IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF JULY, 2019 BEFORE THE HON' BLE MR. JUSTICE B. VEERAPPA MISCELLANEOUS FIRST APPEAL No.4089/2016(WC) BETWEEN:
THE NEW INDIA ASSURANCE CO. LTD. MALLAPPA COMPLEX, B.H. ROAD, SHIMOGA REPRESENTED BY MOTOR THIRD PARTY CLAIMS HUB, MAHALAKSHMI CHAMBERS NO.9, 2ND FLOOR, M.G.ROAD, BANGALORE - 560 001.
BY ITS DULY CONSTITUTED ATTORNEY.
(BY SRI RAVISHANKAR C. R., ADVOCATE) AND:
1. SMT. H. T. GAYATHRI, AGED ABOUT 33 YEARS, W/O LATE SRIDHARA, 2. KUM. SRINCHANA, AGED ABOUT 6 YEARS, D/O LATE SRIDHARA, SINCE MINOR REPRESENTED BY MOTHER AND NATURAL GUARDIAN, SMT. H. T. GAYATHRI, 3. SMT. SEETHAMMA AGED ABOUT 77 YEARS, W/O SRI CHINNAIAH GOWDA, ... APPELLANT 4. SRI CHINNAIAH GOWDA AGED ABOUT 82 YEARS, S/O SRI LINGANNA GOWDA, THE RESPONDENTS NO.1 TO 4 ARE RESIDING AT HULLATHI VILLAGE, THIRTHAHALLI TALUK- 577432.
5. M/S MYSORE PAPER MILLS LIMITED KAGADA NAGAR, P.O. BHADRAVATHI-577301, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR.
... RESPONDENTS (BY SRI M. V. MAHESWARAPPA, ADV., FOR R1, R3 & R4; SRI M. RAMACHANDRAN, ADVOCATE FOR SRI M.R.C. RAVI, ADVOCATE FOR R5; R2 IS MINOR, REPRESENTED BY R1) ...
THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 30(1) OF THE EMPLOYEES COMPENSATION ACT, AGAINST THE JUDGMENT AND AWARD DATED:11.03.2016 PASSED ON ECA NO.5/15 ON THE FILE OF THE SENIOR CIVIL JUDGE & JMFC, THIRTHAHALLI, ALLOWING THE PETITION FILED UNDER SECTION 3 & 4 OF THE EMPLOYEES COMPENSATION ACT.
THIS MISCELLANEOUS FIRST APPEAL COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT This Miscellaneous First Appeal is filed by the Insurance Company against the judgment and order dated 11th March 2016 made in ECA No.5/2015 on the file of the Commissioner for Employees Workmen’s Compensation/Tribunal awarding total compensation of Rs.4,35,690/- with 12% interest from the date of petition till its realization.
2. The parties herein are referred to as per their rankings before the Tribunal.
3. It is the case of the claimants that they are the wife, son and parents of deceased Sridhara s/o Chinnaiah, who was working as Watcher in the Mysore Paper Mills Limited of respondent No.1. On 4.7.2004 when he went to work as usual, as per the instructions of respondent No.1, while he was traveling in Tractor- Trailor No. KA-14/T-2542-2543 of Sri Jagadish S/o Thimmappa Gowda and after loading the Acasia plants in plantation nursery and was proceeding to forest plantation, the driver of Tractor-Trailor drove the vehicle in a rash and negligent manner at Annebailu road, Thirthahalli Taluk and caused the accident at about 3.30 p.m., due to which the Watcher-Sridhara got stuck under the Tractor and sustained grievous injuries and died on the way to Manipal Hospital. It is their further case that at the time of death, the deceased Sridhara was aged about 38 years and was earning monthly wages at Rs.3,123/- and petitioner Nos.1 to 4, who are claimants were mainly dependant on the deceased, filed a claim petition claiming compensation against respondent Nos.1 and 2.
4. The 1st respondent-Employer (5th respondent herein) filed objections denying the averments made in the claim petition and occurrence of the accident, but admitted the monthly wages of the deceased. It has further contended that the compensation, if any, liable to be paid is only by the 2nd respondent, who is insurer, but the claimant did not approach the Commissioner within time to receive compensation and hence, there was no occasion for the respondents to deposit the compensation amount before the Court and therefore, sought to dismiss the claim petition.
5. The Insurance Company filed objections denying the relationship between the claimants/ petitioners and the deceased Sridhara, age of the deceased and monthly wages, but admitted that it had covered the risk of 600 field staff and field workers of the 1st respondent (M.P.M. Forest) under its Policy No.670601/41/03/01/0000002 valid from 15.4.2004 to 14.4.2005 and its rights and liability as per the terms and conditions with exceptions and limitations as mentioned in the said policy. It was also submitted that it is a policy under the Workmen’s Compensation Act (‘the Act’ for short) and it is only answerable to the first respondent-employer to reimburse its liability to its employees to an extent of the principal amount of compensation and the liability to pay interest or costs is that of the employer-1st respondent; that the policy does not cover the expenses of medical treatment to the workers and does not cover the payment of interest of penalty. It is the duty and liability of the 1st respondent-employer to pay the compensation and then seek for re-imbursement of compensation from it. Therefore, sought to reject the claim petition.
6. Based on the claim petition, the Commissioner for Workmen’s Compensation framed the following issues:
“ 1. ªÀÄÈvÀ PÁ«ÄðPÀgÀÄ £ÀµÀÖ ¥ÀjºÁgÀ PÁAiÉÄÝ 1923 gÀ PÀ®A 2(1) (J£ï)gÀ£ÀéAiÀÄ PÁ«ÄðPÀ JA§ ¥ÀzÀzÀ ªÁå¦ÛUÉ M¼À¥ÀqÀĪÀgÉà JA§ÄzÀ£ÀÄß CfðzÁgÀgÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀĪÀgÉÃ?
2. ªÀÄÈvÀ PÁ«ÄðPÀ£ÀÄ ¥ÀæwªÁ¢AiÀÄ°è PÉ®¸À ¤ªÀð»¹zÀÄÝ C¥ÀWÁvÀzÀ ¢£ÀzÀA¢UÉ PÁ«ÄðPÀ ªÀÄvÀÄÛ ªÀiÁ°ÃPÀ JA§ ¸ÀA§AzÀªÀ£ÀÄß ºÉÆA¢zÀÝgÀÄ JA§ÄzÀ£ÀÄß CfðzÁgÀgÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀĪÀgÉ?
3. ªÀÄÈvÀ PÁ«ÄðPÀ£ÀÄ PÉ®¸ÀzÀ°è ¤gÀvÀ£ÁVzÁÝUÀ C¥ÀWÁvÀ ¸ÀA¨sÀ«¹ ªÀÄgÀt ºÉÆA¢gÀÄvÁÛgÉ JA§ÄzÀ£ÀÄß CfðzÁgÀgÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀĪÀgÉÃ?
4. C¥ÀWÁvÀ ¸ÀA¨Às«¹zÀ ¸ÀAzÀ¨sÀðzÀ°è ªÀÄÈvÀ PÁ«ÄðPÀ£À ªÀAiÀĸÀÄì ºÁUÀÆ ªÀiÁºÉAiÀiÁ£À JµÀÄÖ ªÉÃvÀ£ÀªÀ£ÀÄß ¥ÀqÉAiÀÄÄwÛzÀÝgÀÄ JA§ÄzÀ£ÀÄß CfðzÁgÀgÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀĪÀgÉÃ?
5. ºÁVzÀÝ°è CfðzÁgÀgÀÄ AiÀiÁªÀ ¥ÀjºÁgÀPÉÌ CºÀðgÀÄ ªÀÄvÀÄÛ AiÀiÁjAzÀ ¥ÀqÉAiÀÄ®Ä CºÀðgÀÄ?
6. DzÉñÀªÉãÀÄ?
7. In order to prove their claim, the claimant-wife of the deceased workman examined herself as P.W.1 and marked the documents as Exs.P.1 to 13. The 1st respondent-employer examined the Senior Assistant of respondent No.2-insurance company as R.W.1 and marked the insurance policy as Ex.R.1 and the Senior Manager (HRD of respondent No.1-company) is examined as R.W.2 and marked the documents as Exs.R.2 to 10.
8. Considering the entire material on record, the Tribunal recorded a finding that the claimants have proved that the deceased was the employee under the 1st respondent and the accident has occurred arising out of and during the course of employment under the 1st respondent and he has proved the relationship between the employee and the employer. Accordingly, holding that the claimants are entitled to the compensation, proceeded to award compensation of Rs.4,35,690/- with interest at 12% per annum from the date of petition till realization. Hence, the insurance company has filed the present miscellaneous first appeal.
9. Neither the 1st respondent before the Tribunal i.e., M/s. Mysore Paper Mills Limited, who is 5th respondent herein nor the claimants have filed any appeal against the impugned judgment and order passed by the Tribunal.
10. I have heard the learned Counsel for the parties to the lis.
11. Sri C.R. Ravishankar, learned Counsel for the appellant-insurance company contended that since the monthly wages declared by the employer/owner is Rs.2,430/- for each employee, the Tribunal erred in taking the monthly wages at Rs.3,279/-. He would further contend that the insurance company is not liable to pay any interest on the compensation awarded by the Tribunal since it is not legally liable under the terms and conditions of the workmen’s compensation policy. He would further contend that the Tribunal erred in awarding excess compensation since the liability on the insurance company is only for a sum of Rs.2,30,315.40 ps. He also contended that the Tribunal has erred in holding that the Insurance Company is liable to pay compensation with interest. In support of his contentions, he relied upon the judgment of the Hon’ble Supreme Court in the case of New India Assurance Co. Ltd.-vs- Harshadbai Amrutbhai Modhiva reported in AIR 2006 SC 1926.
12. Per contra, Sri M. Ramachandran for Sri M.R.C. Ravi, learned Counsel for respondent No.5 submits that as per Ex.R.10-policy, the policy was in force from 15.4.2004 to 14.4.2005 for the monthly wages of more than Rs.4,000/- to 600 employees and the premium of Rs.1,02,375/- was paid. He further contended that the accident had occurred on 4.7.2004, respondent No.5 – owner/employer has sent the information to the Insurance Company on 28.10.2004 and the claimant on 20.12.2004 as per Annexures-R3 and R4 respectively, but the insurance company has not deposited the compensation within the time stipulated. Therefore, respondent No.5 is not liable to pay the interest. He further pointed that ground No.12 taken in the appeal by the insurance company that the employer had declared the monthly wages of the deceased at Rs.2,430/- is contrary to the material on record and Annexure-R10 the policy as well as the report of the accident of the workman with annexures enclosed. Even in the objection filed before the Tribunal, they have not taken any such contention and they have admitted that the insurance was covered with the risk of 600 employees, who are field staff and field workers of the 1st respondent (M.P.M. Forest) under its Policy No.670601/41/03/01/0000002 valid from 15.4.2004 to 14.4.2005 and therefore, the appeal filed by the insurance company is liable to be dismissed.
13. Sri M.V. Maheswarappa, learned Counsel for respondent Nos.1 to 4/claimants relying upon the provisions of Section-4A(1), (2) and (3) contended either the insurance company or the employer has to comply with the provisions of the Act by depositing the amount within the time stipulated and since the same has not been deposited, the insurance company is liable to pay the compensation and sought for dismissal of the appeal.
14. This Court while admitting the appeal on 3.8.2016 has framed the following substantial question of law that arise for consideration:
“Whether the mulcting of liability to pay interest on the insurer is sustainable in the light of the terms and conditions of the insurance police produced at Ex.R.1?”
15. Having heard the learned Counsel for the parties, it is not in dispute that the deceased Sridhara was working as Watcher under the 1st respondent – M/s. Mysore Paper Mills Limited and he died in the road accident that occurred on 4.7.2004 arising out and during the course of his employment. It is also not in dispute that according to the 1st respondent, the deceased used to receive monthly wages of Rs. 3,279/-
as per Annexure-R2. It is also not in dispute that the accident occurred had arisen out of and during the course of employment under the 1st respondent as evidenced by the material documents Exs.P.1 to P.8.
16. It is the specific contention of the appellant- insurance company before this Court that the monthly wages for each employee as declared by the employer-1st respondent is Rs.2,430/- and as per insurance policy; insurance granted in terms of the policy is not extended to include any interest or penalty imposed on the insured on account of his failure to comply with the requirements laid down under the Workmen’s Compensation Act, 1923 and any compensation payable on account of occupational diseased listed in Part ‘C’ of schedule III of the Workmen’s Compensation Act, 1923. It is also the specific contention of the employer that as per the policy-Ex.R.10, it has declared the monthly wages from 15.4.2004 to 14.4.2005 of about 600 employees as Rs.4000/- and has paid the premium of Rs.1,02,375/-. The accident has taken place on 4.7.2004. Accordingly, the employer has sent information to the insurance company on 28.10.2004 for deposit of the compensation amount and to the claimant 20.12.2004 as per Annexures-R3 and R4 respectively. Though a specific ground is taken by the learned Counsel for the insurance company that in support of his contentions, the same is contrary to the objections filed before the Commissioner for Workmen’s Compensation/Tribunal at para-7(a) wherein he has stated that the insurance company admits that the opponent has covered the risk of 600 field staff and field workers of the 1st respondent(M.P.M. Forest) under policy NO.670601/41/03/01/0000002 valid from 15.4.2004 to 14.4.2005 and the rights and liabilities of the opponent is as per the terms, conditions, exceptions and limitations as detailed in the said policy. It is further stated that the policy is under the Workmen’s Compensation Act and the insurance company is only answerable to the 1st respondent-employer to re- imburse the 1st respondent-employer towards liability to his employees to an extent of the principle of compensation and the liability to pay interest or costs is that of the 1st respondent-employer. It is also stated that the insurance policy does not cover the expenses of medical treatment to the workers. It also does not cover payment of interest or penalty. It is also stated that it is the duty and liability of the 1st respondent-employer to pay the compensation and then seek for re- imbursement of the compensation from the insurance company. Therefore, the contention of the learned Counsel for the insurance company that the employer has declared the income of the deceased as Rs.2,430/- cannot be accepted as the same is contrary to the material on record.
17. In so far as the contention of the learned Counsel for the appellant that the Tribunal erred in awarding a sum of Rs.1,00,000/- under the Consortium and Rs.25,000/- towards funeral expenses under the provisions of the Workmen’s Compensation Act, the same is not disputed by the learned Counsel for the respondents and they are not in a position to assist the Court whether the said heads come under the provisions of the Act. Therefore, the Tribunal awarding compensation under the heads Consortium and Funeral Expenses cannot be sustained.
18. Though Sri M.V. Maheswarappa, learned Counsel for the claimants sought to justify that the Tribunal was right in awarding funeral expenses in view of the provisions of Sub-section (4) of Section 4 of the Act, the claimants are entitled for atleast rupees five thousand but the amendment has come into force only on 18.1.2010 which is prospective. Therefore, the contention of the learned Counsel for the claimants cannot be accepted and therefore, the insurance company is not liable to pay compensation under the heads - Consortium or Funeral expenses. Hence on that ground, the impugned judgment and order passed by the Tribunal to that extent is liable to be modified.
19. The Tribunal while considering the entire material on record has recorded a finding that in the insurance policy produced by the respondent No.2/insurance company, there is an express exclusion Clause of the liability of the interest under the insurance policy and hence, in view of the same, the liability arising under Section 4(A)(3) of the Workmen Compensation Act to pay interest on the principal amount as imposed on the insured, was not required to be met by the insurance company and accordingly, it held that the insurance company is not liable to pay any interest. Admittedly, the said finding of fact recorded by the Tribunal is not at all challenged either by the 1st respondent-employer or by the claimants.
20. It is unfortunate that the learned Commissioner for Workmen’s Compensation/Tribunal at one breadth, has recorded a finding that the insurance company is not liable to pay interest and at another breadth in the operative portion of the judgment and order has directed the insurance company to deposit the compensation amount with interest within a period of one month from the date of order till its realization which is inconsistent and unsustainable.
21. In view of the aforesaid admitted facts and taking into consideration Annexure-R-2-claim form wherein the employer has declared the monthly wages of the employee at Rs.3,279/- and if 50% of the monthly wages of the deceased is deducted in terms of Section 4(1)(a) of the Act, the actual monthly wages to be taken would be Rs.1,639/- and relevant factor to be multiplied would be 189.56 taking into consideration the age of the deceased as 38 years, the claimants are entitled to an amount of compensation of Rs.3,10,690/-.
22. It is also not in dispute that in terms of the policy and in view of the objections raised by the insurance company that it is not liable to pay interest and it is only the employer, who has to pay the amount of compensation, according to the 1st respondent- employer, an intimation regarding the date of accident i.e., 4.7.2004 was sent to the insurance company as long back as on 28.10.2004 and to the claimants on 20.12.2004 as per Annexures-R3 and R4 respectively. Therefore, the contention of the counsel for the employer - 5th respondent herein that, the employer cannot pay the interest, cannot be accepted in view of the provisions of Section 4(A) of the Act which reads as under:
“4A. 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 case 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 shall— (a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due; and (b) 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 per cent of such amount by way of penalty:
Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.
Explanation.—For the purposes of this sub-section, “scheduled bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
3A. The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependant, as the case may be.]]”
23. On careful perusal of the said provisions, the compensation to be paid when due and penalty for default shall be paid as soon as it falls due. 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 case may be, without prejudice to the right of the workman to make any further claim. 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 shall direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due; and 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 per cent of such amount by way of penalty. Provided that an order for the payment of penalty shall not be passed under Clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. The interest and the penalty payable under Sub-Section (3) shall be paid to the workman or his dependant, as the case may be.
24. In view of the categorical averments made in the objections and in view of the terms and conditions of the policy, it has been agreed between the insurance company and the employer that the insurance company need not pay the interest and therefore, it is for the employer, who has to pay the interest in terms of the provisions stated above and in view of the fact that neither the employer nor the claimants have not challenged the finding of fact recorded by the Tribunal that the insurance company is not liable to pay any interest in view of the terms and conditions of the policy.
25. It is also not in dispute that the Tribunal has awarded the compensation with interest at 12% from the date of petition till its realization. Admittedly, the claimants have not challenged the said order. Therefore, the employer has to pay the interest on the compensation amount after one month from the date of the petition till its realization.
26. In view of the aforesaid reasons, the substantial question of law framed in this miscellaneous first appeal is answered in the negative holding that the Tribunal is not justified in directing insurance company to pay the interest in view of Ex.R1, the insurance policy.
27. In the result, the appeal filed by the insurance company is allowed in part. The impugned judgment and order passed by the Tribunal is modified to the extent that the insurance company is liable to pay the compensation of Rs.3,10,690/- (Rupees Three Lakhs Ten Thousand Six Hundred and Ninety Only) and the employer-5th respondent herein is liable to pay the interest on the said compensation amount after one month from the date of the petition till its realization in terms of the policy. However, liberty is reserved to employer to recover the same from the insurance company in terms of the conditions of the insurance policy and in view of the specific averments made in the objections at para-7(a) filed by the insurance company before the Commissioner for Workmen’s Compensation.
28. Registry is directed to transmit the entire amount in deposit before this Court to the Tribunal forthwith and the Tribunal shall pay the compensation awarded by this Court i.e., a sum of Rs.3,10,690/- (Rupees Three Lakhs Ten Thousand Six Hundred and Ninety Only) and refund the remaining amount to the insurance company and the employer - 5th respondent herein shall deposit the interest within a period of 3 months from the date of the receipt of the judgment and order.
29. The Tribunal shall disburse the compensation amount to the claimants in terms of the apportionment made by it and balance amount of compensation shall be refunded to the appellant-insurance company.
Ordered accordingly.
Sd/- Judge Nsu/-