IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL. A.O. No. 275 of 2007 Buta Ram …. Appellant. Vs. The Oriental Insurance Company Ltd. and another …… Respondents. Sri J.P. Joshi, learned counsel for the appellant. Sri Pankaj Purohit, learned counsel for the respondent No.1. Sri Davesh Joshi, Advocate for respondent No.2. Dated: 26-3-2009 Hon’ble B.C. Kandpal, J. This appeal U/S 30 of Workmen’s Compensation Act, 1923, has been preferred by the employer, against the judgment and award dated 5- 6-2007, passed by Workmen’s Compensation Commissioner and Assistant Labour Commissioner, Rishikesh, in WCA No. 5/2003, Ganga Prasad Vs. Buta Singh and another. 2- Brief facts of the case are that petitioner Ganga Prasad was employed as a driver on the vehicle No. U.P. 07-C-9086 owned by Buta Singh. On 19-4-2002, during the course of his employment his right hand was completely damaged, hence he filed claim petition for compensation against the employer and the insured. 3- Notices were issued to the opposite parties on the claim petition filed by the petitioner. 4- The opposite party No.1, owner of the offending vehicle/employer filed his written statement and alleged that the claimant was 2 employed on his truck and he was having valid driving license. He further alleged that the vehicle was insured with Oriental Insurance Company and the insurer is liable to pay the compensation. 5- The Oriental Insurance Company filed its written statement and alleged that the offending vehicle was not having valid registration and its driver was not possessing valid and effective driving license. It was further alleged that an exorbitant amount of compensation has been claimed. 6- On the basis of pleadings of parties, the learned Workmen’s Compensation Commissioner framed following issues in the petition:- 1- Whether on 19-4-2002, Ganga Prasad driver sustained injuries during the course of his employment, due to which he suffered loss in his working capacity?. 2- To what amount of compensation the workman is entitled to get and from whom?. 7- Parties adduced evidence in support of their case. Thereafter, the learned Workmen’s Compensation Commissioner, after hearing learned counsel for the parties and considering the entire material available on record, awarded a sum of Rs. 1,03,135/- as compensation against the Oriental Insurance Company along with interest @ 6% per annum from the date of filing the claim petition till the date of actual payment. At the same time the learned Workmen’s Compensation Commissioner imposed penalty for a sum of Rs. 50,000/- against 3 the opposite party No.1, owner of the offending vehicle/employer. 8- Feeling aggrieved by the aforesaid judgment and order, the owner/employer has preferred this appeal before this Court. 9- Heard learned counsel for the parties and perused the material on record. 10- The short controversy involved in this case is that as to whether the penalty amount of Rs. 50,000/- could be imposed against the employer by the Workmen’s Compensation Commissioner without following the provision of Section 4A(3)(b) proviso without affording an opportunity of being heard or not. The impugned judgment and award nowhere indicates that the Workmen’s Compensation Commissioner while passing the order for payment of penalty against the insured/employer, has afforded any opportunity to the employer, to show cause as to why the penalty should not be imposed against him. 11- In order to resolve the controversy the relevant provision of Section 4-A (3)(b) of the Workmen’s Compensation Act, 1923, is reproduced below:- “4A Compensation to be paid when due 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 4 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 Gazette, 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 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 not be passed. 5 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). (3-A) 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.” 12- It is quite clear from the aforesaid provision that the Workmen’s Compensation Commissioner before passing an order for the imposition of the penalty against the insured/employer shall have to give a reasonable opportunity to show cause as to why the order should not be passed. In the instant case not opportunity has been provided to the employer/insured before imposing the penalty. 13. Therefore, the impugned order passed by the Workmen Compensation Commissioner, imposing the penalty against the employer, is against the provision of law. This court in Appeal From Order No. 171 of 2001, has clearly held that the order of payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause as to why it should not be passed. 14. In view of the aforesaid position, the judgment and award passed by the learned Workmen’s Compensation Commissioner, directing the employer to make the payment of penalty amounting to Rs. 50,000/-, is liable to be set aside. 6 However, it is open for the Workmen’s Compensation Commissioner to pass appropriate order after affording the reasonable opportunity to the employer to show cause as to why the penalty should not be imposed against him. 15. Accordingly, appeal is allowed. The impugned judgment and award passed by the Workmen’s Compensation Commissioner, pertaining to the direction issued against the employer imposing penalty upon him, is hereby set aside. 16. The amount, if any, deposited by the employer before the court below shall be refunded to him. (B.C. Kandpal, J.) ISB