Gujarat High Court
New India Assurance Co.Ltd vs Gordhan Vira Harijan & 2 on 6 July, 2017
Author: Z.K.Saiyed
Bench: Z.K.Saiyed
C/FA/153/2007 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL NO. 153 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE Z.K.SAIYED
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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NEW INDIA ASSURANCE CO.LTD.....Appellant(s)
Versus
GORDHAN VIRA HARIJAN & 2....Defendant(s)
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Appearance:
MR KV GADHIA, ADVOCATE for the Appellant(s) No. 1
MR MUKESH H RATHOD, ADVOCATE for the Defendant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 2 - 3
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CORAM: HONOURABLE MR.JUSTICE Z.K.SAIYED
Date : 06/07/2017
ORAL JUDGMENT
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1. Being aggrieved and dissatisfied with the judgment and award passed by the learned Workmen Compensation Commissioner, Labour Court, Gandhidham - Kachchh on 10th May, 2006 in Workmen Compensation Application No.41 of 2005, the present appellant has filed the present appeal.
3. I have heard Mr.K.V.Gadhia, learned advocate for the appellant, Mr.M.H.Rathod, learned advocate for the defendant no.1 at length. Though served, none present for the defendant nos.2 and
3.
4. Mr.K.V.Gadhia, learned advocate for the appellant has contended that in policy of 40 persons, more than 73 claims are filed. However that contention is not taken into consideration as other Appeals filed by the Insurance Company are already decided on that point against the Insurance Company. He further submitted that as far as interest & penalty is concerned, as per the terms of the policy, legal position settled by the Hon'ble supreme Court in the case of Harshadbhai Amrutbhai Modhia reported in 2006 AIR SCW 2352 as well as Appeals arising from the same incident, as stated above, the Insurance Company could not have been held liable for interest & penalty. Hence that much amount needs to be refunded to the Insurance Company.
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C/FA/153/2007 JUDGMENT
5. The appellant insurance company has placed a copy of the insurance policy on record. The relevant clause of the insurance policy, reads thus:-
Law(s)
1. The Workmen's Compensation Act, 1923 and subsequent amendments of the said Act prior to the date of the issue of Policy. 2 The Fatal Accident Act, 1855.
It is hereby understood and agreed that the Workmen's Compensation (Ahmedabad) Act of 1959, (8 of 1959) and 1962 (64 of 1962) and 1976 (65 of 1976) and 1984 (22 of 1984) are demed to be added to the Laws set out, in the Schedule to the Policy.
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/their failure to comply with the requirements laid down under the W.C.Act, 1923 and
(ii) any compensation payable on account of occupational diseases listed in Part 'C' of Schedule III of the W.C.Act, 1923.
6. The appellant-insurance company produced on record a copy of the policy in light of which the claims came to be made before the learned Commissioner. The relevant terms and conditions of the said policy have been extracted hereinabove in para 6 of this judgment. A glance at the proviso to the specific condition No.1 (with regard to the laws- which includes Workmen Compensation Act, 1923) makes it clear beyond Page 3 of 6 HC-NIC Page 3 of 6 Created On Sun Aug 20 12:54:52 IST 2017 C/FA/153/2007 JUDGMENT doubt that the insurer and the insured did not intend to cover the risk of imposition of any penalty or interest on the employer in the event of his failure to discharge his obligation under Workmen Compensation Act, 1923 within prescribed time and the said risk was expressly excluded from the risk covered by the policy. Thus, when such risk is not covered under the policy and the insurance company has not insured such risk, then, the insurance company cannot be directed to make payment of the amount towards interest and/or penalty unless the statute, like in case of Motor Vehicles Act, 1984, so provides, expressly or by implication. Actually, by virtue of the express terms in the subject policy, the risk towards the obligation to pay interest and/or penalty, has been expressly excluded. In view of such provision, it is not necessary to examine in present case the larger issue as to whether the insurance company would be liable to pay statutory interest, if and when awarded (in view of the delay caused in making payment of the compensation) by the learned Commissioner while passing the award and/or whether it would be liable to pay any amount towards penalty, if and when imposed by the learned Commissioner.
7. The policy taken out by the employer for covering his liability under the provisions of Page 4 of 6 HC-NIC Page 4 of 6 Created On Sun Aug 20 12:54:52 IST 2017 C/FA/153/2007 JUDGMENT the Workmen Compensation Act, 1923 does not have a character and status of a statutory policy like the one issued and taken out under the provisions of Motor Vehicles Act, 1984 and such a policy which is taken out by the employer to cover the liability under the Workmen Compensation Act, 1923 is purely in the realm of contract and therefore, would be governed by the terms and conditions mutually agreed and accepted by the parties to the contract. Hence, any risk, which is not included under the policy and/or is expressly excluded, cannot be transferred and/or imposed on the insurance company, unless law, as in the case of Motor Vehicles Act, 1984, would require.
8. Therefore, present appeal against award which imposes on the insurance company the liability to pay interest at the rate of 12% p.a. and also the penalty to the tune of 50 % deserves to be allowed and the impugned directions in the said award deserves to be quashed and set aside. It has been submitted at the bar that similar appeals arising from the common or similar award and pertaining to the very same incident/accident have been decided by the Court vide judgment dated 18th May, 2008 in First Appeal No.1085 of 2007 whereby the appeal(s), preferred by the insurance company, has/have been allowed. Thus, Page 5 of 6 HC-NIC Page 5 of 6 Created On Sun Aug 20 12:54:52 IST 2017 C/FA/153/2007 JUDGMENT the present appeals shall also follow the suit.
9. Thus, considering the legal provisions settled by the Hon'ble Apex Court in the case of Harshadbhai Amrutbhai Modhiya (Supra) as well as this Court in the aforesaid First Appeal as well as First Appeal Nos.4085 and 4086 of 2009, the appeal of the Insurance Company qua challenging the interest and penalty is quashed and set aside. It has been stated that the Insurance Company has already deposited the said amount before the Ld. Commissioner. Therefore, the Ld. Commissioner is also instructed to refund the amount of interest and penalty to the Insurance Company after due verification on an application being made by the Insurance Company.
10. In the result, the present appeal is allowed to the aforesaid extent. Rule is made absolute to the aforesaid extent. R & P be sent back to the trial Court forthwith. No order as to costs.
(Z.K.SAIYED, J.) mmshaikh Page 6 of 6 HC-NIC Page 6 of 6 Created On Sun Aug 20 12:54:52 IST 2017