The Oriental Insurance Company Limited Branch Bhatapara v. Balwant Singh Saluja

: Ms. Swati Agrawal, Advocate on behalf of Mr. Pankaj Agrawal, Advocate. For Respondents : None present, though served. {Hon’ble Mr. Justice Naresh Kumar Chandravanshi} Judgment on Board 17/08/2026

#1. This Miscellaneous Appeal has been preferred under Section 30 of the Employees' Compensation Act, 1923 (for brevity, “EC Act, 1923”), calling in question the legality and correctness of the impugned award dated 18.03.2020 passed by the learned Commissioner for Employees' Compensation-Cum- Labour Court, Baloda Bazar, District Baloda Bazar (C.G.) in Case No. 21/E.C.Act/2018/Fatal, whereby compensation of Rs. 7,36,680/- alongwith interest @ 10 % per annum from the date of accident, as well as penalty of Rs.1,00,000/- has been imposed upon the appellant/Insurance Company.

#2. This appeal has been admitted for hearing on 08.10.2024 on following substantial questions of law :- “1. Whether the monthly income of the deceased was wrongly determined as Rs. 8,000/- per month instead of Rs.6,500/- as per the record ?

#2. Whether the Commissioner was justified in awarding compensation of Rs.7,36,680/- alongwith interest @ 10% and penalty of Rs.1,00,000/-, fastening liability on appellant/Insurance Company which is contrary to law and perverse to the record ?

#3. Learned counsel appearing for the appellant/Insurance Company would submit that in claim application, claimants themselves have stated that monthly 3 wages of deceased – Gangram Dhruw was Rs.6,500/-, but Commissioner-cum- Labour Court has assessed his monthly income /wages to the tune of Rs.8,000/-, which is against the claim and evidence of claimants themselves, as such, amount of compensation determined by the Commissioner-cum-Labour Court is on higher side. Likewise, interest @ 10% per annum granted on the amount of compensation is also on higher side. It is next contended that it is settled law that the liability to pay the penalty cannot be imposed upon the insurance company; despite that the learned Commissioner-cum-Labour Court erroneously imposed the liability to pay the penalty on the appellant/insurance company. Hence, she prays that appeal may be allowed and the amount of compensation granted in favour of claimants may be reduced suitably.

#4. Despite service of notice to respondents, neither they present nor represented by any counsel, whereas Vakalatnama has been filed on behalf of respondents No. 1 to 4.

#5. Heard counsel for the appellant and perused the impugned award including record of the learned Commissioner-cum-Labour Court.

#6. Though, in a claim application under Section 22 of the EC Act, claimants as well as Rajim Bai, who is wife of deceased – Gangaram Dhruw, have stated that monthly income / wages of deceased was of Rs.6,500/-, but it is seen in practical life that sometimes employers pay lower wages to the employees, which is not sustainable in law.

#7. Learned Commissioner-cum-Labour Court has assessed monthly income of the deceased to the tune of Rs. 8,000/- as per minimum wages declared by Labour & Employment Ministry, which was published in Gazette of 31.05.2010, whereas, the deceased died in an accident on 21.2.2014, therefore, assessing income of deceased to the tune of Rs. 8,000/- per month cannot be said to be on 4 higher side, as it is based on the minimum wages declared by the Government. Likewise, granting interest @ 10% per annum on the amount of compensation is also not found to be arbitrary, hence, finding recorded by learned Commissioner -cum-Labour Court in this regard also deserve to be and are hereby affirmed.

#8. So far as saddling liability of payment of penalty upon appellant / Insurance Company is concerned, the same is not found to be sustainable, rather, the employer is liable to pay the penalty, as has been contemplated in Section 4(A) 3(b) of the EC Act, 1923.

#9. Hon'ble Supreme Court in the matter of New India Assurance Co. Ltd. vs. Rekha Chaudhar & Ors. 1 has held that insurer is liable to indemnify the owner only in respect of the compensation alongwith interest thereon and not the penalty. For the sake of convenience, paragraphs 24& 25 of the said judgment are extracted below :- “24. This court in Sheela Devi and Another v. Oriental Insurance Company Limited & Another2 wherein one of us was part of the bench (Justice Aravind Kumar) while dealing with a supplementary question of reduction of penalty amount had reiterated the view taken by this court in Ved Prakash Garg vs. Premi Devi3 and observed that: “10. It is settled law that statutory penalty which is imposed upon the employer under section 4-A(3) (b) of the Act is not to be indemnified by the Insured. In Ved Prakash Garg (supra), this court has held that the Insurance company shall compensate the Insured- Employer for the principal amount of compensation as well as interest thereon, however, in case of any 1 Civil Appeal No. 174 of 2026, decided on 23.02.2026 2 3 2025 SCC Online 827 1997 (8) SCC 1 5 additional amount of compensation is awarded by the commissioner by way of penalty, the same would be the liability of the Insured-employer alone and not of the Insurance Company. The decision in Ved Prakash Garg (Supra) has been followed in L.R. Ferro Alloys Ltd. v. Mahavir Mahto4 holding that the Insurer is liable to indemnify the owner only for the compensation along with Interest thereon and not the penalty imposed on the employer for default in payment of amount within one month from the date of incident. In view of the above, the direction of the High Court, fixing the liability to pay statutory penalty on the Employer only, requires no interference from this court.”

#25. Hence, in the light of aforesaid discussion, we are of the considered view that the present Appeal deserves to be allowed. Accordingly, it stands allowed. Consequently, the Impugned Judgement and Order dated 21.05.2025 passed in F.A.O No. 147 of 2021 is set aside, so far as it imposes the liability of paying the penalty under Section 4A(3)(b) of Employees’ Compensation Act, 1923 on the Appellant-Insurance Company and the said liability is fastened upon the Employer i.e., Respondent no. 4 herein to pay the amount of penalty of Rs. 2,57,838/- (Two Lakhs Fifty-Seven Thousand Eight Hundred Thirty-Eight Rupees Only) as Ordered by the Commissioner by Order dated 08.02.2021 within a period of eight (8) weeks from today. Rest of the findings of the High Court remains undisturbed.” 4 (2002) 9 SCC 450 6

#10. In view of the aforesaid legal position laid down by the Supreme Court, it is evident that the liability of the Insurance Company is confined only to indemnify the employer in respect of the compensation amount along with interest thereon, and not the penalty imposed under Section 4A(3)(b) of the EC Act, 1923.

#11. In the instant case, the learned Commissioner-cum-Labour Court has imposed the penalty upon the appellant / Insurance company, which is unsustainable in law, as has been mentioned above.

#12. Accordingly, the impugned award dated 18.03.2020 passed by learned Commissioner-cum-Labour Court, Baloda Bazar, District Baloda Bazar in Case No. 21/E.C.Act/2018/fatal is set aside only to the limited extent whereby the liability to pay penalty of Rs. 1,00,000/- has been imposed upon the appellant/ Insurance Company. Since the employer is liable to pay penalty as per Section 4(A)(3)(b) of the EC Act, 1923, therefore, it is directed that penalty of Rs.1,00,000/- imposed by the impugned award shall be payable by the employer/ respondent No. 5 – Balwant Singh Saluja. Liability of remaining part of the impugned award is upheld.

#13. Thus, the substantial question of law No. 1 is answered in “negative” i.e. in favour of the claimants and against the appellant/Insurance Company. As regards the substantial question of law No. 2, first part i.e. awarding ‘compensation’, ‘interest’ and ‘penalty’ is answered in “affirmative”, however, second part i.e. imposing penalty upon the appellant / Insurance is answered in “negative” i.e. in favour of the appellant / Insurance Company and against the respondent No. 5 / employer.

#14. Appellant/insurance company is entitled to recover the amount of penalty deposited by it & disbursed to the claimants, if any, from the employer/ 7 respondent No. 5 by filing execution petition before the concerned Commissioner-cum-Labour Court.

#15. Resultantly, the appeal is allowed to the extent indicated herein-above.

#16. Pending interlocutory application (s), if any, stands disposed of. AMIT KUMAR DUBEY KUMAR DUBEY Sd/- (Naresh Kumar Chandravanshi) Judge