The Oriental Fire And General Insurance Co. Ltd. v. Matias Burla And Another

S.C Mohapatra, J.:— These two appeals arise out of the order of the Commissioner under the Workmen's Compensation Act, 1923 (hereinafter referred to as ‘the Act’).

2. It is not in dispute that the truck bearing No. ORJ 2159 belonging to respondent No. 2 met with an accident resulting the death of two workmen employed by respondent No. 2 in the truck. The appellant is the insurer of the truck and respondent No. 1 in both the appeals are the legal representatives of the deceased workmen. There is no dispute in these appeals that the two workmen died in course of their employment.

3. The Commissioner under the Act held that the respondent No. 2 being the employer of the two deceased workmen is responsible to pay the compensation under section 3 of the Act. He, however, held that the liability of the employer can be enforced against the insurer. Accordingly, the Commissioner directed that the insurer shall deposit the compensation amount determined in the proceedings within two months failing which the amount shall be recovered from the insurer as arrear of land revenue under section 31 of the Act. When the amounts of compensation determined were not paid by the insurer within two months, notices were issued to it. In spite of valid service of notice, the insurer neither appeared nor deposited the amounts. Accordingly, the Commissioner levied penalty and interest on the insurer under section 4-A of the Act. Receiving the demand notices, the insurer has preferred these two appeals beyond the period of limitation with the petition for condonation of delay. After giving opportunity to parties to be heard in the matter of condonation of delay, the delay in preferring the appeals has been condoned.

4. Mr. S.S Basu, the learned counsel for the appellant raised the following contentions.

5. The insurer is not liable to pay the compensation under the Act.

(a) The levy of interest and penalty under section 4-A of the Act on the insurer is without jurisdiction.

6. Liability of the insurer :— In the decision reported in Bibhuti Bhusan Mukherjee v. Smt. Dinamoni Dei . 521981 C.L.T 235., which was an appeal under the Act, it was held that the Commissioner under the Act can direct the recovery of the compensation amount from the insurer. In another decision of this Court reported in Kumari Subasini Panda v. State of Orissa . 571984 C.L.T 262., in an appeal under section 110 D of the Motor Vehicles Act, 1939 this Court observed that by virtue of section 95 of the Motor Vehicles Act the Tribunal constituted under the Workmen's Compensation Act is competent to determine the liability of the insurer to the extent the workman was entitled under the Act and had the workman or his successors gone to the forum under the Act, they could have got compensation as prescribed under the Act and the insurer is bound to indemnify the owner to that extent. The contention of Mr. Basu having thus no force, is rejected.

7. Jurisdiction of Commissioner lo impose penalty under section 4-A of the Act and interest;—

8. Section 4 A reads as follows :—

“4 A. Compensation to be paid when due and penalty for default—

(1) Compensation under section 4 shall be paid as soon as it falls due.

(2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the cass may be, without prejudice to the right of the workman to make any further claim.

(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty.”

9. A bare glance at section 4 A(3) is enough to show that it can be invoked against an employer. The use of the word, ‘employer’ in this provision as distinct from the phrase ‘any person’ in section 31 of the Act, which deals with recovery of compensation, also further confirms the view that the provision can be invoked against an employer. Being a penal provision, it is to be construed rigidly. The insurer, who takes the liability to indemnity the employer, is not the employer. On this short ground only, the contention of Mr. Basu that the interest claimed and penalty imposed on the insurer unauthorised, becomes unassailable.

10. Thus, the order for collection of interest and penalty claimed from the insurer is liable to be reversed. The insurer has already deposited the compensation amount of Rs. 14,000/., interest of Rs. 140/. and penalty of Rs. 7,070/-. The Commissioner is directed to refund to the insurer Rs. 7,210/. deposited towards the interest and penalty and retain Rs. 14,000/- deposited towards compensation to be paid to the dependants of the two deceased workmen. The refund shall be made within three months from today.

11. In the result, the appeals are allowed in part. No costs.

Appeals partly allowed.