Himachal Pradesh High Court
_____________________________________________________________________ vs Shri Khandra And Ors on 21 March, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
.
FAO No. 110 of 2020
Date of Decision: 21.3.2024
_____________________________________________________________________
Oriental Insurance Company Ltd.
.........Appellant
Versus
Shri Khandra and Ors.
.......Respondents
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? Yes.
For the appellant:
r Dr. Lalit Kumar Sharma, Advocate.
For the Respondents: Mr. H.C. Sharma, Advocate, for respondent No.1.
Mr. Rajan Kahol, Mr. Vishal Panwar and Mr. B.C.
Verma, Additional Advocates General, with Ms.
Ravi Chauhan, Deputy Advocate General, for
respondent No.2.
Mr. Naveen Awasthi, Advocate, for respondent
No.3.
__________________________________________________________________________
Sandeep Sharma, J. (Oral)
Instant appeal filed under Section 30 of Employees Compensation Act, 1923 (in short "the Act"), lays challenge to award dated 31.7.2018, passed by the learned Sr. Civil Judge, District Shimla, Himachal Pradesh (exercising the power of Commissioner under the Act), whereby court below, while allowing the claim petition having been filed by ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 2 the respondent-claimant (herein after referred to as "the claimant" ) under .
Section 22 read with Section 4-A of the Act, saddled the appellant-
Insurance Company with liability to pay compensation to the tune of Rs.
10,91,981.79/-, on account of death of Raj Kumar, son of the claimant.
2. Precisely, the facts of the case as emerge from the record are that deceased Raj Kumar sustained injuries, while in the employment of respondent No.3 on 24.6.2009, as a result thereof, he was declared 100% disabled by the medical officer. Claimant, who happens to be father of the deceased Raj Kumar instituted a claim petition under Section 22 of the Act, seeking therein compensation on the ground that his deceased son sustained injuries during the course of the employment with respondent No.3. He further alleged that on account of injuries suffered in the accident during employment, his son had become 100% disabled and he spent approximately Rs. 80,000/- for treatment of his deceased son. After the accident, deceased Raj Kumar went to his house in Nepal and died there on 25.1.2012. Claimant claimed that at the time of death of his son, he was 25 years old and he being hale and hearty, was maintaining him as well as his father i.e. claimant. Claimant claimed that he being totally dependent upon his son (deceased Raj Kumar) is entitled to compensation. He specifically averred in the claim petition that information qua the accident ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 3 of deceased Raj Kumar was given to police at Police Station Pooh, District .
Kinnaur, Himachal Pradesh vide rapat No. 9 dated 2.7.2009 and thereafter, deceased remained admitted in IGMC Shimla. Claimant also averred in the claim petition that factum of accident of deceased Raj Kumar was reported by respondent No.3 i.e. Contractor of the Public Works Department to the Workman Compensation Commissioner, Rampur on 25.9.2009. He submitted that deceased prior to his death was earning Rs. 135/- per day and Rs. 4050/- per month as wages from respondent No.3.
3. Aforesaid claim put forth by the claimant came to be refuted by respondents No. 2 and 3 and appellant-Insurance Company on various grounds, however fact remains that court below on the basis of pleadings adduced on record by the respective parties as well as evidence led on record, allowed the claim petition and held the appellant-Insurance Company liable to pay compensation as detailed herein above. In the aforesaid background, appellant-Insurance Company has approached this Court in the instant appeal, praying therein to set-aside the aforesaid impugned order.
4. Aforesaid appeal was admitted by this Court vide order dated 29.8.2022, on following substantial questions of law Nos. 2, 3 and 4:
"2. Whether the impugned order is vitiated in law whereby the finding returned by the Commissioner below on the issue Nos. 1 to 6 ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 4 is based upon non appreciation mis-appreciation and wrong .
appreciation of the statements of PW-1 to PW-3 and RW-1 to RW-3 as well as Ext. PW-2/A, Ext.RW-1/A, Ext.RW-2/A, Ext.RW-2/B, Ext.RW-2/C and Ext.D-1.
3. Whether the claim petition was liable to be dismissed in the facts and circumstances wherein the alleged accident has occurred on 24- 06-2009 where the deceased has suffered injury in Distt. Kinnaur in the employment of respondent No.3 while he has died in Nepal on 25-01-2012 outside of the course of the employment of respondent No.3 and no insurable interest was subsisting as such time qua the deceased.
4. Whether the Commissioner below is competent to impose the element of interest upon the insurer in the face of Apex Court judgment rendered in New India Insurance V/s Harshad Bhai, 2006 (2) TAC 321(SC)."
5. Precisely, the grouse of the appellant as has been highlighted in the appeal and further canvassed by Dr. Lalit Kumar Sharma, learned counsel for the appellant is that since deceased died after two years of the accident and it had no causal connection with the injury allegedly sustained by him in the alleged accident, there was no occasion, if any, for the court below to saddle the appellant-Insurance Company with liability to pay the compensation. Mr. Lalit, further submitted that claim petition was filed beyond the period of limitation and as such, it otherwise could not have been entertained. He submitted that as per admitted case of the parties, Raj Kumar died in Nepal after two years of the alleged accident and ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 5 at no point of time, it ever came to be proved on record at the behest of the .
claimant that death was on account of injuries suffered by the deceased in the alleged accident. Lastly, learned counsel for the appellant-Insurance Company, submitted that court below has erred in directing the appellant-
Insurance Company to pay interest because interest, if any, was otherwise, required to be paid by the employer in view of the terms and conditions contained in the Insurance Policy (Ex.RW2/A). In support of his aforesaid submissions, he also placed reliance upon judgment passed by the Hon'ble Apex Court in New India Insurance V/s Harshad Bhai 2006 (2) TAC 321(SC).
6. To the contrary, learned counsel for the respondents, while supporting the impugned award vehemently argued that bare perusal of award nowhere suggests that compensation, if any, ever came to be awarded in favour of the claimant on account of death of his son, rather court below awarded compensation, having taken note of permanent disablement suffered by the deceased in the alleged accident.
7. Mr. H.C. Sharma, learned counsel appearing for the claimant while making this Court peruse the evidence led on record vis-à-vis reasoning assigned in the impugned award, strenuously argued that though claim petition was filed by the claimant well within limitation, but despite that, during pendency of the claim petition, an application under ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 6 Section 5 of the Limitation Act was filed for condonation of delay, which .
was allowed by the court below and such order, condoning delay, was never laid challenge in the superior court of law, as such, appellant-Insurance Company is estopped from raising plea of limitation at this stage.
8. Mr. Naveen Awasthi, learned counsel appearing for respondent No.3, submitted that since factum with regard to the alleged accident was immediately communicated by him to the Commissioner, no illegality can be said to have been committed by the court below, while saddling the appellant-Insurance Company, with liability to pay the interest.
9. Having heard learned counsel for the parties and perused material available on record vis-à-vis reasoning assigned in the impugned award, this Court finds no illegality or infirmity in the same and as such, no interference is called for. Primarily, challenge to the impugned award has been also laid on the ground that claim petition was barred by limitation and no evidence worth credence was ever led on record by the claimant, especially with respect to causal connection, if any, of injury suffered in the accident with the death of the deceased, however, having carefully gone through the impugned award, this Court finds force in the submission of Mr. H.C. Sharma, learned counsel appearing for the claimant that compensation awarded by the court below, was not on account of ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 7 death of the deceased, rather court below, having taken note of the fact .
that deceased suffered 100% disablement on account of injuries suffered by him in the accident, proceeded to award compensation. Admittedly, in the case at hand, deceased Raj Kumar suffered injury in the accident on 24.6.2009, as a result thereof, he remained admitted in the hospital.
Doctor attending upon the deceased declared him to be 100% disabled. If it is so, deceased otherwise had become eligible to be awarded compensation in terms of provisions contained in the Act.
10. Learned r counsel appearing for the appellant-Insurance Company has not been able to dispute that on account of injuries suffered by the deceased, he was rendered permanently disabled to the extent of 100%, as a result thereof, he was unable to do any work. True it is that after the alleged incident, deceased left for Nepal, but such fact, if any, may not be of much relevance, especially in view of the finding returned by the court below, wherein it proceeded to hold the claimant entitled for compensation on account of complete/total disablement of his deceased son during the course of his employment.
11. Similarly, this Court finds no force in the submission of Dr. Lalit Sharma, learned counsel, that claim petition could not have been entertained by the court below being barred by limitation. Though this ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 8 court is prima-facie convinced that claim petition was filed well within .
limitation, but even otherwise record clearly reveals that, during pendency of the petition, claimant had filed an application under Section 5 of the Limitation Act, seeking therein condonation of delay in filing the petition and the same was allowed vide order dated 4.12.2015, which never came to be laid challenge in the superior court of law and as such, it has attained finality. After 5.12.2015, appellant-Insurance Company, without filing an appeal laying therein challenge to aforesaid order dated 4.12.2015, continued to participate in the proceedings initiated by the claimant under the Act, seeking therein compensation and as such, it is estopped, at this stage, to raise the plea of limitation.
12. However, this Court finds force in the submissions of Dr. Lalit K. Sharma, learned counsel appearing of the appellant-Insurance Company that court below erred in burdening the appellant-Insurance Company with liability to pay interest @ 12% per annum w.e.f. 31.7.2018, till the date of passing of the award. If the terms and conditions contained in the insurance policy are perused in their entirety, liability to pay interest, if any, on the part of the appellant-Insurance Company, has been excluded.
13. Similarly, Section 4A(3) clearly provides that where any employer is in default in paying the compensation due under this Act ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 9 within one month from the date it fell due, the Commissioner shall direct .
the employer, in addition to the amount of the arrears, to pay simple interest thereon at the rate of 12% per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government.
14. Though, in the case at hand, it has been argued by Mr. Naveen Awasthi, learned counsel, that information with regard to accident was given to the appellant-Insurance Company but such fact, if any, may not be of much help because as per Section 3, there is a liability of employer to pay compensation, if personal injury is caused to an employee by accident arising out of and in the course of his employment, the employer shall be liable to pay compensation in accordance with the provisions contained in Chapter-2.
15. Provisions contained under Section 4A(3) clearly provide that, where an employer is in default in paying the compensation due under this Act within one month from the date it fell due i.e. 30 days after the date of the accident, liability, if any, to pay the interest shall be upon the employer, but definitely, not upon the appellant-Insurance Company. In the instant case, court below has awarded interest @ 12% per annum in terms of provisions contained under Section 4A of the Act, but liability to pay the ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 10 same has been wrongly fastened upon the appellant-Insurance Company, .
whereas such amount, if any, in terms of provisions contained under Section 4A, is liable to be paid by the employer.
16. Needless to say, policy placed reliance in this case is Group Insurance Policy issued under the Act and as such, liability to pay interest, would be squarely governed by the provisions contained under Section 4A of the Act, but definitely not under the provisions of Motor Vehicle Act, as is being sought to be pressed into service by the learned counsel for the claimant as well as employer
17. Reliance in this regard is placed upon New India Assurance Co. Ltd v. Harshadbhai Amrutbhai Modhiya and Anr, 2006 (2) TAC 321 (SC), relevant paras whereof read as under:
"8. 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.
9. 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.
10. Section 5 provides for the method of calculating wages.::: Downloaded on - 27/03/2024 20:30:45 :::CIS 11
11. Section 8 stipulates the manner in which the amount of .
compensation would be distributed. Sub-section (4) of Section 8 reads as under:
"4) On the deposit of any money under sub- section (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 dependants 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.
12. 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 of 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."
13.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 ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 12 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-`-vis the insurer.
14.The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimize his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law.
15.In Ved Prakash Garg (supra), 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: "
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 ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 13 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."
16. Yet again in L.R. Ferro Alloys Ltd. (supra), this Court opined that if an amount of compensation is not deposited within a 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 insurer employer for default of payment of amount stating:
::: Downloaded on - 27/03/2024 20:30:45 :::CIS 14"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 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."
17.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 Vehicle Act, 1988.
18.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 ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 15 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.
19. The views taken by us find support from a recent judgment of this Court in P.J. Narayan v. Union of India and Ors. [2004 ACJ 452] wherein it was held:
"1. This writ petition is for the purpose of directing 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 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 Writ Petition is dismissed. No order as to costs."
18. Substantial questions of law stand answered accordingly.
19. Consequently, in view of the detailed discussion made herein above, as well as law taken into consideration, present appeal is partly allowed and impugned award is modified to the extent that interest @ 12% per annum from 23.7.2009 till date of passing of the award shall not be ::: Downloaded on - 27/03/2024 20:30:45 :::CIS 16 paid by the appellant-Insurance Company, rather by the employer. In the .
aforesaid terms, present appeal is disposed of alongwith pending applications, if any. Interim directions, if any, stand vacated.
March 21, 2024 (Sandeep Sharma),
(manjit) Judge
r to
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