[Cites 14, Cited by 0]
Madras High Court
M/S.National Insurance Co. Ltd., vs Mr. Deepak, on 30 April, 2026
CMA No. 2846 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 17.03.2026
PRONOUNCED ON : 30.04.2026
CORAM
THE HON'BLE MR.JUSTICE K.KUMARESH BABU
CMA No. 2846 of 2021
and
C.M.P.No.16370 of 2021
M/s.National Insurance Co. Ltd.,
Sreeji Complex, Bedford,
Coonor.
..Appellant(s)
Vs
1. Mr. Deepak,
2. M/s.Golden Hills Estate Private Ltd.,
Karumpalam, Nilgiris District.
..Respondent(s)
Prayer: Civil Miscellaneous Appeal filed under Section 30(1) of Employee’s
Compensation Act, 1923, praying to set aside the order of the Commissioner for
Employee’s Compensation, Coonoor passed in E.C.No.279 of 2019 dated
05.10.2020.
For Appellant(s): Mr. Nageswaran and Narichania
For Respondent(s): Mr. M.Vijaya Kumar (For R1)
Mr.M.R.Raghavan (For R2)
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CMA No. 2846 of 2021
JUDGMENT
The present Civil Miscellaneous Appeal has been filed challenging the
order dated 05.10.2020 passed in W.C.No.279 of 2019 by the Commissioner of
Employee’s Compensation, Coonoor.
2. The facts leading to the present lis are that, on 03.06.2018, the
claimant, one Mr. Deepak Sharma, aged about 40 years, who was employed in
the 1st respondent’s factory, met with an accident in the Rolling Room while
feeding the Rotorvane. During the course of such work, his right hand was
caught in the feed conveyor, resulting in severe injuries and crushing of his right
upper limb. The claimant was immediately admitted to the hospital on
03.06.2018 where his right hand up to the upper limb had to be amputated, and
he underwent necessary medical treatment before being discharged on
19.07.2018. As a result of the accident, the claimant suffered permanent
disability, losing his right hand and resulting in total loss of earning capacity.
Hence, the claimant filed an application in E.C.No.279 of 2019, before the
Commissioner for Workmen’s Compensation, Coonoor, claiming compensation
to the tune of Rs.10,00,000/
3. The factory in which the claimant was employed was arrayed as the
1strespondent, and the Insurance Company with which the 1st respondent had
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held availed Employees’ Compensation Insurance policy (bearing Policy
No.650600411710000002) was impleaded as the second respondent. The 1st
respondent, in its counter statement, averred that although the accident had been
duly intimated to the second respondent, no compensation was paid to the
claimant. It was further contended that, in view of the valid insurance policy,
the liability to pay compensation under the Workmen Compensation Act, 1923
rests with the second respondent. On the other hand, the second respondent filed
its counter statement contending that the claimant must establish that he was an
employee of the 1st respondent and that the accident arose out of and in the
course of employment. It was further alleged that the accident occurred due to
the negligence of the claimant. The second respondent also contended that the
compensation claimed was excessive and, in any event, that it is not liable to
pay interest under the terms of the policy.
4. The learned Commissioner for Workmen’s Compensation, upon
consideration of the pleadings of both parties, framed the following question for
determination.:
1.) Whether the claimant sustained the injury on 03.06.2018 in the course of
his employment? Whether there existed an employer–employee
relationship between the claimant and the 1st respondent?
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2.) What the quantum of compensation to which the claimant is entitled as
per the Workman Compensation Act, 1923?
5. From the Claimants’ side the Claimant himself has been examined as
AW1(ம.சா.1) and had marked documents Ex.A1 to Ex.A4 (மசா. ஆ.1 to மசா.
ஆ.4) as evidence, whereas the 1strespondent side had marked documents
Ex.R1 to Ex.R4( எ.மா.ஆ.1 to எ.மா.ஆ.4) as respondent side evidence. The
2nd respondent had also marked the Ex.R1(எ.மா.ஆ.1) as evidence.
6. The learned Joint Commissioner for Workmen’s Compensation, after
hearing the arguments on both sides and perusing the materials available on
record, proceeded to decide the aforesaid issues. Insofar as Issue No.1 is
concerned, the learned Joint Commissioner, upon consideration of the evidence
on record, namely Ex.A1 (மசா.ஆ.1), being the medical certificate issued by
the doctor to the Insurance Company, which clearly states that the claimant was
an employee of the 1st respondent and had sustained injuries on 03.06.2018 and
Ex.A2 (மசா.ஆ.2), being the admission and discharge certificate granted by the
doctor, held that the claimant was an employee of the 1st respondent and that he
sustained injuries in the course of his employment on 03.06.2018
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7. Insofar as Issue No.2 is concerned, the learned Commissioner, upon
perusing Ex.R1 (எ.மா.ஆ.1), being the salary certificate of the claimant for the
period from 01.06.2018 to 30.06.2018, and upon considering the cross-
examination of the claimant by the 1st respondent with regard to his age, held
that the monthly income of the claimant was Rs.8,000/- and that he was aged
about 44 years at the time of the accident. Accordingly, the learned Joint
Commissioner awarded a compensation of Rs.6,62,477/- to the claimant, vide
order dated 05.10.2020, payable by the second respondent, together with
interest at 12% per annum from the date of accident till the date of deposit.
Aggrieved by the aforesaid order, the second respondent has preferred the
present Civil Miscellaneous Appeal before this Court, impleading the claimant
and the 1st respondent factory as respondents therein.
8. Heard Mr.Nageswaran and Mr.Narichania, learned counsels appearing
on behalf of the appellant, Mr.M.Vijaya Kumar, learned counsel appearing on
behalf of the 1st respondent and Mr.M.R.Raghavan, learned counsel appearing
on behalf of the 2nd respondent.
9. The learned counsel for the appellant would submit that even though
the appellant had raised grounds with regard to the grant of compensation by
also contesting the relationship of employer and employee between the first and
second respondent.
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10. The learned counsel would contend that the forum failed to properly
appreciate the insurance policy along with its terms and conditions, marked as
Ex.R1, which, according to the appellant, clearly establishes that the insurer is
not liable to pay interest under the policy. Placing reliance on the judgment of
the Hon’ble Supreme Court in the case of New India Assurance Co., Ltd., Vs.
Neeru Dabur and others, reported in 2004 ACJ 452, it is further contended that
the insurer cannot be fastened with liability to pay interest on the compensation
amount. In view of the aforesaid submissions, the learned counsel prays that this
Court may be pleased to set aside the impugned order and allow the present
appeal.
11. Countering his arguments, the learned counsel appearing for the
second respondent would contend that the accident which had occurred on
03.06.2026 had been intimated to the appellant immediately under Form-18 and
it is only the appellants, who had not honoured its commitment under the
insurance policy. Had the appellant disbursed the compensation amount, the
question of payment of interest would not have arisen. That apart, he would
submit a compensation of a sum of Rs.6,62,477/- together with interest at the
rate of 12% p.a. from the date of accident had been made. He would further
submit that the appellant had only deposited the compensation amount and had
not deposited interest as ordered by the Tribunal to maintain an appeal against
the interest alone. It is mandatory that a certificate of the Commissioner to the
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effect that the appellant had deposited the amount payable under the order
appealed against is annexed along with the appeal. In the present case, he would
submit that only a certificate to the amount of compensation had been issued by
the Commissioner also include 12% interest from the date of accident, which
was also directed to be paid and in that context, he would submit that the appeal
itself would have to be struck off as being violative of mandatory provision for
deposit of order against which appeal had been filed and in that context he had
relied upon by the judgment of the Allahabad High Court in the case of in the
case of New India Assurance Co., Ltd.,(cited supra)
12. The primordial issue which had been raised as a substantial question
of law is only with regard to the grant of interest payable by the
appellant/insurance company.
13. An issue as to the maintainability of the appeal for non-payment of
the disputed amount, which is supported by a certificate under Section 31 of the
Act, had been raised.
14. Admittedly, the certificate had been produced only with regard to the
deposit of the claim amount, namely the compensation awarded, and not the
interest component as calculated up to the date of filing of the appeal. On that
ground itself, the appeal can be rejected as not being maintainable to be heard
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by this Court, as a pre-condition deposit had not been complied with. However,
considering the fact that the appeal had been admitted by this Court as early as
on 05.10.2021 and that two substantial questions of law touching upon the same
issue, which have been framed by this Court supra, this Court restrains itself
from dismissing the appeal on the said ground.
15. An argument had been made by the learned counsel appearing for the
appellant that under the contract between the employer, namely the second
respondent, there is no contract for payment of interest. He would submit that
insurance is a contract of indemnity, indemnifying the insured against any claim
made against him, insofar as such claim is covered for indemnification.
16. In the case of P.J.Narayan Vs. Union of India and others, reported
in (2006) 5 SCC 200, the Hon’ble Apex Court, while dealing with a claim to
strike off a clause, whereby the insurance company would not be liable to pay
interest, had held that there is no statutory liability on the insurance company
under the Workmen’s Compensation Act and that it is a matter of contract
between the insurance company and the insured, and the insurance company can
always refuse to insure, having found that it is not supported by statute and the
Court had held that the insurance company cannot be forced to take on
liabilities which it otherwise do not intend to undertake under the contract.
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17. In the case of L.R.Ferro Alloys Ltd., Vs. Mahavir Mahto and
another, reported in (2002) 9 SCC 450, while dealing with an issue relating to
reimbursement of compensation, interest and penalty, the Hon’ble Apex Court
had held that the liability to pay interest is part and parcel of the legal liability to
pay compensation upon default of payment within one month, and therefore
held that the claim for compensation along with interest will have to be made
good jointly by the insurance company and the insured employer. However, the
payment of penalty imposed on the insured employer being on account of his
personal fault, the insurance company cannot be made liable to reimburse the
penalty imposed on the employer. Holding so, the Hon’ble Apex Court had held
that compensation together with interest is payable by the insurance company.
18. The learned counsel for the appellant also placed reliance upon the
judgment of the Hon’ble Apex Court in the case of New India Assurance Co.,
Ltd., Vs. Harshadbhai Amrutbhai Modhiya & Another, reported in 2006 (5)
SCC 192, to submit that the insurance company was not liable to pay interest. In
coming to such a conclusion, the Hon’ble Apex Court had held that insurance
is a contract of indemnification and, if under the contract the liability to pay
interest had not been undertaken, such liability cannot be mulcted upon the
insurance company, as the contract is not a statutory contract as in the case of
motor vehicle insurance.
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19. Section 4A of the Employees’ Compensation Act, 1923 envisages that
compensation under Section 4 is to be paid as soon as it falls due, which has
been interpreted to by a Larger Bench of the Hon’ble Apex Court in the case of
Pratap Narain Singh Deo Vs. Srinivas Sabata, reported in (1976) 1 SCC 289
to mean the date on which the injury had been caused.
20. Subsequent judgments of the Hon’ble Apex Court, interpreting the
same from a different date in the case of Oriental Insurance Company Limited
Vs. Mohd.Nasir and another reported in 2009 (6) SCC 280 and in the case of
National Insurance Co., Ltd., Vs. Mubasir Ahmed and another, reported in
2007 (2) SCC 349 had been held to be the judgments by the Hon’ble Apex
Court in the case of Oriental Insurance Company Limited Vs. Siby George
and others, reported in 2012 (12) SCC 540, to be per-incuriam by taking note of
the Larger Bench judgment in the case of Pratap Narain Singh Deo (cited
supra).
21. Sub-section (3) of Section 4A envisages the consequences of default
in paying compensation due under the Act within one month from the date it fell
due. Clause (a) of sub-section (3) envisages payment of simple interest at the
rate of 12% per annum, and Clause (b) envisages penalty in addition to the
interest and penalty.
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22. In the present case, it is not disputed by the learned counsel for the
appellant that the incident had been reported to it within three days, as
envisaged in the contract of insurance with the employer. The insurance policy
had been marked as Exhibit P1.
23. A reading of Clause 5 of the conditions of the policy mandates that
the insurance company should be informed of the incident within 30 days of
such occurrence by the employer. Even though the policy of insurance excludes
payment of interest, the same can only be taken into account when such notice
of the incident had not been given within a period of thirty (30) days.
24. The provisions of the enactment also envisage payment of
compensation within one month, which is thirty (30) days by application of the
General Clauses Act.
25. Having been given notice of the incident by the employer, namely the
second respondent herein, no details have been placed before this Court, nor
even before the Commissioner, as to what steps the appellant had taken to make
good the compensation payable to the first respondent/employee.
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26. The condition prescribed for intimation within thirty (30) days, which
is also the period fixed by the statute to pay compensation to the workman, the
appellant insurance company cannot wriggle out of its liability to indemnify the
employer by paying the interest component, which is the statutory interest
leviable under sub-section (3) to Section 4A of the Act.
27. In the peculiar facts of these cases, the judgments relied upon by the
learned counsel for the appellant in the case of New India Assurance Co., Ltd.,
Vs. Harshadbhai Amrutbhai Modhiya & Another, reported in 2006 (5) SCC
192 cannot be made applicable, as in the said judgment, the facts leading to
fixation or non-fixation of liability on the insurance company had not been
discussed, and therefore, the same can only be treated as a judgment confined to
its own facts.
28. On the aforesaid findings, I do not find any reason to interfere with
the order impugned herein. Accordingly, the appeal fails and stands dismissed.
No costs. Consequently, connected miscellaneous petition is closed.
30-04-2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
kak
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To
The Commissioner for Employee’s Compensation,
Coonoor.
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K.KUMARESH BABU, J.
kak
30-04-2026
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