Madras High Court

M/S.Bharti Axa General Insurance vs T.Pappa @ Banumathy on 17 February, 2021

                                                                             C.M.A.No.628 of 2020

                                    IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                DATED : 17.02.2021

                                                       CORAM

                                   THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM

                                               C.M.A.No.628 of 2020
                                                       and
                                               C.M.P.No.3800 of 2020

                     M/s.Bharti AXA General Insurance
                       Company Limited,
                     Metro Plaza, 2nd Floor,
                     No.162, Anna Salai,
                     Chennai – 600 002.                                .. Appellant


                                                        Vs.


                     1.T.Pappa @ Banumathy

                     2.M/s.Adroit Designs Pvt. Ltd.,
                     No.10, 2nd Floor, Perms Park,
                     100 Feet By-pass road,
                     Velachery, Chennai – 600 042.

                     3.Venkatesan

                     4.M/s.Alstom T & D India Pvt. Ltd.,
                     No.142, Vandaloor Valajabad Salai,
                     Padappai – 601 301.                                 .. Respondents



                     1/9


https://www.mhc.tn.gov.in/judis/
                                                                                                C.M.A.No.628 of 2020

                                   Civil Miscellaneous Appeal filed under Section 30 of the Workmen
                     Compensation Act, 1923, against the award dated 09.03.2018 passed in
                     E.C.No.197 of 2013 on the file of the office of the Commissioner of
                     Workmen's Compensation, Deputy Commissioner of Labour – I, Chennai.


                                        For Petitioner               :   Mr.M.B.Raghavan
                                        For RR 1 and 2               :   No appearance
                                        For R3                       :   Mr.M.Mayakrishnan
                                        For R4                       :   Mr.P.J.Rishikesh


                                                             JUDGMENT

The civil miscellaneous appeal is filed against the judgment dated

09.03.2018 passed in E.C.No.197 of 2013 on the file of the office of the

Commissioner of Workmen's Compensation, Deputy Commissioner of

Labour – I, Chennai.

2. The first respondent/claimant filed an application under

Section 22 of the Workmen Compensation Act, 1923 (for brevity “the WC

Act”), on the ground that her son Loganathan was employed under the

second respondent/employer for doing building demolition work in a place

belongs to Venkatesan, third respondent herein. The second

https://www.mhc.tn.gov.in/judis/ C.M.A.No.628 of 2020

respondent/employer had taken a workmen compensation policy for a

period from 23.08.2012 to 22.11.2012 for commercial construction projects

work at Alstom T. D India Pvt. Ltd, Salamangalam Village, Padappai, Tamil

Nadu – 601 301. While working in the site to do demolition work of

bathroom tiles with drilling machine on 25.08.2012 at 20.30 hours, due to

electric shock, the son of the first respondent/claimant sustained fatal

injuries and died. The Deputy Commissioner of Labour adjudicated the

issues with reference to the documents produced by the respective parties.

3. The learned counsel appearing on behalf of the appellant/

Insurance Company has not disputed the liability with regard to the

compensation to be paid. The learned counsel for the appellant/Insurance

Company contended that regarding the interest clause, the

appellant/Insurance Company is not liable to pay, as the interest and penalty

clause can directly be attributed to the part of the employer concerned and

the insurance company cannot be made liable. The appellant/Insurance

Company and its policy are not directly connected with the terms and

conditions of the policy stipulated and the interest and penalty are excluded

https://www.mhc.tn.gov.in/judis/ C.M.A.No.628 of 2020

when there is a specific agreement between the employer and the Insurance

Company. The Insurance Company cannot be made liable by stating that

WC Act contemplates interest clause. Even in such clause, employer alone

is liable to pay penalty and interest. In support of the said contention, the

learned counsel for the appellant/Insurance Company relied upon the

judgment of the Supreme Court in the case of P.J.Narayan Vs. Union of

India and others1 and in the short judgment, the Supreme Court has made

the following observations:

“This writ petition is for the purpose of directing the insurance company to delete the clause in the insurance policy which provides that in case 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 1 2004 ACJ 452

https://www.mhc.tn.gov.in/judis/ C.M.A.No.628 of 2020

interest. In the absence of any statute to that effect, insurance company cannot be forced by courts to take on liabilities which they do not want to take on. The wit petition is dismissed. No order as to costs. ”

4. In New India Assurance Co.Ltd. Vs. Harshadbhai Amrutbhai

Modhiya and another2, the Apex Court held as under:

“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 the 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 Motor Vehicles Act. Where a statute does not provide for a compulsory insurance or the extent thereof, it will bear repetition to state, the parties are free to 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.”

5. A copy of the policy issued is produced before this Court. The

conditions stipulate that “Interest and penalty are not covered”. When there 2 2006 ACJ 1699

https://www.mhc.tn.gov.in/judis/ C.M.A.No.628 of 2020

is a specific condition between the employer and the Insurance Company

under the policy, the Insurance Company is not liable to pay the interest and

penalty. The Insurance Company has rightfully pointed out that they are not

liable to pay the interest and penalty and therefore, the finding of the Deputy

Commissioner of Labour that such a condition is in violation of the WC Act

is not at all warranted. The Insurance Company has not issued the policy

under the WC Act. However, the policy is issued in order to indemnify the

liability of the employer under the WC Act on contractual basis. Therefore,

the contention of the appellant/Insurance Company with reference to the

exclusion is in accordance with the principles and there is no infirmity as

such.

6. This being the facts and circumstances, the liability regarding

the interest and penalty cannot be imposed on the appellant/Insurance

Company due to the exclusion norms. Thus, the award dated 09.03.2018

passed in E.C.No.197 of 2013 stands set aside only in respect of the interest

amount to be paid by the appellant/Insurance Company to the claimant.

However, the appellant/Insurance Company is liable to pay the principal

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award amount, which is calculated as Rs.8,36,920/- (Rupees Eight Lakhs,

Thirty Six Thousand, Nine Hundred and Twenty Only). The interest at the

rate of 12% per annum from expiry of 30 days from the date of accident till

the deposit and the calculated amount should be paid by the second

respondent/employer within a period of twelve weeks from the date of

receipt of a copy of this order.

7. As far as the appellant/Insurance Company is concerned, the first

respondent/claimant is permitted to withdraw a sum of Rs.8,36,920/-

(Rupees Eight Lakhs, Thirty Six Thousand, Nine Hundred and Twenty

Only) alone, by filing an appropriate application and the balance amount of