The exclusion of interest liability in insurance policies is conditional rather than absolute; the insurer must explicitly plead and provide evidentiary proof of specific statutory non-compliance by the insured to escape liability for interest payments on awarded compensation.

ORDER

Dated this the 22^nd day of June, 2026

1. This Review Petition is filed by the Respondent Nos.3 & 4 in MFA (ECC) No.27/2023 filed under the Employee’s Compensation Act, 1923, to review the Judgment dated 08.09.2025 passed by this Court disposing the Appeal. The Respondent No.1 is the Appellant/Insurance Company and the Respondent Nos.2 & 3 are the Respondent Nos.1 & 2 in the Appeal who filed Application for compensation before the Employees Compensation Commissioner under the Employee’s Compensation Act.

2. The parties are referred to according to their status in this Review Petition.

3. The Employees Compensation Commissioner passed Award in favour of the Respondent Nos.2 & 3 herein, who are the dependants of the deceased employee, awarding compensation of Rs.6,12,360/- with simple interest @ 12% from the date of accident till the date of deposit/recovery, Rs.5,000/- towards funeral expenses, and Rs.1,225/- being the cost towards payment of court fee and directing the Respondent No.1/Insurance Company to deposit the said amounts.

4. The Respondent No.1 filed Appeal contending that the Respondent No.1 is not liable to pay interest on the compensation awarded in view of the decision of the Hon'ble Supreme Court in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya [2006 (2) KLT 667 (SC)] and that as per the declared wages, the wages of the employee is Rs.5,850/- and hence the Insurance Company is liable to pay compensation calculated at the monthly wages of Rs.5,850/-.

5. This Court admitted the Appeal on the following two substantial questions of law:

“(i) Whether the insurer is having liability to pay interest on the compensation amount in view of the decision of the Apex Court in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya [2006 (2) KLT 667 (SC)] ?

(ii) Whether the insurer is having the unlimited liability to indemnify the employer, irrespective of the terms of agreement fixing the premium amount at the time when the policy was issued ?”

6. This Court passed the impugned judgment answering both the questions of law in favour of the Respondent No.1 herein and modifying the order of the Commissioner directing the Respondent No.1 to pay Rs.4,54,013/- to the Respondent Nos.2 & 3 and directing the Review Petitioners to pay Rs.1,58,347/- and interest at the rate of 12% per annum on the entire compensation of Rs.6,12,360/- from the date of accident till payment/realisation with funeral expenses of Rs.5,000/- and court fee of Rs.1,225/-.

7. Now the Review is filed on the ground that while passing the impugned judgment, this Court failed to consider the two binding Division Bench Judgments of this Court, i.e., The New India Assurance Company Limited v. J. Chellappan and Others [2017:KER:39705] and Branch Manager, New India Assurance Co. Ltd. v. Kaleeswari and Another [2017 (5) KHC 844].

8. I heard the learned Counsel for the Review Petitioners, Sri. N. James Koshy, the learned Counsel for the Respondent No.1/Insurance Company, Sri. Lal K. Joseph, and the learned Counsel for Respondents Nos.2 & 3, Sri. Devika Mohan.

9. The learned Counsel for the Review Petitioners contended that it is well settled by the decisions of this Court cited above that exclusion of interest is not an absolute one and it is only a conditional exclusion; that in order to invoke the exclusion clause, the Insurance Company ought to have stated in their written statement that the applicant or the employer had failed to comply with the requirements laid down under the Act; that the Insurance Compan