IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA: FAO.No.82/2004. Date of Decision: 4th November ,2008. National Insurance Company. …Appellant. Versus: Karnail Singh. …Respondents Coram: The Hon’ble Mr.Justice Sanjay Karol, Judge. Whether approved for Reporting?1 Yes. For the appellant: Ms. Sunita Sharma, Advocate. For Respondent-1. Ms.Archana Dutt, Advocate. Sanjay Karol, J(Oral) . The appeal was admitted on the following substantial question of law: “Whether order dated 11.8.2003 of Commissioner Workmen’s Compensation Act (SDM) Paonta Sahib imposing penalty of 50% upon the appellant-Insurance Company for non-payment of the amount of compensation is valid and legal or not?.” The present appeal has been filed by the National Insurance Company on a limited ground, therefore, facts necessary for adjudication of the appeal are given as under: The claimant Karnail Singh filed a petition under Section 4 of the Workmen’s Compensation Act claiming compensation for the injury which he received while checking truck bearing registration No. HP-0IA-9795 belonging to Shri 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 2 Rajinder Pal Singh. The claimant driver sustained injury on 7th March, 1998 and had to be hospitalized from 7th March, 1998 up to 11th March, 1998 to undertake medical treatment. The police also took cognizance of the incident. The owner filed its reply admitting the claimant to have been employed by him as his driver but, however, took a stand that the liability to pay the compensation was that of the Insurance Company as the vehicle was insured at that time. The Insurance Company pleaded breach of the policy. To prove its case the claimant examined Dr.Dinesh Bhandari (PW-1), Head Constable Sh.Jeet Ram (PW-2), eye witness Sh. Balbir Singh (PW-3) and himself as PW-4. Based on the pleadings of the parties, the medical record Ext.PW-1/A and the medical bills Ext.P-2 to Ext.P-7 the injury and the medical treatment received by the claimant was proved. Considering that the claimant possessed an effective and valid driving license, it was observed that the terms and conditions of the policy were not breached. Consequently compensation of Rs. 25,000/- was awarded in favour of the petitioner. The operative portion of the award is reproduced as under: “Keeping in view the above discussions, I am of the opinion that respondent No.1 and 2 are jointly and severally responsible to pay a sum of Rs.25,000/- incurred by the petitioner on his 3 3 medical treatment at Dr.D.K.Bhandari, Hospital, Vikas Nager (Uttranchal). It is therefore, ordered that respondent No.1 and 2 jointly and severally shall pay the above compensation to the petitioner. The amount above shall be deposited by the respondents No.1 and 2 with this court within a period of 45 days from the date of receipt of copy of this order failing which the penalty to the extent of 50% of the amount awarded shall be imposed. A copy of this order be sent to the respondents. The file after due completion be consigned to G.R.R. Nahan”. The apex Court in L.R.Ferro Alloys Ltd. Vs. Mahavir Mahto and another (2002) 9 SCC 450, after referring to and relying upon the earlier decision rendered by the apex Court in Ved Prakash Garg Vs. Premi Devi (1997) 8 SCC 1, has held as under: “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 4 4 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. 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.” (Emphasis supplied) Even this Court in Ram Dulari Kalia V H.P. State Electricity Board and another,ILR 1986 H.P.842 has held that the employer is liable to pay the amount and if it is not paid within one month from the date it fell due, the Commissioner shall 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, also pay a further sum of such penalty as may be imposed. Ved Parkash Garg (supra) and L.R.Ferro Alloys Ltd. (supra) were later considered by the apex Court in New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya and another (2006) 5 SCC 192 and the ratio of law laid down by the court holds good even now. Thus the amount of penalty shall be paid by the employer and not the Insurance Company. The question of law is answered accordingly. Ms.Sunita Sharma learned counsel for the appellant, at the time of hearing further argued that the 5 5 amount awarded towards reimbursement of medical expenses incurred by the claimant was not covered within the ambit and scope of the Workmen’s Compensation Act, 1923. The issue which is now sought to be urged was neither raised nor pressed either at the time of the admission of the appeal or even subsequently thereafter till the matter came up for final hearing today. Keeping in view the paltry sum involved, I am not inclined to consider the same at this stage. For the aforesaid reasons, the question is answered and the appeal is disposed of as such. (Sanjay Karol), Judge. November 4, 2008(R)