The main legal point established in the judgment is the liability of the insurer to indemnify the employer for the interest awarded and the entitlement to interest from the date of the accident.

Bansi Lal Bhat, J.

This appeal is directed against the award dated 31st January, 2012 passed by the Commissioner, under Employee's Compensation Act, 1923 (Assistant Labour Commissioner Jammu for brevity 'Commissioner') in case titled Smt. Lal Dei and ors v. Kirtan Singh and anr., in terms whereof an amount of Rs. 439900/- was awarded as compensation in favour of the claimants-2 respondents for brevity 'claimants'). The Commissioner also awarded interest of Rs. 94578/-. The award was directed to be satisfied by respondent no. 2 Insurer as the offending vehicle was insured with it and the policy was effective at the time of accident. The impugned award has been assailed to the extent of directing of payment of interest by the appellant-insurer.

2. Heard rival sides and perused the record.

3. It is not in dispute that the deceased Davinder Singh was working as Cleaner with Tata Vehicle No. JK02F/2787 owned by respondent no. 1 who was an 'employee' as defined under the Employee's Compensation Act, 1923. It is also not disputed that the deceased met with an accident arising out of and during the course of his employment with respondent no. 1. Finding by the Commissioner that the deceased was aged 23 years at the time of accident, and assessment of salary at Rs. 4000/- per month for purposes of computation of compensation has not been questioned. It is also not in dispute that the offending vehicle was being 3 plied within the conditions and terms of insurance policy. Since findings of fact on the relevant issue have not been assailed, the award of compensation to the tune of Rs. 439900/- does not form the subject of controversy. The points for consideration raised in this appeal are:-

(i) Whether the insurance company is liable to indemnify the insured for the interest awarded against him under Section (3) of Section 4-A of the Workmen's Compensation, Act, 1923?

(ii) Whether learned Commissioner, Workmen's Compensation Act, Jammu was justified in directing payment of interest from the date of accident, when the interest is payable on completion of one month from the date on which it fell due and it fell due on the date of adjudication?

Point no. 1 :

4. In so far as liability of insurer to indemnity the employer-respondent no. 4 for the delay in payment of compensation is concerned, be it seen that the award of interest for delay in payment is mandate of law and has statutory backing. Section 4-A of the 4 Employee's Compensation Act, 1923, provides as under:-

"4A Compensation to be paid when due and penalty for default.

(1) Compensation under Section 4 shall be paid as soon as it falls due.

(2) I cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the rights of the workman to make any further claim.

(3) Where any employer is in default in payment the compensation due under this Act within one month from the date it fell due, the Commissioner shall;

(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent, per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due' and

(b) If, in his opinion, there is no justification for the delay, direct that the employer 5 shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent, of such amount by way of penalty.

Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.

Explanation:- For the purposes of this subsection, "scheduled ban