JUDGMENT :

JYOTSNA REWAL DUA, J.

1. The appellant-Assurance Company has assailed the order passed by Employee’s Compensation Commissioner on the ground that liability of payment of interest could not have been fastened upon it in view of specific terms of the Insurance Policy.

2. Bare Minimum factual position.

2(i) Learned Employee’s Compensation Commissioner in its judgment dated 25.5.2012 held that deceased Dil Bahadur Thapa was working as a labourer with respondent No.2/Dot Ram. He died on 26.8.2007 during the course of his employment at the work site of respondent No. 2 at RD 1820 Malana Phase-II, Tehsil Manali, District Kullu. Respondent No.2/Dot Ram was given the work contract by respondents No. 3 and 4. Age of the deceased at the time of accident was determined as 20 years. Income of the deceased at the time of his death was assessed at Rs. 75/- per day. As per Section 4 Schedule IV of the Employees Compensation Act, factor of 224 was applied to work out the payable compensation. The claimants were accordingly held entitled to compensation of Rs. 2,52,000/- [ 224(factor)X1125(half salary of the deceased)] alongwith interest @ 12% per annum from the date it fell due till its payment. In the facts and circumstances of the case, the claimants were also held entitled to penalty to the extent of 50% on the compensation amount.

2(ii) Liability to pay the compensation amount of Rs. 2,52,000/- alongwith 12% interest per annum from the due date was fastened upon the appellant-Assurance company whereas liability to pay the penalty was upon respondent No. 2/Dot Ram/employer of the deceased.

3. Heard learned counsel for the parties.

3(i) The short contention of the appellant is that it is only liable to pay the compensation amount determined by the Employee’s Compensation Commissioner and that the liability to pay interest in view of the unambiguous terms of the policy executed between the appellant and the employer Dot Ram/respondent No. 2 cannot be foisted upon the Assurance Company.

3(ii) Learned counsel for the respondents by placing reliance upon following para of Ved Prakash Garg v. Premi Devi, reported in (1997) 8 SCC 1 submits that Assurance Company is bound to make good the claim for compensation alongwith interest:

“19. As a result of the aforesaid discussion it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words the insurance company will be liable to meet the claim for compensation along with interest as imposed on the insured employer the Workmen's Commissioner under the Compensation Act on the conjoint operation of Section 3 and Section 4-A sub Section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the insured employer by the Workmen's Commissioner under Section 4-A (3)(b) is concerned, however, the insurance company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone.”

4. Observations.

4(i) Before venturing into the contentions raised by the parties, it will be appropriate to first refer to the provisions of Workmen’s Compensation Policy executed between the employer and the appellant. This policy is Ex.R-1 and was valid from 21.2.2007 to 20.2.2008. The clause relevant for the purpose of considering the point raised by the appellant is extracted hereinafter:

“Provided always that in the event of any changes in the law(s) or the substitution of other legislation thereof this policy shall remain in force but the liability of the Company shall be limited to such sum as the Company would have been liable to pay if the Law (s) had remained unaltered.

Law(s):

1. The Workman’s Compensation Act, 1923 and subsequent amendments of the said Act, prior to the date of the issue of Policy.

2. The Fatal Accidents Act, 1855. It is hereby understood and agreed that the Workmen’s Compensation (Amendment) Act of 1959 (8 of 1959, and 1962 (64