The Insurance Company is liable for interest on compensation under the Employee’s Compensation Act, while the employer is responsible for penalty payments.

Order :

1. The present appeal has been filed by the employer against the order dated 14.07.2017 passed by the Judge, Workmen Compensation Act (Labour Court), Sri Ganganagar in W.C. Case No.31/2015 (Comp. No.18/2015) whereby the claim petition as filed on behalf of the applicants-claimants was allowed and compensation to the tune of Rs.5,14,875/- with interest at the rate of 12% per annum was awarded in favour of the claimants. An award of Rs.15,000/- qua penalty and Rs.5,000/- qua funeral expenses was also passed vide the order impugned.

2. Vide the impugned order, the respondent-Insurance Company has been held liable to pay the compensation amount and the amount qua the funeral expenses whereas the employer was held liable to pay the interest and the penalty amount. It is the said finding/direction of the liability to pay the interest and penalty that is under challenge in the present appeal.

3. Learned counsel for the appellant employer although at the first instance raised the ground pertaining to the penalty amount but then, in view of the settled position of law in Ved Prakash Garg vs. Premi Devi & Ors.; AIR 1997 SC 3854 and further clarified and reiterated by the Division Bench of this Court in United India Insurance Co. Ltd. Vs. Smt. Sira Kanwar & Ors.; D.B. Civil Misc. Appeal No.768/2005 (decided on 27.04.2007) waived the said ground and maintained his challenge only to the extent of the liability to pay the interest on the compensation amount. In support of the said submission, counsel relied upon the judgment in the case of Ved Prakash (supra).

4. Counsel submits that there being a contract with the Insurance Company, the Insurance Company was liable to indemnify the owner and therefore, it is the Insurance Company who would be liable to pay the interest amount.

5. Counsel further submits that the interest on the compensation amount would be payable from the date of the impugned order and the learned Court erroneously granted the same from the date of the accident.

6. Per contra, learned counsel appearing for the respondent- Insurance Company relied upon the Hon’ble Apex Court judgment in the case of New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya & Anr.; AIR 2006 SC 1926 to submit that the statutory liability to pay the interest as well as the penalty amount is of the employer in terms of Section 4A(3) of the Employee’s Compensation Act, 1923 (hereinafter referred to as ‘the Act of 1923’).

7. Heard learned counsel for the parties and perused the record.

8. In view of the submissions made, the following substantial questions of law arise in the present appeal:

i) Whether the Insurance Company is liable to meet the award passed by Workmen’s Commissioner/Court imposing interest against the insured employer under Section 4A(3) of the Act of 1923?

ii) Whether the interest on the compensation amount would be payable from the date of accident or from the date of the order passed by the Workmen’s Commissioner/Court?

9. So far as the second substantial question of law is concerned, the position of law is no more res integra. As held by the Hon’ble Apex Court in Shobha & Ors. vs. Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors.; AIR 2022 SC 1410 , the liability to pay the interest on amount of arrears of compensation in the matters of the Act of 1923 shall be from the date of accident and not from the date of the order passed by the Workmen’s Commissioner/Court.

10. Coming on to the first substantial question of law, the said issue also stands settled. In Ved Prakash (supra), the Hon’ble Apex Court specifically held that it is not the Insurance Company which shall be liable to pay the penalty imposed on the insured employers by the Workmen’s Commissioner under Section 4A(3)