Radhabehn and ors. Vs. Mulji Kanji Dhrod and ors. - Court Judgment

K.G. Shah, J.

1. This is an appeal under Section 30 of the Workmen's Compensation Act, 1923 (for short 'the W.C. Act') at the instance of the dependants who were the original claimants in Workmen's Compensation Application No. 36 of 1988 before the Ex-Officio Commissioner for Workmen's Compensation at Himatnagar (for short 'the Commissioner') and is directed against a part of the judgment and award rendered by the Commissioner in the aforesaid Workmen's Compensation Application No. 36 of 1988 on March 21, 1990. The facts of the case may briefly be stated as follows:

2. Narsibhai Savjibhai Patel, the deceased, was employed by respondent No. 1 as a tractor driver and on 12.3.1988, while Narsibhai was driving the tractor near Bodeli in Baroda District during the course of his employment with respondent No. 1, the tractor overturned with the result that Narsibhai sustained severe injuries. In other words, the tractor met with an accident which arose out of and in the course of Narsibhai's employment with the respondent No. 1. During treatment Narsibhai succumbed to his injuries on 16.3.1988. The appellants who admittedly are the dependents of deceased Narsibhai, therefore, filed the claim petition for compensation under the W.C. Act before the Workmen's Compensation Commissioner at Baroda. That claim petition registered at Baroda as workmen's compensation case came to be transferred to the Commissioner at Himatnagar.

3. In the claim application, the applicants averred that the accident leading to the death of Narsibhai arose out of and in the course of Narsibhai's employment with respondent No. 1. The applicants stated in the claim application that deceased Narsibhai was getting by way of his wages, Rs. 1,500/- per month and that at the time of the accident he was about 28 years of age. In the claim application the applicants further stated that on 26.4.1988 they have served the notice of the claim both to respondent No. 1, the employer, as also to respondent No. 2, the New India Assurance Co. Ltd., Bhuj-Kutch, with whom at the time of the accident the tractor in question was insured and the insurance policy was in force. In the claim application itself, the applicants stated that the tractor in question was insured with respondent No. 2 and as in the Motor Vehicles Act, 1939 (for short 'the M.V. Act') provisions have been made, respondent No. 2 is liable to pay to them the award amount. With these statements in the main, the applicants claimed an award in the sum of Rs. 1,30,0007- and they also claimed a further sum at the rate of 50 per cent by way of penalty and interest to be recoverable from the respondents.

4. In response to the notices issued to them, the two respondents filed their separate written statements against the claim. By his written statement, Exh. 11, respondent No. 1, the employer, resisted the claim application and his liability to pay compensation. However, he has admitted that the deceased was in his employment at the time the accident happened. He has not disputed the fact that the deceased was in his service right from 15.10.1986. In para 7 of the written statement, respondent No. 1 clearly admitted that fact as was averred by the applicants in para 3 of the claim application that he (respondent No. 1) was paying Rs. 1,500/- per month by way of wages or salary to the deceased. However, in that para 7 respondent No. 1 pleaded ignorance about the age of the deceased at the time of the accident and put the applicants to the proof of the age of the deceased at the time of the accident. In para 10 of written statement, Exh. 11, respondent No. 1 pleaded the fact about the insurance of the tractor with respondent No. 2 and contended that in view of the fact that the insurance policy was in force, it would be respondent No. 2, the Insurance Company, who should be responsible for paying the entire amount of compensation. This written statement, Exh. 11, was filed by respondent No. 1 before the Commissioner on 23.1.1989.

5. On 3.8.1989, i.e., more than six months after the written statement of the respondent No. 1 was filed before the Commissioner, respondent No. 2, the Insurance Company, filed its written statement, Exh. 20, against the claim made by the dependents. In para 3 of that written statement, respondent No. 2, the Insurance Company, averred that no notice under Section 10 of the W.C. Act was served upon it and hence the claim application against it is not maintainable at law. We may mention here that at the trial, it has been amply proved that before filing the claim application, the appellants had served a notice contemplated by Section 10 of the W.C. Act to both the respondents and the present contention contained in para 3 of the written statement of respondent No. 2 was not pressed at the trial.

6. In para 4 of the written statement, the Insurance Company contended that it was not legally liable for the penalty amount of 15 per cent (it should be 50 per cent because in the claim application penalty has been claimed at 50 per cent and not at 15 per cent). In para 5 of the written statement, Exh. 20, the Insurance Company contended that there is no statutory obligation under law upon it to pay penalty. In para 9 of the written statement, the Insurance Company denied the claim averment that deceased Narsibhai was getting a pay of Rs. 1,500/- p.m. and was about 28 years of age at the time of the accident. In para 13 of the written statement, the Insurance Company stated that even otherwise, the claim was highly excessive, exaggerated, exorbitant and speculative.

In sum, the Insurance Company prayed for the dismissal of the claim application against it.

7. The learned Commissioner, on the pleading of the parties, raised necessary issues at Exh. 21.

8. At the trial, on behalf of the applicants, Radhabehn, the widow of the deceased, was produced as a witness and no other oral evidence was tendered by any of the parties. The necessary documentary evidence was also produced by the parties. The School Leaving Certificate showing the date of birth of the deceased was received in evidence by consent of the parties at Exh. 31. That certificate shows that the date of birth of the deceased was 15.6.1960. On that basis, on the date of the accident, the deceased had completed 27 years of age, but had not completed 28 years of his age.

9. On the appreciation of evidence, the learned Commissioner found that the deceased was a workman within the scope of W.C. Act and was in the employment of respondent No. 1 at the time of the accident and he was driving the tractor of respondent No. 1. The learned Commissioner also found that the deceased received personal fatal injuries on account of the accident which arose out of and in the course of his employment with respondent No. 1. He also found that the tractor in question was insured with respondent No. 2. The feeble contention which was taken by the respondents about the maintainability of the claim petition was not accepted by the learned Commissioner. On the question of the wages or income (Sic. the learned Commissioner held that it was very difficult to come) to a definite conclusion that the deceased was getting Rs. 1,500/- p.m. by way of his pay, etc. However, in the opinion of the learned Commissioner as, under the Minimum Wages Act, even an ordinary labourer gets Rs. 11/- per day a daily wages, in the facts and circumstances of the case, it would be just and proper to consider Rs. 600/- per month as the pay, etc., for the deceased. It appears that the learned Commissioner was conscious of the fact that the School Leaving Certificate showing the birth-date of the deceased was very much there on record at Exh. 31. Still, however, he was led away by the fact that in the claim application, the age of the deceased was shown to be about 28 years and so took the age of the deceased at 28 years and on the basis of his income at Rs. 600/- per month, the learned Commissioner worked out the compensation payable to the dependents at Rs. 50,829.60. He awarded that amount in favour of the claimants as compensation under the W.C. Act against both the respondents. He further awarded interest at 6 per cent on the aforesaid amount, as the compensation was not paid to the claimants within the statutory period and he held both the respondents liable even for the award of interest as aforesaid.

10. As said above, in the claim application itself, the claimants claimed penalty at the rate of 50 per cent. The learned Commissioner found that as the amount of compensation was not paid by respondent No. 1, the employer, within the statutory period, he was liable to pay penalty. The learned Commissioner, therefore, held that respondent No. 1 should be ordered to pay 20 per cent of the total compensation as penalty to the claimants. Before the learned Commissioner, on behalf of the claimants, it was argued that respondent No. 2, the Insurance Company, should not only be liable to pay the compensation and interest, but it should also be held liable to pay the penalty amount. That contention came to be negatived by the learned Commissioner and for that the learned Commissioner placed reliance on the judgment of this Court in the case of Gautam Transport, Bhavnagar v. Jiluben Huseinbhai 1989 ACJ 587 (Gujarat).

For holding the Insurance Company, respondent No. 2, liable for the interest part of the award, the learned Commissioner relied upon the decision of this Court in the case of Huseinbhai Ahmedbhai Memon v. Mangiben 1984 ACJ 701 (Gujarat).

Thus, in the final analysis, the learned Commissioner passed an award in the sum of Rs. 50,829.60 with 6 per cent interest thereon from the date of the application till realisation against the two respondents. In addition to this, the learned Commissioner also directed that respondent No. 1 should pay Rs. 10,165/- being 20 per cent of the compensation amount by way of penalty, to the claimants. The learned Commissioner passed suitable direction for apportionment and investment of the compensation amount. He also directed the respondents to pay proportionate costs of the claim application and he ordered Rs. 200/- by way of pleader's fees to be taxed.

11. In so far as the claim made in the claim application has not been allowed in full, the appellants have come to this Court by way of this appeal under Section 30 of the W.C. Act. We have heard Mr. K.B. Pujara, the learned Advocate for the appellants and Mr. B.R. Shah, the learned advocate for respondent No. 2, insurance company. Respondent No. 1 though duly served has not entered appearance.

12. The debate at the Bar mainly centred round the question whether the Insurance Company would be liable to pay penalty Under Section 4-A of the W.C. Act. Of course, other questions were also canvassed at the Bar. Before we take up this central issue which was canvassed before us, namely, whether the Insurance Company would be liable for the payment of penalty under Section 4-A of the Workmen' s Compensation Act, we would like to dispose of the other points which were raised before us.

13. As said above, the School Leaving Certificate showing the date of birth of the deceased was produced on record of the case. It was received in evidence with the common consent of the parties. That certificate is to be found at Exh. 31 on the record of the case. This certificate shows that the date of birth of the deceased was 15.6.1960. The accident in this case had taken place on 12.3.1988 and the deceased died on 16.3.1988. Both, on the date of the accident and also on the date of his death, the deceased had not completed 28 years of his age, though he had completed 27 years of his age. Under Section 4 of the W.C. Act read with Schedule IV, what is relevant is the completed years of age of the deceased on his last birth-date immediately preceding that date on which the compensation fell due. Obviously, it would on the facts of this case be that the age of the deceased for the purpose of computation of compensation payable to the claimants should have been taken as 27 years and not as 28 years. It appears that the learned Commissioner has taken 28 years as the age of the deceased in the claim application for the applicants stated that the deceased was about 28 years of age. Whatever the applicants might have stated in the claim application to be the age of the deceased, in preference to that statement in the claim application, the learned Commissioner should, in our opinion, have gone by the School Leaving .Certificate, which was a more authentic document which was received in evidence by the common consent of the parties and should have held on that basis that the deceased was, for the purpose of computing the compensation, only 27 years of age and was not 28 years of age. We would, accordingly, rectify the mistake committed by the Commissioner and in the final analysis compute the compensation payable to the dependents on the basis that the deceased was 27 years of age at the time when the compensation fell due.

14. Mr. Pujara further submitted that the learned Commissioner has gravely erred in not accepting the case put up by the appellants about the income of the deceased. In the claim application, the appellants contended that the deceased was getting in all Rs. 1,500/-p.m. by way of his wages or emoluments. Admittedly, he was in the employment of respondent No. 1, employer. That employer in his written statement categorically admitted that he was paying Rs. 1,500/- per month by way of wages or emoluments to the deceased. This admission made by respondent No. 1 was an admission against his own interest inasmuch as it was on the basis of the income of the deceased that the compensation, if at all, would be awarded against him. Higher the income of the deceased, higher would be the compensation payable by the employer. In that sense, the employer would not be interested in making a false statement or a wrong admission and exaggerate the income of the deceased. When the employer in his written statement admitted the claim allegation that the deceased was getting Rs. 1,500/- p.m., that admission must be taken to be an admission of true facts, Otherwise, the respondent No. 1, who was ultimately likely to be held responsible, would not admit the fact that he was paying Rs. 1,500/- per month to the deceased by way of wages. Then, there is another aspect of the matter. Appellant No. 1, the widow of the deceased, has stepped into the witness-box and has stated on oath that her husband, the deceased, was getting Rs. 800/- per month by way of his salary and Rs. 700/ - per month by way of dearness allowance. In all, according to her, her husband was getting Rs. 1,500/- per month by way of wages. She has stated that out of his wages, her deceased husband passed on Rs. 1,200/- per month to her for maintaining the family. It may be noticed here that the family of the appellant resided at Lalpur in Modasa Taluka of Sabarkantha District. The place of employment of the deceased was near Bodeli in Baroda District. Appellant No. 1 in her deposition has stated that whenever her husband came to his native place, he paid to her money for the maintenance of the family and he thus paid to her about Rs. 1,200/- per month. Thus, as stated by appellant No. 1, her husband was getting about Rs. 1,500/- per month out of which he passed on Rs. 1,200/- per month to her for the maintenance of the family at his native place. On behalf of the Insurance Company, the appellant No. 1 was severely cross-examined and it was suggested to her that she has not produced any documentary evidence in support of the contention that her husband was getting Rs. 1,500/- per month by way of wages and was paying Rs. 1,200/- per month to her for the maintenance of the family. Appellant No. 1 has plainly admitted the fact that she does not have any documentary evidence in support of her say. As said above neither the employer, respondent No. 1, has tendered any oral evidence. Thus, the state of pleadings as they stand show that in the claim application, the applicant contended that the deceased was getting Rs. 1,500/- per month by way of his wages. The employer in his written statement very much admitted that fact and that would, as shown hereinabove, be an admission against respondent No. 1's own interest and, therefore, that admission should have a greater value.

15. Appellant No. 1, the widow of the deceased, under oath stated the facts about the income of her deceased husband and there should be no reason to disbelieve her on those facts. Being the wife of the deceased, she would obviously know what her husband was earning. As her husband must be paying sufficient amount to her for the maintenance of the family, she must be in the know of the fact about the amount paid to her by her husband for the maintenance of the family and there is no reason why we should disbelieve her when she has stated that her husband was paying to her Rs. 1,200/- per month for the maintenance of the family. To expect a village woman--a wife of a tractor driver--to produce documentary evidence in support of her statement about the income of her husband would be expecting too much and it would be adopting an unrealistic approach.

There is yet another matter which requires to be considered and that is the extent of the family of the deceased. The deceased in his family had himself, his wife, six minor daughters and both the aged parents. They ate all the claimants before the learned Commissioner and the appellants before this Court. The family was, therefore, a family consisting often souls. As stated by the appellant No. 1, the deceased was the only breadwinner of the family. In other words, the deceased was maintaining out of his earnings as a driver, a family of ten persons. In these hard days, it would just be impossible to believe that the deceased could have maintained his such a large family for Rs. 600/- per months, as worked out by the learned Commissioner to be the income of the deceased.

One more aspect of the matter may be noticed. The Insurance Company filed its written statement some six and a half months after the employer, respondent No. 1, filed his written statement, admitting therein the fact that he was paying to the deceased Rs. 1,500/- per month by way of wages and yet, in that written statement, Exh. 20, the Insurance Company did not even indirectly suggest any collusion between the claimants and the employer. When appellant No. 1 was in the witness-box also no suggestion was made that the claimants and the employer were in collusion and yet, at the time of the argument before the learned Commissioner, on behalf of the Insurance Company, an arguments appears to have been made that the employer and the claimants are in collusion and it is as a result of such a collusion that the employer had admitted in his written statement the fact that he was paying Rs. 1,500/- per month by way of wages to the deceased. Still more surprising is the fact that the learned Commissioner has, without any basis, accepted that contention and has slashed down the income of the deceased from Rs. 1,500/- per month to Rs. 600/- per month. To say the least, the approach of the learned Commissioner was wholly illegal. Even at the cost of repetition, there was a categorical assertion that the deceased was getting Rs. 1,500/ - per month by way of his wages. In the written statement filed by respondent No. 1, the employer, there was equally categorical admission of that assertion, viz., that he was paying Rs. 1,500/- per month by way of wages to the deceased. That admission made by respondent No. 1 was the admission against his own interest. Therefore, it should have higher probative value. The Insurance Company in its written statement never even distantly pointed out or asserted any collusion between the claimants and the employer. While cross-examining appellant No. 1 also no suggestion was made that the claimants and the employer were in collusion. On these facts, there was no scope for an argument that the claimants and the employer were in collusion and it was as a result of such a collusion that the employer had admitted Rs. 1,500/- as the income derived by the deceased from him. The learned Commissioner has accepted had submission of the Insurance Company about collusion between the employer and the claimants without there being any material on record forming a foundation for any such submission. The learned Commissioner has also accepted the argument of the Insurance Company that the employer has not cared to produce any documentary evidence to show that he was really paying Rs. 1,500/- per month to the deceased. Now, this line of reasoning is again wholly illegal. As pointed out hereinabove, the claimants assented that the deceased was getting Rs. 1,500/- per month by way of his wages. It was for the claimants to prove the income of the deceased. The employer submitted that fact. It was not for the employer to produce any evidence to disprove a fact which he very much admitted. It was not at all necessary for the employer to produce evidence in support of the contention raised by the claimants about the income of the deceased. The employer was in no duty to adduce evidence to prove the case set up by the claimants and for that purpose to produce his account books. Therefore, the non-production of any documentary evidence by the respondent No. 1, employer, on the point of the wages that he paid to the deceased was absolutely an irrelevant fact. If the employer disputed the claimants' case about the income of the deceased, then, obviously the employer would have been required to produce his account books to prove as to what he was paying to the deceased by way of his wages. But, when the employer admitted the claim averments about the income of the deceased as was paid by him to the deceased, there was no necessity on the part of the employer to have produced his account books or any other documentary evidence. Nothing, therefore, could be made out of this non-production by the employer of any documentary evidence in support of the income of the deceased. The whole approach of the learned Commissioner on this line is unjustified and, if we may say so, illegal.

16. The matter on this point can be viewed from yet another angle. As said above, in the written statement that it filed, the Insurance Company never contended that the claimants and the employer were in collusion, though the employer's written statement was on the record much prior to the filing of the written statement by the Insurance Company and in that written statement of the employer, there was a categorical admission about Rs. 1,500/- per month being the wages that were paid by the employer to the deceased. In the cross-examination of appellant No. 1--the sole witness in the case--no suggestion about any collusion between the claimants and the employer was made. Still, however, if the Insurance Company wanted to disprove that fact about the income of the deceased as was apparent on the evidence adduced by the parties, it was open to the Insurance Company to call upon the employer, who was its insured, to produce his account books and to show that, as a matter of fact, the wages that were paid by employer to the deceased were less than Rs. 1,500/- per month. Nobody prevented the Insurance Company from doing this exercise. The Insurance Company has not given any notice to the employer to produce his account books. It has not requested the Commissioner to have brought on record the account books and the documentary material in the possession of the employer, showing the wages that were paid by the employer to the deceased. Under these circurristances, it was just not open to the Insurance Company to argue that the admission about income of the deceased made by the employer was the result of the collusion between the employer and the claimants. The learned Commissioner had, without any basis on record, accepted the submission of the Insurance Company that respondent No. 1, employer, has, mala fide, made an admission in his written statement about Rs. 1,500/- per month being the income of the deceased and he has also accepted the argument of the Insurance Company that the employer has joined hands with the claimants and they are in collusion. This line of arguments of the Insurance Company before the learned Commissioner was wholly unjustified. The learned Commissioner should not have given any credence to that line of arguments.

17. The evidence on the record was clear and categorical. There was assertion of facts made by the claimants in their claim application about the income of the deceased. That assertion was admitted by the employer in unequivocal terms. Appellant No. 1, the widow of the deceased, under oath stated the facts about the income of the deceased. These pieces of material on the record were more than sufficient to warrant a finding that the claimants have satisfactorily proved that the deceased was getting Rs. 1,500/- per month by way of his wages. The learned Commissioner was in error in holding that it was very difficult to come to a definite conclusion that the deceased was getting Rs. 1,500/- per month by way of wages, etc. The whole approach of the learned Commissioner on the question of the income of the deceased was, in our opinion, illegal. We would, therefore, be required under Section 30 of the W.C. Act to rectify that error of law committed by the learned Commissioner. We accept the evidence on record and hold that the deceased was getting Rs. 1,500/- per month by way of his wages. It would be on that basis that the compensation payable to the dependants-appellants shall have to be worked out.

18. Under the W.C. Act, the maximum income that can be taken into consideration for the purpose of computing compensation payable to the claimants is Rs. 1,000/-. Therefore, notwithstanding the fact that the deceased was, as per the findings recorded by us hereinabove, getting Rs. 1,500/- per month, the compensation shall have to be computed on the basis of the income of the deceased at Rs. 1,000/- per month. The method of computation of compensation is prescribed under Section 4 of the W.C. Act. In case of death, the compensation has to be the amount equivalent to the 40 per cefit of the monthly wages of the deceased workman, multiplied by the relevant factor. Now that relevant factor has to be found in Schedule IV of the W.C. Act and that relevant factor has relation to the completed years of age on the last birth-date of the deceased workman, immediately preceding the date on which the compensation fell due. As pointed out hereinabove, on the date of the accident and on the date of death, the deceased had completed 27 years of age and he had yet to complete 28 years of age. Therefore, the relevant factor corresponding to the completed years 27 shall have to be found in such a case is 213.57. The learned Commissioner has taken the age of the deceased as 28 years and on that basis has taken the relevant factor to be 211.79. Now, taking Rs. 1,000/- being the maximum permissible monthly income of the deceased and reducing it to 40 per cent we get Rs. 400/- per month. When this amount of Rs. 400/- is multiplied by 213.57, we come to the figure of Rs. 85,4287 -. The basic compensation thus payable to the dependents would come to Rs. 85,428/- and not Rs. 50,829.60 as worked out by the learned Commissioner.

19. As said above, the accident happened on 12.3.1988 and the deceased died on 16.3.1988. The compensation under the W.C. Act, therefore, fell due latest on 16.3.1988. Under Section 4-A of the W.C. Act, it is provided that the compensation under Section 4 shall be paid as soon as it falls due. Under Sub-section (2) of Section 4-A of the W.C. Act, a duty is cast upon the employer, who does not accept the liability for compensation to the extent claimed, to make provisional payment based on the extent of liability which he accepts and to deposit such payment with the Commissioner or to make such payment to the workman and such deposit or such payment shall be without prejudice to the workman's right to make a further claim. Sub-section (3) of Section 4-A of the W.C. Act to which we will have a further occasion to refer in detail provides for two things: (1) a direction about simple interest at the rate of 6 per cent, and (2) a direction for recovery from the employer of a further sum not exceeding 50 per cent of the amount of compensation by way of penalty.

Thus, a bare reading of Section 4-A of the W.C. Act makes it clear that if the employer does not pay or deposit the amount of compensation at least to the extent the liability for which he accepts, within one month from the date on which the compensation fell due, the Commissioner may direct payment of simple interest at the rate of 6 per cent per annum on the amount of compensation. In the present case as indicated hereinabove the compensation fell due latest on the date the deceased died, i.e.., latest on 16.3.1988. Respondent No. 1, as the employer, was, therefore, duty-bound to pay to the claimants or to deposit before the Commissioner within one month from 16.3.1988, compensation amount payable to the claimants, or at least that much amount by way of compensation the liability for which he admitted. Nothing of this sort has been done by .respondent No. 1. On the contrary, the appellants as the claimants were required to issue a notice dated 26.4.1988, both to the employer and respondent No. 2. The office copy of that notice has been produced on record of the case at Exh. 38. The notice was sent to the two respondents under registered post acknowledgement due. The postal acknowledgement under the signature of respondent No. 1 is at Exh. 40 and the postal acknowledgement showing the receipt of the notice by the Insurance Company is at Exh. 41. These postal acknowledgements show that the notice was received by the respondent No. 1 on or about 7.5.1988 and it was received by respondent No. 2 on 2.5.1988. In the notice, the claimants have stated all the relevant facts about the employment of the deceased with respondent No. 1, about his monthly wages being Rs. 1,500/-, about the fact of the accident and about the death of the deceased and they have, by the notice, called upon the respondents to pay to them Rs. 1,30,000/- by way of compensation within ten days from the receipt of the notice. In the notice they have also stated that if the amount of compensation as demanded in the notice was not paid, they would be constrained to move the Commissioner for Workman's Compensation at Baroda under the provisions of the Act, for getting the amount recoverable by them together with penal amount of 50 per cent costs and interest. Even within one month from the receipt of this notice, respondent No. 1, the employer, did not care to pay or deposit the amount of compensation at least to the extent to which he admitted his liability. Respondent No. 1, therefore, clearly is liable to pay interest on the compensation amount in terms of Section 4-A of the W.C. Act. The learned Commissioner has awarded 6 per cent interest and has made both the respondents liable for that award for interest and will show that the Insurance Company is also liable to pay interest.

20. The amount of Rs. 85,428/- payable to the claimants by way of compensation should, therefore, carry interest at the rate of 6 per cent per annum from the date of the claim petition till payment.

21. Then comes the question of penalty. The relevant section bearing on the question of penalty is Section 4-A of the W.C. Act. That section reads as follows:

4-A. Compensation to be paid when due and penalty for default.-(1) Compensation under Section 4 shall be paid as soon as it falls due.

(2) In case 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 payment 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 at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for delay, a further sum not exceeding fifty per cent of such amount shall be recovered from the employer by way of penalty.

As shown above, while considering the point of interest, Sub-section (1) of Section 4-A of the W.C. Act casts a duty upon the employer to pay compensation under Section 4 of the W.C. Act as soon as it falls due and if the employer has any dispute as regards his liability to pay compensation, then he is duty-bound to pay or deposit that much amount of compensation, the liability for which he accepts, and he must pay that much amount of compensation as soon as it falls due. If the employer is in default in paying the compensation due under the W.C. Act within one month from the date it fell due, the Commissioner is empowered to direct that in addition to the amount of arrears, simple interest at 6 per cent per annum on the amount due together with, if in the opinion of the Commissioner, there is no justification for delay, a further sum not exceeding 50 per cent of such amount to be recoverable from the employer by way of penalty. Thus, under Section 4-A of the W.C. Act, firstly, the duty is cast upon the employer to pay the compensation as soon as it falls due, and if he has any dispute, he should pay or deposit at least the admitted part of the compensation, and if he commits default in making such payment within one month, the Commissioner, in his discretion, would have power to direct the payment of simple interest at the rate of 6 per cent per annum and if in the opinion of the Commissioner, there is no justification for the delay, the Commissioner can make a further direction for the recovery of the sum not exceeding 50 per cent of the amount of compensation by way of penalty from the employer.

22. In the present case, admittedly, no compensation has been paid to the claimants or deposited by the employer within one month from the date of death of the deceased. Again, admittedly, no such payment or deposit has been made by the employer within one month from the date of receipt of the notice under Section 10 of the W.C. Act. -The notice was received by respondent No. 1, employer, as stated earlier, on 7.5.1988. The claimants waited in the fond hope of receiving the compensation for more than a month from that date and, ultimately, when no compensation was paid to them, they were constrained to file the claim application before the Commissioner for Workmen's Compensation, Baroda, on 24.6.1988. Admittedly therefore, the compensation was not paid within one month. Respondent No. 1, the employer, has not shown any justification for not having paid the compensation within the period of one month. The case, therefore, has clearly attracted the applicability of Section 4-A of the W.C. Act, both for the purposes of direction for interest as has been made by the learned Commissioner as also for direction for payment of penalty. The learned Commissioner has directed 20 per cent of the compensation amount to be recovered from the employer and paid to the claimants by way of penalty. Mr. Pujara, the learned Advocate for the claimants, submitted that the penalty at the rate of 50 per cent of the basic compensation should have been made payable to the claimants. In support of his submission, Mr. Pujara drew our attention to the Division Bench decision of this Court in the case of Vimlaben Vashrambhai v. Gujarat Housing Board 1975 ACJ 84 (Gujarat). In the case, the claim for compensation under the WC Act was rejected by the Commissioner, and the claimants had come in appeal. While allowing the appeal of the claimants, this Court also inflicted penalty at the rate of 50 per cent of the compensation amount. On the basis of this judgment, Mr. Pujara submitted that we should also inflict SO per cent of the basic compensation as penalty. We are not in a position to accept the submission of Mr. Pujara as in the case of Vimlaben relied upon by him, the facts warranted a finding that there were mala fides on the part of opponent Nos. 1 and 2 in not paying compensation to the claimants within the statutory period. Therefore, in that case, not only that there was no justification for delay in making the payment, but there were positive mala fides on the part of the persons who were liable to pay compensation to the claimants and it was, therefore, that this Court inflicted penalty at the maximum permissible rate being 50 per cent. In the case before us, there are no facts on the basis of which we can say that there were any mala fides on the part of respondent No. 1, the employer, in not paying the compensation within the statutory period. In the case of Vimlaben relied upon by Mr. Pujara, the employers went to the extent of denying that the deceased was their employee and that the deceased was doing masonry work. In the case before us, such is not the position. Respondent No. 1, the employer, has very fairly admitted the fact that the deceased was his employee and that he met with the fatal accident during the course of his employment with him. As pointed out above, he also fairly admitted the income which the deceased was getting. Under these circumstances, it would not be possible for us to say that respondent No. 1, the employer in this case, had any mala fides in not making the payment of compensation. The decision in the case of Vimlaben could also be distinguished on the ground of the period of delay. In that case, the delay was quite sizeable as compared to the delay in this case. In that case, the accident occurred on 24.11.1967 and the claimants issued a notice in June, 1968. On the basis of all these facts, we find that the decision in the case of Vimlaben cannot held the claimants in this case to say that we should follow the decision in the case of Vimlaben and inflict 50 per cent of compensation as penalty on respondent No. 1.

23. Mr. Pujara next relied upon the decision in the case of Vrajlal Laxmidas Ladani v. Legal heirs of deceased Abdulhasan Sida 1986 ACJ 916 (Gujarat), where the Division Bench of this Court refused to interfere with the direction of 50 per cent of compensation as penalty that was made by the Commissioner, on the facts of that case. This Court there said:

If in the background of these facts, the learned Commissioner thought it proper to award 50 per cent of the amount of compensation by way of penalty, there is no reason for interference by this Court in exercise of its appellate powers.

Thus, in the case of Vrajlal there were facts which appealed to the Commissioner for inflicting 50 per cent of the compensation by way of penalty and this Court, hearing as it was an appeal under Section 30 of the W.C. Act, did not find it fit to interfere with that direction.

24. Section 4-A of the W.C. Act vests the Commissioner with a direction to choose the proper percentage of the basic compensation for being directed to be recovered from the employer by way of penalty. Section 30 of the W.C. Act provides an appeal only where a substantial question of law is involved. It would, therefore, be clear that in an appeal under Section 30 of the W.C. Act, the Appellate Court would not lightly interfere with the discretion exercised by the Commissioner and more particularly, the direction in choosing the appropriate percentage of the basic compensation to be awarded by way of penalty. In the present case, therefore, when the learned Commissioner has chosen 20 per cent as the rate of penalty in relation to the basic compensation, while hearing an appeal under Section 30 of the W.C. Act, we would not be justified in disturbing that discretion exercised by the learned Commissioner and the submission of Mr. Pujara that we should inflict the penalty at the rate of 50 percent of the basic compensation does not appeal to us. As we have pointed out herein-above the claimants should be entitled to Rs. 85,428/- by way of basic compensation. Penalty at 20 per cent of that amount would come to Rs. 17,085.60 (say Rs. 17,085/). Respondent No. 1, the employer, obviously would be liable for this penalty amount of Rs. 17,085/-.

25. The hotly debated question before us is whether the Insurance Company would be liable for this penalty component. The learned Commissioner has answered this question in the negative and for that decision he has followed the judgment of this Court in the case of Gautam Transport, Bhavnagar v. Jiluben Huseinbhai 1989 ACJ 587 (Gujarat). In that case, the Commissioner while awarding compensation of Rs. 30,000/- also imposed the penalty of Rs. 15,000/- and he ordered that penalty should be payable by the appellant of that case, who it appears was the employer and the Insurance Company was exonerated for the said amount of penalty. The employer preferred an appeal at the hearing of which a contention was raised that as the vehicle which met with the accident giving rise to the case was insured and the Insurance Company had issued the policy of insurance for indemnifying the appellant for any liability arising under the Workmen's Compensation Act, the Insurance Company should also have been held responsible for the penalty amount. This Court has negatived that contention and the reasons given by this Court for taking that view are:

The Insurance company while issuing an insurance policy only assures that it shall indemnify the assured for all liability which might be springing from the type of risk covered by the insurance policy issued by it. The liability for the penalty arises on account of clear violation of the statutory provisions of the Workman's Compensation Act and the Insurance Company cannot be saddled with the responsibility of indemnifying the assured if the assured acts in clear violation of a statutory requirement. The contract of indemnity also necessarily postulates that the person indemnified has to act in a way in which the damages are mitigated. If by his negligence he incurs an additional responsibility for having violated a statutory requirement then the Insurance Company cannot be asked to indemnify the assured on that score. If such a view were to be taken, it would give a blanket licence to the assured for violating the statutory requirement and in some unforeseen cases, it might even lead us to a situation where the assured and the claimant may join hands to fleece the indemnifier, i.e., the Insurance Company of a sizeable amount. Such could never be the intention of the provision in Workmen's Compensation Act or the Motor Vehicles Act, so far as the insurance policy, viz., the contract of indemnity is concerned.

Thus, this Court has, in terms, negatived the contention that the insurance Company is liable also for the penalty amount awardable under Section 4-A of the W.C. Act.

26. Mr. B.R. Shah, the learned Advocate for respondent No. 2, Insurance Company, argued this point even apart from this judgment in the case of Gautam Transport, 1989 ACJ 587 (Gujarat) and submitted that in any view of the matter, the Insurance Company could never be held liable for the penalty amount, for the recovery of which the Commissioner is empowered to make a direction under Section 4-A of the W.C. Act. In his attempt in this direction, Mr. Shah took us through the various provisions of W.C. Act and the M.V. Act.

27. In the present case, we are concerned with an employment injury arising out of the accident wherein the motor vehicle, viz., the tractor, was involved. However, the W.C. Act is not confined only to the injuries arising out of accidents involving motor accidents or vehicular accidents. The W.C. Act is on a wider canvas. It takes care of employment injuries and the resultant deaths even where no motor vehicle is involved. Under the W.C. Act, there is no scheme for a statutorily compulsory insurance as is to be found under the M.V. Act. It is only because in the M.V. Act, certain liabilities arising under the W.C. Act have been incorporated by a reference, that we are required to refer to the provisions of the M.V. Act, where the employment has resulted into an accident involving the use of motor vehicles.

28. The scheme of statutory insurance as it is popularly called under the M.V. Act is to be found in Chapter VIII of the M.V. Act. Section 94 of the M.V. Act in general forbids the use, in public place, of a motor vehicle, except where the policy of insurance, complying with the requirements of Chapter VIII in relation to that motor vehicle is in force. Section 95 of the M.V. Act spells out the requirements of the policy and the limits of liability. Insofar as it is relevant for the present purpose, Section 95 of the M.V. Act may be reproduced as follows:

95. Requirements of policies and limits of liability. -(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

(a). is issued by a person who is an authorised insurer or by a co-operative society allowed under Section 108 to transact the business of an insurer ; and

(b). insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2)-

(i). against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle, in a public place:

Provided that a policy shall not be required-

(i). to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee-

(a). engaged in driving the vehicle, or

(b). if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(c). if it is a goods vehicle, being carried in the vehicle, or XXX XXX XXX

29. Relying upon the aforesaid provisions contained in Section 95 of the M.V. Act, Mr. B.R. Shah, the learned Advocate for respondent No. 2, submitted that though by virtue of the later part of Clause (i) of the proviso as extracted above, a liability arising under the W.C. Act in respect of death of or bodily injury sustained by any such employee engaged in driving the vehicle is required statutorily to be covered under the policy of insurance, which can answer the requirements of the statutory scheme of insurance under Chapter VIII of the M.V. Act, there is nothing in the provision which requires the Insurance Company statutorily to cover the liability of the employer to pay penalty to the workman or to the dependents of the workman under W.C. Act in the event of the default being committed by the employer in making payment or making deposit of the compensation amount within the statutory period. On the other hand, Mr. Pujara submitted that the words as used in the later part of the proviso referred to hereinabove are wide enough to cover any liability of the employer even to pay penalty to the workman or his dependents on his default to pay or deposit the compensation within the statutory period as envisaged by Section 4-A of the W.C. Act. Mr. Shah submitted that it is not every liability arising under the W.C. Act, which is required statutorily to be covered under the later part of the proviso referred to hereinabove. According to Mr. Shah, the liability which is required statutorily to be covered under the W.C. Act must be the liability in respect of death of or bodily injury to the employee. In the submission of Mr. Shah, the liability to pay penalty can never be said to be a liability to pay in respect of death of or bodily injury to an employee. Mr. Shah submitted that what is payable to the employee who has been injured or to his dependents in the event of his death arising from that injury is compensation and it is that compensation alone, the liability for which of the employer, it required statutorily to be covered. Mr. Shah drew a distinction between the compensation part of the liability of the employer and the penalty part of the liability of the employer under the W.C. Act. Mr. Shah took us through the various sections of the W.C. Act and pointed out that basically it is the compensation payable under the W.C. Act which alone is the liability of the employer in the event of an employment injury or death resulting therefore. From the injury or from the death what flows by way of liability of the employer is a liability to pay compensation and only when he commits default in making payment or deposit of the compensation within the time prescribed by Section 4-A of the W.C. Act that he would further be liable to pay penalty if he fails to show any justification for the delay. Mr. Shah, therefore, submitted that by no stretch of interpretation of Section 95 of the M.V. Act could it ever be said that the Insurance Company would be liable to indemnify the insured even in respect of the penalty payable by the employer to the workman or his dependants in the event of the default of the employer in making payment or deposit of the compensation amount within the statutory period prescribed under the W.C. Act. We see a lot offered in the submission of Mr. Shah. The scheme of the *W.C. Act aims at paying the compensation to the workman having suffered injury. Under the W.C. Act, the liability of the employer to pay compensation is an absolute liability. It is 'no fault liability' and when he fails to pay compensation within the statutory period, he commits a default which attracts on him further liability to pay penalty. Otherwise, liability of an employer under the W.C. Act to pay compensation is an absolute liability; it is no fault liability or absolute liability alone of the employer which is statutorily required to be covered by virtue of the later part of Clause (i) of the Proviso to Section 95 of the M.V. Act reproduced hereinabove. The liability to pay compensation arises from the accident or injury. It has nothing to do with any default being committed by the employer. The liability to pay penalty arises only when the employer commits a default in making payment or deposit within the statutory period. Therefore, the liability spoken of in the later part of Clause (i) of the Proviso to Section 95 which came to be inserted in the M.V. Act by Act No. 100 of 1956 with effect from 16.2.1957 cannot include the liability to pay penalty. The liability to pay penalty cannot be said to be a liability in respect of death of or bodily injury to the employee. It is in respect of the default which might be committed by any employer in making the payment of the compensation within the statutory period. As said above, the submission of Mr. Shah that when the legislature, by Act No. 100 of 1956, inserted in Section 95 of the M.V. Act, compulsory Insurance in respect of the liability of employer to the employee under the W.C. Act, it never contemplated the liability of the employer to pay penalty under Section 4-A of the W.C. Act has a lot of force.

30. The argument of Mr. Shah also deserves acceptance if we view the matter from another angle. In Section 96 of the M.V. Act also, we find a reference to Clause (b) of subsection (1) of Section 95 of the M.V. Act, which we have extracted hereinabove and there it is stated that if the certificate of Insurance Company in favour of the person by whom the policy has been effected and thereafter the judgment in respect of any such liability as is required to be covered by the policy under Clause (b) of Sub-section (1) of section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then the insurer shall, subject to the provisions of Section 95 of the M.V. Act, pay to the person entitled to the benefit of the decree, any sum not exceeding the sum assured payable thereunder as if he were a judgment-debtor in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

31. Section 4-A of the W.C. Act came to be enacted by Act No. 8 of 1959 and came into force with effect from 1.6.1959. The concept of compulsory insurance for the liability of the employer to the employee as it appears in the later part of Clause (i) of the Proviso to Section 95 of the M.V. Act came to be enacted by Act No. 100 of 1956, which came into force on February 16, 1957. Therefore, when Section 4-A of the W.C. Act came to be enacted, the concept of compulsory insurance covering the liability of the employer to the employee as envisaged in Clause (i) of Proviso to Section 95 of the M.V. Act was on the statute book. At that time, i.e., in 1959, when Section 96 of the M.V. Act was also on the statute book and there, by virtue of Section 96 of the M.V. Act, the Insurance Company which issued a certificate of insurance was required to step into the shoes of the judgment-debtor, i. e., the insured, not only in respect of the liability for main claim (for compensation), but also it was liable for the costs and interest. Now, when the legislature enacted Section 4-A of the W.C. Act, the new concept of penalty, being the liability of the employer, was brought in. If the legislature wanted that in respect of the motor accidents and the liability of the employers arising from such accidents to their employees, the Insurance Company which has issued the certificate of insurance in respect of that motor vehicle, should also be made liable to indemnify the insured in respect of the penalty for which the new provision was being made by enacting Section 4-A in the W.C. Act, the legislature would have simultaneously amended Section 96 of the M.V. Act suitably to provide the indemnity to be given by the insurer to the insured also in respect of the insured's liability for penalty payable by the insured employer to the workman or to his dependents in the case of default being committed by the employer, i.e., the insured in making the payment or deposit of the compensation within the statutory period provided in Section 4-A of the W,C. Act. That has just not been done by the legislature. This is not enough. Even after 1959, in after under Section 4-A came to be introduced in the W.C. Act, the M.V. Act has been amended a number of times. It has been amended by Act Nos. 51 of 1960,58 of 1960,25 of 1968,56 of 1969,26 of 1976,27 of 1977,47 of 1978 and 47 of 1982. By none of these amending Acts, by some of which even Section 96 of the M.V. Act came to be amended, the legislature though it fit to insert in Section 96 of M.V. Act any provision making the Insurance Company liable, on part with the judgment-debtor, i.e., the insured of the employer in respect of the employer's liability for penalty payable by the employer under Section 4-A of the W.C. Act. When the aforesaid amending Acts by which the provisions of M.V. Act were amended and by some of which even the provision of Section 96 of the M.V. Act came to be amended, the legislature had before it, on the statute book, Section 4-A of the W.C. Act which provided for a direction for penalty being recovered from the employer in the event of the default in payment or deposit being made by the employer. If the legislature wanted this liability of the employer for penalty to be the subject-matter of a compulsory insurance in case of motor vehicles, then the legislature would certainly have provided either simultaneously with the introduction of Section 4-A of the W.C. Actor by subsequent amendments to the M.V. Act, a suitable provision making the Insurance Company also liable for the penalty by the employer under Section 4-A of the W.C. Act. The legislature has not done anything of the sort and that clearly shows that legislature never wanted that under the compulsory insurance scheme, the liability of chef employer for the penalty payable under Section 4-A of the W.C. Act should be covered. Therefore, even on the joint reading of Section 95 and 96 of the M.V. Act it becomes clear that therein there is no element of compulsory insurance covering the liability of the employer for penalty under Section 4-A of the W.C; Act. Therefore, it cannot be said that when the legislature in Section 95 of the M.V. Act has spoken about the liability of the employer under the W.C. Act as being compulsorily insurable, it has also covered therein the liability of the employer to pay penalty under Section 4-A of the W.C. Act.

32. Though not strictly relevant, we may mention here that the M.V. Act, which together with the various amendments therein held the field till recently, came to be replaced by the Motor Vehicles Act of 1988 (Act No. 59 of 1988) (for short 'the new M.V, Act') and instead and new M.V. Act came into force. Even in the new M.V. Act provisions similar to those found in Sections 95 and 96 of the M.V. Act have been made by Sections 147 and 149. But even there, the scheme has remained almost the same as it was in Sections 95 and 96 of the M.V. Act. What we want to emphasise is that even when the M.V. Act came to be repealed wholesale and a new Act came to be enacted in its place, the legislature did not think it fit to incorporate, as compulsory insurable, the liability of the employer to the employee, to pay penalty under Section 4-A of the W.C. Act.

33. There is yet another angle from which the matter could be viewed. As indicated hereinabove, the liability under the W.C. Act is an absolute liability. It is a no fault liability and the liability to pay compensation. It is only when the employer commits default in paying or deposition the compensation amount within the prescribed period that the further liability attached to him to pay penalty. The word 'penalty' as used in Section 4-A of the W.C. Act is itself suggestive of the fact that what is sought to be recovered from the employer is penalty, which would follow normally by way of penal consequences. It is with a view to penalise the defaulting employer that the concept of penalty has been introduced by Section 4-A of the W .C. Act. It is for, so to say, an offence of having committed a default in paying or depositing the compensation amount within the prescribed period that the employer is sought to be penalised. The idea is that he may not repeat his default in future. Now, if the liability for such a penal consequence could be transferred upon somebody else, the whole purpose of making a penal provision would be frustrated.

Mr. B.R. Shah, the learned Advocate, made a submission on the aforesaid line and sought to draw sustenance for his submission by relying upon Mc Gregor on Damages, 15th Edn., para 700 at page 699. There the view of Rowlatt, J. has been reproduced as follows:

a law which imposes a punishment as distinguished from a payment of compensation is defeated by the punishment being passed on to another. The object sought to be secured by such a statute in the public interest is not that so much money shall be collected by way of fine but that a person who puts himself in such and such a position shall be punished by way of fine in order to make such person prevent such things happening again, and I should have thought that the convicted person could obtain compensation in a Civil Court for the punishment inflicted upon him in the Criminal Court.

Though the observation of Rowlatt, J. reproduced hereinabove appears to be in relation to a punishment inflicted upon a party in the Criminal Court, the principle enunciated by him would apply even when the penalty is inflicted upon a party in a Civil Court or by the Commissioner under the W.C. Act. The principle behind imposition of punishment or fine is to deter the person upon whom the penalty is imposed from repeating the act for which he has been punished. It is, therefore, that Rowlatt, J. has emphasised the idea that if the punishment could be permitted to be passed on to another, then the whole idea behind the enactment for punishment would be frustrated. There Rowlatt, J. has drawn the distinction between punishment on one hand and payment of compensation on the other. The liability to pay compensation can be transferred by a statute to another person, but the liability to pay penalty if permitted to be so transferred by a statute, that would defeat the very provision which imposes the penalty, considering the matter from this angle also, we are convinced that the legislature could never have and has, in fact, never intended that there should be a compulsory insurance covering the liability of an employer to the employee for payment of penalty, as provided in Section 4-A of the W.C. Act.

34. We have hereinabove adverted to the question whether by virtue of Section 95 of the M.V. Act, the liability of the employer to pay penalty under Section 4-A of the W.C. Act is required compulsorily to be covered and we find that it is not so required compulsorily to be covered.

35. Now, before we go to the actual terms of the policy to find out whether, as a matter of fact, it provides indemnity to the insured for its liability to pay penalty to the employee or to his dependents we would like to refer to certain authorities which have dealt with the question Whether the Insurance Company is liable to pay the penalty payable by the employer under Section 4-A of the W.C. Act. We have hereinabove noted a direct judgment of mis Court bearing on the question reported in the case of Gautam Transport, Bhavnagar v. Jiluben Huseinbhai 1989 ACJ 587 (Gujarat). Even the learned Commissioner has relied upon that judgment for holding that respondent No. 2 is not liable for the penalty imposed upon respondent No. 1 in Gautam Transport (supra), this Court has in short given the reasons for the view that is taken, viz., that the Insurance Company is not liable to indemnify the insured in respect of the penalty payable by the insured employer to the workman or the dependants of the workman. In view of what we have said above, with respect, we agree with the view expressed by the Division Bench of this Court in case of Gautam Transport (supra).

36. A similar question arose in the case of Oriental Insurance Co. Ltd. v. Hasmat Khatoon 1989 ACJ 862 (Delhi). The learned Single Judge of the Delhi High Court considered the question in some detail and found in para 8 of the report that considering the provisions of the M.V. Act and the W.C. Act, there was only one area creating overlapping fields of liability where the Insurance Company can cover the liability arising under the W.C. Act in respect of death of or bodily injury to any employee engaged in driving a vehicle or being carried in the vehicle. The learned Single Judge of the Delhi High Court, considering the scheme and the scope of the relevant provisions of the two enactments, held that it is evident that it is the normal compensation payable in case of death of or bodily injury to an employee, which is subject to the provisions of the statute or the contract as mentioned in Section 95 of the M.V. Act. The provision for special interest or penalty under the Workmen's Compensation Act has an entirely different setting and purpose un-known to normal insurance law embodied in the contract between the parties.

The learned Judge proceeded to say that the limits of liability in certain cases can be limited by a contract between the parties under the M.V. Act, but any such contract is null and void under the Workmen's Compensation Act. In view of the divergent setting and 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.

After having gone through this judgment, with respect, we are not in a position to subscribe to the view of the learned Single Judge of the Delhi High Court, so far as the interest part is concerned. As explained hereinabove, the liability of the insurer for interest is specifically mentioned in Section 96 of the M.V. Act, along with the liability for costs. Therefore, on a proper interpretation, the liability for interest should also be read in the expression 'liability' as used in Section 95 of the M.V. Act. But that would not be the position in respect of penalty. As shown hereinabove, even with the various amendments in the M.V. Act, the legislature has never thought it fit to make the liability of the employer insured to pay penalty under Section 4-A of the W.C. Act to the employee or to his dependents the subject-matter of the compulsory insurance under Section 95 of the M.V. Act. However, the liability for interest has specifically been referred to in Section 96 of the M.V. Act. Therefore, it is not possible for us to fall in line with the learned Single Judge of the Delhi High Court when he puts the liability for interest on par with the liability for penalty. The liability for penalty and the liability for interest stand on different footings. The liability for interest is a natural corollary to the liability to make payment of compensation. The liability to pay penalty has different setting. It has relation to the default being committed by the employer in making the payment or deposit within the period prescribed under Section 4-A of the W.C. Act and again the default should be without there being any justification. Such is not the case qua the liability for interest. With respect to the learned single Judge of the Delhi High Court, while agreeing with him on the question of penalty, we find it difficult to agree with him on his interpretation on the point of liability for interest. Therefore, we partially agree with the learned Judge of the Delhi High Court and say that for the liability of the employer for penalty under Section 4-A of the W.C. Act, the Insurance Company cannot be held responsible.

37. In Oriental Insurance Co. Ltd. v. Jevaramma 1988 ACJ 671 (Karnataka), the Division Bench of the Karnataka High Court was also called upon to decide whether the Insurance Company was liable to pay penalty envisaged by Section 4-A of the W.C. Act. In para 7 of the report in that case, the Division Bench of Karnataka High Court observed as follows:

There is another important question to be considered in this case. It is whether the insurer is liable to pay penalty when the insurance policy is taken to cover specifically and only the risk of injury or death of the insured. On careful examination, we are of the opinion that the Insurance Company is liable to meet only the compensation payable for the risk covered and not the penalty also. Penalty is not a necessary part of compensation. Compensation is pecuniary damages payable in respect of the damage or injury caused including death. But penalty is material separation payable for breach of duty to pay the compensation within the statutory period prescribed under the Act. Penalty is distinctly different from compensation.

Now, the above view of the Karnataka High Court is also in line with our thinking which we have indicated hereinabove.

38. In Oriental Fire and General Ins. Co. Ltd. v. Matias Burla 1986 ACJ 732 (Orissa), the learned Single Judge of the Orissa High Court has taken a similar view, but for different and short reason, which appears in para 7 of that report. There the learned Single Judge has emphasised the word 'employer' as it appears in Section 4-A(3) of the W.C. Act and he has distinguished that word 'employer' from the expression 'any person' in Section 31 of the W.C. Act, which deals with the recovery of compensation. The learned Single Judge of the Orissa High Court has, on the basis of the distinction between the word 'employer' as used in Section 4-A of the W.C. Act and the expression 'any person' as used in Section 31 of the W.C. Act, found that the insurer is not the employer, and the provision of Section 4-A of the W.C. Act, being the penal provision, is required to be construed rigidly. In that view of his, the learned Single Judge found the penalty payable by the employer under Section 4-A of the W.C. Act.

39. The above authorities referred to by us also lend support to the view that we have taken hereinabove, viz., the Insurance Company is not liable to pay the penalty payable to the employee workman by the employer insured, under Section 4-A of the W.C. Act.

40. However, our attention was drawn to the decision in the case of Om Parkash v. Ramkali 1987 ACJ 803 (MP), where the learned Single Judge of the Madhya Pradesh High Court has, taking a contrary view, held that the Insurance Company is also liable for the penalty payable by the employer under Section 4-A of the W.C. Act. Having read the judgment in the case of Om Parkash very minutely, with respect to the learned Single Judge of the Madhya Pradesh High Court, we find it difficult to agree with the view taken therein. Of course, in that judgment, an attempt has been made to make an in-depth study of the various provisions of the M.V. Act and the W.C. Act. But what appears to have weighed heavily with the learned Single Judge of the Madhya Pradesh High Court is that in the policy of insurance in that case, the insurer had not excluded its liability under Section 4-A of the W.C. Act and, therefore, the Insurance Company was liable to pay the penalty also. With respect, we are not in a position to subscribe to this view of the learned Single Judge of the Madhya Pradesh High Court. Unless by statutory enactment or by a contract, the liability is included, there would never arise any question for exclusion of that liability. The liability for penalty on the Insurance Company should first be found to have been included and only then would arise the question of excluding that liability by a specific term in the insurance policy. We have hereinabove pointed out with reference to Section 95 of the M.V. Act that statutorily such a liability is not compulsorily insurable in the scheme of Section 95 of the M.V. Act, even though the liability to pay penalty might arise under the W.C. Act. Therefore, as statutorily such a liability cannot be said to have been' covered, there would not arise any question of excluding such a liability. This is one way of looking at the matter. The other way of looking at the matter is, if statutorily such a liability is compulsorily coverable, then even if by the contract an exclusion clause is provided, that would be meaningless for contracting out a statutory liability would be impermissible. In that view of the matter also, the reasoning of the learned Single Judge of the Madhya Pradesh High Court, which is based on the fact that in the contract of insurance such a liability is not excluded, cannot be subscribed to. This is so far as statutory coverage is concerned. Even apart from the statutory coverage, the parties would be free to cover any liability by a contract. If in the contract of insurance, the Insurance Company has undertaken to indemnify the insured employer against its liability to pay penalty, there would not arise any question of excluding such a liability in the same contract. If the Insurance Company wanted an exclusion from such a liability, it would not have included such a liability in the contract of insurance and the matter would have ended there. But if the Insurance Company in the contract of insurance undertakes such a liability there would obviously never be any question of incorporating in the same policy a clause excluding such a liability. If the Insurance Company did not want itself to be rendered responsible for such a liability, suffice it would have been for it not to have included in the contract of insurance any indemnity clause for such a liability. On one hand, to include in the contract of indemnity a liability to be responsible for the liability for penalty and in the same breath to stipulate for the exclusion of such a liability would be incongruous. Therefore, also the logic that in the insurance policy, the liability to indemnify the insured for the liability to pay penalty simply does not appeal to us. Under the statute, the Insurance Company was not bound to cover such a risk as explained by us hereinabove. Even so, if the Insurance Company undertook such aliability, there would not arise such a question of incorporating in the same contract an exclusion clause. Therefore, the reasoning of the learned Single Judge of the Madhya Pradesh High Court to the effect that as in the insurance policy, the Insurance Company has not excluded its liability for penalty, the Insurance Company should be held liable to pay the penalty as well, does not commend to us.

In the case of Om Parkash, 1987 ACJ 803 (MP), the learned Single Judge of the Madhya Pradesh High Court in para 15 of the report has said as follows:

The obvious need not be stressed that the liability of the 'employer', or for that matter, of the 'insurer' as respects to 'penalty' and 'interest' under Section 4-A(3) of the W.C. Act is evidently a 'liability' under W.C. Act and when an award is passed by the Commissioner under Section 4-A(3), the 'employer' and for that matter the 'insurer' becomes legally liable to pay that in terms of para 1 (of the policy); the obligation of the insurer to indemnify the employer in respect of such a liability ensues under para 1 (of the policy) itself.

Now, para 1 of the policy in that case, of course, was largely similar to the relevant clause 'of the policy in the case before us. That para 1 reads as follows:

(1) Subject to the limits of liability, the company will indemnify the insured against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of:

(1). death of or bodily injury to any person caused by or arising out of the use (including the loading and/or unloading) of the motor vehicle.

The Madhya Pradesh High Court, it appears, was greatly impressed by this para 1 of the contract of insurance: However, with respect to the learned single Judge, we find that he has not considered the question from the standpoint whether the liability to pay penalty can at all be said to be a liability in respect of death of or bodily injury to the employee. We have hereinabove pointed out that the liability in respect of death of or bodily injury to the employee. It is a liability in respect of the default committed by the employer in making payment or deposit of compensation within the statutory period. Madhya Pradesh High Court has not at all considered the question from the above standpoint. We are, therefore, not in a position to agree with the view taken by the Madhya Pradesh High Court in the case of Om Parkash, 1987 ACJ 803 (MP).

41. Our attention was drawn by Mr. Pujara to the decision in the case of Northern India Motor Owner's Insurance Co. Ltd. v. Magan Shanaji Solanki 1974 ACJ 55 (Gujarat). That is a Division Bench judgment of this Court. But the question there was entirely different. Of course, while analysing the scheme of the M.V. Act and the W.C. Act in the judgment, this Court has said that the Insurance Company is liable to satisfy the judgment as if it were a judgment-debtor. Relying upon these words as used by this Court in the said case, it was sought to be argued that once the Insurance Company has issued an insurance policy, it steps into the shoes of the insured and whatever liability the insured is called upon to satisfy, becomes the liability of the Insurance Company, whether it is the liability for compensation or whether it is liability for interest or whether it is liability for penalty. We are afraid, the judgment in the case of Northern India Motor Owners' Insurance Co. Ltd. (supra) relied upon by Mr. Pujara cannot be read so widely as he wants us to read. Firstly, in that case, the question never was whether the Insurance Company was liable for the penalty envisaged by Section 4-A of the W.C. Act. The only point that was canvassed before the Division Bench in that case was that the Insurance Company could never be made liable to pay any compensation and the Commissioner under the W.C. Act had no jurisdiction to pass such an order against the Insurance Company. This would be clear from the last lines of para 1 of the report which reads as follows:. The only point which Mr. Shah raised was that an Insurance Company could never be made liable to pay any compensation and the Commissioner under the Workmen's Compensation Act had no jurisdiction to pass such order against the Insurance Company.

In that case, it was canvassed on behalf of the Insurance Company that though under the M.V. Act, the Tribunal could have jurisdiction to pass an order against the Insurance Company directing the Insurance Company to pay compensation to the motor accident victim, the Commissioner under the W.C. Act had no parallel jurisdiction to direct the Insurance Company to pay the employee or to his dependents, compensation. It was, in order to consider the schemes of the W.C. Act and the M.V. Act, insofar as they were relevant, and ultimately found that by virtue of Section 96 of the M.V. Act, the Insurance Company would have the duty to satisfy judgment which is contemplated in Section 96 of the M.V. Act, as if it were a judgment-debtor. That proposition is unexceptionable, but the question is whether included in that proposition is another proposition that the Insurance Company would also be liable for the penalty part, which can be ordered against the employer under Section 4-A of the W.C. Act and there, having read the judgment very carefully, our answer is in the negative. That judgment lays stress on the fact that the liability under W.C. Act is an absolute liability. It is a no fault liability. We have adverted to this aspect earlier in this judgment. It is in relation to such an absolute liability and that would mean the liability to pay compensation, that this Court has said that the Insurance Company would also be liable to pay for such an absolute liability. This would be clear from the following observations which are to be found on page 60 left-hand column in para 6 of the report:

It may be that the liability under the Act may not be the negligence or fault based liability but absolute liability, but that liability is statutorily required to be insured by the policy under Section 95( 1) in respect of such an employee like the driver. Therefore, Sub-section (1) provides that in respect of such driver, the insurer would be liable to satisfy the judgment even in respect of the liability under the Workmen's Compensation Act to the extent provided therein and for that purpose Section 96(1) has enacted a statutory fiction that insurance company is to be treated as if it were a judgment-debtor.

The above observations made by this Court in that case clearly go to show that it was with respect to the absolute liability of the insured, which again was statutorily required to be insured that this Court said that the Insurance Company is to be treated as if it were a judgment-debtor. The Insurance Company cannot be equated with the judgment-debtor in respect of a liability which is statutorily not required to be covered. In other words, the Insurance Company cannot be compelled to step into the shoes of the insured in respect of a liability which is not statutorily coverable and which, in fact, has not been covered in the contract of insurance. Therefore, this judgment in the case of Northern India Motor Owners' Insurance Co. Ltd., 1974 ACJ 55 (Gujarat), in which the question never directly was about the liability of the Insurance Company to pay penalty under Section 4-A of the W.C. Act, has no assistance to render to the appellant before us.

42. Having seen the statutory setting and the authorities, we are of the opinion that the liability of the employer-insured to pay penalty to the workman or his dependents is not statutorily required to be insured under Section 96 of the M.V. Act. Therefore, by statutory fiction, such a liability cannot be passed on to this Insurance Company. In other words, the Insurance Company would not be liable to indemnify the insured for his liability for the payment of penalty under Section 4-A of the W.C. Act. The same view has been taken by this Court in the case of Gautam Transport, Bhavnagar v. Jiluben Huseinbhai 1989 ACJ 587 (Gujarat).

43. This now takes us to the contract of insurance between the respondent No. 1 and respondent No. 2 in the case before us. That contract of insurance, even with IMT Endorsement No. 16 having been incorporated therein, leads us to the same result as we have arrived at earlier. So far as the main body of the contract of insurance envisaged by the policy of insurance as Exh. 33 on the record of case is concerned, it is stated that the limit of liability of the insurer would be such as would be necessary under the M.V. Act, 1939. Of course, there it is stated that the contract of insurance shall be subject to, inter alia, Clause 16. Now that Clause 16 of Endorsement 16, as it is popularly called, insofar as it is relevant provides that:

In consideration of the payment of an additional premium it is hereby understood and agreed that notwithstanding anything contained herein to the contrary the company shall indemnify the insured against his legal liability under:. The Workmen's Compensation Act, 1923 and the subsequent amendments of that Act, prior to the date of this Endorsement, the Fatal Accidents Act, 1855 or at common law in respect of personal injury to any paid driver ....

This endorsement would show that by the contract, the Insurance Company has under-taken the liability not only under the W.C. Act, but also under the Fatal Accidents Act, as also the liability under common law. But when this endorsement speaks of liability which the insurer has undertaken, it is the liability in respect of personal injury to the driver which has been undertaken. We have hereinabove pointed out that the liability to pay penalty cannot be said to be a liability in respect of the personal injury to the driver or death of the driver resulting there from. The liability to pay penalty flows not from the personal injury sustained by the driver or his death resulting therefrom. But it flows from the default committed by the employer (insured) in making the payment or deposit of the compensation amount within the statutory period prescribed under Section 4-A of the W.C. Act. Therefore, even with this clause in IMT 16, it cannot be said that the Insurance Company has undertaken to indemnify the insured against its liability to pay penalty under Section 4-A of the W.C. Act.

44. There is yet another angle from which this IMT 16 attached to the policy could be viewed. The liability which has been undertaken by the Insurance Company under this endorsement IMT 16 has certain provisions. Proviso (2) is important. It says that 'Provided always that the insured shall take reasonable precautions to prevent accidents and shall comply with all statutory obligations.'

The words 'and shall comply with all statutory obligations' appearing in the second Proviso to this IMT 16 make it abundantly clear that the liability of the Insurance Company to indemnify the insured would be dependent upon the insured complying with all his statutory obligations. If the insured failed to comply with his statutory obligations, even under IMT 16, the Insurance Company would not be liable to indemnify him. In the case on hand, by virtue of Section 4-A of the W.C. Act, respondent No. 1, the employer (the insured), was obliged and liable to pay the compensation or deposit it, as soon as the compensation fell due. By virtue of Section 4-A, a statutory liability was cast upon the respondent No. 1, employer-insured, to pay or deposit at least that part of the compensation the liability for which he accepted and he was obliged to make that payment as soon as the payment fell due. He did not do it. The death occurred on 16.3.1988. He did not made the payment soon thereafter. He did not make the payment within one month of that date. He did not make the payment even within one month from the date of receipt of the notice issued to him by the claimants. He, therefore, committed default in complying with his statutory obligations and it is not default which gave rise to the liability for penalty. Therefore, by virtue of the second proviso contained in IMT 16, which is a part of the insurance policy, the Insurance Company is not liable to indemnify the insured against the insured's liability to pay penalty. We may point out here that in the case of Gautam Transport, 1989 ACJ 587 (Gujarat) and in some other judgments also this aspect has been highlighted. Therefore, even on the reading of the insurance policy as it is and even without invoking the interpretations of Sections 95 and 96 of the M.V. Act, the conclusion is that under the policy, the Insurance Company was not liable to indemnify the insured against the insured's liability to pay the penalty on account of the default committed by the insured in making the payment within the statutory time limit.

45. Thus, considering the matter from any angle and all angles, the finding inescapable is that neither in law nor under the contract of insurance embodied in the policy, Exh. 33, respondent No. 2, the Insurance Company, could be held liable to indemnify the employer insured, respondent No. 1, against the liability to pay the penalty. We hold, accordingly, as a result of this finding, the Insurance Company could not be held liable for the penalty component. Nonetheless, it would be liable for the compensation component and the interest component.

46. In the result, appeal is partly allowed and in place of the order and award passed by the learned Commissioner, we substitute the following order and award.

The appellants do recover a sum of Rs. 85,428/- (Rupees eighty-five thousand four hundred twenty-eight) only as compensation from the two opponents (the two respondents) withe interest at the rate of 6 per cent per annum on the said amount from the date of the claim application, i.e., from 24.6.1988 till realisation and the costs of the application before the Commissioner. It is directed that in addition to the aforesaid amount, opponent No. 1 (respondent No. 1) shall pay a further sum of Rs. 17,085/- being 20 per cent of the compensation as penalty, to the applicants.

Opponent No. 2, Insurance Company, shall deposit before the Commissioner the sum of Rs. 85,428/- (less the amount, if any, which it might have already deposited) and the amount of interest of which it has been held liable as aforesaid and the costs of the application before the Commissioner; which have been fixed at Rs. 473.50 within eight weeks from now.

Opponent No. 1 (respondent No. 1) shall forthwith deposit the penalty amount of Rs. 17,0857- before the Commissioner and in default it shall be recovered in the manner provided by law.

The amount of the award as aforesaid is apportioned as follows :

Rs. 10,000/- to each of the minor daughters being appellant Nos. 2 to 7. Rs. 10,000/- to each of the two parents being appellant Nos. 8 and 9.That would make a total of Rs. 80,000/- and the rest of the amount of the award with interest and costs is apportioned to appellant No. 1, the widow of the ' deceased.

On the amount of the award being deposited, the Commissioner shall invest the entire amount apportioned to the six minor daughters, for the same number of years as has been determined by the Commissioner in his judgment and award. He shall further invest a sum of Rs. 10,000/- apportioned to appellant No. 1, the widow, for a period of six years and the balance amount payable to appellant No. 1 shall be paid to her in cash.

The amounts apportioned to the two parents shall also be paid to them in cash.

Investments shall be made on the same terms and conditions as have been imposed by the learned Commissioner in his judgment and award.

There shall, however, be no orders as to costs of this appeal.