1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD FIRST APPEAL NO. 452 OF 1994 National Insurance Company Ltd., having its registered Office, 3, Middleton Street, Calcutta 700071, Branch Office at Rajendra Prasad Road, Jalna and Divisional Office at Aurangabad. .. Appellant Versus 1. Lilabai W/o Pandurang Misal, Age : 28 Years, Occu : Labour, R/o Chandanzira, Jalna. 2. Bhikaji S/o Asaram Misal, Age : 60 Years, Occu. : Nil, R/o as above. 3. Ababai W/o Bhikaji Misal, Age : 50 Years, Occu. : Household, R/o as above. 4. Rajubai D/o Bhikaji Misal, Age : 35 Years, Occu : Nil due to blindness R/o as above. 5. Sandip S/o Pandurang Misal, Age : 10 Years, Occu. : Nil, Minor under the guardianship 2 of respondent No. 1 R/o as above. 6. Balu S/o Pandurang Misal, Age : 06 Years, Occu. : Nil, Minor under the guardianship of respondent No. 1 R/o as above. 7. Kum. Manda D/o Pandurang Misal, Age : 04 Years, Occu. : Nil, Minor under the guardianship of respondent No. 1 R/o as above. 8. Nandu S/o Pandurang Misal, Age : 02 Years, Occu. : Nil, Minor under the guardianship of respondent No. 1 R/o as above. 9. Ravindra Shankar Agrawal, Age : Major, Occu. : Business and proprietor/owner of Agro. Chemicals Company, M.I.D.C. Area, Jalna-Aurangabad Road, Jalna, Residence at Shri Colony College Road, Sadar Bazar, Jalna. .. Respondents Shri D. S. Kulkarni, Advocate h/f Shri S. L. Kulkarni, Advocate for the Appellant. Shri Jayant Chitnis, Advocate for Respondent Nos. 1 to 8. Shri Nikhil S. Jaju, Advocate h/f Shri A. S. Bajaj, Advocate for the Respondent No. 9. 3 CORAM : N. D. DESHPANDE, J. DATE : 08TH JULY, 2010. ORAL JUDGMENT : . Heard Shri D. S. Kulkarni h/f Shri S. L. Kulkarni, learned counsel for the appellant, Shri Jayant Chitanis, learned counsel for respondent Nos. 1 to 8 and Shri Nikhil S. Jaju, learned counsel h/f Shri A. S. Bajaj, learned counsel for the respondent No. 9. 2. The present appeal is arising out of an award for payment of compensation to victim Pandurang Misal in a fatal accident under Section 4 of the Workman's Compensation Act. The appellant National Insurance Company Ltd. alone has preferred this appeal against the aforesaid impugned judgment and award of Rs. 65,264/- with interest and penalty. 3. Perused the impugned judgment and award dated 21.04.1994 passed by the learned Civil Judge Senior Division, Jalna i. e. Commissioner for Workmen's Compensation in W.C. No. 02/1992 under the Workmen's Compensation Act. 4 4. The material facts giving rise to a claim, can be briefly stated as under : At the material time deceased Pandurang Misal was employed as driver by Ravindra Shankar Agrawal who is respondent No. 9 on his truck No. MHB-6721. Said truck was transporting "Sulfuric acid" from Jalna to Udgir. On the fateful night intervening 16/17th April, 1992, it met with an accident on Nalegaon-Nilanga road. The said truck dashed against a road side bridge and met with an accident and caught by fire. The said accident proved fatal for the driver Pandurang Misal and cleaner of the truck namely Ajay Agnihotri who sustained serious burn injuries, narrowly escaped. 5. The legal heirs of deceased driver Pandurang Misal filed a claim petition W. C. No. 02/1992, before the Commissioner for Workmen's Compensation at Jalna for compensation of Rs. 3,00,000/-. However, the petition was allowed for Rs. 65,264/- plus interest. 6. The said truck was insured with the appellant and therefore, the appellant National Insurance Company Ltd. preferred present first appeal U/Sec. 30 of Workmen's Compensation Act, 1923, mainly on the ground that the vehicle 5 in question was not holding the permit to carry the sulfuric acid and there was breach of policy. 7. Heard both the sides. Learned counsel for the respondents has rightly pointed out that Insurance Policy was comprehensive and was valid at the material time i. e. during the period 18.07.1991 to 17.07.1992. As such, the truck owner and the employer/respondent No. 9 are covered under the policy, to be indemnified by the Insurance Company for compensation awarded as per the impugned judgment and award, although the impugned award is passed jointly and severally against them. 8. In that view of the matter, during the course of argument, learned counsel for the Insurance Company therefore, mainly argued the appeal on the point of penalty and interest. It is also stated that the appellant has already deposited an amount of Rs. 65,935/- in this Court and it was further argued that for the penalty for default in the matter of compensation to be paid U/Sec. 4A, there was no opportunity given to the employer, so also the Insurance Company before impugned order of penalty came to be passed. The relevant Section 4A is reproduced as under : 4A. COMPENSATION TO BE PAID WHEN DUE 6 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 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 Gazettee, 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 7 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 nto be passed. Explanation : For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934). (3A) The interest payable under sub- section (3) shall be paid to the workman or his dependant, as the case may be, and the penalty shall be credited to the State Government. 9. Learned counsel for the Insurance Company, Shri Kulkarni also placed reliance on the judgment of the Apex Court reported in 2004 ACJ 452 P. J. Narayan V. Union of India and others Workmen's Compensation Act, 1923, Section 4- A (3)(a)-Interest-Liability of insurance company-whether insurance company is statutorily liable for payment of interest on the 8 amount of compensation-Held; no; it is the liability of the employer; clause in the policy that insurance company will not take on liability for interest held valid. 10. It is thus observed that an insurance is a matter of contract between the insurance company and the insured. It is always open to the insurance company to refuse policy to insurer. Thus, in the absence of any statute to that effect, insurance company cannot be forced by Courts to take on liabilities which they do not want to take on. In the light of said judgment, learned counsel Shri Kulkarni for the Insurance Company urged to modify the award to the extent of interest and penalty. However, on merits there is no case made for breach of policy. It is also stated that there is no challenge or any appeal by an employer. Present appeal is filed by the Insurance Company alone. 11. On the point of penalty as joint and several liability, learned counsel Shri Jaju for the employer also stated that there was no opportunity of hearing given to him before an order directing imposition of penalty came to be passed against the employer. It is also pointed out that Section 4-A (3-A), the 9 interest payable U/Sec. 3 shall be paid to the Workman and the penalty shall be credited to the State Government. Thus, the payment of penalty or challenge to the penalty is of no profit or loss or gain, to the claimant and, therefore, it cannot be considered as a claim by the respondents/claimants whose interest is only to the extent of amount of award and interest thereon. The quantum is not challenged by the claimants/respondents No. 1 to 8. 12. It is seen from record that the insurance company has deposited the amount of compensation. Upon consideration of record and after hearing both the sides, the arguments of learned counsel for the appellant and the respondent No. 9/employer needs to be accepted on the point of penalty since there was no opportunity given to them before passing the award, or show cause was issued. 13. Thus, the impugned judgment and award to the extent of payment of compensation and interest calls for no interference. Hence this order O R D E R 1. The direction/order of penalty of Rs. 10 32,632/- in W.C. No. 02/1992 is quashed and set aside. 2. The appeal is partly allowed with no order as to costs. 3. Needless to state that the respondent Nos. 1 to 8 are entitled to the compensation in equal share. The amount deposited in this Court shall be remitted to the Civil Court Senior Division, Jalna for payment to the claimants/respondents as per their share. The first appeal is disposed of. [ N. D. DESHPANDE, J.] bsb/July 10