1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD FIRST APPEAL NO. 529 OF 1993 M/s New India Assurance Co. Ltd., having its registered office at 87, M.G.Road, Fort, Bombay-400 001, Branch Office at Abbott Building, Near Ashoka Hotel, Kings Road, Ahmednagar-414 001 and Divisional Office at Adalat Road, Aurangabad, through its Senior Divisional Manager and constituted Attorney Shri Khaleel s/o Sayed Chand. Appellant Versus 1 Shri Yeshwant Dhondiba Varpe, major, Occ: Nil; 2 Housabai w/o Yeshwant Varpe, Major, Occ: Household work; 3 Kum.Shobha d/o Yeshwant Varpe, minor, u/g of No.1 above. All are residing at Kolhar, Tq. Shrirampur, Dist.Ahmednagar. 4 The Chairman, Rampur Vividh Karyakari Seva Society, Rampur, Tq. Rahuri, District Ahmednagar. (Rampur Vividh Karyakari Sahakari Vikas Seva Sanstha Maryadit, A/P Rampur, Tq.Rahuri, Dist.Ahmednagar). 5 Lahanu alias Babasaheb Dhondiba Banker, age: 31 years, Occ: Driver, Kolhar, Tq.Rahuri, District Ahmednagar. Respondents Mr.V.N.Upadhye, advocate for the appellant. None appears for Respondents through served. 2 CORAM: R.M.BORDE, J. DATE : 05 th January, 2010. ORAL JUDGMENT: 1 Heard Shri V.N.Upadhye, learned Counsel for the appellant. None appears for Respondents though served. 2 This is an appeal by Insurance Company raising exception to the part of directions contained in paragraphs (B) and (C) of the order passed by Commissioner for Workmen’s Compensation & Judge, Labour Court, Ahmednagar, on 04.08.1993 in Application (WC) No.5 of 1992. 3 It is needless to go into factual details of the matter as the grievance set out by appellant is restricted only so far as issuance of directions issued to the Insurance Company in respect of payment of 50% of the penalty amount to the tune of Rs.22,151/-. While allowing the claim raised by Respondents No.1 to 3 – original applicants, the trial Judge directed the employer and the Insurance Company (Opponent No.3 in the application) to jointly and severally accept the liability in respect of payment of compensation of Rs.44,302/- along with interest @ 6% p.a. on the amount of compensation from 25.09.1990 till realisation and further to pay 50% of the penalty amount i.e. Rs.22,151/- to the applicants. 4 The short question raised in the appeal is whether Insurance Company can be held liable for payment of 50% of the penalty amount as directed by the Commissioner. 5 It is contended by learned Counsel appearing for appellant – Insurance Company that the Insurance Company has expressly agreed to indemnify the employer in respect of statutory liability. It is contended that 3 claim in respect of payment of penalty is not covered by statutory liability which can be fastened against Insurance Company and it is the personal liability of the employer. 6 The point raised in the appeal is squarely covered by the decision of the Apex Court in the matter of New India Assurance Company Ltd. Vs. Harshadbhai Amrutbhai Modhiya, reported in 2006 (5) SCC 192. It is observed by the Apex Court while dealing with a similar question in paragraph 17 of the judgment, thus: “17 Yet again in L.R. Ferro Alloys Ltd, this Court opined that if an amount of compensation is not deposited within a period of one month, the insurance company shall be liable to reimburse the owner only the amount of compensation with interest therefrom but not the penalty imposed on the insured employer for default of payment of amount stating: (SCC pp. 451-452, para 5) 5 The only contention put forth before us is that the entire liability including penalty and interest will have to be reimbursed by the insurance company and this aspect has not been examined by the learned Single Judge in the High Court and needs examination at our hands. In Ved Prakash Garg v. Premi Devi this Court after examining the entire scheme of the Act held that payment of interest and penalty are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment of that amount within one month. Therefore, claim for compensation along with interest will have to be made good jointly by the insurance company with the insured employer. But, so far as the penalty imposed on the insured employer is on account of his personal fault the insurance company cannot be made liable to reimburse penalty imposed on the employer. 4 Hence the compensation with interest is payable by the insurance company but not penalty. Following the said decision and for the reasons stated therein, we modify the order made by the High Court to that extent. The appeal is allowed in part accordingly.” 7 In view of law laid down by the Apex Court, Insurance Company – appellant herein cannot be held liable in respect of payment of penalty as directed by the Commissioner. It is clarified that it is the responsibility of the employer to pay amount of penalty to the applicants, as directed by the trial Court. The directions contained in paragraphs (B) and (C) of the impugned order, in that respect, therefore, needs modification. The applicants can very well press their claim in respect of payment of penalty as against the employer. However, the Insurance Company cannot be made responsible in respect of payment of amount of penalty as directed by the trial Court. 8 Appeal is, thus, partly allowed. The directions contained in paragraphs (B) and (C) of the impugned order in respect of fastening liability of payment of penalty amount to the tune of Rs.22,151/- along with interest thereon, so far as Insurance Company is concerned, is quashed and set aside. The Insurance Company – appellant herein is exonerated in respect of the liability towards payment of penalty amount, as directed by the trial Court. Rest of the decree passed by the trial Court is maintained. In the facts and circumstances of this case, there shall be no order as to costs. (R.M.BORDE) JUDGE ******* adb/fa52993