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1996 Supreme(Ori) 253
IN THE HIGH COURT OF ORISSA
S.N. Phukan, C.R. Pal, A. Pasayat, JJ.
DIV. MANAGER, NEW INDIA ASSU. CO. LTD. - APPELLANT
Versus
BISWANATH BURMAN AND OTHERS - RESPONDENT
Decided On : 03-10-1996
The insurer cannot be made liable for interest and penalty under the Workmen's Compensation Act, 1923 in the absence of any stipulation in the policy of insurance.
Headnote:
WORKMEN'S COMPENSATION ACT, 1923 - SECTION 4A - INSURANCE COMPANY'S LIABILITY FOR INTEREST AND PENALTY - EMPLOYER'S LIABILITY - INSURANCE POLICY TERMS AND CONDITIONS.
Fact of the Case:
The case involved two questions referred to a Full Bench by a learned Single Judge of the Orissa High Court. The questions were: (1) Whether an insurer can be held liable for interest and penalty under the Workmen's Compensation Act, 1923 (the Act) in the absence of a specific provision in the Act and stipulation in the policy issued by the insurer? (2) Whether the levy of penalty is automatic or whether the insurer is entitled to an opportunity to show that the levy of penalty is not warranted, even if it is held that the insurer is liable?
Finding of the Court:
The Court held that the insurer cannot be made liable for interest and penalty under the Act in the absence of any stipulation in the policy of insurance. The Court further held that it is not necessary to answer the second question in view of the answer to the first question.
Issues: 1. Whether an insurer can be held liable for interest and penalty under the Workmen's Compensation Act, 1923 (the Act) in the absence of a specific provision in the Act and stipulation in the policy issued by the insurer? 2. Whether the levy of penalty is automatic or whether the insurer is entitled to an opportunity to show that the levy of penalty is not warranted, even if it is held that the insurer is liable?
Ratio Decidendi: The Court interpreted Section 4A(3) of the Act and the definition of 'employer' under the Act. It held that the word 'employer' in Section 4A(3) of the Act cannot be substituted with the word 'insurer'. The Court also held that the liability of the insurer to indemnify the employer would depend on the terms and conditions of the insurance policy.
Final Decision: The Court answered the first question in the negative, holding that the insurer cannot be made liable for interest and penalty under the Act in the absence of any stipulation in the policy of insurance. The Court did not answer the second question in view of its answer to the first question.
JUDGMENT :
S.N. Phukan, C.J. - In Misc. Appeal No. 355 of 1992 a learned Single Judge of this Court has referred the following two questions arising out of Workmen's Compensation Act, 1923 (for short "the Act') for our decision':
(1) Whether insurer can be made liable for interest and penalty under the Act notwithstanding absence of specific provision therefore in the Act and stipulation in the policy issued by the insurer?
(2) Whether levy of penalty is automatic or the insurer is entitled to an opportunity to show that levy of penalty is not warranted, even if it is held that insurer is liable?
In the other appeals, only the first question has been referred.
2. The necessity for making the present references to this Full Bench arose as a learned Single Judge of this Court in the Oriental Fire & Genl. Ins. Co. Ltd. v. Matias Burla 1986 ACJ 732 (Orissa), held that u/s 4A, the insurer is not liable to pay either penalty or interest; but the decision of the learned Single Judge was not accepted by a Division Bench of this Court in Khirod Nayak Vs. Commissioner for Workmen's Compensation and Others, .
3. Heard the learned Counsel for the parties.
4. We may now extract below the relevant sections of the Act before we consider the two questions referred to us.
Sub-clause (e) of Clause (1) of Section 2 of the Act defines the word 'employer' which runs as follows:
'employer' includes any body of persons whether incorporated or not and any managing agent of an employer and the legal representative of a deceased employer, and, when the services of a workman are temporarily lent or let on hire to another person by the person with whom the workman has entered into a contract of service or apprenticeship, means such other person while the workman is working for him;
Section 4A runs as follows:
Compensation to be paid when due and penalty for default. -- (1) Compensation u/s 4 shall be paid as soon as it falls due.
(2) In 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 payments shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim.
(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner may direct that, in addition to the amount of the arrears, simple interest(r) 6 per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount shall be recovered from the employer by way of penalty.
5. It is the settled law that where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise. Where the legislature while enacting a statute used clear and unequivocal language capable of only one meaning, it must be enforced, however harsh or absurd or contrary to common sense the result may be. [See Cartledge v. E. Jopling & Sons Ltd. (1963) AC 758]. Therefore, if the language of Section 4A of the Act is clear, it is the duty of this Court to expound the section as it stands.
6. Reading the definition of 'employer' with Section 4A of the Act, there can only be one interpretation that the employer is liable if there is any default in paying the compensation due under the Act within one month from the date it fell due. The interest and penalty shall be recoverable only from the employer as is clear from Sub-section (3) of Section 4A of the Act. If we hold that the insurer is liable for penalty or interest, it would amount to substituting the word 'employer' in Sub-section (3) of Section 4A of the Act with the word 'insuer'. now let us consider the various decisions of different High Courts placed before us.
7. The decision of a learned Single Judge of this Court in B
