NEW INDIA ASSURANCE CO. LTD. Vs. BAHADUR SINGH

JUDGEMENT

(1.) THIS appeal is directed by the non -applicant u/s 30 of the Workmen's Compensation Act, 1923 (For short 'the Act') against the award dated 18.1.96 passed by Commissioner for Workmen's Compensation Ujjain in W.C. Case No. 11/82 whereby compensation of Rs. 28,800/ - was awarded for the injuries sustained by the claimant with 50% penalty and interest at the rate of 6% per year.

(2.) THE facts leading to the claim case, in brief, are that the claimant was working as workman in the factory of respondent No. 1 located at Udyogpuri, Ujjain. The claimant in the night of 14.11.81 at 2 a.m. during the course of his employment, met with an accident while operating the machine, wherein his three fingers of right hand were out. His thumb and little finger were rendered useless. This factory was insured with the appellant. The respondent was earning Rs. 8/ - per day. His age was 20 years. He, therefore, filed claim petition seeking compensation of Rs. 28,800/ - and Rs. 1,000/ - for medical expenses and 50% penalty with interest. The respondent No. 1, the owner of the factory admitted the case of the respondent. However, the appellant resisted the claim. The Tribunal awarded compensation as stated above. Hence, this appeal by Insurance Company.

(3.) FROM the plain reading of the aforesaid provision, it is clear that the employer is required to pay compensation as soon as it falls due where the employer accepts liability to pay compensation, but disputes the extent of the claim of compensation, under such situation, he has to make provisional payment to the extent which he accepts, to the workman directly or deposit it with the Commissioner, if he denies the total liability, he is not required to make provisional payment, his liability would depend upon the final adjudication by the Commissioner. If compensation becomes ascertained either provisionally or finally on adjudication and the same is not paid within one month from the date, it falls due, the Commissioner can direct u/s 4A(3) to pay interest and also penalty, not exceeding 50% of the compensation amount. In this case, the respondent met with accident on 14.11.81 during the course of his employment. He sustained injuries and informed his employer who accepted entire liability but did not pay compensation within one month of the accident, thus, default was committed and the Tribunal rightly passed order for payment of interest and penalty amount u/s 4A(3) of the Act. But it fell in error in directing the appellant Insurance Company to pay penalty amount as the fault was committed by the employer. The appellant had agreed to indemnify the employer for paying compensation for the injuries or death caused to his employees during the course of his employment. But it had not agreed to pay penalty for the fault committed by him. The Apex Court in case of Ved Prakash Garg (supra) held that the Insurance Company was not liable to pay penalty amount, however, it was under obligation to pay the principle amount of compensation alongwith interest as interest is not penalty. It held :