National Insurance Company Limited vs Rakesh Bhardwaj & Another

Sushil Kukreja, J

The present appeal is maintained by the appellant-National Insurance Company Limited, who was respondent No. 2 before the Court below (hereinafter referred to as “the appellant”), under Section 30 of the Employee’s Compensation Act (for short “the Act”), against award dated 29.10.2024, passed by learned Commissioner under Employee’s compensation Act, Civil Judge, Jogindernagar, District Mandi, H.P., in Case No. (Registration No.) 43 of 2013, whereby the learned Commissioner directed the appellant, alongwith respondent No. 1-Asian Engineering, to pay a sum of Rs.2,49,576/-, i.e., penalty @ 50% of the award to the petitioner-Rakesh Bhardwaj (respondent No. 1 herein), with a prayer to quash and set-aside the impugned award by allowing the instant appeal.

Succinctly, the facts giving rise to the present appeal are that petitioner-Rakesh Kumar Bhardwaj filed a petition under Section 22 of he Act, wherein he averred that since March, 2004 to December, 2007, he was working as crane operator with Asian Engineering (respondent No. 2 herein). He, after leaving his aforesaid job, on the persuasion of respondent No. 2, again joined as crane operator and in the month of June, 2009, he was doing duty in crane, bearing registration No. GJ-15-BB-9546. The said crane all of sudden developed some mechanical fault and he reported the matter to respondent No. 2, in turn mechanic-Abdul Rehman, from Head Office Vapi, Gujarat, was called. On 17.06.2009 the petitioner was deputed to assist mechanic and all of sudden a powerful blast occurred in the crane due to which he sustained multiple injuries on his person. He was shifted to the local hospital, wherefrom he was referred to Wockhard Hospital Rajkot, Gujarat, where he remained admitted upto 30.06.2009 and in this period he was operated upon multiple times. Both the eyes of the petitioner were removed, his left hand was amputated and he had sustained injuries on his abdomen, chest, liver, hepatic fluxre colon perforation, right Diaphragm, multiple interior abdomen wall, left chest wall, neck, middle phalynx, right index finger etc.. The petiti ner was again referred to Government Hospital Haria, LG Rotary Hospital, Vapi, Gujarat, where he remained hospitalized till 08.07.2009. As per the petitioner, in the aforesaid blast he suffered 100% disability and he became dependent upon others for his day to day routine works, including answering the call of nature etc.. He further averred that before the accident he was healthy man of 32 years and respondent No. 2 used to give him salary of Rs.15,000/- per month and other allowances, as per the terms and conditions of respondent No. 2 alongwith residence facility. The family of the petitioner, i.e., his wife, two sons and old and ailing parents were wholly dependent upon him and he was only bread winner of the family. Lastly, the petitioner sought compensation of Rs.10,00,000/- alongwith interest and penalty amount from the respondents.

Respondent No. 1-Asian Engineering, by filing reply, raised preliminary objections of maintainability, locus standi, jurisdiction etc. On merits, the replying respondent denied that the petitioner was working as crane operator with it since March 2004 to December 2007 and also denied that office of respondent had persuaded the petitioner to join the respondent. As per the replying resp ndent, the petitioner was trainee crane opera or and he worked only for six months and subsequently he got better job till 2009 somewhere else. The replying respondent incurred expenses to the tune f Rs.2,81,527/- on the treatment of the petitioner. Lastly, a prayer for dismissal of the petition was made.

Respondent No. 2-National Insurance Company, by way of its reply, took preliminary objection of maintainability. On merits, the replying respondent, for want of policy particulars denied that the crane was insured with it. It was averred that respondent No. 1 did not report the injuries of its employee to the replying respondent, therefore, indemnity, if any, was not accepted by the replying respondent. Lastly, the replying respondent prayed for dismissal of the petition.

The petitioner filed rejoinder to the replies filed by the respondents, wherein the averments made in the claim petition were reiterated. On 15.07.2014 on the basis of the pleadings of the parties, the learned court below framed the following issues:

“1. Whether the petitioner was the employee of respondent No. 1 and he received injuries during the course of his employment under respondent No. 1, as alleged? OPP

Whether the petitioner is entitled for the compensation, if yes from whom and to what extent, as prayed for? OPP.

Whether the petition is not maintainable? OPR.

Whether the petitioner has no locus standing to file the present suit, as alleged? OPR.

Whether the petitioner is not entitled for the compensation under Employee Compensation Act as the workmen is covered in ESI Act and barred under Section 53 of ESI Act, as alleged? OPR

Relief.”

After deciding issues No. 1 and 2 in favour of the petitioner, issues No. 2, 3 and 4 against the respondents, issue No. 5 in favour of the respondents, the petition was# allowed.

Feeling dissatisfied, the petitioner preferred an appeal, i.e., FAO (WCA) No. 225 of 2024, with a prayer to enhance the compensation by 50% of the awarded amount as penalty for the delayed payment in accordance with the provisions of Section 4-A of the Act by allowing the appeal. However, the aforesaid appeal, pre erred by the petitioner, was remanded back to the learned C mmissioner below by a Co-ordinate Bench of his Court, vide judgment dated 16. 07.2024.

After the remand, the learned Commissioner below, passed the impugned award on 29.10.2024 and directed the respondents i.e. the owner and employer to pay a sum of Rs.2,49,576/-, i.e., penalty @ 50% of the award. Hence, the appellant-National Insurance Company Limited preferred the instant appeal.

I have heard the learned counsel for the appellant, learned Counsel for respondent No. 1, learned counsel for respondent No. 2 and carefully examined the entire record.

The learned counsel for the appellant contended that the impugned award is against the law and facts of the case and based on surmises and conjectures, without appreciating the documents, thus the same is not sustainable in the eyes of law and is liable to be set-aside He further contended that the learned Commissioner below had erred in passing the impugned award particularly by directing the appellant and respondent No. 2-Asian Engineering to pay 50% of awarded amount to the petitioner (claimant), as penalty. He also c ntended that the insurer had deposited the whole awarded amount alongwith interest, as per the impugned awa d, therefore, the penalty, if any, was to be fastened on respondent No. 2-Asian Engineering, i.e., the empl yer f the petitioner (claimant) and not on the insurer, thus the impugned award is liable to the set-aside on this score itself.

Conversely, the learned Counsel for respondent No. 2 i.e. the employer submitted that the penalty cannot be imposed upon the employer, as the payments have been made by the employer to the claimant immediately after the accident.

At the very outset, it may be pertinent to mention here that initially the award was passed by the learned Commissioner on 10.09.2018 and in terms of the award, respondent No. 1 was held entitled for the payment to the tune of Rs.4,99,152/- alongwith interest @ 12% per annum from the date of the accident, i.e., 17.06.2009, till its actual realization. The said award was challenged before this Court by respondent No. 1/claimant and vide order dated 16.07.2024, passed by co-ordinate Bench of this Court, the matter was remanded back to the learned Commissioner for deciding the entitlement of the claimant to penalty amount imposed under Section 4-A of the Act, however, the remaining part of the impugned award was affirmed. The relevant portion of the aforesaid judgment is reproduced under:

“5. A perusal of the impugned award reveals that there is no discussion, whatsoever, in respect of entitlement of the appellant to the penalty amount under Section 4-A of the Act. Hence, for that reason alone and to that limited extent, the matter is remanded to the learned Commissioner for deciding the entitlement of the appellant to the penalty amount under Section 4-A of the Act. Remaining part of the impugned award is affirmed. The parties, through their learned counsel, are directed to appear before the learned Commissioner on 06.08.2024.”

After the matter was remanded back to the Court of learned Commissioner, fresh award was passed vide order dated 29.10.2024, which has been challenged before this Court by the appellant-National Insurance Company in the instant appeal on the ground that the insurer cannot be directed to pay the penalty under the Act for the delayed payment of compensation to the claimant/injured. Now, the question, which arises for consideration before this Court is “whether the appellant being insurer can be directed to pay the amount of penalty under the Employees Compensation Act for the delayed payment of compensation to the injured?

It is a settled law that the penalty imposed on the insured on account of his/her failure to make payment of amount payable under the Act is not to be paid by the insurer. In Ved Prakash Ga g vs. Premi Devi & others, (1997) 8 SCC 1, the Hon’ble Apex Court observed that the insurance c mpany is liable to pay not only the principal amount of compensation payable by insured employer but also interest thereon, if ordered by the Commissioner to be paid by the insured employer. On conjoint operation of Section 3 and 4A(3)(a) of the Act, insurance company is liable to meet claim for compensation along with interest as imposed on insured employer by the Act. It has, however, been held that it was the liability of the insured employer alone in respect of additional amount of compensation by way of penalty under Section 4-A (3)(b) of the Act. Para-19 of the aforesaid judgment reads as under:

“19. As a result of the aforesaid discussion it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words the insurance company will be liable to meet the claim for compensation alongwith interest as imposed on the insured employer by the Workmen’s commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4-A sub-Section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen’s Commissioner under Section 4-A(3)(b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone.”

In the instant case, the learned Commissioner vide impugned award da ed 29.10.2024 directed respondents No. 1 and 2, i.e., insurer as well as the employer to pay 50% of the awarded amount, as penalty, i.e., Rs.2,49,576/-. H wever, in view of the law laid down by the Hon’ble Apex ourt, the appellant-Insurance Company could not have been made liable to pay the amount of penalty and t e same has to be paid by the employer. Therefore, the learned Commissioner below has erred in holding the appellant-Insurance Company liable to pay the amount of penalty, as such the same is required to be set-aside.

In view of what has been discussed hereinabove, the instant appeal is allowed and the award of the learned Commissioner below in so far as it fastened the liability to pay the amount of penalty on the insurance company is set- aside. The appellant-Insurance Company is exonerated from paying the amount of penalty, which shall be paid by the employer (respondent No. 2 herein).

In view of discussion hereinabove, the appeal is disposed of accordingly, so also pending applications, if any.