Judgment:
S.B. Wad, J.
1. An important question of law arising for decision in this appeal is whether the Insurance Company with which the offending vehicle is insured is liable to pay penalty and additional interest awarded and the penalty imposed by the Commissioner under Section 4-A(3) of the Workmen's Compensation Act, 1923. To be more specific, the question is whether the word 'liability' mentioned in proviso to Section 95(1)B and Sub-section 2(a) of the Motor Vehicles Act is so wide as to include liability for payment of interest in default of payment of compensation and the penalty imposed under Section 4-A(3) of the Workmen's Compensation Act
2. The petitioner was working as a workman/loader of Truck No. DEG 3809, owned by Competent Construction Company. On 21-5-85 when the workman, along with the other workman, was proceeding to unload the truck after loading the same with loose earth, the truck overturned and the workman sustained grievous injuries and succumbed to them. There is no dispute that the workman died on account of the accident during the course and arising out of the employment under Competent Construction Company. The widow and the child made application for compensation under the Workman's Compensation Act, 1923. The Commissioner under the Act recorded the following findings while imposing compensation, interest and penalty
It is highly deplorable that the management did not care to deposit the amount of compensation within prescribed time even though the poor widow with her minor children including a child aged 13 days continued to run from pillar to post for compensation. The Management/Insurance Company continued to shift the blame for delay to each other instead of depositing the admitted compensation in time.
Accordingly, I hold and hereby award Rs. 25,000/- as penalty and interest of Rs. 3,197/- @ 6% per annum from the date of accident till 3rd January, 1986 on the entire amount of Rs. 87,388/- and 6% interest per annum on the balance amount of Rs. 30,360/- (unpaid); 3rd January 1986 till the date of realisation. The primary liability for payment of the entire amount is that of the management but since the respondent No. 1 has taken insurance cover from respondent No. 2, thereforee, the entire amount under this award shall be satisfied by the Insurance Company. I have considered the authorities submitted by the respondent No. 1 viz. 1983 ACJ 601, 1973 ACJ 428, 1984 ACJ 591 and 1986 ACJ. In view of these citations, I Further bold that both the respondents Nos. 1 and 2 are jointly and severally liable to pay compensation to the applicants. The counsel fee is allowed Rs. 1,000/- which will be paid by the respondents jointly and severally. The award will be satisfied within 15 days of this order, failing which the same will be recovered as arrears of land revenue.
3. The award is challenged by the Insurance Company submitting that special interest and penalty imposed under Section 4-A(3) of the Work men's Compensation Act cannot be recovered from the Insurance Company and their liability is limited only to the amount of compensation. Counsel for the Insurance Company has relied upon 1986 ACJ 732 and 1988 ACJ 677. On the other hand, counsel for the respondent Construction Company has submitted that the liability under the Award is indivisible. It cannot be held that compensation is payable by the Insurance Company and special interest and penalty should be paid by the employer under the Workmen's Compensation Act. His submission is that the use of the word 'liability' in Section 95 is a deliberate innovation by the amending Act of 1956 and the word is wide enough to include not only the compensation but special interest and penalty awarded under the Workmen's Compensation Act. He has relied upon the judgment of a single Judge of Madhya Pradesh High Court, reported at 1987 ACJ 803.
4. Before going into the question as to who is liable to pay penalty and special interest on the interpretation of the provisions of the two statutes, it is necessary to note some relevant dates of occurrence. The accident took place on 21-5-85. The respondent company who had insured the offending vehicle with the Insurance Company sent the information regarding the accident to the Insurance Company, which was received on 26-8-85. Thereafter, the Insurance company deposited the amount of compensation payable under the Workmen's Compensation Act. The submission on behalf of the appellant insurance company is that the owner of the truck informed the insurance company of the fact of the accident after the statutory period of one month under Section 4-A was over. As a matter of fact, instead of one month, the owner informed the Insurance Company-after three months of the date of the accident. The question is whether on facts of this case the Insurance Company can be held responsible for the said payments, apart from the legal interpretations of the relevant provisions.
5. The Workmen's Compensation Act, was passed in 1923, with the following object:
The growing complexity of industry in this country, with the increasing use of machinery and consequent danger to workmen, along with the comparative poverty of the workmen themselves renders it advisable that they should be protected as far as possible, from hardship arising from accidents. A legislation of this kind helps to reduce the number of accidents in a manner that cannot be achieved by official inspection, and to mitigate the effect of accidents by provision for suitable medical treatment, thereby making industry more attractive to labour and increasing its efficiency. The Act provides for cheaper and quicker disposal of disputes relating to compensation through special tribunals than possible under the civil law.
6. Section 3 of the Act makes it mandatory for the employer to pay compensation in accordance with the Act if personal injury is caused to a workman by accident arising out of and in the course of his employment. In other words, the liability of the employer is not required to be proved if the two conditions mentioned in Section 3(1) are satisfied. The amount of compensation payable is prescribed by Section 4 and Schedule 1. Thus, the Act does not require that the quantum of compensation should be worked out on the basis of the evidence. Reading Section 3 and Section 4 of the Act together it is clear that this is a category of liability in the nature of absolute liability created by the statute. The object of these mandatory provisions is clear. The workmen are exposed to dangers to life with in creased industrialisation. A victim of an industrial accident cannot be subjected to the civil trials under the law of torts. The victims need quick, cheap and effective machinery for immediate relief both in case of death and bodily injury. To make these provisions more effective Section 4-A provides that compensation shall be paid as soon as it falls due. An employer is liable to make a provisional payment even if he does not accept the liability. The compensation has to be paid within one month from the date it fell due. If the employer is in default, the Commissioner may direct simple interest at 6% per annum to be paid over and above the compensation. If the delay over the above one month is caused by the employer in making the payment of compensation, and there is no justification for the delay, the Commissioner is empowered to impose a penalty in the sum not exceeding 50% of the compensation amount. The compensation received under the Act is not liable to any assessment, charge or attachment. The amount awarded under the Act is recoverable as arrears of land revenue. The Act prohibits any contract or agreement whereby the workman relinquishes any right of compensation from the employer for personal injury in so far as it purports to remove or reduce the liability of any. Person to pay compensation under the Act. Any such contract is null and void under Section 17 of the Act. Thus, it may be seen that although the genesis of the liability under the Workmen's Compensation Act is in the law of torts, very substantial and novel improvements are made by the various provisions stated above in regard to statutory liability created by the Act.
7. On the other hand the provisions of the Motor Vehicles Act in regard to Insurance of the vehicles for the benefit of third party, for the Passengers, for the employees and for damage to property/vehicles are mostly in the realm of contract, except where the liability is created by Sections 95 and 96 of the Motor Vehicles Act. Even there the principle recognised is that of the minimum liability created by the statute, which cannot be contracted out. But, beyond the principal liability the matter is left to the contract between the insurance company and the owner of the vehicle. Liability of the insurance company is regulated by Section 96 which purports to lay down that the insurance company will answer the liability under the judgment pronounced against the owner/wrong doer. The liability of the owner of the vehicle is required to be established by means of evidence, oral and circumstantial. The Court/Motor Accidents Claims Tribunal is required to work out as to what is the just compensation in a given case depending on the monetary loss caused to the dependants due to the death or injury caused to the victim. The liability of the insurance company can be limited either by the statute or by the contract of insurance. The amount of compensation is recoverable by the normal process of law. There is no concept or provision of making payment within a statutory period and imposition of penalty for not making the payment within the statutory period. The concept of liability in an industrial accident is, thus, quite different from the normal concept of the accident caused by the Motor Vehicles.
8. There is only one area creating overlapping fields of liability. An insurance policy can cover liability arising under the Workmen's Compensation Act, 1923, in respect of death or bodily injury to any employee engaged in driving the vehicle or being carried in the vehicle. If the goods vehicle is carrying not less than six employees, the liability of the insurance company for any one accident can be limited up to Rs. 50,000/-, 'including the liabilities, if any, arising under the Workmen's Compensation Act, 1923.' These two cases of overlapping are mentioned in Section 95 of the Act. Thus, considering the scheme and scope of the relevant provisions of the two enactments it is evident that it is the normal compensation payable in case of death or bodily injury to an employee, which is subject to the provisions of the statute or contract as mentioned in Section 95. The provision for special interest or penalty under the Workmen's Compensation Act has an entirely different setting and purpose unknown to normal insurance law embodied in the contract between the parties. Limits of liability in certain cases can be limited by a contract between the parties under the Motor Vehicles Act but any such contract is null and void under the Workmen's Compensation Act. In view of the divergent setting and the provisions under the said enactments, the word 'liability' occurring in Section 95 in the context of Workmen's Compensation Act has to be understood only as normal compensation and not to include special interest and penalty awarded under Section 4-A(3) of the Workmen's Compensation Act.
9. The construction of the two sections commented by me is apparently supported by 1986 ACJ 732 and 1988 ACJ 677. However, a discordant view is taken by the single Judge of the Madhya Pradesh High Court in 1987 ACJ 803. The learned Judge has held that the word 'liability' used in Section 95 covers liability to pay special interest and penalty and if the Insurance Company wants to avoid such liability, it should provide for such a term in the contract of insurance. The burden is on the insurance company to show that it has not taken upon itself the liability to pay special interest and penalty. The learned Judge has referred to and distinguished several decisions of Madhya Pradesh High Court and other High Courts. However, with respect, it has to be noted that the learned Judge has not analysed the nature of liability and the kinds of liability under Motor Vehicles Act and the Workmen's Compensation Act. So also, the object and the machinery for mandatory payment of the statutory amount under Workmen's Compensation Act, has not been brought to the notice of the learned Judge. When the Workmen's Compensation Act has expressly provided for an exhaustive remedy of recovery of compensation by way of arrears of land revenue; when the Workmen's Compensation Act has expressly exempted the compensation amount from being assigned or being subjected to any charge; when the minimum compensation is assured by the statute itself, I do not find any necessity of very widely interpreting the word 'liability' in Section 93, as done by the learned Judge. Casting a negative burden on the insurance company to exclude itself from liability to pay interest and penalty is not warranted by the provisions of insurance of vehicles under the Motor Vehicles Act or under the general law of insurance. With respect, I am not persuaded by the reasoning of the learned Judge, reported in 1987 ACJ 803.
10. For the reasons stated above, I hold that an insurance company is not liable to pay interest and penalty under Section 4-A(3). Its liability is only to pay compensation.
11. But, even assuming that an insurance company which is liable to pay interest as well as penalty, the requirements of Section 4-A itself would show that the obligation imposed by that Section can be answered only by the employer. The compensation under the said section has to be paid as soon as it falls due. The date when the payment has become due can be known only by the owner/employer because he alone would know the date of the accident causing death or injury. Since he would alone know the date when the amount is payable, he would also be the only person who would know that within one month from the due date compensation must be paid. He is liable to pay simple interest @ 6% per annum on the delay, but if he fails to show justification for delay, penalty shall be recovered from the employer. Thus, if the employer wants to avoid penalty, he must show justification for the delay. Since the causes and justification for the delay is within the knowledge of the employer, no- body else can provide a justification for the delay. The provisions of Section 4-A of Workmen's Compensation Act, being mandatory and being made with specific object of industrial security, they will prevail over the provisions of the Motor Vehicles Act.
12. On the facts of this case, the insurance company can, by no stretch of imagination be held to be liable to pay the interest and penalty as awarded by the Commissioner. The insurance company gat the know ledge of the accident which had taken place on 21-5-85 only on 26-8-35. They did not know as to when payment of compensation had fallen due. They did not know the date of accident in time. They did not know when one month would elapse. Thus, they had a valid justification for not making the payment within one month from the date of the accident. As soon as the insurance company got the information they deposited the compensation amount, as required by the Workmen's Compensation Act.
13. For the reasons stated above, the impugned order of the Commissioner under the Workmen's Compensation Act is set aside in so far as it puts the responsibility of the payment of interest and penalty and costs on the appellant insurance company. It is hereby clarified that the amount of interest for the default in payment of compensation, the penalty and the costs under the Award made by the Commissioner shall be payable only by Competent Construction Company/the respondent. The impugned award stands modified to that extent. The appeal is allowed with costs.