The distinction between compensation and penalty, and the need for judicious exercise of discretion in imposing penalties.

( 1 ) THIS is an appeal preferred by the Oriental Insurance Co Ltd , Mysore, against the award made by the Commissioner for Workmen's Compensation, Mysore District, Mysore, in W C A cr-2/86-87 dated July 13, 1987, awarding compensation of Rs 44,200. 80 on account of the death of the husband of the claimant and a penalty amounting to 50% of the aforesaid compensation together with interest at the rate of 6% per annum on the compensation awarded and costs of Rs 50.

( 2 ) LEARNED counsel for the insurance company submitted that the provisions of section 95 (1) (b) and section 95 (2) (a) of the Motor Vehicles Act, 1939 (hereinafter referred to as "the M V Act"), are applicable to the facts of the case and that there is no liability on the part of the insurance company to pay any compensation to the claimant in the facts and circumstances of the case. We have examined these provisions and we find that they are not attracted to the facts of this case because of the reason that the accident took place not when the vehicle was in motion but purely in the circumstance that the deceased was trying to remove timber from a stationary lorry and it was in the course of employment that the accident took place thus attracting the provisions of the workmen's Compensation Act, 1923, and not the provisions of the Motor Vehicles Act, 1939.

( 3 ) WE are of the opinion that the provisions of section 12 of the Workmen's Compensation Act are applicable and that the insurance company is liable to pay compensation to the claimant. Section 12 (1) reads as follows :

"where any person (hereinafter in this section referred to as the principal) in the course of, or for the purposes of, his trade or business contracts with any other person (hereinafter in this section referred to as the contractor) for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the trade or business of the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from the principal, this Act shall apply as if references to the principal were substituted for references to the employer except that the amount of compensation shall be calculated with reference to the wages of the workman under the employer by whom he is immediately employed. "

( 4 ) IT is not in dispute that the deceased was the employee of M/s Vasavi Transport, Hunsur town, Mysore District, which is repondent No 4. Since the death occurred while unloading timber from a stationary lorry at the timber depot, the insurance coverage is invoked and the insurance company has to be fastened with liability under the Workmen's Compensation Act and not under the Motor Vehicles Act.

( 5 ) THE quantum of compensation awarded which is Rs 44,200. 80 is not seriously contested as being excessive or unreasonable. The next contention urged by learned counsel for the appellant is that the penalty awarded by the Commissioner for Workmen's Compensation is not sustainable in view of the fact that there was no issue raised on the question; that there was no finding on the issue and the no opportunity was given to the claimants to assign reasons in support of their case for condonation of delay in not making payment of compensation in time. In this regard, learned counsel for the appellant has drawn our attention to the decision rendered in N A K Pathan v julekhabi Pathan, ILR1986 KAR 2413. The relevant paragraph for the purpose of this case on the question of the correctness of the levy of penalty reads thus : "second Part of section 4a (3) deals with levy of penalty, which becomes imposable if, in the opinion of the Commissioner, there is no justification for the delay in paying the amount. The question of justifaction for the delay or the absence of it depends, at least partially, on