High Court of Karnataka Partly Allows Insurance Company's Appeal in Workmen's Compensation Case, Modifies Award to Exempt Insurer from Interest Liability Under Policy Exclusion

Nature of Litigation: Appeal against a Judgment and Award in a workmen's compensation case

Remedy Sought

The appellant Insurance Company sought modification of the award to exempt it from liability for interest on the compensation

Filing Reason

The appeal was filed under Section 30(1) of the Employees' Compensation Act, 1923, challenging the imposition of joint liability for interest

Previous Decisions

The learned Tribunal awarded compensation of Rs.6,92,760/- with 12% interest from the date of accident, holding the respondents jointly and severally liable

Issues

Whether the deceased was an employee under the respondent No.2 Whether the accident arose out of and in the course of employment Whether the claimants are entitled to compensation and its quantum Whether the Insurance Company is liable for interest on the compensation awarded

Submissions/Arguments

The appellant's counsel argued that the insurance policy excluded liability for interest, making the employer solely responsible Reliance was placed on Supreme Court and Division Bench judgments interpreting similar policy exclusions The counsel submitted that the challenge was only on the interest aspect, not the compensation quantum

Ratio Decidendi

The Insurance Company is not liable for interest on compensation under a workmen's compensation policy if the policy contains an exclusion clause for interest and penalty -- Such policies are private contracts distinct from compulsory motor vehicle insurance -- The terms of the insurance policy govern the liabilities, and exclusions must be given effect to as per contract law principles

Judgment Excerpts

The learned counsel for the appellant/Insurance Company submits that he is not challenging the quantum of the compensation awarded and his challenge is only on one aspect The substantial question of law that arises in the present case is: 'Whether the Court below is justified in fixing the liability to pay interest on the compensation awarded on the appellant Insurance Company?' The Policy also provides for an exclusion of the interest and penalty on any such claims

Procedural History

The claimants filed a petition under the Employees' Compensation Act, 1923 -- The learned Tribunal passed a Judgment and Award on 19.03.2018, awarding compensation with interest -- The Insurance Company filed an appeal under Section 30(1) of the Act -- The High Court heard the appeal, with respondents proceeded ex-parte due to non-appearance -- The Court delivered the judgment on 06.02.2026, partly allowing the appeal