FA/3631/2006 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 3631 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE KS JHAVERI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? -Yes. 2 To be referred to the Reporter or not ? -No. 3 Whether their Lordships wish to see the fair copy of the judgment ?-No. 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?-No. 5 Whether it is to be circulated to the civil judge ?-No. ========================================================= NEW INDIA ASSURANCE CO LTD - Appellant(s) Versus GADHVI VIPULDAN GOPENDRADAN & 1 - Defendant(s) ========================================================= Appearance : MR HASMUKH THAKKER for Appellant(s) : 1, MR SANDEEP N BHATT for Defendant(s) : 1, RULE SERVED for Defendant(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE KS JHAVERI Date : 29/08/2008 ORAL JUDGMENT 1. This appeal is directed against the judgement and order dated 23/2/2005 passed by the learned Workman Compensation FA/3631/2006 2/4 JUDGMENT Commissioner, Kutch in W.C. Application No.372 of 1996 whereby the learned Commissioner has allowed the application of the applicant and the claimant has been awarded a total sum of Rs.60,000/- along with interest at the rate of 9%. 2. The case of the applicant is that applicant was working with opponent no.1 as a Carpenter. On 21/1/1996, while he was on duty, he has got fractured due to fall from building. The applicant was earning Rs. 2,500/- per month. Opponent no.1 has got insurance of the applicant from opponent no.1. According to the applicant, under the said circumstances, the opponent no.2 is liable to pay compensation with interest and penalty. Therefore, the applicant has filed application for compensation wherein the Commissioner has passed the aforesaid award. 3. The present appeal has been filed on the ground that opponent no.2-insurance company has not been held liable for the amount of compensation as well as the amount of penalty and interest. 4. Heard learned counsel for the respective parties. The issue involved in this appeal is squarely covered by a decision of the Apex Court in the case of New India Assurance Co. Ltd. V. Harshadbhai Amrutbhai Modhiya, reported in 2006 AIR SCW 2352 in paras 14, 15 and 21 it is held as under: FA/3631/2006 3/4 JUDGMENT 14. By reason of the provisions of the Act, an employer is not statutorily liable to enter into a contract of insurance. Where, however, a contract of insurance is entered into by and between the employer and the insurer, the insurer shall be liable to indemnify the employer. The insurer, however, unlike under the provisions of the Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-a-vis the insurer. 15. The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimize his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment of interest by an employer, therefore, is not prohibited in law. 21. For the reasons aforementioned, the impugned judgement cannot be sustained. It is set aside accordingly. The appeal is allowed. The appellant is not liable for the interest. However, we make it clear that the employer shall be liable to pay the amount of interest to the claimant. In the facts and circumstances of the case, there shall be no order as to costs.” 5. In view of the above decision, the insurance company can be held liable only for the amount of compensation payable to the original claimant but no liability qua interest and penalty on the compensation can be fastened upon the respondent no.2 Insurance Company. 6. In the premises aforesaid, the appeal is, partly allowed. The FA/3631/2006 4/4 JUDGMENT amount of compensation shall be paid by the insurance company. It will be open to the employee to recover the balance amount from the employer. The amount deposited by insurance company, if withdrawn by the claimant then it may be recovered from insured- employer. If it is not withdrawn then it may be refunded to insurance company. The award of the Tribunal is modified accordingly. No order as to costs. (K.S. JHAVERI, J.) (ila)