LI Network
Published on: January 3, 2024 at 11:00 IST
The Himachal Pradesh High Court ruled that the penalty imposed on the insured due to the failure to make payments under the Workmen’s Compensation Act, 1923 should not be borne by the insurer.
This judgment stemmed from an appeal filed by the National Insurance Company (insurer) under Section 30 of the Employees Compensation Act, 1923, contesting an order by the Commissioner of Employee’s Compensation in Solan. The order had awarded compensation totaling Rs. 4,52,760/- along with 12% annual interest.
Justice Sushil Kukreja, a Single Bench, referenced a legal precedent in Ved Prakash Garg Vs. Premi Devi (1997)8 SCC 1, stating that while the insurance company is accountable for the principal compensation payable by the insured employer, any penalty imposed on the insured for non-payment under the Act is solely the responsibility of the insured employer.
The Court emphasized the insurer’s obligation limited to compensation and interest per the Act.
Factual Overview:
The deceased, a conductor in a truck, died due to a mishap caused by the vehicle’s rash and negligent driving, while engaged in his duties. His parents, the respondents, claimed his death occurred during employment, and the vehicle was insured by the appellant. Initially, the parents filed a petition under Section 166 of the Motor Vehicles Act, 1988, later withdrawn to be refiled.
The vehicle’s owner and driver contended the insurer was obliged to indemnify the accident. The insurance company objected to the petition’s maintainability, leading to the matter reaching the High Court.
Ruling:
The Workmen’s Compensation Commissioner held the insurer responsible for compensating the claimants and paying the penalty. However, in line with the Apex Court’s precedent, the High Court emphasized that the insurer couldn’t be held liable for the penalty amount. The Court ordered that the penalty be paid by the vehicle owner (respondent No. 3).
The Court set aside the directive against the insurance company to pay the penalty, holding it solely liable to pay the compensation amount of Rs. 4,52,760/- to the claimants along with interest.
The High Court consequently partially allowed the appeal, altering the direction for payment.
