Madhya Pradesh High Court
M/S Arora Construction vs Smt. Alveena Pathak on 6 August, 2024
Author: Avanindra Kumar Singh
Bench: Avanindra Kumar Singh
1 MA-3773-2013
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE AVANINDRA KUMAR SINGH
ON THE 6th OF AUGUST, 2024
MISC. APPEAL No. 3773 of 2013
M/S ARORA CONSTRUCTION
Versus
SMT. ALVEENA PATHAK AND OTHERS
Appearance:
Shri Narendra Chouhan - Advocate for the appellant.
Shri Raveesh Deolia - Advocate for the respondent no.1.
Shri Gopi Chourasia - Advocate for respondent no.4.
Shri G.C. Sohane - Advocate for respondent no.5.
ORDER
This appeal has been filed under Section 30 of the Workmen's Compensation Act 1924 on the ground that the employer, M/s Arora Construction has been saddled with the liability to pay 12% per annum interest on principal amount of Rs.2,94,402/- after 30 days from 25.6.2008 whereas it should have been on the Insurance Company. It was submitted that appeal of the Insurance Company was already dismissed on 16.11.2020.
2. Bare minimum facts of this case are that the deceased Ramesh Pathak was working as a labour in M/s. Arora Construction who had taken a contract to carry out the works in the Vehicle Factor, Jabalpur. The appellant insured labourers under him in the Oriental Insurance Company, i.e. the respondent no.5 while the Vehicle Factory is represented through respondent no.4, General Manager, Vehicle Factory.
3. The claim application under Section 10 of the Workmen's Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM 2 MA-3773-2013 Compensation Act was filed by the Family members of the deceased, Smt. Alveena Pathak and others, learned Labour Court, Jabalpur under Commissioner Workmen's Compensation Act in Case No.109/ WC Act/ 2008/Fatal by award dated 9.10.2013 has awarded a compensation of Rs.2,94,402/- saddling the liability of payment on M/s. Arora Construction and the Insurance Company within one month. It was also directed that the award shall carry interest of 12% p.a. after one month from the date of accident, i.e. 25.6.2008 and interest to be paid by the employer. It was also directed by the Commissioner that non-applicant no.2, M/s. Arora Construction i.e. the appellant here are liable to pay penalty amounting to 25% of the compensation amount.
4. Against this award an appeal was filed by the Insurance Company which was registered as M.A. No.3688 of 2013 Oriental Insurance Company Vs. Smt. Alveena Pathak and by judgment dated 16.1.2020, the appeal was dismissed by this Court, whereas this pending appeal is filed by the employer, which is pending, although on 21.11.2019 in Appeal No.3688 of 2013 it was directed that both the appeals be listed together.
5. On 21.11.2019, this appeal was admitted on the following substantial question of law :-
" Whether the Commissioner, Workmen's Compensation committed an error of law in holding that the appellant-company is liable for payment of the amount, beyond the limit prescribed in the policy?"
6. Heard learned counsel for the parties and perused the record.
7. Learned counsel for the appellant placed reliance on the judgment of Delhi High Court in the case of National Insurance Company Ltd. Vs. Bhim Singh and others dated 5.4.2021, wherein in Para-12, it has been held as under :-
Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM3 MA-3773-2013 " In view of the aforesaid, considering the judgment of Hon'ble Supreme Court in Ved Prakash Garg, which has not been superseded by the later judgment, and the provisions contained under Section 3 of the Workmen Compensation Act and this case being the case of Workmen Compensation Act, it cannot be said that the insurance company is not liable to pay the interest alongwith the amount of compensation inasmuch as in terms of the contract entered into by the insurance company with the owner of the vehicle they are liable to indemnify the insured and thus to pay compensation along with interest to the dependents of the deceased.
Accordingly, the appeal is dismissed.
8. He also relies on the judgment of Hon'ble Supreme Court in the case of Oriental Insurance Company Ltd. Vs. Siby George 2012 (134) FLR 1064 SC in which it was held as under :-
7. It is, thus, to be seen that sub-section (3) o f section 4-A is in two parts, separately dealing with interest and penalty in clauses (a) and (b) respectively.
Clause (a) makes the levy of interest, with no option, in case of default in payment of compensation, without going into the question regarding the reasons for the default. Clause (b) provides for imposition of penalty in case, in the opinion of the Commissioner, there was no justification for the delay. Before imposing penalty, however, the Commissioner is required to give the employer a reasonable opportunity to show cause. On a plain reading of the provisions of sub-section (3) it becomes clear that payment of interest is a consequence of default in payment without going into the reasons for the delay and it is only in case where the delay is without justification, the employer might also be held liable to penalty after giving him a show cause. Therefore, a finding to the effect that the delay in payment of the amount due was unjustified is required to be recorded only in case of imposition of penalty and no such finding is required in case of interest which is to be levied on default per se.
9. The matter once again came up before the Court when by amendments introduced in the Act by Act No. 30 of 1995 the amount of compensation and the rate of interest were increased with effect from 15.9.1995. The question arose whether the increased amount of compensation and the rate of interest would apply also to Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM 4 MA-3773-2013 cases in which the accident took place before 15.9.1995. A three Judge Bench of the Court in Kerala State Electricity Board vs. Valsala K. , AIR 1999 SC 3502 answered the question in the negative holding, on the authority of Pratap Narain Singh Deo, that the payment of compensation fell due on the date of the accident. In paragraphs 1, 2, and 3 of the decision the Court observed as follows:
" 1.The neat question involved in these special leave petitions is whether the amendment of Ss.4 and 4A of the Workmen's Compensation Act, 1923, made by Act No.30 of 1995 with effect from 15-9-1995, enhancing the amount of compensation and rate of interest, would be attracted to cases where the claims in respect of death or permanent disablement resulting from an accident caused during the course of employment, took place prior to 15- 9-1995?
2. Various High Courts in the country, while dealing with the claim for compensation under the Workmen's Compensation Act have uniformly taken the view that the relevant date for determining the rights and liabilities of the parties is the date of the accident.
3. A four Judge Bench of this Court in Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 1 SCC 289:
(AIR 1976 SC 222: 1976 Lab IC 222) speaking through Singhal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workmen by the accident which arose out of and in the course of employment. Thus, the relevant date for determination of the rate of compensation is the date of the accident and not the date of adjudication of the claim.
12. In light of the decisions in Pratap Narain Singh Deo and Valsala, it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed and Mohd. Nasir insofar as they took a contrary view to the earlier decisions in Pratap Narain Singh Deo and Valsala do not express the correct view and do not make binding precedents.Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM
5 MA-3773-2013
9. Learned counsel for the respondent relies on the judgment of Bombay High Court Aurangabad in National Insurance Co. Ltd. Vs. Shaikh Hasina Sharfuddin judgment dated 5.3.2021 in which it was held as under :-
14. The next point that arises for consideration is whether insurance company can avoid its liability to pay interest and compensation on account of delay in payment of compensation to the Applicant on the ground that there is a clause in the policy to the effect that the insurance company will not be liable for payment of interest or penalty on account of delayed payment of compensation.
The policy contains an exclusion clause that the insurance company shall not be liable for interest and/or penalty imposed on the insured under any law or otherwise. In terms of Section 4A of the Employees Compensation Act, the employer is liable to pay interest at the rate of 12% per annum on the amount of compensation and penalty to the extent of 50% of the amount of compensation payable, if the employer commits delay in payment of compensation. It is a statutory liability. Insurance company cannot make an agreement contrary to the statutory provisions. Employees Compensation Act is a beneficial legislation for the benefit of the employees. Insurance company cannot make any contract detrimental to the interest of the beneficiary i.e. the employees. Such an agreement would be opposed to public policy and, therefore, such a clause absolving the insurance company to pay the interest or the penalty for the late payment cannot be enforced. Therefore, submission of the learned counsel in this respect cannot be accepted.
10. In the facts and circumstances of the case where the appeal of the Insurance Company has been dismissed in M.A. No.3688 of 2013 by order dated 16.1.2020, therefore, all the facts have been crystallized. The amount of compensation to be paid to the claimant is also not in dispute. The only point of contention is whether employer, i.e. the appellant can be saddled with the liability to pay 12% interest as directed by award dated 9.10.2013 or the liability is to be borne by the Insurance Company whose appeal has been rejected.
Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM6 MA-3773-2013
11. Section 4-A of the Employee's Compensation Act 2023 reads as under :-
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:
Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.
Explanation.--For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
(3A) The interest and the penalty payable under sub-section (3) shall be paid to the *[employee] or his dependant, as the case may be.
12. Therefore on reading of Section 4-A (3) of the Employee's Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM 7 MA-3773-2013 Compensation Act 2023, it is clear that employer was bound to inform the Insurance Company immediately after the incident. From perusal of the record and evidence, it is seen that Ex. D-1 notice is of 7.7.2008, the accident had taken place on 25.6.2008. There is additional matter added into carbon copy of Ex.D-1 by appellant. There is no signature on it. Original record has not been produced regarding Ex.D-1. There is also some controversy raised by the appellant in the trial court that he signed blank proposal form but this argument again cannot be accepted as it is duty of the employer, who enters into contract with the Insurance Company to verify the facts as mentioned in the Insurance Policy and raise objection, if any. A contrary plea cannot be accepted unless proved strictly by the appellant herein that fraud was played upon him by the Insurance Company.
13. There is no justification brought on record by the employer for delay in informing the Insurance Company. Therefore, the order regarding interest and penalty is kept intact because as per proviso clause before imposing penalty a reasonable opportunity to the employer to show causes should be given but it is not required because employer has accepted the liability and order of penalty is also not challenged in this appeal. Accordingly, the substantial question of law as referred in Para-5 of this order is answered in negative as the policy Ex.D-2 is issued as per W.C. Act as mentioned in "D - D" part. Hence, order of Commissioner is confirmed and the appeal is dismissed.
(AVANINDRA KUMAR SINGH) JUDGE bks Signature Not Verified Signed by: BASANT KUMAR SHRIVAS Signing time: 8/7/2024 11:42:02 AM