The insurance company is not liable to indemnify the assured for penalties arising from clear violation of statutory requirements under the Workmen's Compensation Act.

JUDGMENT :

D.C. Gheewala, J.

1. The present appeal is directed against the order No. 60 of 1983 of the Commissioner for Workmen's Compensation. The present two appellants along with respondent No. 2 the insurance company, were held responsible by the learned Commissioner as the deceased had died during the course of employment of the present appellants. The learned Commissioner, while awarding compensation of Rs. 30,000, also imposed a penalty of Rs. 15,000 and he ordered that the said penalty shall be payable by the present appellants and the insurance company was exonerated from paying the said amount. The appellants have challenged the said order and we heard Mr. Damani, learned advocate for the appellants,at great length. The Bench which was previously seized of this matter, by an order dated October 15, 1985, issued notice to respondent No. 9 while observing that they did not see any reason as to why this court should interfere with the order of penalty. However, when notice was issued in pursuance of the said order of this court, Mr. P. V. Nanavaty appeared for respondent No. 9.

2. We heard Mr. Damani at length and Mr. Damani, in the course of very exhaustive and able arguments, raised the following few contentions for our consideration:

(1) According to Mr. Damani, the learned Commissioner, before passing an order of penalty, should have heard the appellants and in the absence thee of, the order passed by him would be clearly violative of the principles of natural justice.

(2) As the policy issued by respondent, No.9 indemnified the appellants for any liability arising under the Workmen's Compensation Act, the insurance company should have been held responsible even for the amount of Rs. 15,000 imposed by way of penalty.

For the reasons to be now recorded, we feel that none of the raised by Mr. Damani contains any merit and hence the appeal requires to be dismissed at the admission stage.

3. Regarding Mr. Damani's first contention that before passing any order imposing penalty, the appellants should have been heard, it must be said that it is clearly without any substance inasmuch as both the appellants had inter se agreed that appellant No. 2 Gajendra Kantilal Bhatt, will be responsible as the vehicle on the relevant date was running in his name and was running for his purpose. Gajendra Kantilal Bhatt was impleaded as a party in December, 1983. He had, however, chosen to remain absent. Gautam Transport Company also remained absent. If a party is served with a notice of litigation against him but chooses to remain absent, then he cannot be heard making a grievance that he was not heard, because an opportunity was afforded to him but he did not avail of the same. In that view of the matter,in the present case,the contention raised by Mr. Damani requires to be rejected.

4. Mr. Damani tried to refer to section 95 of the Motor Vehicles Act for substantiating his argument that the insurance company would be responsible for indemnifying the insured for the liability under the Workmen's Compensation Act as well. The provision would not be relevant for the purpose of this matter and even if we were to hold that for determining the conditions of the policy, section 95 of the Motor Vehicles Act can be looked into, then also the clear fact that the contract of insurance is a contract of indemnity cannot be lost sight of.

5. The insurance company while issuing an insurance policy only assures that it shall indemnify the assured for all liability which might be springing from the type of risk covered by the insurance policy issued by it. The liability for the penalty arises on account of clear violation of the statutory provisions of the Workmen's Compensation Act and the insurance company cannot be saddled with the responsibility of indemnifying the assured if the assured acts in clear violation of a statutory requirement. The contract of indemnity also necessarily postulated that the person indemnified has to act in a way in which the dama