[Cites 16, Cited by 0]

Karnataka High Court

The New India Assurance Co Ltd vs Smt. Kalamma on 18 February, 2026

                                       NC: 2026:KHC:10034
                                     MFA No. 2408 of 2018


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 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 18TH DAY OF FEBRUARY, 2026

                        BEFORE
     THE HON'BLE MS. JUSTICE TARA VITASTA GANJU
MISCELLANEOUS FIRST APPEAL NO. 2408 OF 2018 (WC)
BETWEEN:

     THE NEW INDIA ASSURANCE CO LTD.,
     BRANCH OFFICE: 1ST FLOOR,
     TUMUR SHOPPING COMPLEX,
     B.H.ROAD, TUMKUR.
     REPRSENTED BY DIVISIONAL OFFICE-XII,
     MAYUR COMPLEX, KIADB MAIN ROAD,
     PEENYA, BANGALORE-560 058.
     REP. BY ITS DIVISIONAL MANAGER.
                                             ...APPELLANT
AND:

1.   SMT. KALAMMA
     AGED ABOUT 26 YEARS,
     W/O LATE PARUSAPPA @ PARASHURAM,

2.   KUM. HULUGAMMA
     AGED ABOUT 07 YEARS,
     D/O LATE PARUSAPPA @ PARASHURAM,
     SINCE MINOR REPRESENTED BY
     NATURAL GUARDIAN/MOTHER,
     SMT.KALAMMA

3.   SRI. RAMAPPA
     AGED ABOUT 54 YEARS,
     S/O SRI.HULIGEPPA,

     THE RESPONDENTS NO.1 TO 3 ARE
     R/AT KALAPURA VILLAGE,
     KUDLIGI TALUK,




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                                       NC: 2026:KHC:10034
                                    MFA No. 2408 of 2018


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     BELLARI DISTRICT-586 101.

     NOW ALL ARE RESIDING AT
     M/S. FAIR GRANITES AND ASSOCIATES,
     PANDITANAHALLI VILLAGE,
     DEVARAYAPATNA POST,
     TUMKUR TALUK AND DISTRICT-572 101.

4.   SRI. K.M.ABDUL KHADAR
     AGED ABOUT 59 YEARS,
     S/O LATE MOHAMMED,
     R/AT M/S. FAIR GRANITES & ASSOCIATES,
     PANDITANAHALLI VILLAGE,
     DEVARAYAPATNA POST,
     TUMKUR TALUK AND DISTRICT-572 101.
                                         ...RESPONDENTS

((BY SRI. RAVISHANKAR.C.R., ADVOCATE - FOR APPELLANT)
(R1 TO R4 ARE PLACED EX-PARTE V/O/DTD:29.03.2023)


                          ***

     THIS MFA IS FILED U/S.30(1) OF THE EMPLOYEES
COMPENSATION ACT, AGAINST THE JUDGMENT AND AWARD
DT.01.08.2016 PASSED IN ECA NO.36/2014 ON THE FILE OF
THE 2ND ADDITIONAL SENIOR CIVIL JUDGE & MACT, TUMAKURU,
AWARDING COMPENSATION OF RS.8,73,880/- WITH INTEREST
AT 12% P.A. FROM THE DATE OF THE ACCIDENT FROM
RESPONDENTS TILL REALIZATION.

     THIS MFA COMING ON FOR FINAL HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:


CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU




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                                            NC: 2026:KHC:10034
                                         MFA No. 2408 of 2018


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                     ORAL JUDGMENT

I.A.No.1/2018 & I.A.No.2/2018

1. I.A.No.1/2018 is filed by the appellant/Insurance

Company seeking condonation of delay of 521 days in filing

the appeal.

2. For the reasons stated in the affidavit accompanying

the application, I.A.No.1/2018 is allowed. The delay of 521

days in filing the appeal is condoned.

3. The learned counsel for the appellant/Insurance

Company seeks to rely upon I.A.No.2/2018 in this behalf to

say that the entire issue would rest on the Insurance policy.

However, it is contended that since the Panel Advocate had

not filed the insurance policy before the learned Trial Court,

he has placed the same before this Court, in an application

under Order XLI Rule 27 read with Section 151 of the Code

of Civil Procedure, 1908, being I.A.No.2/2018.

4. The record reflects that since there was no appearance

on behalf of the respondents, the respondents were

proceeded with ex-parte by order dated 29.03.2023 passed

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by this Court. No objections have been filed by any party to

this application. Given the issue involved, this policy is

necessary and relevant for the adjudication of the present

appeal. Accordingly, and for the reasons stated in the

affidavit accompanying the application, I.A.No.2/2018 is

allowed. The appellant is permitted to produce the certified

copy of the insurance policy. The same is taken on record.

5. The present appeal seeks to challenge a Judgment and

Award dated 01.08.2016, in E.C.A.No.36/2014, passed by

the learned II Additional Senior Civil Judge and MACT at

Tumakuru, (hereinafter referred to as 'Impugned

Award'). The claim petition under Section 10(2) of the

Workmen's Compensation Act, 1923 (hereinafter referred

to as the "E.C.Act") has been partly allowed and the

compensation in a sum of ₹8,73,880/- has been awarded in

favour of the respondent Nos.1 to 3/claimant Nos.1 to 3.

With interest at the rate of 12% per annum.

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6. As stated above, the respondent Nos.1 to 4 are placed

ex-parte, by an order of this Court dated 29.03.2023.

7. The brief facts are that, one Parusappa @ Parashuram,

aged about 23 years, was a workman employed with

respondent No.4 in a Crusher Unit, situated at Sy.No.9 of

Panditanahalli, Devarayapatna, Tumkur Taluk, on a monthly

salary of Rs.8,000/-. On 14.11.2012, while he was pulling

broken stones from top of the hill to load the same to the

vehicle, he lost control and fell down from the top of the hill.

As a result, he sustained multiple injuries to his head, hand,

leg and vital parts of his body. Immediately, he was shifted

to Sridevi Hospital, Tumkur, where he took treatment as an

in-patient. However, on the same day, at 5:15 p.m., while

under treatment, he succumbed to his injuries in the

Hospital. On account of his death, his dependents filed a

claim petition, seeking compensation.

8. It was the case of the claimants that the deceased was

earning a monthly salary of Rs.8,000/- and was contributing

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to the income of the family and after the accident, the

respondent Nos.1 to 3/claimants have been facing severe

financial difficulties. Hence a claim was filed.

9. The matter was contested by the respondent

No.4/owner as well as the Appellant/Insurance Company

before the learned Tribunal and several defences were

raised. However, there was no dispute that the deceased

was employed by the respondent No.4/owner.

10. On the basis of the pleadings of the parties, the

learned Tribunal framed the following issues:

"1. Whether the Petitioners prove that they are legal heirs of deceased Parashirma @ Parasappa S/o. Ramappa?

2. Whether the petitioners prove that the deceased Parashirma @ Parasppa S/o. Ramappa was employee under Respondent No.1?

3. Whether the petitioners prove that deceased Parashirma @ Parasappa S/o. Ramappa succumbed to injuries in an accident/mishap that occurred on 14.11.2012 at Sy.No.9, Pandithanahalli, Devarayapatna, Tumkur Taluk?

4. Whether the petitioners prove that deceased Parashirma @ Parasappa died in the accident that occurred in the course of employment?

5. What is the quantum of compensation petitioner is entitled to and from whom?

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6. What Order or Award?"

11. After examining the evidence of the parties, the

learned Tribunal awarded compensation in a sum of

Rs.8,73,880/- along with interest at the rate of 12% p.a.

from the date of the accident. The learned Tribunal also held

that the appellant/Insurance Company is liable to pay the

compensation amount with interest.

12. Learned counsel for the appellant/Insurance Company

submits that he is not challenging the quantum of the

compensation awarded and his challenge is only on one

aspect. He submits that the appellant/Insurance Company

cannot be made jointly liable to pay the interest awarded by

the learned Trial Court in terms of the contract between the

appellant and respondent No.4/employer in terms of which,

this amount is to be paid by the employer/respondent No.4.

In this behalf, reliance is placed by learned counsel for the

appellant/Insurance Company on the following judgment of

the Supreme Court as well as the Division Bench of this

Court:

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i) The New India Assurance Co.,Ltd., v.

Harshadbhai Amruth Bhai Modhiya and another1

ii) The Oriental Insurance Co., Ltd, v. Raju and Others.2

13. The substantial question of law that arises in the

present case is:

"Whether the Court below is justified in fixing the liability to pay interest on the compensation awarded on the appellant Insurance Company?"

14. The learned counsel for the appellant/Insurance

Company submits that the insurance policy [workmen

compensation policy] dated 25.02.2012 is a policy which

provides for an exclusion. It is contended that unlike policies

under the Motor Vehicles Act, which are compulsory, the

insurer and insured can contract to exclude interest or

penalty and that such contract has been entered into.

15. This Court has examined the policy which forms part

of contract between the appellant and respondent No.4. The

policy, while being in the name of the respondent No. 4,

does set out that, in the case of personal injury by accident

(2006) 5 SCC 192

1992 SCC OnLine Kar 294

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or death arising out of the cause of employment, the insured

shall be liable to pay for such injury under law, but subject

to terms and exceptions contained herein the policy itself.

The Policy also provides for an exclusion of the interest and

penalty on any such claims. The relevant extract of the

policy is set out below:

"NOW THIS POLICY WITNESSETH that if any time during the period of insurance any employee in the insured's immediate service shall sustain personal injury by accident or disease arising out of and in the course of his employment by the insured in the Business and if the Insured shall be liable to pay compensation for such injury either under the Laws (s) set out in the Schedule or at Common Law then subject to the terms exception and conditions contained herein or endorsed hereon the Company will indemnify the Insured against all sums for which the insured shall be so liable and will in addition be responsible for all costs and expenses incurred with its consent in defending any claim for such compensation.

PROVIDED ALWAYS that in the event of any changes in the law(s) or the substitution of other legislation thereof this policy shall remain in force but the liability of the Company shall be limited to such sum as the Company would have been liable to pay if the Law (s) had remained unaltered.

Law(s)

1. The Workmen's Compensation Act, 1923 and subsequent amendments of the said Act, prior to the date of the issue of Policy. 2. The Fatal Accidents Act, 1855.

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It is hereby understood and agreed that the Workmen's Compensation (Amendment) Acts, of 1959 (8 of 1959, and 1962 (64 of 1962) and 1976 (65 of 1976) and 1984 (22 of 1984) and 1995 (30 of 1995) and 2000 (46 of 2000) and deemed to be added to the Laws set out in the Schedule to the Policy.

Provided that the Insurance granted hereunder is not extended to include:

(i) any interest and/or penalty imposed on the Insured on account of his/her failure to comply with the requirements laid down under the W. C. Act. 1923 and

(ii) any compensation payable on account of occupational diseases listed in part 'C' of schedule III of the W.C. Act, 1923"

[Emphasis supplied]

16. The learned counsel for the appellant/Insurance

Company submits that the issue involved in the present

case is the subject matter of a decision of this Court in the

case of The New India Assurance Co. Ltd. Vs. Smt.

Kalamma and others3.

17. This Court, in Smt. Kalamma's case, while

examining as to this aspect of the matter, had passed the

following directions:

"10. The learned counsel for the appellant/ Insurance Company has also taken us through the

M.F.A.No.6064/2018 - Order dt.06.02.2026

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Insurance Policy (Workmen Compensation Policy), dated 26.07.2016, and its clauses to submit that the policy of insurance is a private policy and unlike the policies in the case of the Motor Vehicles Act, 1988, which provide for compulsory third party policies, this particular policy provides for an exclusion, wherein, the interest or penalty would not be applicable to the account of the insurer, but to the owner of the policy."

xxx xxx xxx "12. The policies of this nature have been interpreted time and again by the Courts. The Supreme Court in the case of Harshadbhai Amrutbhai Modhiya's case, while interpreting this issue, has relied on a judgment of LR Ferro Alloys Ltd.,4 as well as a judgment of PJ Narayan v. Union of India,5 to set out that, the liability including penalty and interest would not be paid for by the Insurance Company, but by the owner himself. The relevant extract of the judgment in the case of Harshadbhai Amrutbhai Modhiya's case is set out below:

"14. By reason of the provisions of the Act, an employer is not statutorily liable to enter into a contract of insurance. Where, however, a contract of insurance is entered into by and between the employer and the insurer, the insurer shall be liable to indemnify the employer. The insurer, however, unlike under the provisions of the Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-à-vis the insurer.

xxx xxx xxx

16. In Ved Prakash Garg [(1997) 8 SCC 1] this Court undoubtedly held that in terms of the contract of insurance entered into by and between the employer and the insurer under the provisions of the Motor Vehicles Act, 1988, which would also apply in a given case to the claim under the provisions of the Workmen's Compensation Act, the insurer would also be liable for payment of interest stating: (SCC p. 15, paras 12-13)

4 (2002) 9 SCC 450

5 (2006) 5 SCC 200

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"A conjoint reading of these provisions in the insurance policy shows that the insurance company insured the employer owners of the insured motor vehicles against all liabilities arising under the Workmen's Compensation Act for which statutory coverage was required under Section 95 of the Motor Vehicles Act, 1939 which is analogous to Section 147 of the present Motor Vehicles Act noted earlier. Section 149 deals with 'Duty of insurers to satisfy judgments and awards against persons insured in respect of third-party risks.' The moot question is whether the insurance coverage as available to the insured employer owners of the motor vehicles in relation to their liabilities under the Workmen's Compensation Act on account of motor accident injuries caused to their workmen would include additional statutory liability foisted on the insured employers under Section 4-A(3) of the Compensation Act.

The question posed for our consideration is required to be resolved in the light of the aforesaid statutory schemes of the two interacting Acts. It is not in dispute and cannot be disputed that the respondent-insurance companies concerned will be statutorily as well as contractually liable to make good the claims for compensation arising out of the employers' liability computed as per the provisions of the Compensation Act. The short question is whether the phrase "liability arising under the Compensation Act" as employed by the proviso to sub-section (1) of Section 147 of the Motor Vehicles Act and as found in proviso to clause (i) of sub-section (1) of Section II of the insurance policy, would cover only the principal amount of compensation as computed by the Workmen's Commissioner under the Compensation Act and made payable by the insured employer or whether it could also include interest and penalty as imposed on the insured employer under contingencies contemplated by Section 4-A(3)(a) and (b) of the Compensation Act."

17. Yet again in L.R. Ferro Alloys Ltd. this Court opined that if an amount of compensation is not deposited within a

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period of one month, the insurance company shall be liable to reimburse the owner only the amount of compensation with interest therefrom but not the penalty imposed on the insured employer for default of payment of amount stating: (SCC pp. 451-52. para

5) "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 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 the insurance company cannot be made liable to reimburse the 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."

18. We are, in this case, not concerned with a case where an accident has occurred by use of a motor vehicle in respect whereof the contract of insurance would be governed by the provisions of the Motor Vehicles Act. 1988.

19. As indicated hereinbefore, a contract of insurance is governed by the provisions of the Insurance Act. Unless the said contract is governed by the provisions of a statute, the parties are free to enter into a contract as for their own volition. The Act does not contain a provision like Section 147 of the Motor Vehicles Act. Where a statute does not provide for a compulsory insurance or the extent thereof, it will bear repetition to state that the parties are free to

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choose their own terms of contract. In that view of the matter, contracting out, so far as reimbursement of amount of interest is concerned, in our opinion, is not prohibited by a statute.

20. The views taken by us find support from a recent judgment of this Court in P.J. Narayan v. Union of India wherein it was held: (SCC р. 200. para 1)

"This writ petition is for the purposes of directing the insurance company to delete the clause in the insurance policy which provides that in cases of compensation under the Workmen's Compensation Act, 1923, the insurance company will not be liable to pay interest. We see no substance in the writ petition. There is no statutory liability on the insurance company. The statutory liability under the Workmen's Compensation Act is on the employer. An insurance is a matter of contract between the insurance company and the insured. It is always open to the insurance company to refuse to insure. Similarly, they are entitled to provide by contract that they will not take on liability for interest. In the absence of any statute to that effect, insurance companies cannot be forced by courts to take on liabilities which they do not want to take on. The writ petition is dismissed. No-order-as-to costs."

[Emphasis supplied]

13. The Division Bench of this Court in the Raju's case, has taken a similar view. The relevant paragraphs are set out below:

"4. On a careful consideration of the award as well as the coverage found in the policy issued under the Act in favour of the insured, it is seen that the liability of indemnifying the insured as to imposition of interest of penalty is expressly excluded. The last sentence of the condition imposed reads as follows:--

"It is hereby understood and agreed that the cover provided under the policy shall not extend to indemnify the Insured/Insureds in respects of any interest and/or penalty which may be imposed on him/them on account of his/their failure to comply

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with the requirements laid down under the Workmen's Compensation Act, 1923 and subsequent amendments of the said Act."

6. The submission is, that so long as there is a contract between the parties, the insurer undertakes only to indemnify compensation that may be awardable in favour of a workman in the event of his being injured or his death. In the instant case, the submission is that when there is a condition by which the liability of the insurer is excluded as to the payment of interest awardable, the Commissioner ought not to have imposed interest on the amount determined as compensation. Sri Shankar, learned Counsel for appellant also brought to our notice the view taken by this Court in a similar matter arising in M.F.A. No. 1626 of 1987* disposed of on 31st October, 1988. It is seen from a perusal of the Judgment of the Division Bench that referring to the material terms of the policy, it was held that the insurer cannot be made liable to pay interest and penalty on the compensation which may be fixed for the death or injury of the employee whose risk is insured. Thus, the Division Bench held in that appeal that it was an error on the part of the Commissioner to have fixed liability on the insurer respecting the interest and penalty payable by the insurer as compensation to his employer. Thus the appeal of the insurer came to be allowed setting aside the imposition of penalty and interest imposed on them."

[Emphasis supplied]

18. It is not in dispute that the deceased died during the

course of his employment and that he is liable to be paid

compensation by the appellant/Insurance company.

However, the challenge is only of interest thereon.

19. In view of the settled position of law and the judgment

passed by this Court in Smt. Kalamma's case, this Court

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modifies the Judgment and Award passed by the learned

Tribunal in the following manner:

(i) The award of compensation of Rs.8,73,880/- along

with interest from the date of the accident

[14.11.2012] till realisation is not disturbed.

(ii) The liability for the principal amount of

Rs.8,73,880/-, however, shall be on the

appellant/Insurance Company, while the liability for

the interest of 12% p.a., shall be on the respondent

No.4/ employer.

(iii) Let a decree be drawn up in terms of the modified

award.

(iv) The respondent No.4/employer shall deposit the

amounts payable as interest at 12% p.a. on the

compensation amount within eight weeks from today.