An insurer's liability excludes interest and penalties if the insurance policy explicitly states such exclusions, as determined under commercial contract principles.

JUDGMENT

The 3^rd opposite party in WCC No.326 of 2003 of the Court of the Commissioner for Workmen’s Compensation has filed this appeal challenging the order passed by the Commissioner.

2. The 1^st respondent herein filed the compensation case. According to him he was employed under the 3^rd respondent as welder in connection with dismantling guarder work of an overbridge at Didarganj, New Patna, for the East Central Railway. While he was engaged in the work on 01.08.2002 at about 4.30 p.m. he fell from a height of 7 meters and sustained serious injuries. He was treated in various hospitals for a long time and in spite of the treatments availed he is now bedridden and his lower limb is totally paralysed. He has no sensation below T 9 region.

He sought compensation of Rs.10 lakhs.

3. The 2^nd respondent filed a written statement contending that it was not liable to pay compensation to the 1^st respondent. The work was awarded to the 3^rd respondent and as per the terms and conditions of the agreement, the 2^nd respondent was not liable to pay any amount to the 1^st respondent. The Railway contended that in case it was found that the 1^st respondent was entitled for compensation, the 3^rd respondent as well as the appellant were to be held liable. The 3^rd respondent did not appear before the Commissioner and it was declared exparte. The appellant filed written statement admitting insurance coverage for seven welders with wages less than Rs.4000/- under the 3^rd respondent. Other averments in the claim petition were disputed by the appellant.

4. On conclusion of the proceedings, the learned Commissioner found that the 1^st respondent was a worker under the 3^rd respondent and sustained injuries in the accident happened on 01.08.2002. The Commissioner also found that the 1^st respondent was a workman under Section 2 (1)(n) of the Workmen’s Compensation Act and sustained personal injuries out of an accident occurred during and in the course of his employment on 01.08.2002. The Commissioner concluded that the permanent disability was 100%. Workman was found entitled for a compensation of Rs.4,61,136/-. It was further held that the 1^st respondent shall be entitled to receive simple interest @ 12% from the date of accident. The 3^rd respondent was held liable to pay compensation and the appellant being the insurer was directed to pay the compensation along with simple interest at the rate of 12% with effect from 11.08.2002 within 30 days from the date of receipt of the order, failing which the amount was directed to be recovered with 30% penalty.

5. Case of the appellant is that as per the terms of the policy, the appellant was not liable to pay interest. Further it was also not liable to pay any penalty. Moreover, the appellant contended that the policy covered only 7 welders with monthly wages of Rs.4,000/- and as the 1^st respondent claimed that he was drawing Rs.15,000/- per month as wages the appellant was not liable to indemnify the contractor with respect to the 1^st respondent.

6. Heard the learned counsel for the appellant and the learned counsel for the 1^st respondent.

7. The learned counsel for the appellant invited attention of the Court to an additional document produced along with I.A.No.3 of 2018. He pointed out that the said document, certified copy of the full-text of the Insurance Policy, would show that it was made clear in the policy that the insurer shall not be liable to indemnify the insured in respect of any interest and/or penalty which may be imposed on him/them on account of his/their failure to comply with the requiremen