Gujarat High Court
Pramiladevi Nagendrakumar Jaiswar vs Abhishek Fabrics on 28 November, 2025
NEUTRAL CITATION
C/FA/2417/2008 JUDGMENT DATED: 28/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2417 of 2008
With
R/FIRST APPEAL NO. 3615 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DEVAN M. DESAI
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Approved for Reporting Yes No
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PRAMILADEVI NAGENDRAKUMAR JAISWAR & ORS.
Versus
ABHISHEK FABRICS & ANR.
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Appearance:
MR DG SHUKLA(1998) for the Appellant(s) No. 1,2,3,4
MR RAJESH A VYAS(3596) for the Appellant(s) No. 1,2,3,4
MR DG CHAUHAN(218) for the Defendant(s) No. 1
MR PALAK H THAKKAR(3455) for the Defendant(s) No. 2
RONAK D CHAUHAN(7709) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 28/11/2025
COMMON ORAL JUDGMENT
1. First Appeal No. 2417 of 2008 is filed by appellant - original applicant for enhancement of compensation in rate of interest and penalty. First Appeal No. 3615 of 2008 is filed by appellant - Page 1 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined original opponent No. 2 - Insurance Company, challenging the judgment and order. Both the First Appeals are filed under Section 30 of Workmen's Compensation Act, 1923 and arising out of judgment and order dated 05.03.2008 by Ex-Officio Commissioner for Workmen's Compensation Act, Surat in Workmen's Compensation (Fatal) Application No. 111 of 2005.
2. Heard learned advocate Mr. D.G. Shukla for the appellant - claimant and learned advocate Mr. Palak Thakkar for the Insurance Company. In both the First Appeals, the facts are common and both the appeals are arising out of common judgment and award. Therefore, upon request, both the appeals are decided by this common order.
3. The brief facts of the case are under:
3.1 Deceased, Nagendrakumar Nankuram Jaiswar was in the employment of original opponent No. 1 as a weaver. On 01.04.2005, at around 8.30 a.m., when deceased was performing his duties on machines, due to stress and strain Page 2 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined of the work, he fell down and died. Deceased was aged about 27 years of age and was drawing a salary of Rs.
4,000/- per month. As the employer - opponent No. 1 did not deposit the amount of compensation as stipulated under the Act, claimants filed an application under the Workmen's Compensation Act for compensation of Rs. 4,27,140/- coupled with interest at the rate of 12% per annum and penalty at 60%. Employer - opponent No. 1 appeared and filed written statement at Exhibit - 10. The employer admitted the relationship of employee and employer between the deceased and opponent No. 1 and also admitted that deceased died due to stress of work. The accident is arising out of and in the course of employment. However, the employer denied its liability to pay compensation, interest and penalty as the employer is covered under the policy. Opponent No. 2 - insurance company - appellant of First Appeal No. 3615 of 2008 appeared and filed written statement at Exhibit - 13 and denied his liability of paying Page 3 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined any compensation to the claimants on the ground that the death has not occurred out of the employment and there is no nexus between the nature of work and the cause of death. After considering the evidence, the learned Commissioner allowed the claim application by directing the Insurance Company to pay compensation of Rs. 4,26,340/- with interest at the rate of 9% per annum from the date of accident till realisation to the claimants and further directed opponent No. 1 to pay the penalty at the rate of 2% amounting to Rs.8,527/- to the claimants.
3.2 Being aggrieved and dissatisfied with the award of granting of interest and penalty, the claimants have filed the appeal for enhancement of compensation. The Insurance Company has preferred the appeal being aggrieved and dissatisfied with the granting of compensation. Together with liability of interest at the rate of 9% per annum.
4. Learned advocate for the claimants submitted that on 01.04.2005, the deceased during the course of his employment, Page 4 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined due to stress and strain, fell down in the factory and died. It is contended that there is a casual connection between injury and the accident. The employer vide Exhibit - 35 has issued a certificate inter alia stating that the deceased has died due to heart attack, resulting due to heavy workload in the factory. As per the certificate issued by the employer, the accident is arising out of and in the course of employment. It is further contended that in the examination in chief Exhibit - 43, employer, has narrated the nature of work and has also stated that the deceased had to lift the beam and was to see that the cloth is properly woven. In performing his duties, the deceased had to undergo lot of physical and mental stress. The deceased while performing his duties, fell down and died due to massive heart attack. It is contented that the certificate of Dr. Mahesh Desai, of the Insurance Company, Exhibit
- 31 has opined that the death is due to Cardio-Respiratory Arrest Due to Coronary Insufficiency. The post-mortem report also certifies that the employee has died due to massive heart attack.
5. It is further contended that the evidence on record is Page 5 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined sufficient to hold that the accident is arising out of and in the course of employment and the learned Commissioner has rightly held that claimants are entitled to compensation, interest and penalty, as the claimants have established basic requirements as contemplated under the Workmen's Compensation Act. Reliance has been placed upon section 4A Act:
"4A. Compensation to be paid when due and penalty for default.-
(1) Compensation under section 4 shall be paid as soon as it falls due.
(2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the [employee], as the case may be, without prejudice to the right of the [employee] to make any further claim.
(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall--
(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent. 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, by notification in the Official Gazette, on the amount due; and
(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent, of such amount by way of penalty"
It is also the contention of learned advocate for the claimant that the employer did not deposit the compensation within a period of Page 6 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined one month from the date it fell due as contemplated under the Act and failed to comply with the statutory requirements. The Act provides that in case the employer fails to deposit the compensation, the employer is liable to pay simple interest at the rate of 12% over the compensation together with penalty not exceeding 50% of compensation. Section 4A (3)(a) of the Act, prescribes award of simple interest of 12%. The learned Commissioner has committed a gross error in awarding only 9% simple interest. Imposition of 2% penalty is also a very meagre and negligible penalty.
6. It is therefore contented that following substantial questions of law are proposed by the claimants:
(i) Whether the learned Commissioner has erred in law in considering the provisions of Section 4A(3)(a) and
(b) of the Workmen's Compensation Act, 1923?
(ii) Whether the learned Commissioner has committed an error in law in awarding penalty to the extent of only 2%?Page 7 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined
(iii) Whether the learned Commissioner has committed an error in law in awarding simple interest at the rate of only 9% per annum?
(iv) Whether the learned Commissioner has committed an error in law in not awarding penalty to the extent of 50% inspite of holding that there was no payment made by the employer till the date of order and no justification for delay?
(v) Whether the learned Commissioner has committed an error in law in not awarding simple interest at the rate of 12% per annum inspite of the statutory provision contained under Section 4A(3)(a) which also empowers the learned Commissioner to award interest at higher rates?
(vi) On such other question of law as may be framed by the Hon'ble Court during the course of hearing. In support of his contentions, learned advocate for the claimant has relied upon a case of "Chairman, Vaidyanath Sahakari Page 8 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined Sakhar Karkhana Ltd vs. Shantabai" reported in 2025 JX (SC) 469.
7. It is submitted that it is held by the Hon'ble Apex Court that accident encompasses unforeseen events causing injury or death without design on part of the workman. Heart attack during employment can be classified as an accident if link to job stress. The connection has to be established between work duties and resulting in injury. Stressful nature of job which contributed to deceased's heart attack would make the claimants entitled for the benefits under the Act. No other submissions, except the above are made by learned advocate for the claimants.
8. As against this, learned advocate for the Insurance Company has strenuously submitted that there is no evidence on record establishing nexus between the nature of work and the cause of death. There is no causal connection between the work and the cause of death. The certificate issued by the employer is not a sufficient piece of evidence whereby it can be assumed that the primary burden of proving the nexus between the cause of death Page 9 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined and nature of work is established by claimants. The evidence also lacks any material to show that the deceased was having any prior health complaints. The incident occurred at around 8:30 a.m., which was the starting time of the factory and therefore, it cannot be presumed that due to stress and strain of the work, the deceased sustained heart attack. The claimants must establish by medical evidence that the cause of death is the resultant effect of the stress and strain. The death due to heart attack cannot be construed as an accident arising out of and in the course of employment. In support of his submissions, learned advocate for the Insurance Company has relied upon a case of "Shakuntala Chandrakant Shreshti vs. Prabhakar Maruti Garvali and another" reported in 2007 (11) SCC 668. It is contended that the onus is upon the claimant to show that it was due to work-related strain which contributed to or aggravated the injury. If a finding is arrived at without pleading or legal evidence, the statutory authority will commit a jurisdictional error while exercising jurisdiction. It is contended that there must be some evidence that the employment contributed to the death of the deceased. In the Page 10 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined present case, there is no evidence on record that the death occurred during the course of employment.
9. Following substantial questions of law have been proposed by learned advocate for the Insurance Company for the determination:
1. Whether the learned Workmen's Compensation Commissioner has committed an error of law in granting compensation along with interest when death of the husband of respondent No.1 did not occur due to accident but occurred due to Cardio-Respiratory Arrest due to Coronary Insufficiency?
2. Whether the learned Workmen's Compensation Commissioner has committed an error of law in granting compensation contrary to the judgment passed by the Hon'ble Supreme Court in the case of Shakuntala Shreshti vs. Prabhakar Maruti Garvali, 2006 AIR SCW 668?Page 11 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined
3. Whether the learned Workmen's Compensation Commissioner has committed an error of law in directing the appellant to pay interest contrary to the provisions of the Act and contrary to the judgment of the Hon'ble Supreme Court in the case of the New India Assurance Co. Ltd. vs. Harshadbhai Amrutbhai Modhia, 2006 AIR SCW 2352.
10. It is contended by learned advocate for the Insurance Company that the policy is issued covering the risk under Workmen's Compensation Act and the policy prescribe an exclusion clause. As per the terms and conditions of the policy, the insurance granted is not extended to include any interest and/or penalty imposed on the insured on account of his failure to comply with the requirements laid down under the Workmen's Compensation Act, 1923. When a specific term excludes the liability of paying interest, the Insurance Company cannot be saddled with a liability to pay interest to the claimants by indemnifying the insured. The learned commissioner, thereby has Page 12 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined committed an error by awarding interest to the claimants by holding Insurance Company liable. The Act also mandates that the primary liability of depositing the compensation is upon the employer and on failure to deposit the amount of compensation, the employer can be saddled with a liability of simple interest on the compensation. The Act does not prescribe any provision to indemnify an employer by making a payment of interest to the claimants. In support of his contention, learned advocate for the Insurance Company has relied upon a decision in the case of "New India Assurance Company Limited vs. Harshad Bhai Amrutbhai Modhia" reported in 2006 AIR SCW 2352. No other submissions were canvassed by learned advocate for the Insurance Company.
11. I have considered the submissions canvassed by learned advocates for the parties and perused record and proceedings. The record reveals that there is no dispute with regard to relationship of employee and employer between the deceased and original opponent No. 1. The only question for consideration is Page 13 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined whether death can be treated as an accident arising out of and in the course of employment or not. The contention of the learned advocate for the claimant is that the cause of death is directly connected with the nature of work and due to stress and strain of the work, the deceased died at the place of factory at around 8:30 a.m. on 01.04.2005. As against this, the grievance voiced out by the learned advocate for the Insurance Company is that there is no evidence on record which establishes nexus between the cause of death and the nature of work. It is also the contention of the Insurance Company that Dr. Mahesh Desai has opined in his certificate, Exhibit - 31 that the deceased did not die out of any accident or the death is not an accidental injury. On such controversy, answer has to be given as to whether death, due to heart attack, in the present set of facts, can be said to have any causal connection with the nature of work or not.
12. To address the controversy, it is relevant to consider a few facts which emerge from the record. The employer, in his certificate at Exhibit - 35, has stated that due to the heavy Page 14 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined workload in the factory, deceased employee succumbed due to heart attack. The oral deposition of the employer recorded at Exhibit - 43, if perused, the witness has narrated in detail the nature of the work and has clearly stated that the deceased employee was working in the factory under heavy physical and mental stress. The deceased was also required to ensure that the quality of the cloth is maintained properly and was supposed to attend to looms, and the nature of the work was strenuous. On the date of the incident, the deceased, while performing his duties, fell down in the factory premises, which amounts to an accident. The evidence of the employer on these grounds has gone unchallenged. It is not the case of any party that the deceased had any physical ailment prior to the date of the incident or that he was suffering from heart disease or any other disease prior to his death. The certificate issued by the Dr. Mahesh Desai is of hardly any relevance in the present case, because the said doctor had no occasion to examine the deceased. Said doctor had not examined any case papers of deceased prior to his death. The post-mortem Page 15 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined report relied upon by the doctor reflects the cause of death as Cardio-Respiratory Arrest Due to Coronary Insufficiency. When the Insurance Company has raised a contention that there is no nexus between the cause of death and the nature of work, and that death due to heart attack cannot be termed an "accident" as defined under the Act, heavy burden lies upon the Insurance Company to rebut that the deceased employee had a pre-existing heart ailment prior to the date of the accident and that the death was the result of such ailment. In the present case, the employer himself has admitted that the deceased was undergoing stress and strain due to the nature of his work. This evidence, having been gone unchallenged, has probative value in establishing the connection between the death of the employee and the nature of his work. The fall in the factory premises amounts to an accident arising out of and in the course of employment.
13. In the case of "Chairman, Vaidyanath Sahakari Sakhar Karkhana Ltd." (Supra), the Hon'ble Apex Court had an occasion to decide a question akin to the one involved in the present appeal. Page 16 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined In the cited case, the employee died due to heart attack, and a dispute was raised with regard to the interpretation of the word "accident" in the context of work-related injuries. The contention of the appellant therein was that the heart attack did not arise out of employment as required under Section 3(1) of the Employees' Compensation Act. While determining the liability of the employer to compensate the claimants, the Hon'ble Apex Court, in paragraphs 14, 15, and 16, discussed and explained the scope of the term "accident" as contemplated under Section 3(1) of the Employees' Compensation Act.
"14. The expression "accident" according to P Ramanatha Aiyar's Advance Law Lexicon Dictionary means "undesigned, sudden or unexpected event; mishap; misfortune; disaster". The word "accident" is derived from the Latin verb "accidere" signifying "fall upon, befall, happen, chance". In other words, it is a sudden and unexpected event taking place without expectation upon the instant, rather than something which continues, progresses or develops; something happening by chance not according to usual course of things or events, out of the range of ordinary calculations; that which exits or occurs abnormally, or an uncommon occurrence.
15. The word "accident" generally denotes an event that takes place without one's foresight or expectation; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected; chance, casualty, contingency (Webster Dictionary).
16. In other words, an "accident" being an unforeseen event causing a misfortune or loss is different from an omission which Page 17 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined is as a result of negligence or misconduct. Therefore, the expression "accident" means an untoward mishap which is not expected or designed. In the context of the Act under consideration, the term "accident" for the purpose of seeking compensation for personal injuries sustained would include any injury which is not designed by the workman himself. Thus, the word "accident" would include all mishaps occurring by chance or caused unintentionally and events happening due to unforeseen circumstances under Section 3(1) of the Act. It must be interpreted as mishap or "untoward event not expected or designed" in the popular and ordinary sense. If the injury or death occurred without designed on the part of the workman then the death or injury would be by accident, although it was brought about by a heart attack or some other cause to be found in the condition of the workman himself. The expression "accident" not being defined under the Act must be interpreted to be an untoward event which is not expected or designed; therefore, an accident means unintended and unexpected occurrence which produces hurt or loss. The interpretation of the word "accident" must be in the popular and ordinary sense and not in a technical sense. Thus, the expression "accident" arising out of and in the course of his employment in Section 3(1) of the Act must be so interpreted as to establish that (1) at the time of the accident he was in fact engaged in the duties of his employment; (2) that it occurred at the place where he was performing those duties; and (3) that the immediate act which led to the accident is not so remote from the sphere of his duties so as to be regarded as something foreign to them."
14. The Hon'ble Apex Court has observed that an "accident" is an unforeseen event causing misfortune or loss, and is distinct from an omission resulting from negligence or misconduct. For the purpose of seeking compensation for personal injuries, an injury would be included so long as it is not designed or intended by the workman himself. "Accident" means an untoward mis-hap which is Page 18 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined not expected or designed. The interpretation of the word "accident" must be understood in its popular and ordinary sense, and not in a technical sense. The Hon'ble Apex Court further observed that the expression "accident" must refer to an accident arising out of and in the course of employment as contemplated under Section 3(1) of the Act in establishing an occurrence of "accident" as defined under Section 3(1) of the Act, three contingencies must be established: (1) at the time of the accident he was infact engaged in the duties of his employment; (2) that it occurred at the place where he was performing those duties; and (3) that the immediate act which led to the accident is not so remote from the sphere of his duties so as to be regarded as something foreign to them. Applying the said ratio to the present case, the three important factors in determining whether the death of the employee amounts to an "accident" as contemplated under Section 3(1) of the Act are clearly satisfied. It is an undisputed fact culls out from the record that at the time of the accident the deceased was performing his duties as a weaver in the factory, and the accident occurred within Page 19 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined the factory premises where he was engaged in his work. Further, as he was required to perform his duties under strenuous working conditions, the occurrence of his falling down cannot be said to be remote from the sphere of his employment. Further, whether the employee was working under stressed conditions and under the constant supervision of his superiors in monitoring his performance is a pure question of fact. As observed above, the employer has clearly stated that the employee was working under strenuous conditions. Therefore, in my view, the cause of death being a heart attack has a direct nexus with the nature of his work, and accordingly, the provisions contemplated under Section 3(1) of the Act are squarely applicable.
15. In the case of "Chairman, Vaidyanath Sahakari Sakhar Karkhana Ltd." (Supra), in paragraph-17, the Apex Court considered the case of "Shakuntala Chandrakant Shreshti (Supra). The Apex Court in "Shakuntala Chandrakant Shreshti"
(Supra) laid down tests for attracting the provisions of Section 3 of the Act, which are reproduced as follows:Page 20 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined (1) There must be a causal connection between the injury and the accident and the work done in the course of employment.
(2) The onus is upon the applicant to show that the it was the work and the resulting strain which contributed to or aggravated the injury.
(3) If the evidence brought on records establishes a greater probability which satisfies a reasonable man that the work contributed to the causing of the personal injury, it would be enough for the workman to succeed, but the same would depend upon the fact of each case.
So far as the tests are concerned, the causal connection between the injury, the accident, and the work done in the course of employment is established beyond any doubt. The evidence of the claimant, as well as the admission of the employer in his examination-in-chief, clearly indicate that the claimants have discharged their initial burden of proving that the stress and strain of work had contributed to or aggravated the injury. The test laid down by the Hon'ble Apex Court - that there has to be evidence Page 21 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined on record which establishes a greater possibility, satisfying a reasonable mind, that the work contributed to the causing of the personal injury is found present in this case. This requirement has also been satisfied. Sufficient evidence is available on record to establish a causal connection between the death and the nature of work the deceased was performing in the employer's factory. While interpreting the question of causal connection between the death and the nature of employment, the Court must favour social justice for workers. A strict interpretation of the word "accident" under Section 3(1) of the Employees' Compensation Act, 1954, is not the purpose of the enactment. Considering the aforesaid circumstances, I am of the view that the learned Commissioner has not faulted in any manner in arriving at a conclusion that the cause of death is directly related to the nature of work which the employee was performing during the course of his employment.
16. The next questions to be addressed are the imposition of liability of interest upon the Insurance Company and the percentage of penalty imposed upon the employer by the learned Page 22 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined Commissioner. Section 4A of the Employees' Compensation Act mandates that where the employer does not accept liability for compensation to the extent claimed, and although he is bound to make a provisional payment based on the extent of liability which he accepts, fails to deposit such payment with the learned Commissioner or fails to make payment to the employee within one month from the date it fell due, the learned Commissioner shall direct the employer, in addition to the amount of compensation, to pay simple interest at the rate of 12% per annum, and may further direct payment of a penalty not exceeding 50% of the amount of compensation.
17. The provision, in unequivocal terms, empowers the learned Commissioner to direct the employer to pay simple interest at the rate of 12% per annum in addition to the amount of arrears if employer has not deposited the amount within one month from the date it fell due. The learned Commissioner has no jurisdiction or authority to reduce the rate of interest and grant a lesser percentage when the law prescribes interest to be charged at 12%. Page 23 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025
NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined In my opinion, the learned Commissioner has committed an error in interpreting the mandatory provisions of the Act by awarding interest at the rate of 9% per annum from the date of the accident instead of 12% per annum.
18. So far as the rate of penalty imposed at 2% of the amount of compensation, in my view, is nothing but an indirect rejection of the mandate provided in the Act regarding the imposition of penalty upon the employer. Admittedly, the employer has flouted the mandatory provision contemplated under Section 4A of the Act by failing to deposit the compensation within one month from the date it fell due. Therefore, the employer is liable to pay interest at the rate of 12% per annum on the amount of arrears of compensation, together with penalty at the rate of 10% on the amount of compensation.
19. The provision of imposition of penalty is purely a discretionary order. However, while exercising such discretion, the Court must act judiciously and in the context of the facts placed Page 24 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined before it. The evidence indicates that the deceased was aged about 27 years and has left behind a widow and two minor children. In my view, imposition of penalty at the rate of 10% is just and reasonable.
20. The next issue that remains to be determined is from whom the claimants are entitled to recover the interest and penalty. The learned Commissioner has fastened the liability to pay interest upon the insurance company, whereas the penalty has been imposed upon the employer. The issue of liability to pay interest and penalty is now settled in the decision of "Harshadbhai Amrutbhai Modhia" (Supra), wherein it has been held that the Insurance Company cannot be saddled with liability to pay interest and penalty unless the policy expressly covers the same.
"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 Page 25 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined 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."
Moreover, the Insurance policy placed on record, along with its terms and conditions, clearly provides that the insurance coverage does not extend to include any interest or penalty imposed on the insured (employer) on account of failure to comply with the requirements laid down in Section 4A of the Act. An Insurance Page 26 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined policy is a contract, and the parties to it are bound by its terms and conditions. When the policy excludes liability for interest and penalty - which is otherwise fastened upon the employer - the insurance company cannot be burdened with such liability of interest.
21. To this extent, the impugned judgment and order require modification. The Insurance Company is exempted from the liability to pay interest. The liability to pay both interest and penalty shall rest upon the employer.
22. The claimants shall be entitled to recover the amount of compensation together with interest at the rate of 12% per annum from the date it fell due until realization, and penalty at the rate of 10% from original Opponent No. 2, the employer. Opponent No. 1, the employer, shall deposit the differential amount of compensation before the learned Commissioner within a period of four weeks from the date of receipt of this order. Once the amount is deposited by the employer, the same shall be disbursed in Page 27 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025 NEUTRAL CITATION C/FA/2417/2008 JUDGMENT DATED: 28/11/2025 undefined favour of the claimants after following due process. Any excess amount deposited by the Insurance Company shall be refunded to it after following the due procedure.
23. With these observations, the First Appeal filed by the claimants is partly allowed, and the First Appeal filed by the Insurance Company is also partly allowed. Record and proceedings be sent back to the concerned Court/Tribunal.
(D. M. DESAI,J) MUSKAN Page 28 of 28 Uploaded by MUSKAN AJAY MENON(HC02359) on Thu Dec 04 2025 Downloaded on : Thu Dec 04 20:46:35 IST 2025