compensation of
Rs.15,000/- towards funeral expenses is also exorbitant.
4. Learned counsel for the appellant/Insurance
company relied upon Clause (1) in Exhibit R1/policy. It is
contended that an Exclusion clause in a contract of
Insurance has to be interpreted differently as the
insurance contracts are special Contracts premised on the
notion of good faith. An insurance Contract by its very
nature mandates disclosure of all material facts by both
parties. An exclusion clause or any other clause or term is
a limb, which has got no existence outside, as such, it
exists and vanishes along with contract, having no
independent life of its own. When it is destructive to the
main contract, right at its inception it has to be severed,
being a conscious exclusion, though brought either
inadvertently or consciously by the party who introduced
it. Learned counsel for the appellant submitted that the
impugned Judgment has to be set aside.
5. On the other hand, learned counsel for the
respondent Nos.1 and 2 submitted that the Commissioner
has rightly appreciated the material on record and
awarded compensation. Hence, the impugned Judgment
requires no interference.
6. The learned counsel for Respondent No.2 has
relied upon the Judgment of the Apex Court M/s.Texco
Marketing Pvt. Ltd. vs. TATA AIG General Insurance
Company Ltd. and Others, wherein Exclusion Clause has
been discussed in the present case.
7. Heard the learned counsels on either side and
perused the records.
8. Having considered the rival submissions and
perused the material on record, it is evident that in the
present case, the dispute pertains to the liability for
payment of interest on compensation awarded under the
Employees Compensation Act, 1923. The legal position in
this regard stands conclusively settled by the Apex Court
in the case of New India Assurance Co. Ltd. v.
Harshadbhai Amrutbhai Modhiya reported in (2006) 5
SCC 192, wherein it is held that the liability of the insurer
is governed strictly by the terms of the policy and in the
absence of a specific contractual provision extending
coverage to interest or penalty, such statutory liabilities
must be borne by the employer.
9. It is also observed that the judgment of the
Apex Court relied upon by the respondent No.2 herein in
M/s Texco Marketing Pvt. Ltd. v. TATA AIG General
Insurance Co. Ltd. reported in (2023) 1 SCC 428,
relates to commercial consumer insurance contracts and
principles of exclusion clause disclosure under IRDA
regulations, and therefore has no application to the
statutory compensation claims under the Employees
Compensation Act, 1923, where the claimant/employee is
not a party to the insurance contract. Accordingly,
following the binding ratio of Harshadbhai Amrutbhai
Modhiya's case (supra), the insurer/appellant is
exonerated from liability to pay interest and the burden of
such payment shall rest upon the employer.
10. Further the co-ordinate Bench of this Court in
MFA No.5760/2016 disposed of on 17.09.2025, has
allowed the appeal with an observation that the Insurance
Company is exonerated from paying the interest on the
compensation amount and the employer shall pay the
interest on the compensation.
11. In view of the observations made in the
judgment of the Apex Court and the judgment in MFA
No.5760/2016 passed by the co-ordinate Bench of this
Court, this appeal has to be allowed.
12. In view of the foregoing discussions, this Court
proceeds to pass the following order:
i) The appeal is allowed.
ii) The Judgment and Award dated
28.10.2017 passed by the Senior Civil Judge
and Commissioner for workmen
Compensation, Madikeri, in ECA No.10/2016
is hereby modified.
iii) The appellant/Insurance Company is
exonerated from paying the interest on the
compensation amount and the employer shall
pay the interest on the compensation amount.
iv) The amount in deposit shall be
transmitted to the Court of Senior Civil Judge
and Commissioner for Employees
Compensation, Kodagu, Madikeri.
v) Records shall be transmitted to the
concerned court.
Sd/-
(DR.K.MANMADHA RAO)
JUDGE
BNV
