ORDER :

1. Heard Mr. P.V. Dinesh, the learned counsel appearing for the appellant. Also heard Mr. Amit Kumar Singh, the learned counsel appearing for the insurance company (respondent No. 1).

2. This appeal arise out of the order dated 29.09.2009 in MFA No. 67 of 2006 whereby the High Court has allowed the appeal filed by the insurance company and thereby directed the employer to pay interest on compensation as against the order of the Commissioner directing the insurer, to pay compensation with interest under the provisions of the Workmen’s Compensation Act, 1923 (now, the Employees Compensation Act, 1923) (for short, the ‘Act’). The sole reason offered by the High Court for allowing the appeal is that there is a contractual exception for the insurer, on payment of interest.

3. In this case, the employee was engaged as a Carpenter Helper with the employer. On 19.02.2001, the employee fell down from the second floor of the construction site and suffered serious injuries. He was rushed to the Hospital by the employer where he was treated and undoubtedly, all his hospital expenses were borne by the employer.

4. As the employer was insured with the respondent, on the next day of the accident, the employer reported the accident to the insurance company by letter dated 20.02.2001 and also requested for the claim form. As there was no response, further correspondence were exchanged and at that stage, the employee sent a legal notice seeking compensation from the employer or to take steps with the insurance company, to facilitate payment of compensation to him. As this did not elicit the required response, a claim petition was filed before the Commissioner, Workmen’s Compensation.

5. In course of the proceedings before the Court of the Commissioner for Workmen’s Compensation, Thiruvananthapuram, it was found that the claimant is a workman and that the accident occurred during the course of his employment. The total disability of the workman was assessed at 52% and on that basis, compensation for a sum of Rs.1,80,989/-with 12% interest from the date of the accident was awarded, favouring the employee. Since a valid and existing insurance policy existed, the Commissioner passed on the liability to pay the compensation with interest, upon the insurance company.

6. The insurance company preferred an appeal before the High Court mainly on the ground that liability towards interest on compensation cannot be fastened on the insurance company as the policy excludes liability of the insurer, from paying the interest.

7. The above contention would require us to take note of the relevant terms of the policy:

“Provided that the Insurance granted hereunder is not extended to include:

(i) any interest and/or penalty imposed on the Insured an account of his/their failure to comply with the requirements laid down under the W.C. Act 1923 and

xx xx xx”

8. The Division Bench of the High Court in order to examine the liability of the insurance company bearing in mind the above clause in the insurance contract, adverted to the applicable law on the point and concluded that the insurer does not have any liability to indemnify the insured in respect of the interest, on the determined sum of compensation. The High Court relied on the judgment of this Court reported in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya & Anr., (2006) 5 SCC 192 wherein this Court observed as follows:

“19. As indicated hereinbefore, a contract of insurance is governed by the provisions of the Insurance Act. Unless the said contract is governed by the provisions of a statute, the parti