NEW INDIA ASSURANCE CO. LTD. Vs. TARABAI

JUDGEMENT

(1.) THE following question of law has been referred to by learned Single Judge:

(2.) THIS Division Bench has been constituted to answer the question as there is difference of opinion between Judges of this High Court as to whether Insurance Company can be saddled with the liability of payment of penalty

(3.) WE have heard learned Counsel Mr. M.L. Dhupar and Mr. A. H. Khan for the Insurance Company and Mr. Samvatsar and Mr. G.K. Neema for the claimants i.e., legal heirs of the worker. The contention of the learned Counsel for the appellant Insurance Company is that the Insurance Company is liable to make good the loss to the extent of compensation awarded and not for the penalty, as the penalty is imposed because of the default on the part of the employer. The second contention of the learned Counsel of the appellant is that the policy covers the risk of accident and not the delay caused and negligence in defending the case by the employer. It has further been submitted that the liability of payment of compensation is co -extensive for the fault (accident) and not for default i.e., negligence of the employer. The question of opportunity of hearing before imposing the penalty has also been raised by the Counsel for the appellant. In opposition of the contention of the learned Counsel for the appellant learned Counsel for the claimants, on the other hand, submitted that the Insurance Company covers the entire risk. The poor claimants cannot be saddled with the responsibility of recovering the amount of penalty from the employer. It has further been submitted that if there is any default of employer the Insurance Company may separately claim for recovery of money from the employer, but the Company cannot be allowed to disown the liability of payment so far as amount of compensation awarded to the legal heirs of the worker is concerned. It has also submitted that as the liability is co -extensive the same is co -extensive not only in the matters of fault, but in the matter of default occasioned by employer also.