Back
2025 Supreme(Ker) 1963
IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.A. ABDUL HAKHIM, J.
United India Insurance Co. Ltd., Represented By Its Authorized Signatory – Appellant
Versus
Annamma Ninan, W/o. Late Mathew Ninan and Ors. – Respondents
MFA (ECC) No. 1 of 2025
Decided On : 08-07-2025
For the Appellant : Smt. S. Jayasree, Smt. R. Meera.
For the Respondents: Sri. Gigimon Issac, Sri. B. Ashok Shenoy, Shri. Tobias Togi Mathew, Sri. P.S. Gireesh, Shri. Arjun R Naik, Shri. Umasanker U.U., Shri. Aditya A. Shenoy.
IMPORTANT POINT
Insurance liability extends to interests on indemnification where defaults in payment occur, even under subcontractor conditions.
Headnote:
(A) Employee's Compensation Act, 1923 - Section 4A - Insurance Policy Exclusions - Liability for compensation to employees under subcontractors - The court examined the exclusion clause in the policy, determining coverage exists for skilled workers and liability for interest follows from default in payment by the insurer. (Paras 9 , 10 , 21 )
(B) Compensation Payment - The court addressed whether the insurer holds liability for interest based on policy terms, concluding that failure to process claims dictates insurer's responsibility.
Facts of the case:
The Applicants sought compensation for the death of a workman from a fall, entitling compensation with interest and funeral expenses under the claim settled by the Commissioner.
Findings of Court:
The court affirmed the insurer's liability to pay based on the inclusion of skilled workers in the policy, ruling against the appellant's claims of exclusion.
Issues: The main issue was whether the insurer was liable for interest despite policy exclusions regarding subcontracted employees.
Ratio Decidendi: The court ruled the policy must be construed to ensure that skilled workers are covered, specifying the employer's defaults oblige the insurer to compensate, including interest for delays.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. insurance coverage for compensation is established. (Para 1 , 2) |
| 2. arguments revolve around policy terms and exclusions. (Para 6 , 7) |
| 3. court examines exclusion and default aspects of policy liability. (Para 8 , 9 , 12 , 13 , 19 , 20) |
| 4. liability confirmation and consequent interest obligations outlined. (Para 10 , 11) |
| 5. the appeal found lacking merits and thus dismissed. (Para 21) |
JUDGMENT :
(M.A. ABDUL HAKHIM, J.)
1. The Appellant is the 3rd Opposite Party/Insurance Company in the Application before the Employees Compensation Commissioner. Respondents 1 and 2 are the Applicants who are the dependents of the deceased workman. The Respondents 3 and 4 are the 1st and 2nd Opposite Parties who are impleaded as the employer.
2. The Applicants sought compensation for the death of the workman on 27.11.2015 on account of a fall from the second floor of the new apartment project of the 1st and 2nd respondents. The Commissioner, as per the impugned order, found that the Applicants are entitled to a compensation of Rs.4,40,560/- with interest at the rate of 12% per annum from the date of accident till the date of payment/realization and Rs.10,000/- towards funeral expenses.
3. Even though the 3rd Opposite Party contended that they have no liability to pay interest and penalty to the Applicant as per Ext.R1 Certificate of Insurance issued to the respondents 1 and 2, the Commissioner found that the 3rd Opposite Party is liable to pay the compensation and the 3rd opposite party was directed to pay the compensation, interest and funeral expenses.
4. This Court admitted this Appeal on the following substantial questions of law:
i. Whether the Commissioner is justified in directing the 3rd opposite party/Insurance Company to pay the compensation, when the policy does not cover the employees employed through sub contractor?
ii. Whether the Commissioner is justified in directing the 3rd opposite party/Insurance Company to pay the compensation without considering specific contention from the part of the 3rd opposite party that the deceased was not an employee of the 1st opposite party and the deceased was an employee of a contractor by name Gopalakrishnan?
5. I heard the learned counsel for the Appellant, Smt.Jayasree S., and the learned counsel for Respondents 1 and 2, Sri. Gigimon Issac and the learned counsel for the Respondents 3 and 4, Sri. Ashok Shenoy.
6. The learned counsel for the Appellant contended that in the Exclusion Clause in Ext.R1 Insurance Policy, the liability of the insured for the person employed in the business under a contractor or sub-contractor of the insured is specifically excluded. It is revealed from the evidence that the deceased was employed through a sub- contractor and hence the 3rd Opposite Party is not liable to pay compensation for the death of the workman. The learned counsel further contended that in the Exclusion Clause in Ext.R1 Insurance Policy, interest or penalty imposed on the insured under any law is specifically excluded. Hence, the Appellant/3rd Opposite Party is not liable to pay interest for the compensation awarded. The learned counsel relied on the decision of the Hon’ble Supreme Court in Kunnel Engineers and Contractors Private Limited v. New India Assurance Company Limited and Another [(2023) 15 SCC 776] and the decision of this Court in National Insurance Co. Ltd. v. Usha [2023 KHC 9219] in support of her contentions.
7. On the other hand, the learned counsel for the Respondents contended that on account of the indemnification clause provided in Ext.R1 Policy, it is for the insurer to pay the compensation directly to the employee or to the dependents of the employee and it is not a question of payment by the employer and reimbursement. The learned counsel for respondents 3 and 4 invited my attention to Exts.R4 & R5 sent by the 1st Opposite Party to the 3rd Opposite Party promptly intimating the accident and submitting the relevant documents for processing the claim for compensation.
