First Appeal No.101 of 1999

13th July, 2006

Petitioner Counsel: Shri. V. N. UPADHYE
Respondent Counsel: Shri. CHILLARGE,Shri. V. G. SAKOLKAR,Shri. S. V. CHANDOLE

Cases Cited:
New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya, 2006 AIR SCW 2352 [Para 5]
Ved Prakash Garg Vs. Premi Devi, (1997)8 SCC 1 [Para 5]

JUDGMENT

JUDGMENT :- This is an appeal by Insurance Company, Respondents Nos. 1 and 2 filed Claim Petition under sections 4 and 4A of the Workmen's Compensation Act, 1923. After receiving notice from the Court, Insurance Company deposited Rs.87,980/-. According to the Insurance Company, this calculation was done on the basis of claim furnished by the employer - respondent No.3 - who has shown the salary and allowances drawn by the deceased to be Rs.11,000/- p.m.

2. The case has proceeded on admitted facts as to :

(i) accident,

(ii) age,

(iii) accident arising out of and in the course of employment.

The point of dispute is the monthly income/ salary. The workman claimed it to be Rs.2,000/- p.m. while the employer disputed the same.

3. The Trial Court found that the salary of the workman was Rs.1,800/- p.m. and calculated the amount of compensation to be Rs.2,08,952/-. After deducting the amount that was deposited, the Trial Court found that the applicants were entitled to receive a sum of Rs.1,09,975/-, penalty of Rs.98,977/- and interest on the unpaid compensation.

4. The employer has not preferred any appeal.

5. The Insurance Company claims in this appeal that the insurer does not have liability to pay the penalty and interest etc. The insurer has placed reliance on reported judgments of the Supreme Court, namely :

(i) New India Assurance Co. Ltd. Vs. Harshadbhai Amrutbhai Modhiya and another (2006 AIR SCW 2352);

(ii) Ved Prakash Garg Vs. Premi Devi and others ((1997)8 SCC 1).

On perusal of these judgments that Hon'ble Apex Court has held that liability covered by insurance does not extend to penalty, though liability to pay interest would be covered thereby.

6. The claimants opposed on the ground that the insurer has failed to prove that it has bonafide calculated the amount and that, therefore, even the insurer has liability to pay the penalty. Learned Advocate for the claimants, however, was not able to demonstrate as to how the claimants are able to argue contrary to the dictum of Supreme Court as laid down in above two judgments.

7. On the other, learned Advocate for the employer urged as follows :

(i) That though no appeal is preferred by employer against the award of penalty, the employer is entitled to argue that the order under appeal is erroneous, relying upon Clause 13 of the Letters Patent of Bombay.

(ii) That Proviso to Sub-section (3) of Section 4A of Workmen's Compensation Act contemplates a notice to the employer to show cause as to why the amount of penalty should not be saddled on him and that no such notice is served.

8. It is necessary to deal with the submissions of learned Advocate for respondent No.3.

9. For ready reference it shall be useful to quote below clause 13 :

"13. Extraordinary original Civil jurisdiction : And we do further ordain that the said High Court of Judicature at Bombay shall have power to remove and to try and determine, as a Court of extra-ordinary original jurisdiction, any suit being or falling within the jurisdiction of any Court; whether within or without the Presidency of Bombay, subject to its superintendance, when the said High Court shall think proper to do so, either on the agreement of the parties to that effect or for purposes of justice, the reasons for so doing being recorded on the Proceedings of said High Court."

10. It is seen from Clause 13 of Letters Patent Appeal that :

"It refers to the original jurisdiction of the High Court not only to try the matter which falls within its original jurisdiction but also to call for in the interest of justice and to try such matters which pertain to the original jurisdiction of Courts which are subordinate to it."

Plain reading of Clause 13 of Letters Patent does not admit the interpretation advanced by learned Advocate.

11. The submission of learned Advocate Mr. Chandole that the High Court could hear and decide the appeal is thus wholly unacceptable as it is not the necessary fall out of plain reading of clause 13 of Letters Patent.

12. Learned Advocate contended that since he proceeds on admitted position that Code of Civil Procedure does not apply, he would not argue that he would be entitled to either oppose the decree without filing an appeal under Rule 22, Order 41 of the Code of Civil Procedure, as entire reliance is placed on Clause 13 of the Letters Patent Appeal.

13. This Court has already held that opposing the decree and praying for its reversal as against the person who has not preferred an appeal, is not contemplated by Clause 13 of the Letters Patent.

14. In so far as aspect of show cause notice is concerned, learned Advocate has tried to urge in favour of need of notice relying upon a foot note in the Snow White's book on Workmen's Compensation Act with short notes. The short note relied upon by the learned Advocate reads as follows :

"Where the Commissioner imposed penalty and interest on the appellant for death of driver who met with an accident, it was held that as per sec.4-A(3)(6) of the Act as no show cause notice was sent and thus employer was not given opportunity, Commissioner had no jurisdiction to pass an order in the matter of payment interest and penalty. (Smt. Amba @ Ambicadevi Vs. Smt. V. Soubhagyamma, 2001 (91) FLR 876 (Karn HC)."

(Quoted from the book " The Workmen's Compensation Act, 1923 and The Workmen's Compensation Rules, 1924 published by Ketan Thakkar, Show White Publications Pvt. Ltd. at page No.xl.)

15. Learned Advocate was not able to produce for perusal of the Court, the judgment relied upon in the note quoted above. It is seen from record that the claim petition filed by the workman specifically contained a prayer for penalty. Admittedly, it was a case filed under the Workmen's Compensation Act. The employer had filed the Written Statement. In paragraph No.4 of the written statement, the employer has averred as follows :

"4. That the contents of para No.4 of the petition also denied as the respondent is not liable to pay any penalty as the amount is paid within stipulated period."

It is thus clear on facts that the employer - present respondent No.3 - had full opportunity of defending the claim for penalty. Moreover, admittedly the notice of claim petition is served on the employer. The Court framed issues in which specific issue relating to penalty has been framed, which is issue No.3.

"Issue No.3 : Whether petitioners are entitled for claim penalty ? If yes, at what rate ?"

It is thus clear that more than sufficient opportunity was given to the employer to defend against the claim of penalty.

16. The term "opportunity to show cause" does not contemplate a separate notice. This Court, therefore, finds on plain reading of third Proviso that it contemplates an opportunity to show cause. It is seen that opportunity to show cause does not necessarily mean a notice to be drawn, addressed and to be served.

17. There is another aspect of the matter namely had the employer been aggrieved, he was under an obligation to deposit the amount of compensation and then file an appeal under Section 30 of the Workmen's Compensation Act for which he was under obligation to :

(i) produce a certificate of deposit; and

(ii) address the Court for admission hearing on substantial question of law.

The attempt of the respondent No.3 original employer is to defeat the order of payment of compensation without complying both the mandatory requirements. In the circumstances, no latitude whatsoever can be granted to respondent No.3. The employer, who has not preferred appeal, is not entitled under the provisions of the Workmen's Compensation Act to claim reversal of the judgment appealed against by the Insurance Company or any other party. The award under Workmen's Compensation Act thus is not liable to be upset in favour of respondent No.3 employer.

18. The Insurance Company, however, has become successful in holding that the award needs to be modified in so far as the liability to pay the penalty is fastened to it in view of judgment of Apex Court referred to in para No.5 above.

19. This Court, therefore, partly allows the appeal and modifies the impugned judgment and award as follows :

(a) Order clause (B) shall be modified as follows :

"The respondent No.3 employer do pay to the claimants the amount of penalty of Rs.98,977-50 Ps. within one month from the date of decision."

(b) The Insurance Company shall be entitled for restitution according to law with costs throughout proportionately.

(c) Parties shall bear respective costs.

Appeal partly allowed.