IN THE HIGH COURT OF HIMACH AL PRADESH, SHIMLA FAO (WCA) No. 54 of 2004 Reserved on: 19.6.2009 Date of decision: 3.8.2009 New India Assurance Company ……………Appellant Versus Smt. Mehandi Devi & others ……………Respondents Coram The Hon’ble Mr. Justice V.K. Ahuja, J. Whether approved for reporting?1 For the appellant : Mr. K.D. Sood, Advocate. For respondent No. 1 to 5 : Ms. Devyani Sharma, Advocate. V.K. Ahuja, J. This is an appeal filed by the Insurance Company, under Section 30 of the Workmen Compensation Act, against the order passed by learned Workmen Compensation Commissioner, Paonta Sahib, District Sirmour, dated 22.10.2003, vide which he awarded a sum of Rs. 97,320/-, as compensation in favour of the claimants alongwith penalty and interest. 1 Whether the reporters of the local papers may be allowed to see the Judgment?Yes. 2 Briefly stated the facts of the case are that a petition under Section 4 of the Workmen’s Compensation Act, hereafter referred to as ‘Act’ was filed by the claimants Mehandi Devi and others, respondents No. 1 to 5 herein, against proforma respondent No. 6, who was impleaded as respondent No. 1 while the Insurance Company i.e. the appellant was impleaded as respondent No. 2. It was alleged by the claimants that deceased Attar Singh was employed as driver by respondent No. 1 in the original petition on the truck bearing No. HR-46-A-0605 and the deceased was getting Rs. 4000/- per month. On 19.4.1998 the said truck was being driven by the deceased and it fell into khud causing injuries to the driver Attar Singh, who died resultantly. The age of the deceased was alleged as 26 years at the time of his death. The petition for compensation was filed by the claimants. Respondent No. 5 owner was proceeded against exparte. The reply was filed by the appellant as respondent No. 2 in which they admitted the factum of the death of deceased in the accident but they pleaded that the salary of the deceased workman was not more than Rs. 1000/- per month and the age of the deceased was over 30 years. The plea was also taken by the appellant 3 in regard to the violation of the conditions of the insurance policy. Learned Commissioner on conclusion of the trial held that the claimants were entitled to a sum of Rs. 97,320/- along with interest @ 9% from the date of the filing of the petition. It was further directed that the amount shall be deposited by the appellant within 45 days from the date of the receipt of the copy of the order, failing which the penalty to the extent of 50% of the amount awarded shall be imposed. The learned Tribunal had taken the income of the deceased at Rs. 1000/- and his age as 36 years and had accordingly granted the compensation. Being aggrieved in regard to the order passed for penalty and interest the appellant/Insurance Company has come up in appeal in the present case. In regard to the penalty, it was submitted by the learned counsel for the appellant that the penalty was not payable by the Insurance Company and the said order passed by the learned Commissioner is not sustainable. However, in my view the said plea is not sustainable since a perusal of the record shows that considering the plea of penalty, the learned Commissioner observed that it was not pressed. 4 Moreover, it has been directed by the learned Commissioner that penalty to the extent of 50% of amount awarded shall be imposed meaning thereby it was never imposed upon the Insurance Company vide impugned order. It was to be imposed up to the extent of 50% but once no direction had been given that it is being imposed and at what rate the Insurance Company was not liable to pay any penalty. Moreover, according to the provision of Section 4-A proviso, no order of penalty shall be passed without giving a reasonable opportunity to the employer to show cause as to why it should not be passed. Once there is nothing to show that any opportunity was given to the employer to show cause that any penalty had been imposed upon the employer or on the Insurance Company, it was not payable. The penalty according to the law is only payable by the employer and not by the Insurance Company and once there was direction to the Insurance Company to pay penalty and at what rate, this plea of the learned counsel for the appellant is not sustainable in the eyes of law and the same is rejected. Coming to the next question in regard to the interest, though this was taken as a ground of appeal that the learned Commissioner has gravely erred in awarding 5 penalty and interest and it was not payable by the appellant Insurance Company. It was urged in the ground of the appeal that there is no statutory liability on the Insurance Company either to pay penalty or interest. However, no specific submissions were made in regard to the interest if it was not payable by the Insurance Company. In my view there is no dispute that the interest is payable @ 12% after amendment by Act No. 30 of 1995. There can be no dispute in regard to the preposition that once the compensation has been awarded in favour of the claimants and it is payable by the Insurance Company. The Insurance Company is liable to pay interest @ 12% according to the amended Act. The main question for consideration is the date of the interest from which it was payable. It has to be seen as to whether the interest was payable after one month of the date of accident or it was payable from the adjudication of the claim put up by the claimants. Learned Single Judge of this Court in Sita Ram vs. Satvinder Singh and another, Latest HLJ 2008 (HP) 1110 had considered this question as to from which date the interest was payable. The Learned Single Judge had referred to a latest decision of the Hon’ble Supreme Court in National 6 Insurance Co. Ltd. Vs. Mubasir Ahmed and another 2007 ACJ 845 wherein it was held that the starting point is on completion of one month from the date from it fell due and the return fell due was interpreted as the date of the adjudication of the claim. However, it referred to a decision of the Constitutional Bench in Partap Narain Singh Deo vs. Shrinivas Sabata and another AIR 1976 Supreme Court 222. It was also held that this decision of the Constitutional Bench appears to have not been referred to before the Hon’ble Apex Court in Mubasir Ahmed case and after considering the law as to which of the decision was applicable, it was held that in case of conflict, the decision of the constitutional bench or the larger bench has to be preferred and accordingly the decision of the Constitutional Bench in Partap Narain Singh Deo (Supra) was relied upon. In coming to this conclusion the learned Single Judge had also placed reliance upon a Division Bench judgment of the Kerala High Court in National Insurance Co. Ltd. Vs. Rekha, 2008 ACJ 886. In that case also the judgment of the Apex Court in Mubasir Ahmed case and earlier decisions were referred to and accordingly it was held that there was no ground to interfere in that part of the order awarding 7 interest from the date of accident. Keeping in view the above decision of the Division Bench of Kerala High Court and the decision of the learned Single Judge of this Court it is clear that in case some provisional compensation had been deposited by the employer within one month of the accident, then the interest would have been payable only from the date of adjudication but once no such compensation was deposited, the interest has to be awarded from the date of the accident and accordingly the order passed by the Workmen Commissioner suffers from an illegality who granted the interest only from the date of adjudication and that to @ 9 % against the statutory provisions of granting of interest @ 12%. There is no substance in the plea raised by the learned counsel for the appellant that since no cross objections were filed by the claimants, they are not entitled to interest from the date of accident or @ 12%. I am not convinced of this submission once the question of penalty and interest has been challenged by the appellant and the claimants are before this court and the question of interest and penalty are being considered and in case the learned Commissioner has not awarded the interest at the statutory 8 rate, this court is not debarred from allowing the plea raised by the claimants during the course of arguments for granting of the statutory interest inspite of the fact that no cross appeal or objections were filed by the claimants. In view of the above discussion, I accordingly hold that the claimants were entitled to interest @ 12% from the date of accident in case no provisional amount had been deposited by the employer. However, in case the amount had been deposited, it shall be payable from the date of adjudication till the date of the deposit. The present appeal filed by the appellant is liable to be dismissed. However, the claimants are entitled to the enhanced interest, as admissible as per law. The appeal is accordingly dismissed. (V.K. Ahuja), 3rd August, 2009 Judge. (vs)