[Cites 17, Cited by 0]
Orissa High Court
(An Appeal Under Section 30 Of The ... vs Sushil Mahakud & Ors on 29 November, 2025
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 04-Dec-2025 18:50:39
IN THE HIGH COURT OF ORISSA AT CUTTACK
FAO No.242 of 2024
(An appeal under Section 30 of the Employee's Compensation Act,
1923)
New India Assurance Company .... Appellant (s)
Limited, Cuttack
-versus-
Sushil Mahakud & Ors. .... Respondent (s)
Advocates appeared in the case through Hybrid Mode:
For Appellant (s) : Adam Ali Khan, Adv.
For Respondent (s) : Mr. Biswajit Mohanty, Adv.
(for R-1 & 2)
Mr. Samar Pratap Mohanty, Adv.
(for R-3)
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-14.11.2025
DATE OF JUDGMENT:-29.11.2025
Dr. Sanjeeb K Panigrahi, J.
1. The instant First Appeal (FAO) has been instituted by the
Appellant, assailing the order dated 30.01.2024 passed by the
learned Commissioner for Employees' Compensation-cum-
Divisional Labour Commissioner, Dhenkanal in E.C. Case No. 07 of
2017.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
Location: ORISSA HIGH COURT, CUTTACK
(a) The deceased, Raghab Mahakud, was employed as a skilled
labourer, stone breaker and dresser under M/s Shree
Gobindraj Stone Crusher. On 02.02.2017, while discharging
his duties at the worksite, he met with an accident and
sustained grievous injuries, to which he later succumbed. In
connection with the said incident, Motanga P.S. Case No. 26
of 2017 was registered on 03.02.2017, and a charge-sheet was
subsequently submitted against the proprietor of the stone
crusher unit.
(b) The employer had obtained Employee's Compensation Policy
No. 55040336160100000068 from the present appellant, valid
from 12.09.2016 to 11.09.2017. The policy covered the risk of
one unnamed semi-skilled worker with monthly wages of
₹7,500, and two unnamed unskilled labourers with monthly
wages of ₹6,000 each.
(c) Upon receipt of notice, the proprietor of the stone crusher
filed his written statement admitting the employment of the
deceased as well as the fact of his death. He asserted that
liability to pay compensation lay with the insurer as his
establishment was covered under the aforesaid policy.
(d) The appellant-Insurance Company filed its written statement
contesting the claim. It pleaded that only such persons who
fall within the definition of "workman" under the Employees'
Compensation Act would be covered under the policy. It was
further pleaded that under Section 3 of the Act, the employer
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is primarily liable to pay compensation and may thereafter
seek reimbursement from the insurer subject to the terms of
the policy. The appellant contended that the applicants failed
to establish employer-employee relationship by producing
documents such as the muster roll, wage register or
registration records. On these grounds, the appellant
submitted that it was not a necessary party and that the
application as against it was not maintainable.
(e) The learned Commissioner, upon consideration of the
materials on record, directed the appellant to pay
compensation of ₹8,67,640 within 30 days from the date of the
order. It was further directed that in the event of default,
penalty up to fifty percent and interest at the rate of twelve
percent per annum from the date the amount fell due would
be imposed.
(f) Being aggrieved by the judgment dated 30.01.2024 passed by
the learned Commissioner for Employees' Compensation-
cum-Divisional Labour Commissioner, Dhenkanal in E.C.
Case No. 07 of 2017, the appellant has preferred the present
appeal.
II. SUBMISSIONS ON BEHALF OF THE APPELLANT:
3. Learned counsel for the Appellant earnestly made the following
submissions in support of his contentions:
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i. Learned counsel for the appellant assailed the findings of the
learned Commissioner as illegal, arbitrary and contrary to the
evidence on record, and therefore liable to be set aside.
ii. It was submitted that although the Employees' Compensation
Insurance Policy was issued by the appellant-Insurance
Company in favour of M/s Shree Gobindraj Stone Crusher
covering certain categories of labourers, under the terms of
the policy the employer was required to satisfy the award in
the first instance and thereafter seek indemnification. The
learned Commissioner erred in fastening direct liability on the
insurer.
iii. It was contended that the insurance policy is a contract
exclusively between the insurer and the employer, and there
is no privity of contract between the deceased workman and
the Insurance Company. The direction to pay the
compensation amount directly to the claimants was therefore
unsustainable. This aspect was not considered by the learned
Commissioner.
iv. It was further contended that under Section 14 of the
Employees' Compensation Act, the insurer may be directed to
pay compensation only in cases of insolvency of the
employer, which has neither been pleaded nor proved. In the
absence of such a contingency, the liability could not have
been shifted onto the insurer.
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v. It was submitted that although the employer, examined as
OPW-1, admitted the employment of the deceased and the
fact of his death during duty hours, he failed to produce the
muster roll, wage register or any other statutory record to
establish the employer-employee relationship. In the absence
of such material, the insurer could not be held liable under the
policy. The learned Commissioner failed to consider this in its
proper legal perspective.
vi. It was submitted that even assuming, without admitting, that
the deceased was covered under the policy, the compensation
ought to have been computed on monthly wages of ₹6,000,
which was the wage basis for calculation of premium. The
learned Commissioner committed illegality in assessing
wages at ₹8,000 for computation.
vii. It was further submitted that the quantum of compensation
awarded is excessive, exorbitant and wholly unjustified.
viii. It was contended that the learned Commissioner erred in
directing payment of penalty up to fifty percent along with
interest at twelve percent per annum, which, in any event,
could not have been imposed on the insurer in view of the
settled position of law.
ix. It was finally submitted that the impugned judgment is
otherwise illegal, arbitrary and unsustainable in law.
Location: ORISSA HIGH COURT, CUTTACK
III. SUBMISSIONS ON BEHALF OF THE RESPONDENTS/CROSS APPELLANTS:
4. Learned Counsel for the Respondents/Cross Appellants earnestly
made the following submissions in support of his contentions:
i. Per contra, learned counsel for the Respondents / Cross-
Appellants submitted that the learned Commissioner failed to
take note of the omission of Explanation II to Section 4 of the
Employees' Compensation Act, 1923 relating to wage ceilings,
and further ignored the sworn testimony of the employer,
who was the pay master. It was submitted that the deceased
was earning ₹12,000 per month (₹9,000 towards monthly
wages and ₹3,000 towards daily food allowance), but the
learned Commissioner illegally restricted the monthly wage
to ₹8,000. It was therefore submitted that the compensation
requires enhancement.
ii. It was submitted that the learned Commissioner, in disregard
of Section 4(4) of the Employees' Compensation Act, failed to
award the statutory amount towards funeral expenses and the
cost incurred for transporting the dead body from the post-
mortem centre to the native village of the deceased. In view of
this omission, enhancement of the award was sought.
iii. It was submitted that although the materials on record clearly
show that the Insurance Company dragged the proceedings
for nearly seven years from the date of filing, the learned
Commissioner did not award any litigation cost. Instead, the
learned Commissioner imposed a penalty under a default
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clause. It was contended that this omission warrants
appropriate modification and enhancement of the award.
iv. It was submitted that the learned Commissioner most illegally
ignored the settled principles of law laid down by the
Constitution Bench of the Supreme Court in Pratap Narain
Singh Deo v. Srinivas Sabata1, Oriental Insurance Co. Ltd. v.
Siby George2 and North East Karnataka Road Transport
Corpn. v. Sujatha3. It was contended that, contrary to these
decisions, the learned Commissioner awarded interest on the
basis of a default clause instead of granting interest at the rate
of twelve percent per annum from the date of the accident to
the date of payment. In view of this gross illegality, the
impugned judgment is liable to be modified and enhanced
accordingly.
v. Learned counsel submitted that F.A.O. No. 242 of 2024,
preferred by the Insurance Company, is based solely on
findings of fact and not on any substantial question of law as
mandated under the first proviso to Section 30 of the
Employees' Compensation Act. It was contended that the
appeal suppresses the material evidence on record, including
police papers as well as the oral testimony of PW-1 and that of
Opposite Party No.1, the employer, which clearly established
employer-employee relationship, the skilled nature of the
(1976) 1 SCC 289.
(2012) 12 SCC 540.
(2019) 11 SCC 514.
Location: ORISSA HIGH COURT, CUTTACK
deceased's work, and that the death occurred in the course of
employment. It was therefore submitted that the appeal is
liable to be dismissed with cost.
vi. It was also submitted that the appellant-Insurer, without
producing any document or evidence regarding the terms of
the policy before the learned Commissioner, has for the first
time in appeal taken the plea that the policy was a "pay and
recover" policy. It was contended that such a plea is an
afterthought and intended only to delay payment to the
dependants of the deceased, and that the appeal is therefore
liable to be dismissed with cost.
vii. It was further submitted that although the insurance policy
indicated that the maximum wage coverage was ₹8,000 per
month, and although the premium received for one skilled
worker was based on monthly wages of ₹7,604 with the
prevailing minimum wage of a skilled worker being ₹7,416,
and the premium received for two unskilled workers was
based on monthly wages of ₹6,083 with the prevailing
minimum wage of an unskilled worker being ₹6,216, the
appellant-Insurance Company suppressed these facts. It was
contended that the insurer falsely pleaded that the deceased
was an unskilled worker whose wages ought to be restricted
to ₹6,000 per month. In view of the incorrect and misleading
pleadings, it was submitted that the appeal filed by the
insurer is liable to be dismissed with cost.
Location: ORISSA HIGH COURT, CUTTACK
IV. FINDINGS OF THE COMMISSIONER FOR EMPLOYEES' COMPENSATION-
CUM-DIVISIONAL LABOUR COMMISSIONER, DHENKANAL:
5. The learned Commissioner framed four issues namely:
i. Whether the deceased Raghab Mahakud was an employee
within the meaning of the E.C. Act?
ii. Whether the accident and accidental death of the deceased
employee was arising out of and in course of his
employment as a skilled labour under the O.P.No-1?
iii. Whether the applicants are entitled to get compensation as
claimed by them or any part thereof?
iv. Whether the Opp. Parties whom its payable?
6. Upon consideration of the oral and documentary evidence adduced,
including the testimony of P.W.1, the evidence of O.P.W.1 (the
employer), and the certified copies of the police papers arising out
of Motanga P.S. Case No. 26 of 2017, the learned Commissioner
held that the deceased, Raghab Mahakud, was working as a skilled
labourer under Opposite Party No.1 and had died in an accident
arising out of and in the course of employment on 02.02.2017.
7. The learned Commissioner further held that the applicants, being
the parents of the deceased, were his dependants within the
meaning of the Act and were accordingly entitled to compensation.
8. As regards the age of the deceased, the learned Commissioner
accepted the age of 25 years as reflected in the inquest report, dead
body challan and post-mortem report, in the absence of any more
authentic document.
Location: ORISSA HIGH COURT, CUTTACK
9. With respect to wages, the learned Commissioner noted the
applicants' assertion and O.P. No.1's admission regarding payment
of Rs. 300 per day, but in the absence of any muster roll, wage
register or documentary record produced either by the applicants or
the employer, determined the monthly wages at Rs. 8,000 in terms
of Notification No. S.O. 1258(E) dated 31.05.2010 issued by the
Government of India under Section 4 of the Act.
10. On that basis, compensation was assessed under Section 4(1) of the
Act at Rs. 8,67,640, calculated as fifty percent of the monthly wages
(Rs. 4,000) multiplied by the relevant age factor of 216.91.
11. On the question of liability, the learned Commissioner held that
although the employer is primarily liable, Opposite Party No.2 New
India Assurance Co. Ltd. had issued a valid Employees'
Compensation Insurance Policy (Policy No. 55040336160100000063)
covering the period of the accident, and its validity had not been
challenged. The insurer was therefore held liable to pay the entire
compensation amount.
12. Accordingly, by order dated 30.01.2024, the learned Commissioner
directed Opposite Party No.2 to deposit the sum of Rs. 8,67,640
within thirty days, failing which penalty up to fifty percent and
interest at the rate of twelve percent per annum would be imposed
on the amount when it fell due.
V. COURT'S REASONING AND ANALYSIS:
13. Heard learned counsel for the parties and perused the material on
record.
Location: ORISSA HIGH COURT, CUTTACK
14. At the outset, it is necessary to bear in mind the statutory
framework governing the present appeal.
15. Section 30 of the Employees' Compensation Act, 1923 provides an
appeal to this Court only against the specific orders enumerated in
clauses (a) to (e) of sub-section (1), and the first proviso further
mandates that such appeal shall lie only if it involves a substantial
question of law. The provision, by its very design, restricts the
scope of appellate scrutiny and does not permit a re-appreciation of
facts as in a regular first appeal under Section 96 of the Code of
Civil Procedure.
16. In this regard, the Supreme Court in North East Karnataka Road
Transport Corpn. v. Sujatha4 observed that the High Court's
jurisdiction under Section 30 is not akin to a first appeal under
Section 96 CPC and that it is confined only to substantial questions
of law. The relevant extract is reproduced hereinunder:
"9. At the outset, we may take note of the fact, being a
settled principle, that the question as to whether the
employee met with an accident, whether the accident
occurred during the course of employment, whether it
arose out of an employment, how and in what manner
the accident occurred, who was negligent in causing the
accident, whether there existed any relationship of
employee and employer, what was the age and monthly
salary of the employee, how many are the dependants of
the deceased employee, the extent of disability caused to
the employee due to injuries suffered in an accident,
whether there was any insurance coverage obtained by
the employer to cover the incident, etc. are some of the
(2019) 11 SCC 514.
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material issues which arise for the just decision of the
Commissioner in a claim petition when an employee
suffers any bodily injury or dies during the course of his
employment and he/his LRs sue(s) his employer to claim
compensation under the Act.
10. The aforementioned questions are essentially the
questions of fact and, therefore, they are required to be
proved with the aid of evidence. Once they are proved
either way, the findings recorded thereon are regarded as
the findings of fact.
11. The appeal provided under Section 30 of the Act to
the High Court against the order of the Commissioner
lies only against the specific orders set out in clauses (a)
to (e) of Section 30 of the Act with a further rider
contained in the first proviso to the section that the
appeal must involve substantial questions of law.
12. In other words, the appeal provided under Section 30
of the Act to the High Court against the order of the
Commissioner is not like a regular first appeal akin to
Section 96 of the Code of Civil Procedure, 1908 which
can be heard both on facts and law. The appellate
jurisdiction of the High Court to decide the appeal is
confined only to examine the substantial questions of
law arising in the case."
17. Examining the impugned order in the light of the above statutory
constraints, it is evident that the appellant-Insurer essentially
challenges the foundational findings of the learned Commissioner,
including the existence of an employer-employee relationship, the
conclusion that the death occurred in the course of employment, the
assessment of monthly wages at ₹8,000, the consequent
computation of compensation, and the fastening of liability upon
the insurer. The respondents, on the other hand, seek enhancement
of the compensation and modification of the directions relating to
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interest and other ancillary components. Each of these issues must
therefore be analysed within the narrow confines of Section 30, and
the matter accordingly calls for examination under distinct heads.
A. Employer-Employee Relationship and Nature of the Accident
18. Insofar as the relationship of employer and employee is concerned,
the learned Commissioner has relied on the oral evidence of P.W.1,
the applicant, as well as O.P.W.1, the employer, who admitted that
the deceased was working under him as a skilled labourer. The
Commissioner has also placed reliance on the contemporaneous
police records arising out of Motanga P.S. Case No. 26 of 2017,
which describe the occurrence at the worksite and the resultant
death of the deceased. These materials were not effectively
dislodged in cross-examination.
19. The grievance of the appellant that, in the absence of muster rolls,
wage registers or other statutory records, the employer-employee
relationship must be treated as unproved, overlooks the nature of
proceedings under the Employees' Compensation Act. The Act is a
piece of social welfare legislation intended to provide speedy relief,
and the evidentiary standard is not as rigid as in a regular civil trial.
It is well settled that lack of formal employment records is not, by
itself, fatal to a claim, particularly when the employer himself
admits engagement of the deceased.
20. In Pratap Narain Singh Deo (supra), the Supreme Court held that
once the relationship of employer and workman is established and
it is shown that the workman suffered personal injury by accident
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arising out of and in the course of employment, the employer's
liability to pay compensation under Section 3 becomes immediate
and automatic. The Court observed:
"7. Section 3 of the Act deals with the employer's
liability for compensation. Sub-section (1) of that section
provides that the employer shall be liable to pay
compensation if "personal injury is caused to a
workman by accident arising out of and in the course of
his employment". It was not the case of the employer
that the right to compensation was taken away under
sub-section (5) of Section 3 because of the institution of
a suit in a civil court for damages, in respect of the
injury, against the employer or any other person. The
employer therefore became liable to pay the
compensation as soon as the aforesaid personal injury
was caused to the workman by the accident which
admittedly arose out of and in the course of the
employment. It is therefore futile to contend that the
compensation did not fall due until after the
Commissioner's order dated May 6, 1969 under Section
19. What the section provides is that if any question
arises in any proceeding under the Act as to the ability
of any person to pay compensation or as to the amount
or duration of the compensation it shall, in default of
agreement, be settled by the Commissioner. There is
therefore nothing to justify the argument that the
employer's liability to pay compensation under Section
3, in respect of the injury, was suspended until after the
settlement contemplated by Section 19. The appellant
was thus liable to pay compensation as soon as the
aforesaid personal injury was caused to the appellant,
and there is no justification for the argument to the
contrary."
21. This principle squarely applies to the present case. The findings of
the learned Commissioner on these foundational aspects, based on
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the categorical admission of the employer and the
contemporaneous police records, have not been shown to be
perverse, unsupported by evidence, or contrary to the record. In the
absence of any such infirmity, no substantial question of law arises
on this issue.
B. Determination of Wages and Quantum of Compensation
22. Turning to the determination of wages, the applicants asserted that
the deceased was being paid daily wages of ₹300 along with food
allowance, and the employer substantially supported this version.
At the same time, it is a matter of record that no documentary
evidence such as muster rolls, pay slips or wage registers was
produced by either side. Faced with this situation, the learned
Commissioner did not mechanically accept the higher figure
claimed but instead had recourse to Notification S.O. 1258(E) dated
31.05.2010 issued under Section 4 of the Act and fixed the monthly
wages at ₹8,000, being the statutory ceiling prevalent at the relevant
time.
23. The appellant argued that the monthly wages should have been
restricted to ₹6,000 on the ground that the insurance premium had
been calculated on that notional figure. This contention is
untenable. The wage figure used for calculating premium is a
matter purely between the employer and the insurer and has no
bearing on the statutory determination of wages under Section 4 of
the Act. Compensation must be computed with reference to the
statutory wage ceiling or the proved wages, and not on the basis of
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any notional wage adopted for premium purposes. In the absence
of better evidence, the Commissioner was justified in applying the
statutory ceiling of ₹8,000. No interference is warranted on this
score.
24. Conversely, the respondents/cross-appellants argue that the wage
ought to have been taken as ₹12,000 by including a food allowance.
However, in the absence of contemporaneous documentary
evidence or any reliable material showing regular payment at that
level, this Court finds no reason to disturb the figure of ₹8,000,
which is grounded in the statutory notification and constitutes a
reasonable assessment. Any contrary view would amount to re-
appreciation of facts, which is impermissible under Section 30.
25. As regards computation, the learned Commissioner has applied
Section 4(1)(a) and calculated compensation as 50% of the monthly
wages, i.e., ₹4,000, multiplied by the relevant age factor of 216.91
applicable to a workman aged 25 years, resulting in a figure of
₹8,67,640. This is in strict conformity with the statutory formula. No
error in calculation or misapplication of Section 4 has been shown,
and consequently no substantial question of law arises on the
quantum so determined.
C. Liability of the Insurer
26. The appellant further questioned the fastening of liability on the
insurer by contending that there is no privity of contract between
the deceased workman and the Insurance Company and that the
employer was required to first satisfy the award before seeking
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indemnification. It was submitted that the policy is a contract
exclusively between the employer and the insurer and, therefore,
the direction to pay compensation directly to the claimants is
unsustainable.
27. This Court finds no merit in the contention. It is not in dispute that
Opposite Party No.1 had obtained a valid Employees'
Compensation Policy covering the relevant period and covering
workers engaged in the establishment. The Commissioner recorded
a specific finding that Policy No. 55040336160100000063 was in
force on the date of the accident and that no material was produced
to show breach of any condition or exclusion of the category of
workman involved. In the absence of any such material, the policy
operates to indemnify the employer in respect of the liability arising
under the Act.
28. At this juncture, however, it is apposite to note that the Supreme
Court in Ved Prakash Garg v. Premi Devi5, while construing Section
4A(3) of the Employees' Compensation Act, held that the insurer is
liable to satisfy the employer's statutory liability to pay
compensation under Sections 3 and 4 together with interest under
Section 4A(3)(a), but that the additional amount by way of penalty
under Section 4A(3)(b) remains the exclusive liability of the
defaulting employer.
29. The impugned order directs that in the event of default, both
penalty up to fifty percent and interest at twelve percent per annum
(1997) 8 SCC 1.
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shall be imposed. Insofar as the direction to impose interest is
concerned, it is squarely in consonance with Section 4A(3)(a) and
the above judicial pronouncements. The insurer cannot be absolved
of liability for statutory interest, which is compensatory in nature
and arises automatically upon default. No infirmity is
demonstrated in this part of the order.
30. However, the direction that the insurer shall also be liable for
penalty up to fifty percent in the event of default is not legally
sustainable. The penalty contemplated under Section 4A(3)(b) is
punitive in nature and is imposed only where the Commissioner
finds absence of justification for the employer's delay in making
payment. This component of liability is personal to the employer
and does not form part of the risk that the insurer is statutorily or
contractually obliged to cover unless there exists a specific
contractual extension of coverage, which in the present case is
neither pleaded nor proved.
31. It is also significant that the insurer did not, before the
Commissioner, produce the terms of the policy to suggest that the
coverage was of a "pay and recover" nature or that there existed
any exclusion relieving it of liability for compensation and statutory
interest. In these circumstances, the Commissioner was justified in
fastening liability for the principal compensation and interest on the
insurer. The only modification warranted is to clarify that the
insurer cannot be made liable for the penalty component.
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32. Accordingly, while the Commissioner's findings regarding the
employer-employee relationship, the circumstances of the accident,
the wage determination, and the computation of compensation do
not give rise to any substantial question of law warranting
interference, the direction in the impugned order insofar as it
contemplates imposition of penalty upon the insurer under Section
4A(3)(b) requires to be set aside. The liability for such penalty, if
imposed, shall remain exclusively that of Opposite Party No.1, the
employer.
33. In all other respects, the impugned order does not disclose any
perversity, misdirection in law, or jurisdictional error so as to attract
interference under Section 30 of the Act.
VI. CONCLUSION:
34. In view of the foregoing analysis, it is held that the learned
Commissioner committed no error in fastening liability on the
insurer for payment of the statutory compensation together with
interest under Section 4A(3)(a). However, the direction insofar as it
contemplates imposition of penalty upon the insurer under Section
4A(3)(b) is unsustainable in law. The liability for penalty, if
imposed, shall rest exclusively on Opposite Party No. 1, the
employer.
35. With the above limited modification, no ground has been made out
to demonstrate any perversity, legal error, or jurisdictional infirmity
in the findings recorded by the learned Commissioner so as to give
rise to a substantial question of law under Section 30 of the Act. The
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award dated 30.01.2024 passed in E.C. Case No. 07 of 2017 is
therefore affirmed in all other respects.
36. Accordingly, the insurer's appeal is admitted only to the limited
extent of setting aside the direction that the insurer would be liable
for penalty in the event of default, and clarifying that such penalty,
if imposed, shall be borne solely by the employer. In all other
respects, the appeal and the cross-appeal stand dismissed.
37. Interim order, if any, passed earlier stand vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 29th November, 2025/
