1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD. FIRST APPEAL NO.263 OF 1995 The United India Insurance Co. Ltd. At 98, Polan Peth, Jalgaon, Through it's Asstt. Divisional Manager at Aurangabad - Authorised Signatory. .... APPELLANT. VERSUS 1) Sou Najabai w/o Topalu Sapkale, Age-Major, Occu:Household, R/o-Sakegaon, Tq-Bhusawal, Dist-Jalgaon. 2) Smt. Sumanbai Topalu Sapkale, Age-Major, Occu:Household, R/o-As above. 3) Kumari Kasubai Topalu Sapkale, Age-Major, Occu:Household, R/o-As above. 4) Bhagwan Topalu Sapkale, Age-Major, Occu:Labour, R/o-As above. 5) Shantaram s/o Latkan Koli, Age-Major, Occu:Business, R/o-At & Post-Sakegaon(Tighase), Tq-Bhusawal, Dist-Jalgaon, 6) Ramdas s/o Shamrao Koli, Age-Major, Occu:Driver, R/o-At and Post- Sakegaon, Tq-Bhusawal, Dist-Jalgaon. .... RESPONDENTS. 2 ... Mr.V.R. Mundada Advocate for the Appellant. Mr.V.Y. Patil Advocate for Respondent Nos 1 to 4. Respondent No.5 served, absent. Appeal against Respondent No.6 abated as per Registrar's order dated 31/3/1998.ty. ... CORAM: K.K. TATED, J. DATE : 14TH JULY, 2009. ORAL JUDGMENT: 1. Heard learned counsel for the Appellant and learned counsel for Respondent Nos. 1 to 4 - original claimants. None for Respondent No.5. Appeal abated against Respondent No.6 as per order dated 31st March, 1998. 2. Present Appeal preferred by original Opponent No.3 against the Judgment and award dated 17th February, 1995 passed by the Commissioner, Workmen's Compensation and Judge, Labour Court, Jalgaon in Application (W.C.) No.11 of 1986. The Respondent Nos. 1 to 4 are original claimants. Respondent No.5 is original Opponent No.1. 3 3. Original claimants filed Application (W.C.) No. 11 of 1986 claiming compensation of Rs.40,087.74 together with costs, and interest at the rate of 18% till realization of the full amount from the date of the accident. The claimants preferred claim petition on 25th March, 1986. The accident took place on 30th June, 1984 in which Subhash died on the spot. The accident took place on the road between Hartale and Bhusawal while the truck was coming to Bhusawal. At that time the opponent No.2 was driving the truck in high speed in rash and negligent manner. The said truck dashed the mile stone on the road side and due to it Subhash was thrown away from the truck and he sustained injuries and he died on the spot. He died due to shock. It is the case of the Insurance Company that they are not liable to pay the compensation to the original claimants because the opponent No.1 denied relationship of employer and employee between himself and deceased Subhash. It is the case of the Insurance Company that Subhash was not working with opponent No.1 and therefore they are not liable to pay any compensation to the claimants. They further submitted that deceased Subhash died due to the shock 4 and not due to the accident and therefore same cannot be covered under the provisions of the Workmen's Compensation Act. They further submitted that the Commissioner for Workmen's Compensation erred in coming to the conclusion that the Insurance Company is liable to pay a sum of Rs.21,000/- plus Rs.8400/- towards the penalty as well as 10% interest from the date of accident till the date of its realization whichever is earlier. 4. Present Appeal is preferred by the Insurance Company under Section 30 of the Workmen's Compensation Act, 1923. Section 30 of the Workmen's Compensation Act, 1923 reads as under: "30. Appeals - (1) An appeal shall lie to the High Court from the following orders of a Commissioner, namely:- (a) an order awarding as compensation a lump sum whether by way of redemption of a half-monthly payment or otherwise or disallowing a claim in full or in part for a lump sum; (aa) an order awarding interest or 5 penalty under section 4-A; (b) an order refusing to allow redemption of a half-monthly payment; (c) an order providing for the distribution of compensation among the dependants of a deceased workman, or disallowing any claim of a person alleging himself to be such dependant; (d) an order allowing or disallowing any claim for the amount of an indemnity under the provisions of sub- section (2) of section 12; or (e) an order refusing to register a memorandum of agreement or registering the same or providing for the registration of the same subject to conditions: Provided that no appeal shall lie against any order unless a substantial question of law is involved in the appeal, and in the case of an order other than an order such as is referred to in clause (b), unless the amount in dispute in the appeal is not less than three hundred rupees: 6 Provided further that no appeal shall lie in any case in which the parties have agreed to abide by the decision of the Commissioner, or in which the order of the Commissioner gives effect to an agreement come to by the parties: [Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against.] (2) The period of limitation for an appeal under this section shall be sixty days. (3) The provisions of section 5 of [the Limitation Act, 1963 (36 of 1963], shall be applicable to appeals under this section." 5. On plain reading of Section 30 of the Workmen's Compensation Act, 1923, it is obvious that although the First Appeal is available against an order passed by the Commissioner before the High Court, the scope 7 of jurisdiction of High Court in such First Appeals is limited. The First Appeal can be entertained only when a substantial question of law is involved in the Appeal and in the case of an order other than the order such as is referred to in clause (b) of Section 1 unless the amount disputed in the Appeal is not less than Rs.300/-. In other words, unless the above two requirements are fulfilled, no First Appeal can be maintained. Further second proviso to Sub section (1) of Section 30 provides that no appeal shall lie in any case in which the parties have agreed to abide by the decision of the Commissioner, or in which the order of the Commissioner gives effect to an agreement arrived between the parties. Considering these facts, I have to consider whether any substantial question of law is involved in the present First Appeal. 6. Learned counsel appearing on behalf of the Appellant Insurance Company submitted that the Insurance Company challenges the impugned Judgment and award passed by the Commissioner on two points i.e. (i) about the quantum, (ii) Penalty and interest. Therefore, in the present case the points for 8 consideration arise as under: "(1) Whether the Tribunal awarded excess compensation payable to the Respondent Nos. 1 to 4 - original claimants? (2) Whether the Appellant - Insurance Company is liable to pay interest and penalty?" 7. With the assistance of learned counsel for the parties, I have gone through the Record and Proceedings of the present case. In any case the Tribunal awarded a sum of Rs.21,000/- to Respondent Nos. 1 to 4 - original claimants. Original claimants specifically stated in their claim petition in Para 1 that: "Deceased Subhash was 22 years old at the time of his death. He was getting daily wages at about Rs. 15 to 20 per day and thus the deceased used to earn near about Rs.450/- or more than than per month." 8. It is well settled principle that even if a 9 person is working on daily wages basis, he is entitled to minimum wages. In the present case, the claimants stated that the deceased used to get Rs.15 to 20 per day, which cannot be on higher side. Not only that the Appellant has not brought any evidence on record to show that deceased was not earning Rs.15 to 20 per day. In any case, this cannot be a substantial question of law involved in the present case and apart from this I hold that the Appellant failed to produce any cogent evidence to show that the compensation awarded by the Commissioner is on higher side. 9. The next submission made by the learned counsel appearing on behalf of the Appellant - Insurance Company that In view of Section 4-A (3) (b) of the Workmen's Compensation Act, 1923, the Insurance Company is not liable to pay interest and penalty on the compensation awarded by the Tribunal. In support of his submission, learned counsel for the Appellant relied on the Judgment in the matter of Ved Prakash Garg vs. Premi Devi and others, reported in 1998 A.C.J. Page 1. The Apex Court in this case held that the Insurance Company which has insured the employer - 10 owner of the vehicle against third party risk and against claims for compensation arising out of proceedings under the Workmen's Compensation Act is not liable for the penalty imposed against the employer. Learned counsel for the Appellant specifically relied on Para 9, 14 and 19 of the Judgment which read as under: "9. Before we deal with the rival contentions and have a look at the divergent view-points expressed by the different High Courts on this question, it will be necessary to keep in view the relevant statutory schemes in the light of which this controversy has to be resolved. The Compensation Act deals with the provisions for payment by certain classes of employers to their workmen of compensation for employment injuries caused by accident. There is no dispute between the parties that the deceased drivers and cleaners in these cases were workmen employed by the appellant-employers. Section 3 of the Compensation Act deals with 'Employer's liability for compensation'. Sub- section (1) thereof lays down that 'if personal injury is caused to a workman 11 by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II'. It is also not in dispute that fatal personal injuries were caused to the workmen by accidents which arose out of and in the course of their employment because of which they were working on the motor vehicles of the appellant employers when they met their end on account of mot accidents. Section 4 of the Compensation act deals with 'Amount of Compensation'. It lays down the statutory scheme for computing the compensation payable in cases of the types of accidental injuries suffered by the workmen concerned. The employer, on a conjoint reading of sections 3 (1) and 4 (1) of the Compensation Act, would be liable to make good the liability for paying compensation to the insured workmen under circumstances contemplated by these provisions. Then follows section 4-A of the Compensation act with which we are directly concerned. It is, therefore, necessary to extract it in extenso. The said section during the relevant time, in 1992, when the accidents were caused read as under: 12 "4-A. Compensation to be paid when due and penalty for default. - (1) Compensation under section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty." 13 The said section was further amended by Act 30 of 1995 with effect from 15.9.1995 and in the amended form it now reads as under: "4-A. Compensation to be paid when due and penalty for default.- (1) Compensation under section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall- (a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such 14 higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specifi3ed by the central Government, by notification in the Official Gazette, on the amount due; and (b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears, and interest thereon, pay a further sum not exceeding fifty per cent of such amount by way of penalty: Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed." A mere look at the aforesaid provision shows that section 4-A deals with the time for payment of compensation as required to be computed under section 4. Sub section (1) thereof mandates that compensation shall be paid as soon as it falls due. Sub-section (2) thereof contemplates a situation wherein the employer though accepting his liability to pay compensation to 15 his injured workman disputes the extent of the claim of compensation and in such a case sub-section(2) enjoins him to make provisional payment based on the extent of accepted liability by depositing it with the Commissioner or payment or paying it directly to the workman. It is obvious that such an obligation of the employer would not arise under section 4-A sub-section (2) if he totally disputes his liability to pay on grounds like the injured person being not his employee or that the accident was caused to him at a time when he was not in the course of employment or that the accident caused to him did not arise out of his employment. If such disputes are raised by the employer then his obligation to make provisional payment under sub- section (2) of section 4-A would not arise and his liability would depend upon the final adjudication by the Workmen's Commissioner at the end of the trial. In that light when sub- section (3) of section 4-A is seen it becomes obvious that once the compensation due under the Act becomes ascertained either provisionally under sub-section (2) or finally on adjudication by the Commissioner and if 16 the employer does not pay the same within one month from the date it thus falls due, the Commissioner can direct under sub-clause (a) of section 4-A (3) interest at the rate provided therein and also penalty as contemplated by sub-clause (b) thereof as per the amended section 4-A (3) of the Compensation Act but even under the unamended section 4-A (3) which applied at the relevant time a clear distinction is made by the legislature between the imposition of penalty by way of a further sum not exceeding fifty per cent of compensation amount and the imposition of interest on the amount of compensation found payable when it is paid within the requisite time as and when fell due. Thus even in the scheme of unamended section 4-A (3) or as per the amended section 4-A (3) read with clauses (a) and (b) thereof, it becomes clear that additional amount of compensation can be levied against the defaulting employer by way of penalty if it is shown that there is no justification for the delay on his part in making good the compensation amount to the claimant. Interest payable on the principal amount, if not paid when it fell due is not considered by the 17 legislature to be a penalty. This is further highlighted by the proviso to section 4-A (3) as substituted by act 30 of 1995 which clearly indicates that a penalty amount under clause (b) cannot be imposed against the employer without giving him reasonable opportunity to show cause. No such show cause notice is contemplated while imposing interest on default of payment of the principal amount on the part of the employer as per section 4-A (3)(a). Absence of this provision is obviously based on the legislative intent that interswt6 on principal amount is not by way of penalty. Therefore, the employer need not be heard in this connection. A simpliciter default in payment of compensation within the time of one month from the ate it fell due would automatically attract the provision for simple interest under section 4-A (3) as per the rate prescribed therein and for such imposition of interest no question of justification for the delay is countenanced by the legislature. But while imposing penalty justification for delay would be a good defence for the employer for meeting such claim for penalty. The same aspect is further highlighted by section 4-A (3) (a) of 18 the Compensation Act as existing on the statute-book at present which shows that the interest payable under sub- section (3) (a) is to be paid to the workman or his dependant while the penalty imposed is to be credited to the State Government. it is in the light of the aforesaid statutory scheme of section 4-A that the question posed for our consideration has to be resolved." "14. On a conjoint operation of the relevant schemes of the aforesaid twin Acts, in our view, there is no escape from the conclusion that the insurance companies will be liable to make good not only the principal amounts of compensation payable by insured employers but also interest thereon, if ordered by the Commissioner to be paid by the insured employers. Reason for this conclusion is obvious. As we have noted earlier the liability to pay compensation under the Compensation Act gets foisted on the employer provided it is shown that the workman concerned suffered from personal injury, fatal or otherwise, by any motor accident arising out of and in the course of his 19 employment. Such an accident is also covered by the statutory coverage contemplated by section 147 of the3 M.V. Act read with the identical provisions under the very contracts of insurance reflected by the policy which would made the insurance company liable to cover all such claims from compensation for which statutory liability is imposed on the employer under section 3 read with section 4-A of the Compensation Act. All these provisions represent a well knot scheme for computing the statutory liability of the employers in cases of such accidents to their workmen. As we have seen earlier while discussing the scheme of section 4-A of the Compensation Act the legislative intent is clearly discernible that once compensation falls due and within one month it is not paid by the employer then as per section 4-A (3) (a) interest at the permissible rate gets added to the said principal amount of compensation as the claimants would stand deprived of their legally due compensation for a period beyond one month which is statutorily granted to the employer concerned to make good his liability for the benefit of the 20 claimants whose breadwinner might have either been seriously injured or might have lost his life. Thus so far as interest is concerned it is almost automatic once default, on the part of the employer in paying the compensation due, takes place beyond the permissible limit of one month. No element of penalty is involved therein. It is a statutory elongation of the liability of the employer to make good the principal amount of compensation within permissible time limit during which interest may not run but otherwise liability of paying interest on delayed compensation will ipso facto follow. Even though the Commissioner under these circumstances can impose a further liability on the employer under circumstances and within limits contemplated by section 4-A(3) (a) still the liability to pay interest on the principal amount under the said provision remains a part and parcel of the statutory liability which is legally liable to be discharged by the insured employer. Consequently such imposition of interest on the principal amount would certainly partake the character of the legal liability of the insured employer to pay the 21 compensation amount with due interest as imposed upon him under the Compensation Act. thus the principal amount as well as the interest made payable thereon would remain part and parcel of the legal liability of the insured to be discharged under the Compensation Act and not dehors it. it, therefore, cannot be said by the insurance company that when it is statutorily and even contractually liable to reimburse the employer qua his statutory liability to pay compensation to the claimants in case of such motor accidents to his workmen, the interest on the principal amount which almost automatically gets foisted upon him once the compensation amount is not paid within one month from the date it fell due, would not be a part of the insured liability of the employer. No question of justification by the insured employer for the delay in such circumstances would arise for consideration. It is of course true that one month's period as contemplated under Section 4-A (3) may start running for the purpose of attracting interest under sub-clause (a) thereof in case where provisional payment has to be made by the insured employer as per 22 section 4-A (2) of the Compensation Act from the date such provisional payment becomes due. But when the employer does not accept his liability as a whole under circumstances enumerated by us earlier then section 4-A (2) would not get attracted and one month's period would start running from the date on which due compensation payable by the employer is adjudicated upon by the Commissioner and in either case the Commissioner would be justified in directing payment of interest n such contingencies not only from the date of the award but also from the date of the accident concerned. Such an order passed by the Commissioner would remain perfectly justified on the scheme of section 4-A (3) (a) of the Compensation act. But similar consequence will not follow in a case where additional amount is added to the principal amount of compensation by way of penalty to be levied on the employer under circumstances contemplated by section 4-A (3)(b) of the Compensation Act after issuing show-cause notice to the employer concerned who will have reasonable opportunity to show cause why on account of some justification on his part for the delay in payment of 23 the compensation amount he is not liable for this penalty. However, if ultimately, the Commissioner after giving reason able opportunity to the employer to show cause takes the view that there is no justification for such delay on the part of the insured employer and because of his unjustified delay and due to his own personal fault he is held responsible for the delay, then the penalty would get imposed on him. That would add a further sum up to 50 per cent on the principal amount by way of penalty to be made good by the defaulting employer. So far as this penalty amount is concerned it