M/S United India Insurance Co v. Brij Raj Singh

PRADEEP NANDRAJOG, J.(Oral)

¶12 short and crisp submissions have been made by learned counsel for the appellant, the insurance company.

¶2It is firstly urged that since accident in question took place on 12.10.2000 and the workman died on 20.10.2000, compensation payable had to be determined with reference to the statutory limits in force when accident took place. The second contention urged is that the insurance company cannot be saddled with liability to pay any compensation.

¶3As on date of accident i.e. 12.10.2000 Explanation II to Section 4 reads as under:- "Where the monthly wages of a workman exceed Rs.2000/-, his monthly wages for purposes of Clause

(a) and Clause (b) shall be deemed to be Rs.2000/- only."

¶4By Act No.46 of 2000 the figure of Rs.2,000 was replaced by figure of Rs.4,000 with effect from 8.12.2000.

¶5Under the impugned order dated 24.6.2005 Commissioner, Workmen's Compensation has assessed compensation at the monthly income of Rs.4,000/-.

¶6The issue stands foreclosed by the decision of the Hon'ble Supreme Court reported as 2000 ACJ 5 Kerala State Electricity Board vs. Vlsala K. view taken is that compensation has to be assessed with reference to statutory provisions in force as on date of accident and not in force when the claim petition is decided.

¶7The first contention is accordingly accepted.

¶8Pertaining to the second contention that penalty could not be levied on the insurance company relevant statutory provision is Section 4-A of the Workmen's Compensation Act 1923. The same 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 workman, as the case may be, without prejudice to the right of the workman 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 workman or his dependant, as the case may be."

¶9The issue pertaining to liability of the insurance company to pay compensation is also foreclosed by the decision of the Hon'ble Supreme Court reported as 1998 ACJ 1 V.P.Garg vs. Preni Devi followed in the decision reported as

(2000) 1 ACC 326 M/s.L.R.Ferrow Alloys Ltd. vs. Mahavir Mahato & Anr. It has been held in the two authorities that liability to pay interest and penalty on the compensation assessed are 2 distinct liabilities arising under the Act and that while liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment of the amount due within 1 month, penalty imposed under the Act is referable to Section 4-A which makes the employer exclusively liable to pay the penalty.

¶10Under the circumstances, the appeal stands disposed of reducing the compensation payable by the Commissioner, Workmen Compensation to Rs.1,97,060/- (Rupees One Lakh Ninety Seven Thousand and Sixty only). Interest payable thereon @12% per annum, which is not disputed as the liability to pay in the appeal would be paid with effect from 21.10.2000 till date of payment.

¶1150% penalty levied on sum of Rs.3,94,120/-, the sum payable under the award is corrected, in that, the penalty shall be paid on sum of Rs.1,97,060/-. Further correction is made that the penalty would not be paid by the appellant. It shall be the liability of the employer i.e. respondent No.2.

¶12Vide order dated 20.9.2005, 50% of the compensation assessed under the award was directed to be paid to respondent No.1, meaning thereby 50% of the compensation assessed was released to respondent No.1.

¶13The Commissioner, Workmen Compensation shall accordingly refund the balance amount lying in credit with him together with accrued interest thereon to the appellant.

¶14No costs.

March 13, 2008

PRADEEP NANDRAJOG, J. d.k.bainsla

* IN THE HIGH COURT OF DELHI + FAO No.282/2005 M/s. United India Insurance Co. Ltd. ........Appellant through: Mr. Sanjay Kumar Chetry, Advocate VERSUS Sh. Brij Raj Singh & Anr. ........ Respondents through: Ms. Nasreen Hasan, Advocate for R-1. Mr. Y.R.Rao, Advocate for R-2. DATE OF DECISION: % 13.03.2008 CORAM: Hon'ble Mr.Justice Pradeep Nandrajog 1. Whether reporters of local papers may be allowed to see the judgment? Y 2. To be referred to the Reporter or not? Y 3. Whether judgment should be reported in Digest? Y :