THE NEW INDIA ASSURANCE CO LTD., BRANCH OFFICE: 1 ST FLOOR, TUMUR SHOPPING COMPLEX, B.H.ROAD, TUMKUR v. SMT. KALAMMA

((BY SRI. RAVISHANKAR.C.R., ADVOCATE – FOR APPELLANT) (R1 TO R4 ARE PLACED EX-PARTE V/O/DTD:29.03.2023) *** THIS MFA IS FILED U/S.30(1) OF THE EMPLOYEES COMPENSATION ACT, AGAINST THE JUDGMENT AND AWARD DT.01.08.2016 PASSED IN ECA NO.36/2014 ON THE FILE OF THE 2ND ADDITIONAL SENIOR CIVIL JUDGE & MACT, TUMAKURU, AWARDING COMPENSATION OF RS.8,73,880/- WITH INTEREST AT 12% P.A. FROM THE DATE OF THE ACCIDENT FROM RESPONDENTS TILL REALIZATION. THIS MFA COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU - 2 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR I.A.No.1/2018 & I.A.No.2/2018 ORAL JUDGMENT

1. I.A.No.1/2018 is filed by the appellant/Insurance Company seeking condonation of delay of 521 days in filing the appeal.

2. For the reasons stated in the affidavit accompanying the application, I.A.No.1/2018 is allowed. The delay of 521 days in filing the appeal is condoned.

3. The learned counsel for the appellant/Insurance Company seeks to rely upon I.A.No.2/2018 in this behalf to say that the entire issue would rest on the Insurance policy. However, it is contended that since the Panel Advocate had not filed the insurance policy before the learned Trial Court, he has placed the same before this Court, in an application under Order XLI Rule 27 read with Section 151 of the Code of Civil Procedure, 1908, being I.A.No.2/2018.

4. The record reflects that since there was no appearance on behalf of the respondents, the respondents were proceeded with ex-parte by order dated 29.03.2023 passed - 3 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR by this Court. No objections have been filed by any party to this application. Given the issue involved, this policy is necessary and relevant for the adjudication of the present appeal. Accordingly, and for the reasons stated in the affidavit accompanying the application, I.A.No.2/2018 is allowed. The appellant is permitted to produce the certified copy of the insurance policy. The same is taken on record. MFA No.2408/2018

5. The present appeal seeks to challenge a Judgment and Award dated 01.08.2016, in E.C.A.No.36/2014, passed by the learned II Additional Senior Civil Judge and MACT at Tumakuru, (hereinafter referred to as ‘Impugned Award’). The claim petition under Section 10(2) of the Workmen's Compensation Act, 1923 (hereinafter referred to as the “E.C.Act”) has been partly allowed and the compensation in a sum of ₹8,73,880/- has been awarded in favour of the respondent Nos.1 to 3/claimant Nos.1 to 3. With interest at the rate of 12% per annum. - 4 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR

6. As stated above, the respondent Nos.1 to 4 are placed ex-parte, by an order of this Court dated 29.03.2023.

7. The brief facts are that, one Parusappa @ Parashuram, aged about 23 years, was a workman employed with respondent No.4 in a Crusher Unit, situated at Sy.No.9 of Panditanahalli, Devarayapatna, Tumkur Taluk, on a monthly salary of Rs.8,000/-. On 14.11.2012, while he was pulling broken stones from top of the hill to load the same to the vehicle, he lost control and fell down from the top of the hill. As a result, he sustained multiple injuries to his head, hand, leg and vital parts of his body. Immediately, he was shifted to Sridevi Hospital, Tumkur, where he took treatment as an in-patient. However, on the same day, at 5:15 p.m., while under treatment, he succumbed to his injuries in the Hospital. On account of his death, his dependents filed a claim petition, seeking compensation.

8. It was the case of the claimants that the deceased was earning a monthly salary of Rs.8,000/- and was contributing - 5 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR to the income of the family and after the accident, the respondent Nos.1 to 3/claimants have been facing severe financial difficulties. Hence a claim was filed.

9. The matter was contested by the respondent No.4/owner as well as the Appellant/Insurance Company before the learned Tribunal and several defences were raised. However, there was no dispute that the deceased was employed by the respondent No.4/owner.

10. On the basis of the pleadings of the parties, the learned Tribunal framed the following issues: “1. Whether the Petitioners prove that they are legal heirs of deceased Parashirma @ Parasappa S/o. Ramappa?

2. Whether the petitioners prove that the deceased Parashirma @ Parasppa S/o. Ramappa was employee under Respondent No.1?

3. Whether the petitioners prove that deceased Parashirma @ Parasappa S/o. Ramappa succumbed to injuries in an accident/mishap that occurred on 14.11.2012 at Sy.No.9, Pandithanahalli, Devarayapatna, Tumkur Taluk?

4. Whether the petitioners prove that deceased Parashirma @ Parasappa died in the accident that occurred in the course of employment?

5. What is the quantum of compensation petitioner is entitled to and from whom? - 6 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR

6. What Order or Award?”

11. After examining the evidence of the parties, the learned Tribunal awarded compensation in a sum of Rs.8,73,880/- along with interest at the rate of 12% p.a. from the date of the accident. The learned Tribunal also held that the appellant/Insurance Company is liable to pay the compensation amount with interest.

12. Learned counsel for the appellant/Insurance Company submits that he is not challenging the quantum of the compensation awarded and his challenge is only on one aspect. He submits that the appellant/Insurance Company cannot be made jointly liable to pay the interest awarded by the learned Trial Court in terms of the contract between the appellant and respondent No.4/employer in terms of which, this amount is to be paid by the employer/respondent No.4. In this behalf, reliance is placed by learned counsel for the appellant/Insurance Company on the following judgment of the Supreme Court as well as the Division Bench of this Court: - 7 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR i) The Harshadbhai Amruth Bhai Modhiya and another1 Assurance Co.,Ltd., India New v. ii) The Oriental Insurance Co., Ltd, v. Raju and Others.2

13. The substantial question of law that arises in the present case is: “Whether the Court below is justified in fixing the liability to pay interest on the compensation awarded on the appellant Insurance Company?”

14. The learned counsel for the appellant/Insurance Company submits that the insurance policy [workmen compensation policy] dated 25.02.2012 is a policy which provides for an exclusion. It is contended that unlike policies under the Motor Vehicles Act, which are compulsory, the insurer and insured can contract to exclude interest or penalty and that such contract has been entered into.

15. This Court has examined the policy which forms part of contract between the appellant and respondent No.4. The policy, while being in the name of the respondent No. 4, does set out that, in the case of personal injury by accident 1 (2006) 5 SCC 192 2 1992 SCC OnLine Kar 294 - 8 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR or death arising out of the cause of employment, the insured shall be liable to pay for such injury under law, but subject to terms and exceptions contained herein the policy itself. The Policy also provides for an exclusion of the interest and penalty on any such claims. The relevant extract of the policy is set out below: "NOW THIS POLICY WITNESSETH that if any time during the period of insurance any employee in the insured's immediate service shall sustain personal injury by accident or disease arising out of and in the course of his employment by the insured in the Business and if the Insured shall be liable to pay compensation for such injury either under the Laws (s) set out in the Schedule or at Common Law then subject to the terms exception and conditions contained herein or endorsed hereon the Company will indemnify the Insured against all sums for which the insured shall be so liable and will in addition be responsible for all costs and expenses incurred with its consent in defending any claim for such compensation. PROVIDED ALWAYS that in the event of any changes in the law(s) or the substitution of other legislation thereof this policy shall remain in force but the liability of the Company shall be limited to such sum as the Company would have been liable to pay if the Law (s) had remained unaltered. Law(s)

1. The Workmen's Compensation Act, 1923 and subsequent amendments of the said Act, prior to the date of the issue of Policy. 2. The Fatal Accidents Act, 1855. - 9 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR It is hereby understood and agreed that the Workmen's Compensation (Amendment) Acts, of 1959 (8 of 1959, and 1962 (64 of 1962) and 1976 (65 of 1976) and 1984 (22 of 1984) and 1995 (30 of 1995) and 2000 (46 of 2000) and deemed to be added to the Laws set out in the Schedule to the Policy. Provided that the Insurance granted hereunder is not extended to include: (i) any interest and/or penalty imposed on the Insured on account of his/her failure to comply with the requirements laid down under the W. C. Act. 1923 and (ii) any compensation payable on account of occupational diseases listed in part 'C' of schedule III of the W.C. Act, 1923” [Emphasis supplied]

16. The learned counsel for the appellant/Insurance Company submits that the issue involved in the present case is the subject matter of a decision of this Court in the case of The New India Assurance Co. Ltd. Vs. Smt. Kalamma and others3.

17. This Court, in Smt. Kalamma’s case, while examining as to this aspect of the matter, had passed the following directions: “10. The for the appellant/ Insurance Company has also taken us through the learned counsel 3 M.F.A.No.6064/2018 - Order dt.06.02.2026 - 10 - NC: 2026:KHC:10034 MFA No. 2408 of 2018 HC-KAR Insurance Policy (Workmen Compensation Policy), dated 26.07.2016, and its clauses to submit that the policy of insurance is a private policy and unlike the policies in the case of the Motor Vehicles Act, 1988, which provide for compulsory third party policies, this particular policy provides for an exclusion, wherein, the interest or penalty would not be applicable to the account of the insurer, but to the owner of the policy.” xxx xxx “12. The policies of this nature have been interpreted time and again by the Courts. The Supreme Court in the case of Harshadbhai Amrutbhai Modhiya's case, while interpreting this issue, has relied on a judgment of LR Ferro Alloys Ltd.,4 as well as a judgment of PJ Narayan v. Union of India,5 to set out that, the liability including penalty and interest would not be paid for by the Insurance Company, but by the owner himself. The relevant extract of the judgment in the case of Harshadbhai Amrutbhai Modhiya's case is set out below: “14. 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 Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-à-vis the insurer. xxx xxx

16. In Ved Prakash Garg [(1997) 8 SCC 1] this Court undoubtedly held that in terms of the contract of insurance entered into by and between the employer and the insurer under the provisions of the Motor Vehicles Act, 1988, which would also apply in a given case to the claim under the provisions of the Workmen's Compensation Act, the insurer would also be liable for payment of interest stating: (SCC p. 15, paras 12-13)