IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS TUESDAY, THE 20TH SEPTEMBER 2011 / 29TH BHADRA 1933 MFA.No. 12 of 2010() -------------------- WCC.36/2006 of W.C.C.,ERNAKULAM .................... APPELLANT: 2ND OPP.PARTY: ------------------------------------------- NATIOAL INSURANCE COMPANY LTD., AROOR BRANCH, ST.AUGUSTINE'S CHURCH BUILDING, BY PASS JUNCTION, AROOR POST, ALAPPUZHA DISTRICT. BY ADV. SRI.RAJAN P.KALIYATH RESPONDENTS:APPLICANT AND FIRST OPPOSITE PARTY ---------------------------------------------------------------------------------- 1. KUNCHA, NETTATHUKULAMBU, NALUCENT COLONY, VANNOOR, ALATHUR POST, PALAKKAD DISTRICT. 2. K.M.ELIAS CONSTRUCTIONS (P) LTD., THENGODU POST, KAKKANADU, KOCHI-682 021, REPRESENTED BY ITS MANAGING DIRECTOR, K.M.ELIAS. ADV. SRI.C.Y.VINOD KUMAR FOR R2 SRI.C.ANILKUMAR (KALLESSERIL) FOR R1 SRI.N.K.POULOSEKUTTY FOR R1 THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 20/09/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH & M.L.JOSEPH FRANCIS JJ., - - - - - - - - - - - - - - - - - - - - - - - - - - - - M.F.A.(W.C.Act) No. 12 of 2010 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20th September, 2011 JUDGMENT K.M. Joseph J., The appellant is the second opposite party/insurer in a proceeding under Section 22 of the Workman's Compensation Act. The Commissioner awarded a compensation in a sum of Rs.4,42,740/- with interest at the rate of 12% from the date of accident till the date of deposit. 2. The only issue raised in this appeal relates to imposing liability upon the appellant to pay interest. 3. We heard learned counsel for the appellant and learned counsel appearing on behalf of the workman. M.F.A. 12 of 2010 :2: 4. Learned counsel for the appellant would point out that the Commissioner has acted illegally in ordering the appellant to pay interest. The basis of this argument is the following Clause in Contract of Insurance: “Penalty, Costs and Interest endorsement: It is hereby understand and agreed that the cover provided under this policy shall not extend to indemnify the insured or insured's in respect of any interest and/or penalty which may be imposed on him/them on account of his/their failure go comply with the requirements laid down under the Workmen's Compensation Act, 1923 and subsequent amendments of the said Act.” 5. The finding of the Commissioner in this regard is as follows: “In the cross examination by the second opposite party, AW1 deposed that her son was working for the last one year for the first opposite party. The applicants produced Ext.A1 FIR M.F.A. 12 of 2010 :3: No.171/2006 to substantiate her contentions. The first opposite party admitted that the deceased was their workman and his death was due to an accident arising out of and in the course of his employment. Even though, the second opposite party denied the employer-employee relationship, death due to an accident arising out of and in the course of employment they could not produce any material evidence in support of their contentions. From the oral as well as documentary evidence, the applicant could substantiate their claim. Hence I find that deceased was a workman as defined under the Act and his death was by an accident arising out of and in the course of his employment under the first opposite party.” 6. We notice that the Commissioner has noted the argument of the appellant that they are not liable to pay interest and penalty. We feel that the appellant is justified in challenging the order of the Commissioner. There is a Clause under which the appellant is freed from the obligation to pay interest and penalty. M.F.A. 12 of 2010 :4: 7. The Commissioner has placed reliance on Ext.D2 letter. Ext.D2 is a letter dated 5.5.2006 sent from the employer to the Insurance Company, which reads as follows: “We kindly inform you that our worker, Mr.Udayakumar had fallen from the 11th floor of our work-site, White Waters Phase III at Thevara Ernakulam on 3.5.2006. He got injured very bad and admitted to Medical Trust Hospital. But he passed away on the same day. So we humbly request you to do the needful for getting insurance claim.” 8. According to the Commissioner, the second opposite party is responsible for the delay in settling the claim and hence the second opposite party is liable to pay the interest. No doubt, in the conditions of the Contract, one of the conditions is as follows: “(5) No admission offer promise or payment shall be made by or on behalf of the insured without the consent the Company which shall be entitled if it so desires to take over and conduct in the name of the insured the M.F.A. 12 of 2010 :5: defence of settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings and in the settlement of any claim and the insured shall give all such information and assistance as the Company may require.” 9. When we put the Clause to the learned counsel for the appellant, he would submit that Ext.D2 was not actually received and he would submit that the procedure is that if Ext.D2 was actually received, the Company would have insisted upon the 1st opposite party filing of a properly filled up claim form with relevant documents. Under Section 4 of the Workmen's Compensation Act, it is liability of the employer to pay the interest and therefore in view of the Clause while they can proceed against the appellant, if there is any breach in civil law, the Company cannot be called upon to pay the interest. M.F.A. 12 of 2010 :6: 10. In view of the specific clause excluding the liability to pay interest, we are of the view that the appellant is justified in contending that the appellant cannot be visited with liability to pay interest. In such circumstances, we allow the appeal and direct that the appellant will not be liable to pay interest as ordered, and that the first opposite party/employer will be liable to pay the interest. This will be without prejudice to the right of the first opposite party to proceed in accordance with law, if so advised against the appellant. The M.F.A. is disposed of as above. Sd/- K.M.JOSEPH, (JUDGE) Sd/- M. L. JOSEPH FRANCIS, (JUDGE) dl/ // TRUE COPY // PA TO JUDGE