Case Note & Summary
The case involves an appeal by the United India Insurance Company against a judgment of the Commissioner, Workmen's Compensation Act, Nagpur, dated 11th July 1994, which directed the insurance company to deposit a sum of Rs.85,428/- as compensation along with interest at 6% per annum from the date of accident and a penalty of 50% on the compensation amount. The deceased, Sheikh Khalid, was an employee of respondent no.4, Dilip Mahadeorao Gade, who owned a Matador vehicle insured with the appellant. On 12th July 1991, while driving the insured vehicle, the deceased died due to drowning when the vehicle was washed away in an overflowing nalah. The claimants, the widow and minor children of the deceased, filed a claim under the Workmen's Compensation Act, 1923. The insurance company contested the claim. The Commissioner awarded compensation, interest, and penalty. The insurance company appealed only against the penalty portion, arguing that it is not liable to pay penalty as per the law laid down by the Supreme Court in Ved Prakash Garg v. Premi Devi and others. The court considered the submissions and held that the insurance company is not liable to pay the penalty, as the penalty is not part of the insured's liability under the policy. The court modified the impugned judgment by setting aside the direction to pay penalty, while confirming the compensation and interest. The appeal was partly allowed.
Headnote
A) Workmen's Compensation - Insurance Liability - Penalty - Section 4A, Workmen's Compensation Act, 1923 - Insurance company is not liable to pay penalty imposed under Section 4A of the Act as the penalty is not part of the insured's liability under the policy - The court relied on the Supreme Court judgment in Ved Prakash Garg v. Premi Devi and others, (1997) 8 SCC 1, to hold that the insurance company's liability is limited to the compensation amount and does not extend to penalty (Paras 2-3).
Issue of Consideration
Whether the insurance company is liable to pay penalty imposed under the Workmen's Compensation Act, 1923, on the amount of compensation awarded to the claimants.
Final Decision
Appeal partly allowed. The impugned judgment is modified by setting aside the direction to pay penalty of 50% on the amount of compensation. The rest of the judgment is confirmed.
Law Points
- Insurance company not liable to pay penalty under Workmen's Compensation Act
- 1923
- Penalty is not part of insured liability
- Section 4A of Workmen's Compensation Act
Case Details
2010 LawText (BOM) (01) 197
Mr. V.R. Thakur for appellant, Mr. Asgar Hussain for respondent nos.1 to 3
United India Insurance Company Limited, Chandrapur
Smt. Ameena Begum Wd/o Khalik, Shariq S/o Sk. Khaliq, Sk. Sadiq S/o Sk. Khaliq, Dilip Mahadeorao Gade
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Nature of Litigation
Appeal against order of Commissioner under Workmen's Compensation Act directing insurance company to pay compensation, interest, and penalty.
Remedy Sought
Insurance company sought setting aside of penalty portion of the award.
Filing Reason
Insurance company challenged the direction to pay penalty of 50% on compensation amount.
Previous Decisions
Commissioner, Workmen's Compensation Act, Nagpur, by judgment dated 11/7/1994, directed appellant to deposit Rs.85,428/- as compensation with interest at 6% per annum and penalty of 50% on compensation.
Issues
Whether the insurance company is liable to pay penalty under Section 4A of the Workmen's Compensation Act, 1923?
Submissions/Arguments
Appellant argued that insurance company is not liable to pay penalty as per Supreme Court judgment in Ved Prakash Garg v. Premi Devi and others.
Respondents argued in support of the Commissioner's order.
Ratio Decidendi
The insurance company is not liable to pay penalty imposed under Section 4A of the Workmen's Compensation Act, 1923, as the penalty is not part of the insured's liability under the insurance policy. The liability of the insurance company is limited to the compensation amount and interest, but not penalty.
Judgment Excerpts
The learned counsel for the appellant raised a grievance to the impugned judgment only on the ground that the Commissioner erred in directing the appellant to pay penalty of 50 % on the amount of compensation.
In support of his contention he relied on the judgment of the Apex Court reported in (1997) 8 Supreme Court Cases 1 (Ved Prakash Garg ..V/s.. Premi Devi and others).
The learned counsel for the respondent nos.1 to 3 fairly states that in view of the judgment of the Apex Court the appeal deserves to be allowed.
Procedural History
The deceased died in an accident on 12/7/1991. Claimants filed application under Workmen's Compensation Act. Proceedings transferred from Chandrapur to Nagpur on 27/11/1992. Commissioner passed award on 11/7/1994. Insurance company filed First Appeal No.555/1994 in Bombay High Court, Nagpur Bench, which was decided on 13/1/2010.
Acts & Sections
- Workmen's Compensation Act, 1923: Section 4A, Section 21
