( 1 ) THE short question involved in this appeal filed by the appellant-insurer is, whether the liability of the insurance Company arising under the workmen's Compensation Act extends to payment of the Principal amount of compensation computed by the Commissioner for workmen's Compensation and interest levied under Section 4-A (3) (a) of the Workmen's compensation Act.

( 2 ) IN the instant case, the Commissioner for Workmen's Compensation having noticed that both the insurer and the insured have failed to deposit the compensation amount to which the claimants were entitled within the prescribed period, has directed both the insured and the insurer to pay interest at the rate of 6% p. a. on the principal amount of compensation computed under Section 4-A (3) (a)of the Workmen's Compensation Act. The appellant-Insurance Company is aggrieved by that part of the order whereby the Commissioner has directed the Insurance Company to pay the interest at 6% p. a. on the principal amount of compensation.

( 3 ) THERE is no dispute regarding the quantum of compensation payable and all that has to be considered is whether the appellant -Insurance Company is liable to pay the interest.

( 4 ) LEARNED counsel for the appellant-Insurance company has vehemently contended before us that the Commissioner has erred in directing the Insurance Company to pay interest at 6% p. a. even though it had not contracted with the insured to pay any interest under the terms of the Policy. He contended that the appellant-Insurance Company is liable to indemnify the insurer only to the extent of the compensation amount payable under Section 4 of the Workmen's Compensation Act and not the interest thereof. He further contended that there is a specific condition in the Policy that the appellant-Insurance company is not required to indemnify the insured in respect of any interest or penalty. While elaborating this contention, he contended that the liability of the Insurance Company in the case at hand is contractual and not statutory under the Workmen's Compensation act and hence, when there is specific condition in the Policy that the appellant is not required to indemnify the insured in respect of any interest, the Commissioner was not justified in directing the Insurance company to pay the interest imposed on the compensation amount awarded to the claimants. He also contended that in the written statement filed by the appellant-Insurance Company before the Commissioner, it has specifically contended that it is not liable to pay interest and that further, its liability is as per the terms and conditions of the Insurance Policy and that even the Insurance Policy, which was produced in the case by the insured himself would contain an endorsement to the effect that "it is hereby understood and agreed that the cover provided under the Policy shall not extend to indemnify the insured in respect of any interest and/or penalty which may be imposed on him/them on account of his /their failure to comply with the requirements laid down under the Workmen's Compensation act, 1923, and subsequent amendment of the said Act. " Therefore, he contended that the terms and conditions of the policy makes it clear that there was no contractual liability for the insurer to pay the interest imposed on the compensation amount awarded by the Commissioner.

( 5 ) IN support of his submissions, the learned counsel for the appellant has placed reliance upon a decision of this Court in the case of Oriental Insurance Company Limited v. Raju and others reported in ILR 1993 Kar. 2247 : 1994 (1) ACJ 191 and he further contended that the said decision found favour with the Hon'ble Supreme Court in the case of Ved prakash Garg v. Premi Devi and others, reported in 1998 ACJ page 1 : (AIR 1997 SC 3854 ). A reliance was also placed upon a decision of the Hon'ble Supreme Court in the case of P. J. Narayan v. Union of India and others reported in 2004 (1) ACJ page 452.

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