Karnataka High Court
Matabsab S/O Ismail Choudari And Ors vs Sri. Rajabakshar S/O Mahaboobsab Momin ... on 31 January, 2025
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NC: 2025:KHC-K:696
MFA No. 200149 of 2019
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
DATED THIS THE 31ST DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE C M JOSHI
MISCL. FIRST APPEAL NO.200149 OF 2019 (EC)
BETWEEN:
1. MATABSAB S/O ISMAIL CHOUDARI,
AGED ABOUT 73 YEARS, OCC: AGRICULTURE,
2. SMT. FATIMA W/O MATABSAB CHOUDARI,
AGED ABOUT 61 YEARS, OCC: HOUSEHOLD WORK,
3. ALLABAKSH S/O BANDAGISAB CHOUDARI,
AGED ABOUT 17 YEARS, OCC: STUDENT,
4. RIYAZ S/O BANDAGISAB CHOUDARI,
AGED ABOUT 11 YEARS, OCC: STUDENT,
5. SHAYEEN D/O BANDAGISAB CHOUDARI,
AGED ABOUT 9 YEARS, OCC: STUDENT,
Digitally
signed by
LUCYGRACE
LUCYGRACE Date: APPELLANTS 3 TO 5 ARE MINORS,
2025.02.04
15:45:34 -
0800 REP. BY THEIR NEXT FRIEND/GRANDFATHER
APPELLANT-1,
ALL ARE R/O JALAWAD, TQ. SINDAGI,
DIST. VIJAYAPUR-586 101.
...APPELLANTS
(BY SRI. S.S. MAMADAPUR, ADVOCATE)
AND:
1. SRI. RAJABAKSHAR S/O MAHABOOBSAB MOMIN,
AGED ABOUT 45 YEARS, OCC: AGRICULTURE,
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NC: 2025:KHC-K:696
MFA No. 200149 of 2019
R/O JALAWAD, TQ. SINDAGI,
DIST. VIJAYPUR-586 101.
2. THE DIVISIONAL MANAGER,
UNITED INDIA INSURANCE CO. LTD.,
S.S. FRONT ROAD,
VIJAYPUR-586 101.
...RESPONDENTS
(BY SRI. P. NITESH VILAS KUMAR, ADV. FOR R1;
SRI. MOHAMMED ABDUL QUAYUM, ADV. FOR R2)
THIS MFA IS FILED UNDER SECTION 30(1) OF THE
EMPLOYEES COMPENSATION ACT, PRAYING TO ENHANCE THE
COMPENSATION AMOUNT BY SUITABLY MODIFYING THE
JUDGMENT AND AWARD DATED 05.06.2018 PASSED BY THE
SENIOR CIVIL JUDGE AND COMMISSIONER FOR EMPLOYEES
COMPENSATION, SINDAGI, IN ECA NO.02/2015.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE C M JOSHI
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE C M JOSHI) By the consent of learned counsel appearing for both the parties, the matter is taken up for final disposal, though it is slated for Admission.
This appeal is directed against the judgment and award dated 05.06.2018 in ECA No.02/2015 passed by the learned Senior Civil Judge and Commissioner for -3- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 Employees Compensation, Sindagi (hereinafter referred to as 'the Commissioner' for short).
2. By the impugned judgment and award, the Commissioner has allowed the claim petition in part and awarded a sum of Rs.5,52,510/- as compensation and directed both the owner and Insurance Company to deposit the compensation amount. However, he has fastened the liability to pay the interest amount on the owner alone. Aggrieved by the said judgment and award, the petitioners are before this Court, seeking enhancement of compensation as well as challenging the liability to pay the interest amount fastened on respondent No.1.
3. Heard the learned counsel appearing for the appellants and the learned counsel appearing for the respondents.
4. The substantial questions of law that arise for consideration in this appeal are,
1) Whether the learned Commissioner was justified in fastening the liability to pay the -4- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 interest on the compensation amount on the owner of the vehicle i.e., respondent No.1?
2) Whether the Commissioner was justified in reducing the wages of the deceased to Rs.6,000/- in the face of Notification issued by the Central Government under Section 4 (1B) of the Employees Compensation Act (for short 'E.C. Act')?
5. The finding on the above two substantial questions of law would not hold this Court for long. So far as fastening of the liability on the owner of the vehicle is concerned, the Apex Court in the case of NEW INDIA ASSURANCE CO. LTD. V. HARSHADBHAI AMRUTBHAI MODHIYA1 has held as below:
"4. However, therein a proviso has been added which reads as under:
"Provided that the insurance granted hereunder is not extended to include:
(i) any interest and/or penalty imposed on the insured on account of his/her failure to comply with the requirements laid down under the WC Act, 1923, and 1 (2006) 5 SCC 192 -5- NC: 2025:KHC-K:696 MFA No. 200149 of 2019
(ii) any compensation payable on account of occupational diseases listed in Part 'C' of Schedule III of the WC Act, 1923."
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19. 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 will bear repetition to state that 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.
20. The views taken by us find support from a recent judgment of this Court in P.J. Narayan v. Union of India [(2006) 5 SCC 200] wherein it was held:
"This writ petition is for the purposes of directing the insurance company to delete the clause in the insurance policy which provides that in cases of compensation under the Workmen's Compensation Act, -6- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 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 companies 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".
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 -7- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 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 -8- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 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.
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21. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly. The appeal is allowed. The appellant is not liable for the interest. However, we make it clear that the employer shall be liable to pay the amount of interest to the claimant. In the facts and circumstances of the case, there shall be no order as to costs."
6. It is pertinent to note that in a subsequent judgment in the case of KAMLA CHATURVEDI V. NATIONAL INSURANCE CO.2, the Apex Court has also clarified that in case of the compensation being ordered to be paid concerning a Workman Policy, it is the employer, 2 (2009) 1 SCC 487 -9- NC: 2025:KHC-K:696 MFA No. 200149 of 2019 who is liable to pay the interest portion and penalty. In the said judgment, it was held as below:
"8. In New India Assurance Co. Vs Harshadbhai case, [(2006) 5 SCC 192] Ved Prakash Garg case [ (1997) 8 SCC 1] was distinguished on facts. It was observed that in the said case the Court was not concerned with a case where an accident had occurred by use of motor vehicle in respect whereof the contract of insurance will be governed by the provisions of the Motor Vehicles Act, 1988 (in short "the MV Act"):
19. ... a contract of insurance is governed by the provisions of the Insurance Act [, 1938 (in short '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 [per] 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, ... the parties are free to choose their own terms of contract. In that view of the matter, contracting out, so far as [the] reimbursement of amount of interest is concerned, ... is not prohibited by a statute."
This position has been reiterated in P.J. Narayan v. Union of India [(2006) 5 SCC 200]. In the
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NC: 2025:KHC-K:696 MFA No. 200149 of 2019 instant case the position is different. The accident in question arose on account of vehicular accident and the provisions of the MV Act are clearly applicable. We have gone through the policy of insurance and we find that no such exception as was the case in New India Assurance Co. Vs Harshadbhai case [(2006) 5 SCC 192] was stipulated in the policy of insurance. Therefore, the Insurance Company is liable to pay the interest."
7. In that view of the matter, the policy involved in the present case being a motor vehicle package policy, the Insurance Company is held liable to pay the interest portion also. Hence, the impugned judgment has to be modified to that effect.
8. So far as the second substantial question of law is concerned, the Notification issued by the Central Government under Section 4 (1B) of the E.C. Act prescribes the wages at Rs.8,000/- per month. For the purpose of computation of the compensation under the provisions of the E.C. Act, it is such notification of the Central Government, which has to be accepted. The timely revision of the wages notified under Section 4 (1B) of the
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NC: 2025:KHC-K:696 MFA No. 200149 of 2019 E.C. Act being in consonance with the Minimum Wages Act, considering any lesser amount than Rs.8,000/- may not be permissible. Therefore, the Commissioner could not have taken a lesser amount than Rs.8,000/-, when the Central Government has issued notification to that effect.
Hence, on this count also, the impugned judgment deserves to be interfered with.
9. In the light of the above discussion, the compensation is calculated as: Rs.8,000 x 50% x 184.17 = Rs.7,36,680/-. In addition to that, a sum of Rs.5,000/-
has to be added towards funeral expenses. Thus, the appellants/petitioners are entitled for total compensation of Rs.7,41,680/-.
10. For the aforesaid reasons, the appeal deserves to be allowed. Hence, the following:
ORDER
(i) The appeal is allowed.
(ii) The impugned judgment and award passed by the Commissioner is modified.
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NC: 2025:KHC-K:696 MFA No. 200149 of 2019
(iii) The appellants are entitled for total compensation of Rs.7,41,680/- together with interest at 12% p.a. from 30 days after the date of incident till its realization.
(iv) Respondent No.2-Insurance Company is directed to deposit the entire compensation amount along with interest within a period of four weeks from the date of this order.
(v) The learned Commissioner is at liberty to order the apportionment among the petitioners, at the time of the disbursal of the compensation amount.
Sd/-
(C M JOSHI) JUDGE LG List No.: 1 Sl No.: 27