ORIENTAL INSURANCE CO LTD Vs. VELLACHI

JUDGEMENT

(1.) HEARD the Learned Counsel for the appellant Sri S. P. Shankar, in this appeal. The only point that has been raised before this Court is that the Insurance Company has been made liable for payment of penalty or the interest on the amount of compensation which was payable by Respondent No. 2, to Respondent No. 1.

(2.) LEARNED Counsel contended that the Company had never assured the Insured to pay amount imposed on him as penalty or as interest for the Insured's failure to comply with the requirements of law to pay the compensation on the due date. Learned Counsel contended that this has specifically been also made clear as per endorsement made in the insurance policy of which the insured was in possession, the appellant had only taken the undertaking to pay the compensation for injury. Learned Counsel asserted that there was an endorsement in the policy to the effect that coverage of the policy shall not extend, then they may indemnify the insured in respect of any interest which may be imposed on failure to comply with the requirements of Workmen's compensation Act. As regards the liability for the compensation or the compensation assessed, that has not been disputed on behalf of the appellant, Counsel for the appellant also pointed out that amount of interest, no doubt has been deposited and paid.

(3.) SECTION 4a of the Workmens Compensation Act , 1923, for short, 'compensation Act', provides that the compensation under Section 4, shall be paid as soon as it falls due. The liability for compensation is primarily fastened on the employer and compensation is payable by the employer on the due date. Section 4-A provide that if the employer does not accept his liability of the compensation to the extent claimed, then he may have to make provisional payment of the amount to the extent admitted by him and that amount shall be deposited with the Commissioner or be paid to the Workman without prejudice to the right of the Workmen to make any further claim. Sub-section 3 of Section 4a provides that where the employer is in default in the matter of payment of compensation due under the Act, within one month from the date it falls due or it fell due, then Commissioner has been empowered to direct the payment of interest at the rate of 6% on the amount together with the penalty which may not exceed 50% of such amount of compensation. Section further provide that the penalty amount shall be recovered from the employer. A reading of this section makes it clear that the liability is on the employer to pay the penalty, in case of his failure to discharge his obligation to pay the compensation on the due date. Unless it is specifically proved and established that the Insurance Company had undertaken to pay the amount of penalty imposed for failure of employer to discharge his obligations to pay off the compensation on the due date, the liability to pay penalty or interest on the amount of compensation under statutory provision of Section 4-A is that of the employer.