1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA FAO(WCA) No. 137 of 2005 Judgment reserved on: 18.3.2009 Date of decision: 20.3.2009. Sunil Kumar ……….Appellant Vs. Lalita Devi & Ors. ……Respondents Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting?1 Yes For the Appellant : Mr. B.C. Negi, Advocate For the Respondents : Mr. Praneet Gupta, Advocate, for respondent No.5. None for other respondents. Kuldip Singh, Judge. The owner of truck No.HR-38-5777 has filed this appeal against order dated 19.1.2005 passed by Commissioner, Under Workmen’s Compensation Act, 1923 (for short ‘Act’), Kangra in case No.4/2003. 2. The facts, in brief, are that respondents No.1 to 4 are the widow, son, daughter and mother of Surjeet Singh who was driving truck No.HR-39-5777 on 9.5.1999 along with cleaner, the truck met with an accident on 9.5.1999 at Kariyamangalam ( Tamil Nadu ). Surjeet Singh had sustained injuries in the accident, an FIR Whether the reporters of the local papers may be allowed to see the Judgment?Yes 2 No.495/99 dated 9.5.1999 was registered at Police Station, Kariyamangalam. Surjeet Singh was admitted in Dharampuri hospital but he died on 13.5.1999 as a result of accident. The accident took place during the course of employment of deceased on the truck as driver. The deceased was being paid Rs.5,000/- per month salary and Rs.50/- per day as diet expenses, in total the deceased was earning Rs.6500/- per month. The appellant and respondent No.5 had the knowledge of accident but they did not pay any compensation to respondents No.1 to 4 who filed claim petition claiming compensation Rs.5,00,000/-, 50% penalty and 12% interest per annum for not paying the compensation to them. The truck No.HR-38-5777 was insured with respondent No.5 at the time of accident, appellant and respondent No.5 are jointly and severely liable to pay compensation, penalty and interest. 3. The appellant-owner contested the petition and took objections of maintainability, limitation, jurisdiction, the deceased was not driver of the appellant and appellant was not liable to pay any compensation. The plea of lack of notice was also raised. The respondent No.5 insurer also contested the petition and took objections that deceased was not holding valid and effective driving licence, the vehicle was not insured at the time of accident. The deceased did not die during the course of employment of appellant. He was not a workman. The plea of limitation, jurisdiction was also taken. The Commissioner had framed the following issues:- 1. Whether Sh. Surjeet Singh was an employee of Sh. Sunil Kumar respondent No.1? ….. OPP 3 2. Whether the deceased Sh. Surjeet Singh died due to accident and during the course of employment as alleged? …… OPP 3. Whether the deceased Sh. Surjeet Singh was not holding a valid driving licence to drive the vehicle at the time of accident? ……. OPD 4. Whether the vehicle in question was not insured at the relevant time of accident? …..OPD 5. Whether the petition is time barred? .. …OPD 6. Whether this court has no jurisdiction to try the petition under the Workman Compensation Act? ……OPD 7. Whether the petitioner is not entitled for any compensation? …...OPD 8. Relief. 4. The issues No.1 to 7 were decided in favour of respondents No.1 to 4. The Commissioner ultimately held that respondents No.1 to 4 are entitled to Rs.3,02,490/- compensation which is payable by insurer respondent No.5. In addition the respondents No.1 to 4 are also entitled to 12% simple interest from 8.6.99 to 19.1.2005, amounting to Rs.2,03,677/- and penalty amounting to Rs.1,51,245/-, interest and penalty were ordered to be paid by appellant-owner. The compensation, interest and penalty are to be paid within one month from the receipt of copy of the order, if the amount is not paid within stipulated period, simple interest at the rate of 12% per annum on the respective liabilities shall also be paid till the date of deposit. Hence this appeal which has been admitted on the following substantial questions of law:- 4 1. Whether the learned Commissioner has wrongly held the appellant liable for interest? 2. Whether the claimants are entitled for the interest for the period from the date of accident till filing of the claim application? 3. Whether the Ld. Commissioner has wrongly exercised judicial discretion while imposing maximum of 50% penalty Under Section 4-A of the Act in the facts and circumstances of the case? 5. I have heard Mr. B.C. Negi learned counsel for the appellant and Mr. Praneet Gupta, learned counsel for respondent No.5 and have also gone through the record, none appeared for other respondents. Mr. B.C. Negi, in view of Ved Prakash Garg vs. Premi Devi and others (1997) 8 SCC 1 and L.R. Ferro Alloys Ltd. Vs. Mahavir Mahto and another (2002) 9 SCC 450 has fairly stated that the penalty is to be paid by appellant. He has submitted that interest is to be paid by insurer, the Commissioner has erred in awarding full penalty at the rate of 50% of the amount of compensation i.e. Rs.3,02,490/-. He has contended that the Commissioner has not exercised judicial discretion in awarding penalty. Mr. Praneet Gupta, learned counsel for respondent No.5 has supported the impugned order and has submitted that respondent No.5 insurer is not liable to pay any interest on the compensation amount in as much as no notice of the accident was given either by respondents No.1 to 4 or appellant to the insurer. 5 Substantial questions of law No.1 and 2. 6. The substantial questions of law No.1 and 2 are interconnected, therefore, both of them are being taken up together for disposal. Clause (a) of sub section 3 of section 4A of the Act is as follows:- “(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve percent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government , by notification in the Official Gazette, on the amount due”. It is thus clear that in default of payment of compensation within one month from the date it fell due, the employer is liable to pay interest at the rate of 12% per annum or at such higher rate of any scheduled bank. The compensation falls due on the date of accident as held in Pratap Narain Singh Deo v. Shrinivas Sabata and another, AIR 1976 SC 222. In the present case, the accident took place on 9.5.1999 , therefore, compensation fell due on 9.5.1999 but Act provides that if compensation is not paid within one month from the date it fell due then interest shall be payable at such rate as provided in clause (a) of sub section 3 of section 4A of the Act. The Commissioner has awarded interest from 8.6.1999, therefore no fault can be found with the date of commencement of interest. It has been submitted that interest is payable only upto the date of filing of the claim petition not thereafter. The clause (a) of sub section 3 does not provide that the interest is payable only upto the date of filing of the claim petition. On the contrary it does indicate that if compensation is 6 not paid within one month from the date it fell due then employer shall be liable to pay interest at the rate of 12% per annum or at such higher rate of any scheduled bank on the amount due. The Act is beneficial legislation. The purpose of awarding of the interest is not to limit the award of interest upto the date of filing of the claim petition. In these circumstances, the rate of interest and the period of interest as awarded by the Commissioner cannot be said to be illegal. 7. Mr. Praneet Gupta, learned counsel for the respondent No.5 has submitted that the insurer cannot be held liable to pay interest from 8.6.1999 onwards in as much as neither claimants nor owner informed the insurer about the accident. It is not in dispute that the truck in question was insured with respondent No.5. RW.1 Sunil Kumar has stated that he had taken claim of the vehicle from the insurer meaning thereby the insurer had the notice of accident. The insurer in its reply has not pleaded that owner did not inform the accident and death of Surjeet Singh in the accident to the insurer The respondent No.5 has tendered some documents in evidence by way of statement of his counsel dated 18.10.2004 and the evidence of insurer was closed on 18.10.2004 by the order of the Commissioner. In view of the statement of RW-1 that he got the claim from the insurer of the truck, it cannot be said that the insurer was not aware of the accident. In these circumstances, the insurer is liable to pay interest from 8.6.1999. There is substance in the statement of learned counsel for the appellant that in view of Ved Prakash Garg vs. Premi Devi and L.R. Ferro Alloys Ltd. Vs. Mahavir Mahto supra, the interest is to be paid by respondent No.5 -insurer and not by appellant-owner and therefore, liability to pay the interest as held by the Commissioner is 7 modified, it is held that interest on the compensation amount also shall be paid by respondent No.5 insurer . The substantial questions of law 1 and 2 are decided accordingly. Substantial question of law No.3 8. Mr. Negi has submitted that in view of Ved Prakash Garg vs. Premi Devi and L.R. Ferro Alloys Ltd. Vs. Mahavir Mahto supra , the penalty is to be paid by the appellant-owner but, the Commissioner has committed an error of law in directing the appellant to pay full penalty on the compensation amount. He has submitted that the Commissioner has not exercised judicial discretion in awarding penalty. The accident took place on 9.5.1999 and Surjeet Singh had died on 13.5.1999. The petition was filed on 26.9.2002 and was decided on 19.1.2005 but, appellant-owner did not pay any amount to the claimants. The appellant in his reply has even denied that the deceased was his driver. The Commissioner has recorded a finding that the deceased was working on the ill-fated truck. The defence of appellant-owner was not found true. RW-1 Sunil Kumar owner of the truck in his statement has nowhere stated that he had rendered any financial help to the claimants after the death of Surjeet Singh their bread earner. In these circumstances, the appellant has not made out any case for reduction of penalty as awarded by the Commissioner. The substantial question of law No.3 is decided against the appellant. 9. No other point was urged. 10. The result of the above discussion, the appeal is partly allowed. The impugned order (award) is modified only to the extent that interest on the amount of compensation at the rate and for the period as held by the Commissioner shall be paid by insurer- 8 respondent No.5 to respondents No.1 to 4 claimants, rest of the award is upheld and appeal is accordingly disposed of. No costs. ( Kuldip Singh) Judge March 20,2009 (sks)