New India Insurance Co. Ltd. vs Kailashbai and Others

N.K. Mody, J.—Being aggrieved by the order dated 31.5.2011 passed by Commissioner for Workmen''s Compensation, Labour Court, Indore in WCF case No. 15 WCF/2009 whereby the claim petition filed by respondent Nos. 1 to 6 was allowed and compensation of Rs. 3,49,184/- was awarded along with penalty @ 15%, the present appeal has been filed. Short facts of the case are that claim petition was filed alleging that Kanhaiyalal was in the employment of respondent Nos. 7 to 9, who died on 13.6.2009 during course of employment. It was alleged that compensation be awarded and prayed that respondent Nos. 7 to 9 be directed to pay the compensation to the tune of Rs. 4 Lacs. The claim petition was filed on 13.7.2009. During pendency of claim petition, on 17.8.2009 respondent Nos. 7 to 9 deposited a sum of Rs. 3,49,184/- which was disbursed to respondent Nos. 1 to 6 on 23.12.2009. After framing of issues and recording of evidence, learned Court below found that respondent Nos. 1 to 6 arc entitled for a sum of Rs. 3,49,184/- which had already been deposited, but since the amount was deposited with a delay of 34 days, therefore as per provisions of 4-A(3)(b) of Workmen''s Compensation Act, appellant and respondent Nos. 7 to 9 are liable for compensation.

Learned Counsel for appellant submits that appellant cannot be held liable for compensation. It is submitted that infact the date of death is 13.6.2009. The intimation was given by the employer on 15.6.2009 and the amount was deposited by respondent Nos. 7 to 9 on 17.8.2009 who were principally responsible for compensation. It is submitted that even if there is delay, then too, appellant cannot be held liable. It is submitted that appeal be allowed and findings regarding payment of penalty be quashed.

Learned Counsel for respondent Nos. 1 to 6 submits that since the amount was not deposited in time, therefore learned Court below committed no error in holding the appellant liable for compensation. Learned Counsel submits that intact penalty ought to have been 50% which has been illegally reduced to 15%. It is submitted that appeal be dismissed and amount of penalty be enhanced.

Learned Counsel for respondent Nos. 7 to 9 submits that since there was no exclusion clause in the policy, therefore learned Court below committed no error in holding the appellant liable for compensation. For this contention, reliance is placed on a decision in the matter of New India Assurance Co. Ltd. Vs. Guddi and Others, wherein this Court has held as under:--

Right and liabilities flow from the agreement entered into between the insurance company, on the one hand, and the employer, on the other. No exception whatsoever has been provided in it. If the insurance company intended that it will not be liable for the penalty in case of default in making payment within the prescribed time, it should have made a provision in the contract itself. In the absence of any such clause in the insurance policy, it is unable to accept the contention of the learned Counsel for appellant that the insurance company is not liable for the penalty." It is submitted that appeal be dismissed.

Clause (b) of sub-section (3) of section 4-A which deals with compensation to be paid when due and penalty for default, which reads as under:--

If, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears, and interest thereon, pay a further sum not exceeding fifty percent of such amount by way of penalty.

From perusal of record, it appears that learned Court below has found that there was no mala fides on the part of respondent Nos. 7 to 9 in depositing the amount of compensation with a delay. Learned Court below has also found that keeping in view the benefits of respondent Nos. 7 to 9, it is not proper to impose the penalty @ 50% and the same was reduced to 15%. Thus, learned Court below found that there was no justification for the delay. Once it is found that there was justification for the delay, no penalty could have been imposed under clause (3) (b) of section 4-A of the Act. Moreover, sub-clause (b) of clause (3) of section 4-A is further controlled by proviso, which lays down that-no penalty can be imposed without giving any reasonable opportunity to the employee to show cause why it should not be passed. The order does not reflect that before imposing a penalty whether any opportunity was given to appellant and respondent Nos. 7 to 9 for the delay occurred in depositing the amount. In the facts and circumstances of the case, the appeal is allowed and the penalty imposed stands quashed.