Case Note & Summary
The case arises from a motor accident that occurred in 1999, resulting in a claim for compensation under the Workmen's Compensation Act, 1923. The Commissioner of Workmen's Compensation & Labour Court passed an order on 17.10.2002 in W.C. (Application) No. 52/1999, awarding compensation along with penalty and interest. The United India Insurance Company, the appellant, challenged the order on the ground that the penalty was wrongly fastened on it. The respondents-claimants filed cross-objections seeking enhancement of interest from 6% to 12% per annum. The substantial questions of law were whether the Insurance Company is liable to pay penalty and whether the interest rate should be 12% for an accident in 1999. The appellant's counsel argued that penalty cannot be imposed on the insurer, relying on the Supreme Court judgment in Ved Prakash Garg v. Premi Devi and others (AIR 1997 SC 3854). The respondents' counsel contended that the interest awarded at 6% was contrary to law and should be 12%. The court held that the penalty is payable by the owner, not the Insurance Company, following the precedent in Ved Prakash Garg. Regarding interest, the court noted that for accidents occurring in 1999, the applicable rate is 12% per annum as per the amended Section 4A of the Workmen's Compensation Act. Accordingly, the appeal was partly allowed, modifying the order to delete the penalty imposed on the Insurance Company, and the cross-objections were allowed, enhancing the interest rate to 12% per annum from the date of accident until realization.
Headnote
A) Workmen's Compensation - Penalty - Liability of Insurance Company - Section 4A, Workmen's Compensation Act, 1923 - The Insurance Company is not liable to pay penalty imposed under Section 4A for delayed payment of compensation; penalty is payable by the employer/owner. (Paras 2, 5, 8) B) Workmen's Compensation - Interest - Rate of Interest - Section 4A, Workmen's Compensation Act, 1923 - For an accident that occurred in 1999, the interest payable on compensation is at the rate of 12% per annum from the date of accident until realization. (Paras 3, 6, 9)
Issue of Consideration
Whether the Insurance Company is liable to pay penalty under the Workmen's Compensation Act, 1923, and whether the interest payable should be at the rate of 12% for an accident that took place in 1999.
Final Decision
Appeal partly allowed. The order of the Commissioner is modified to delete the penalty imposed on the Insurance Company. Cross-objections allowed. Interest awarded at the rate of 12% per annum from the date of accident until realization.
Law Points
- Insurance company not liable for penalty under Workmen's Compensation Act
- 1923
- Interest rate of 12% per annum applicable for accident in 1999
