1 FA.975/1996 acd IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 975 OF 1996 New India Assurance Co. Ltd. ...Appellant. V/s. Smt. Ceema Vinaykumar Singh And M/s. S.N. Shah & Co.. ....Respondents. ----- Mr. S.R. Singh, for the Appellant. Mr. Ranjan Tripathi i/b S.S. Vidyarthi, Advocate for Respondent No.2. ------ CORAM : A.S. OKA, J. DATED : 6 th OCTOBER, 2010. JUDGMENT: 1] Heard the learned counsel appearing for the appellant. None appears for respondent no.1. 2] The appeal arises out of the judgment and order passed by the learned Commissioner for Workmen’s Compensation on a claim petition filed under Workmen’s Compensation Act, 1923 [hereinafter referred to as ‘the said Act of 1923’]. The 2nd respondent is allegedly the employer of the deceased husband of the first respondent. 2 FA.975/1996 According to the case of the first respondent, the deceased husband during the course of his employment with the second respondent died on 28th March 1995. The first respondent after a demise of her husband issued a notice to the second respondent calling upon the second respondent to pay compensation. The second respondent replied by letter dated 19th May 1995 stating that second respondent was covered by the Workmen’s Compensation Policy during the relevant period and therefore claim of the compensation should be settled by the appellant. 3] The claim petition filed by the first respondent was contested by the respondent no.2 by filing a written statement in which a contention on the basis of Workmen’s Compensation Policy was raised. 4] The learned Commissioner by impugned judgment and order directed the appellant and second respondent to jointly and severally to pay compensation of Rs.80,664/- with 6% interest and penalty of 50%. 5] The learned counsel for the appellant invited attention of the Court to the admitted fact that the Policy relied upon by the second respondent was the Workmen’s Compensation Policy and not 3 FA.975/1996 the Policy which is required to be issued under the Motor Vehicles Act, 1988. He submitted that the liability of the appellant to pay the interest and penalty under the said Act of 1923 was specifically excluded under the Policy. He relied upon certain decisions of the Apex Court in support of his contention. 6] Even according to the case made out before the learned Commissioner, the Policy taken out by the 2nd respondent was a Workmen’s Compensation Policy. Perusal of a copy of the said Policy on record shows that the insurance granted thereunder was not extended to include any interest and/or penalty imposed on the insured on account of his failure to comply with the requirements laid down under the said Act of 1923. 7] In the case of P.J. Narayan Vs. Union of India & Others [(2006) 5 Supreme Court Cases 200], the Apex Court held that there is no statutory liability on the insurer under the provision of the Act of 1923. The Apex Court held that insurance is a matter of contract between the insurance company and insured. The Apex Court held that the insurance company cannot be forced by Courts to take on liability which is not covered under the Policy. 4 FA.975/1996 8] In the case of New India Assurance Co.Ltd Vs. Harshadbhai Amrutbhai Modhiya And Another [(2006) ACJ 1699], the Apex Court held that under a Workmen’s Compensation Policy, contracting out insurance coverage for payment of interest and penalty by an employer is not prohibited in law and it is always open to exclude the liability of interest and penalty from purview of the Policy. 9] In the present case such liability of payment of interest and penalty has been excluded from the purview of Workmen’s Compensation Policy taken out by the second respondent. Hence, the Commissioner could not have directed the appellant to pay interest and penalty and to that extent, appellant must succeed. I, therefore, pass the following order:- i) The clause no.(2) of the operative part of the impugned judgment and order is modified and it is clarified that the liability to pay interest and 50% penalty shall be of the only of the Opposite Party No.1 [M/s. S.N. Shah & Co]. To that extent the claim filed by the first respondent stands dismissed against the appellant. Rest of the impugned order is maintained. 5 FA.975/1996 ii) The appeal is partly allowed in above terms with no order as to costs. Iii) If the amount deposited by the appellant towards the interest and penalty is not yet withdrawn by the first respondent, the same be refunded to the appellant with interest, if any, accrued thereon. JUDGE