Gujarat High Court
New India Assurance Company Limited vs Kalpesh Babubhai Solanki on 19 June, 2025
NEUTRAL CITATION
C/FA/2630/2014 JUDGMENT DATED: 19/06/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2630 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
=======================================
Approved for Reporting NoYes
No
=======================================
NEW INDIA ASSURANCE COMPANY LIMITED
Versus
KALPESH BABUBHAI SOLANKI & ANR.
=======================================
Appearance:
MR KV GADHIA(319) for the Appellant(s) No. 1
CHINTAN U PATEL(7879) for the Defendant(s) No. 2
MR HARDIK S SONI(5124) for the Defendant(s) No. 1
HARSHADRAI DAVE for MR PH BUCH(1018) for the Defendant No. 2
=======================================
CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 19/06/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant - insurance company under Section 30 of the Workmen Compensation Act, 1923 (hereinafter be referred to as "the Act") challenging the impugned judgment and order dated 27.11.2013 passed by the Page 1 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined learned Workmen Compensation Commissioner, Labour Court, Bhavnagar in Workmen Compensation (Non-Fatal) Case No.5 of 2009 whereby the learned Commissioner has allowed the claim petition filed by the claimant and awarded the compensation of Rs.4,34,650/- along with the penalty and interest.
2. Being aggrieved and dissatisfied with the impugned judgment and order of the learned Commissioner, the present first appeal is filed by the appellant - insurance company on the grounds that learned Commissioner has committed an error in assessing the percentage of disability though in the medical certificate the disability was shown at 60%, whereas, the learned Commissioner has considered the disability at 80% and also committed an error in awarding penalty.
3. Heard Mr.K. V. Gadhia, learned counsel appearing for the appellant - insurance company, Mr.Hardik Soni, learned counsel appearing for respondent No.1 - claimant and Mr.Harshadrai Dave, learned counsel for Mr.P. H. Buch, learned counsel appearing for respondent No.2 - insurer at length.
4. Mr.Gadhia, learned counsel appearing for the appellant has submitted the same facts which are narrated in the memo of appeal and has submitted that the learned Commissioner has exceeded his jurisdiction which is not vested with him and committed an error in assessing the disability at 80%, whereas, the disability was shown in the medical certificate at 60%. He has submitted that the learned Commissioner has considered the income of the claimant on higher side, though as per the register produced before the learned Commissioner the workman was Page 2 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined receiving Rs.115/- per day, who was working as machine operator sustained injury in the nature that the claimant's right hand was amputated from below wrist and considered the income at Rs.4000/- per month which is not just and proper. He has submitted that the learned Commissioner has committed serious error of law and facts in awarding 9% interest and the liability was fastened upon the appellant instead of original employer. Mr.Gadhia, learned counsel has referred to and relied upon Sections 4 read with Section 5 of the Act which provides the method of calculating the wages. Section 4 and Section 5 of the Act reads as under:-
"4. Amount of compensation. - (1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely:-
(a) where death results fromAn amount equal to [fifty per the injury cent.] of the monthly wages of the deceased [employee] multiplied by the relevant factor:
or an amount of [one lakh and twenty thousand rupees], whichever is more;
(b) where permanent totalAn amount equal to [sixty disablement results from theper cent.] of the monthly injury wages of the injured [employee] multiplied by the relevant factor;
or an amount of [one lakh and forty thousand rupees], whichever is more:
Page 3 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined [Provided that the Central Government may, by notification in the Official Gazette, from time to time, enhance the amount of compensation mentioned in clauses (a) and (b).] Explanation I. - For the purposes of clause (a) and clause
(b), "relevant factor, in relation to [an employee] means the factor specified in the second column of Schedule IV against the entry in the first column of that Schedule specifying the number of years which are the same as the completed years of the age of the [employee] on his last birthday immediately preceding the date on which the compensation fell due.
(c) where permanent partial(i) in the case of an injury disablement result from thespecified in Part II of injury Schedule I, such percentage of the compensation which would have been payable in the case of permanent total disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury; and
(ii) in the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity (as assessed by the qualified medical practitioner) permanently caused by the injury;
Explanation I.-- Where more injuries than one are caused by the same accident, the amount of compensation payable under this head shall be aggregated but not so in any case as to exceed the amount which would have been payable if permanent total disablement had resulted from the injuries.
Explanation II.-- In assessing the loss of earning capacity Page 4 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined for the purpose of sub-clause (ii), the qualified medical practitioner shall have due regard to the percentages of loss of earning capacity in relation to different injuries specified in Schedule I;
(d) where temporarya half monthly payment of disablement, whether total orthe sum equivalent to partial, results from the injurytwenty-five per cent. of : monthly wages of the *[employee], to be paid in accordance with the provisions of sub-section (2).
(1A) Notwithstanding anything contained in sub-section (1), while fixing the amount of compensation payable to a *[employee] is respect of an accident occurred outside India, the Commissioner shall take into account the amount of compensation, if any, awarded to such *[employee] in accordance with the law of the country in which the accident occurred and shall reduce the amount fixed by him by the amount of compensation awarded to the *[employee] in accordance with the law of that country.] *[(1B) The Central Government may, by notification in the Official Gazette, specify, for the purposes of sub-section (I), such monthly wages in relation to an employee as it may consider necessary.] (2) The half-monthly payment referred to in clause (d) of sub-section (1) shall be payable on the sixteenth day --
(i) from the date of disablement where such disablement lasts for a period of twenty-eight days or more, or
(ii) after the expiry of a waiting period of three days from the date of disablement where such disablement lasts for a period of less than twenty-eight days; and thereafter half- monthly during the disablement or during a period of five years, whichever period is shorter:
Provided that--
(a) there shall be deducted from any lump sum or half-
monthly payments to which the *[employee] is entitled the amount of any payment or allowance which the *[employee] has received from the employer by way of compensation during the period of disablement prior to the Page 5 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined receipt of such lump sum or of the first half-monthly payment, as the case may be; and
(b) no half-monthly payment shall in any case exceed the amount, if any, by which half the amount of the monthly wages of the *[employee] before the accident exceeds half the amount of such wages which he is earning after the accident.
Explanation.--Any payment or allowance which the [employee] has received from the employer towards his medical treatment shall not be deemed to be a payment or allowance received by him by way of compensation within the meaning of clause (a) of the proviso.
[(2A) The employee shall be reimbursed the actual medical expenditure incurred by him for treatment of injuries caused during course of employment.] (3) On the ceasing of the disablement before the date on which any half-monthly payment falls due there shall be payable in respect of that half-month a sum proportionate to the duration of the disablement in that half-month.] (4) If the injury of the *[employee] results in his death, the employer shall, in addition to the compensation under sub- section (1), deposit with the Commissioner a sum of *[not less than five thousand rupees] for payment of the same to the eldest surviving dependant of the [employee] towards the expenditure of the funeral of such [employee] or where the *[employee] did not have a dependant or was not living with his dependant at the time of his death to the person who actually incurred such expenditure.] [Provided that the Central Government may, by notification in the Official Gazette, from time to time, enhance the amount specified in this sub-section.]
5. Method of calculating wages.--[In this Act and for the purposes thereof the expression "monthly wages"
means the amount of wages deemed to be payable for a month's service (whether the wages are payable by the month or by whatever other period or at piece rates), and calculated] as follows, namely:--
(a) where the [employee] has, during a continuous period of not less than twelve months immediately preceding the Page 6 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined accident, been in the service of the employer who is liable to pay compensation, the monthly wages of the [employee] shall be one-twelfth of the total wages which have fallen due for payment to him by the employer in the last twelve months of that period;
[(b) where the whole of the continuous period of service immediately preceding the accident during which the [employee] was in the service of the employer who is liable to pay the compensation was less than one month, the monthly wages of the [employee] shall be the average monthly amount which, during the twelve months immediately preceding the accident, was being earned by [an employee] employed on the same work by the same employer, or, if there was no [employee] so employed, by a workman employed on similar work in the same locality;] [(c)] [in other cases [including cases in which it is not possible for want of necessary information to calculate the monthly wages under clause (b)]], the monthly wages shall be thirty times the total wages earned in respect of the last continuous period of service immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period.
Explanation.--A period of service shall, for the purposes of [this section] be deemed to be continuous which has not been interrupted by a period of absence from work exceeding fourteen days."
4.1 Mr.Gadhia, learned counsel has emphasized upon said provision and submitted that since the workman was working as daily wager and earning Rs.115 per day multiplied by 30 then the salary comes to Rs.3450/- per month instead of Rs.4,000/- as considered by the learned Commissioner and awarded compensation on the basis of the same. He has referred to Schedule - I, Part II, Clause No.4 and has submitted that as per the schedule, the injury sustained by the claimant falls under Schedule - I, Part II, Clause No.4, however, the learned Page 7 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined Commissioner has not assessed from the schedule where percentage of loss of earning capacity is described as 60%. He has submitted that the learned Commissioner has awarded 9% interest and liability was fastened upon the insurance company which is not just and proper. Mr.Gadhia, learned counsel has urged to allow the appeal and to quash and set aside the impugned judgment and order passed by the learned Commissioner.
5. Mr.Dave, learned counsel for Mr.Buch, learned counsel appearing for respondent No.2 has submitted that the learned Commissioner, while allowing the claim petition, has rightly awarded the compensation and fastened the liability of paying interest upon the insurance company as respondent No.2 is not liable to pay any interest on the awarded amount, except penalty. He has submitted that the learned Commissioner has not committed any error of facts and law in passing the impugned judgment and order and the appeal being meritless deserves to be dismissed.
6. Mr.Soni, learned counsel appearing for respondent No.1 - original claimant has submitted that the learned Commissioner has rightly considered the submissions of the respective parties and after considering the facts and the nature of injury received by the claimant and considering the wage received by the claimant, learned Commissioner has passed the impugned judgment and order which is in consonance with the settled principles of law and is not required to be disturbed. He has submitted that so far as the liability of paying interest is concerned, the same is either of the party. He has submitted Page 8 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined that the claimant has nothing to show anything as it is well settled by the Hon'ble Supreme Court and this Court in number of cases decided the liability to pay interest is upon the insured and not upon the insurance company. He has submitted that no interference is required to be called for in the impugned judgment and award and the appeal being meritless deserves to be dismissed.
7. On 20.08.2014, this Court [Coram: Hon'ble Mr.Justice Ravi R. Tripathi] has passed the following order.
"1. The present first appeal is filed by the insurance company being aggrieved by judgment and order dated 27.11.2013 passed by the Workmen Compensation Commissioner, Labour Court, Bhavnagar in Workmen Compensation (Non-fatal) Case No.5 of 2009. The matter was heard on 11.8.2014. The Court passed a detailed order, relevant part of which reads as under:
"1. Heard learned advocate Mr.K.V.Gadhia for the appellant-original opponent no.2, who is before this Court being aggrieved by judgment and order dated 26.11.2013 passed by the learned Workmen's Compensation Commissioner, Labour Court, Bhavnagar in Workmen's Compensation Application No.5 of 2009. The learned advocate for the appellant invited attention of the Court to the relevant part of judgment and order wherein the learned Workmen's Compensation Commissioner has assessed the disability at 80% though in the schedule the disability to be assessed is provided at 60%. The learned advocate further submitted that even medical referee has stated in the certificate that the disability sustained by the workman is only 60%.
2. The learned advocate submitted that despite the fact that there is no evidence to show that the workman was earning anything more than Rs.5,000/- and that as per the wage register his monthly average salary is Rs.2300/- per month, calculation of wages at Rs.4000/- is not justifiable.Page 9 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025
NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined The learned Workmen's Compensation Commissioner awarded interest at the rate of 9% which is also not in accordance with law."
2. Learned advocate Mr.Soni appearing for the claimant wanted some time to take instructions in the matter. At his request, the matter was adjourned to 19.8.2014. This time was granted so as to enable the learned advocate Mr.Hardik Soni to take instructions in the matter from his client and if he agrees, the first appeal may be allowed at the admission stage suitably modifying the judgment and order passed by the Workmen Compensation Commissioner which is noted by this Court to be not in accordance with law on more than one point.
3. Learned advocate Mr.Soni yesterday asked for time and the matter was kept today. Learned advocate Mr.Soni submitted that the first appeal is required to be entertained only on the point of interest as the Workmen Compensation Commissioner has awarded 9% interest and directed the appellant-respondent no.2-insurance company to deposit the interest amount. On other two points, learned advocate Mr.Soni tried to justify the order passed by the Workmen Compensation Commissioner.
4. On the face of it, the order passed by the Workmen Compensation Commissioner is dehors the provisions of law governing the subject. The Workmen Compensation Commissioner, for no valid reason, overlooked the contention of the insurance company and accepted the claim of the claimant and assessed his income to be Rs.4,000/- per month. Learned advocate Mr.Soni submitted that it is on record that the claimant was working from morning 8 o'clock to evening 8 o'clock without realizing that even law does not permit a person to work for 12 hours and, therefore, to asses the income of a claimant on the basis of such claim of working for 12 hours at a stretch is uncalled for. Beside that, the Workmen Compensation Act is a law which provides for eventuality which take place and provides tables for calculating the compensation on the basis of the disability sustained by a person. In the present case, it is unfortunate that there is amputation above the palm. But, then the law has provided that in the event of amputation above the palm, disability is to be assessed at 60% and that being so, the assessment of disability by the Workmen Compensation Commissioner at 80% is totally arbitrary and without any basis provided by Page 10 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined the law for the same.
5. At this juncture, the Court put a specific query to learned advocate Mr.Soni to point out if there is any provision in Workmen Compensation Act which gives discretion to the Workmen Compensation Commissioner. Learned advocate fairly stated that he has not come across any such provision which gives discretionary power to the Workmen Compensation Commissioner to assess the disability at his sweet will.
6. Learned advocate Mr.Soni relied upon a decision of the Hon'ble the Apex Court in the matter of Pratap Narain Singh Deo V/s Shrinivas Sabata and another, reported in AIR 1976 SC 222(1). Learned advocate heavily relied upon Head Note `B' of the said judgment which reads as under:
"Workmen's Compensation Act (8 of 1923), S.2(1)(1) and S.2(g)- Total disablement- Personal injury to carpenter in the course of employment-Amputation of left hand above elbow-Since carpenter cannot work with one hand disablement is total and not partial." (Emphasis Supplied).
7. The Court requested the learned advocate Mr.Soni to convince the Court on the similarity of the facts on hand and the case before the Hon'ble the Apex Court. Learned advocate Mr.Soni submitted that once there is amputation, it is amputation whether it is above the palm or above the elbow. Such submission is not expected from an advocate of the standing of Mr.Soni. The same cannot be accepted.
8. If every Workmen Compensation Commissioner is given discretionary power, the purpose of providing the tables for assessing the disability by the law will stand frustrated. One may like to have discretionary power vested in Workmen Compensation Commissioner but for that law is required to be amended. The law can be amended by the competent forum or the same can be interpreted by the Hon'ble the Apex Court or any other competent forum. Otherwise, law is required to be followed by every single person be it Workmen Compensation Commissioner or any other authority.
9. In that view of the matter, matter requires admission. ADMIT."
Page 11 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined
8. The contention raised by Mr.Gadhia, learned counsel with regard to disability received by the claimant is concerned, in the opinion of this Court, the same is required to be considered in light of the provisions of law as it is mainly relied upon the medical certificate issued by Dr.Naresh G. Balani wherein it was mentioned that the claimant sustained injury below elbow i.e. on wrist and the disability was assessed by the doctor at 60%. Mr.Gadhia, learned counsel has referred to and relied upon other certificate issued by Dr.Bipin Chauhan and contended that when there is specific evidence on record with regard to the disability caused to the workman if it is not fallen under Schedule, the Court can certainly assess the disability on the basis of the evidence. But in the present case, when the injury falls under Schedule I, Part II, Clause No.4 and, therefore, it is a serious error on the part of the learned Commissioner. In my view, while assessing the disability, the factum is required to be considered not only in the nature of injury but cause of such injury; whether the person has lost capacity of earning and in future the prospect of the marriage and other is also required to be seen though it is mentioned in the Schedule I Part II, however, considering the nature and evidence on record, it is rightly held and observed by the learned Commissioner. So far as the contention with regard to disability is concerned, I am in complete agreement with the disability considered by the learned Commissioner.
8.1 So far as the income of the claimant is concerned, it is an admitted fact and evidence on record that the claimant was earning Rs.115/- per day and the salary register is produced on record and considering the same Rs.115/- multiplied by 30, the Page 12 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined income comes to Rs.3450/- x 60% x 226.38 = Rs.4,68,607 x 80% disability = Rs.3,74,886/-. So the amount of compensation awarded by the learned Commissioner is on higher side.
8.2 The contention with regard to calculating compensation on the basis of wages as mentioned under Section 5 of the Act, I am of the opinion that it is required to be considered and the appropriate modification is required to be made in the impugned award. So far as the contention with regard to the interest is concerned, it is not res integra. So far as the liability to pay the interest of the insurance company is concerned, it is not liable on the part of the insurance company, but it is liable on the part of the insured and he has to pay the interest at the rate of 9% from the date of award till final realization of the award.
8.3 So far as the amount calculated by the learned Commissioner on the basis of wages as provided under Section 5 of the Act is concerned, the actual amount is required to be awarded is at Rs.3,74,886/- instead of Rs.4,34,650/- and, therefore, the additional amount of Rs.59,764/- is to be refunded to the insurance company with accrued interest thereon.
8.4 So far as the liability to pay interest is concerned, in view of the decision of the Hon'ble Supreme Court in the case of New India Assurance Company Limited Vs. Harshadbhai Amrutbhai Modhiya reported in (2006) 5 SCC 192, the said liability is of respondent No.2 and, therefore, the impugned judgment and award is modified to the extent.
9. In the case of Harshdbhai Amrutbhai Modhiya (supra), Page 13 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined the Hon'ble Supreme Court has held and observed in paras - 9, 10, 11, 12, 13, 14 and 24 as under:-
"9. Section 3 of the Act provides for the employer's liability to pay compensation in the event a workman suffers personal injury by an accident arising out of and in the course of his employment. The amount of compensation is required to be calculated in accordance with the provisions contained therein.
10. Section 4 of the Act provides for the mode and manner in which the amount of compensation is to be calculated. While so calculating, the Workmen's Compensation Court is required to take into consideration the factors enumerated therein.
11. Section 5 provides for the method of calculating wages.
12. Section 8 stipulates the manner in which the amount of compensation would be distributed. Sub-sec. (4) of Sec. 8 reads as under:
"4) On the deposit of any money under sub-sec. (1), as compensation in respect of a deceased workman the Commissioner shall, if he thinks necessary, cause notice to be published or to be served on each dependant in such manner as he thinks fit, calling upon the dependents to appear before him on such date as he may fix for determining the distribution of the compensation. If the Commissioner is satisfied after any inquiry which he may deem necessary, that no dependant exists, he shall repay the balance of the money to the employer by whom it was paid. The Commissioner shall, on application by the employer, furnish a statement showing in detail all disbursements made."
13. Section 12 of the Act provides for the mode and manner of payment of compensation by a principal employer and/ or his contractor. Section 17 of the Act nullifies contracting out in the following terms:
"Contracting out. Any contract or agreement whether made before or after the commencement of this Act, whereby a workman relinquishes any right o24. Section 17 of the Page 14 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined Workmen's Compensation Act voids only a contract or agreement whereby a workman relinquishes any right of compensation from the employer for personal injury arising out of or in the course of the employment and insofar as it purports to remove or reduce the liability of any person to pay compensation under the Act. As my learned brother has noticed, in the Workmen's Compensation Act, there are no provisions corresponding to those in the Motor Vehicles Act, insisting on the insurer covering the entire liability arising out of an award towards compensation to a third party arising out of a motor accident. It is not brought to our notice that there is any other law enacted which stands in the way of an insurance company and the insured entering into a contract confining the obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. In this situation, the obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the Motor Vehicles Act the Workmen's Compensation Act, does not confer a right on the claimant for compensation under that Act to claim the payment of compensation in its entirety from the insurer himself. The entitlement of the claimant under the Workmen's Compensation Act is to claim the compensation from the employer. As between the employer and the insurer, the rights and obligations would depend upon the terms of the insurance contract. Construing the contract involved here it is clear that the insurer has specifically excluded any liability for interest or penalty under the Workmen's Compensation Act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under the Workmen's Compensation Act. The High Court was, therefore, not correct in holding that the appellant insurance company, is also liable to pay the interest on the amount of compensation awarded by the Commissioner. The workman has to recover it from the employer.f compensation from the employer for personal injury arising out of or in the course of the employment, shall be null and void in so far as it purports to remove or reduce the liability of any person to pay compensation under this Act."
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 Page 15 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025 NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined 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-a-vis the insurer.
24. Section 17 of the Workmen's Compensation Act voids only a contract or agreement whereby a workman relinquishes any right of compensation from the employer for personal injury arising out of or in the course of the employment and insofar as it purports to remove or reduce the liability of any person to pay compensation under the Act. As my learned brother has noticed, in the Workmen's Compensation Act, there are no provisions corresponding to those in the Motor Vehicles Act, insisting on the insurer covering the entire liability arising out of an award towards compensation to a third party arising out of a motor accident. It is not brought to our notice that there is any other law enacted which stands in the way of an insurance company and the insured entering into a contract confining the obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. In this situation, the obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the Motor Vehicles Act the Workmen's Compensation Act, does not confer a right on the claimant for compensation under that Act to claim the payment of compensation in its entirety from the insurer himself. The entitlement of the claimant under the Workmen's Compensation Act is to claim the compensation from the employer. As between the employer and the insurer, the rights and obligations would depend upon the terms of the insurance contract. Construing the contract involved here it is clear that the insurer has specifically excluded any liability for interest or penalty under the Workmen's Compensation Act and confined its liability to indemnify the employer only against the amount of compensation ordered to be paid under the Workmen's Compensation Act. The High Court was, therefore, not correct in holding that the appellant insurance company, is also liable to pay the interest on the amount of compensation awarded by the Commissioner. The workman has to recover it from the employer."
Page 16 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025NEUTRAL CITATION C/FA/2630/2014 JUDGMENT DATED: 19/06/2025 undefined
10. In view of the aforesaid facts and circumstances of the case and the decision cited at the Bar, the appeal requires consideration.
11. In the result, the appeal is allowed in part. The respondent No.1 - claimant is entitled to get the compensation an amount of Rs.3,74,886/- along with 25% penalty as awarded by the learned Commissioner and also 9% interest from the date of award till its realization. So far as the amount of interest which is deposited by the insurance company is concerned, the same shall be refunded to the insurance company and the same shall be recovered from respondent No.2 and if it is not deposited, the same shall be deposited within four weeks before the concerned Court. The learned Commissioner shall consider such application that may be filed by the appellant and decide the same in accordance with law. Registry is directed to transmit back the record and proceedings to the concerned Court forthwith.
Pending civil application/s shall stand disposed of accordingly. Interim relief, if any, granted earlier stands vacated forthwith.
(HEMANT M. PRACHCHHAK,J) V.R. PANCHAL Page 17 of 17 Uploaded by V.R. PANCHAL(HC00171) on Mon Jun 23 2025 Downloaded on : Mon Jun 23 22:45:48 IST 2025