IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 9TH APRIL 2010 / 19TH CHAITHRA 1932 MFA.No. 294 of 2009() --------------------- WCC.4/2007 of W.C.C.,ERNAKULAM .................... APPELLANT(S): 2ND OPP.PARTY: ---------------------------- NEW INDIA ASSURANCE CO.LTD., PERUMBAVOOR. BY ADV. SRI.RAJAN P.KALIYATH RESPONDENT(S): --------------- 1. PARUKUTTY, W/O.AYYAPPANKUTTY, PARAPPURAM, THURUTHUKANDATHIL HOUSE, PULLUVAZHY POST, PIN-683 541. 2. K.V.SAMUEL, M/S.SAMSON PLY AND BOARDS, PULLUVAZHY POST, PERUMBAVOOR. THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 09/04/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = M.F.A. NO. 294 OF 2009 = = = = = = = = = = = = = = = Dated this the 9th day of April, 2010. J U D G M E N T This is an appeal preferred against the order of the Workmen's Compensation Commissioner, Ernakulam in W.C.C. 4/07. The Compensation Commissioner granted an order for Rs.22,415/- as compensation with 12% interest from 29.9.03 till the date of petition and the liability was cast on the insurance company. 2. The appeal is preferred by the insurance company challenging the interest awarded against the insurance company. The specific contention of the insurance company is that by virtue of the terms and conditions of the policy the insurance company has contracted out and it is not liable to pay interest. In that regard the policy is produced before Court below and it has been marked as well. The policy would reveal that the insurance granted is not extended to M.F.A.. 294 OF 2009 -:2:- include any interest and/or penalty imposed on the Insured on account of his/ their failure to comply with the requirements laid down under the Workmen's Compensation Act, 1923. This exclusion clause has come up for consideration before the Hon'ble Supreme Court of India in the decision reported in New India Assurance Co. Ltd. v. Harshad Bhai Amrutbhai Modhiya (AIR 2006 SC 1926). The Hon'ble Supreme Court held employer while entering into a contract of insurance can therefore act as per his will and can contract out of certain items of his liability such as liability to pay interest. The Hon'ble Supreme Court held that 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 M.V.Act does not have a statutory liability. Therefore in the light of the said decision and as there is a specific term in the contract of insurance M.F.A.. 294 OF 2009 -:3:- whereby the insurance company has contracted out and as his liability to pay interest is excluded the insurance company cannot be saddled with the liability of paying the interest. But it does not mean that the claimant is not entitled to get interest. The claimant is entitled to get interest from the employer. Therefore the order passed by the Compensation Commissioner is modified and it is made clear that the insurance company is only liable to pay the amount awarded as compensation and the interest thereof has to be paid by the employer to the employee. With this modification the MACA is disposed of accordingly. M.N. KRISHNAN, JUDGE. ul/-