Case Note & Summary
The appellant, Navneet S/o Sadashiv Tembhurnikar, was the original claimant in a workmen's compensation case. He suffered injuries in an accident arising out of and in the course of his employment with respondent no.1, Mohammad Anwar Khan (since deceased, represented by legal representatives). The employer had insured the vehicle with respondent no.2, The United Insurance Co. Ltd. The Worksmen's Compensation Commissioner, under Section 4(1)(b) of the Workmen's Compensation Act, 1923, awarded compensation of Rs.4,47,944/- with interest at 12% per annum from the date of cause of action till deposit. However, the Commissioner held that the employer alone was liable to pay the interest, while the insurance company was only liable for the principal amount. The appellant challenged this finding, arguing that the insurance company should also be liable for the interest. The High Court examined the provisions of Section 4A(3)(a) of the Act, which imposes a penalty and interest on the employer for failure to pay compensation when due. The court noted that the insurance policy covers the liability of the employer under the Act, and the interest is part of the compensation. Relying on the Supreme Court judgment in Ved Prakash Garg v. Premi Devi, (1997) 8 SCC 1, the court held that the insurance company is jointly liable to pay interest along with the employer. The Commissioner had erroneously relied on New India Assurance Co. Ltd. v. Shiv Singh and another, 2000(2) TAC 618 and New India Assurance Co. Ltd. v. Mohd. Yusuf Inamuddin Pirijade and others, 2004(3) TAC 227, which were not applicable. The appeal was allowed, and the insurance company was directed to pay interest at 12% per annum from the date of cause of action till the date of deposit.
Headnote
A) Workmen's Compensation - Liability of Insurer for Interest - Section 4A(3)(a) of the Workmen's Compensation Act, 1923 - The court considered whether the insurance company is liable to pay interest on compensation awarded under the Act. The Commissioner had held the employer alone liable for interest, but the High Court, relying on Ved Prakash Garg v. Premi Devi, held that the insurer is jointly liable for interest under Section 4A(3)(a) as part of the compensation amount. The appeal was allowed, and the insurance company was directed to pay interest at 12% per annum from the date of cause of action till deposit. (Paras 1-3)
Issue of Consideration
Whether the insurance company is liable to pay interest on the amount of compensation awarded under the Workmen's Compensation Act, 1923, along with the principal amount, or whether such interest liability falls solely on the employer.
Final Decision
The appeal is allowed. The insurance company is directed to pay interest at the rate of 12% per annum on the compensation amount of Rs.4,47,944/- from the date of cause of action till the date of depositing the amount in the court.
Law Points
- Liability of insurance company for interest on compensation under Workmen's Compensation Act
- 1923
- Section 4A(3)(a) imposes joint liability on insurer
- Insurance company cannot escape liability for interest by relying on policy terms
- Commissioner's order holding employer alone liable for interest is erroneous
