CMA(MD)/57/2023 of The Branch Manager Vs R.Manjula on 2 November 2026

J U D G M E N T

This Civil Miscellaneous Appeal is filed under section 30 of the Employee's Compensation Act, 1923, against the order passed by the Deputy Commissioner of Labour, Madurai in E.C.No.110 of 2017 , dated 29.08.2022.

2. Brief facts to dispose the appeal is as that One Mr. H. Raman had been working as a Supervisor under the fourth respondent Firm for the past three years. On 13.06.2016, at about 05.30 p.m., while Mr. H. Raman was supervising the work at the compost manure site and scattering paddy straw, he died due to electrocution and electric shock, arising out of and in the course of his employment. The deceased was earning a monthly salary of Rs.20,000/-. Since the fourth respondent, being the Proprietor of the Firm, had engaged the services of Raman, he was liable to pay compensation of Rs.7,07,160/-. Hence, the legal heirs of the deceased Raman approached the Deputy Commissioner of Labour, Madurai.

3. The written statement of the fourth respondent is that the allegations contained in the claim petition are denied. The fourth respondent is engaged in horticultural activities, including the cultivation and sale of button mushrooms. It is admitted that the deceased Raman was employed under the fourth respondent as a Supervisor. It is also admitted that the deceased died due to electrocution and electric shock in the course of his employment.

The monthly salary of Rs.20,000/- drawn by the deceased is also admitted. The deceased Raman died during the course of employment and the insurance policy was in force, the insurance company is liable to pay compensation.

4. The written statement of the appellant is that the allegations contained in the claim petition are denied. Since the employer has not been duly insured, the appellant Insurance Company is not liable to pay compensation. The salary certificate issued by the employer is a fabricated document. Only a voucher has been produced before the Court, and the employer has not produced the disbursement book showing the amount, mode of payment and date of payment. The fourth respondent has not proved that the deceased Raman is the employee of the fourth respondent. The appellant is responsible to pay only for basic compensation and is not liable for interest and penalty under the terms and conditions of the policy.

5. Before the Labour Commissioner, on the side of the petitioners, the first petitioner examined herself as P.W.1 and 13 documents were marked as Ex.P1 to Ex.P13. On the first respondent one Manivannan, who is the Manager of the first respondent Firm, was examined as R.W.1 and through him Ex.R1 was marked. On

the side of the second respondent, one Ravichandran, who is the Senior Regional Manager of the second respondent insurance company, was examined as R.W.2 and through him Ex.R2 was marked.

6. After considering the case, the Deputy Commissioner of Labour, Madurai, has come to a conclusion that the second respondent is liable to pay a compensation of Rs.7,07,160/- and directed them to pay the said amount together with interest at the rate of 12% per annum. Against the said order, the second respondent filed this appeal.

7. This appeal was admitted on 27.01.2023 on the following substantial questions of law: “(1) Whether the learned Commissioner has got power to order any amount contrary to the terms and conditions of the insurance policy?

(2) Whether the Commissioner has got power to go beyond the terms of insurance policy and direct the appellant / Insurance Company to pay interest for the award amount?

(3) Whether the learned Commissioner has got power to award interest against the insurance company contrary to the provisions of law?”

8. The learned counsel for the appellant submitted that though their liability is admitted, the insurance company is liable to pay the policy amount, but, has no liable to pay interest on the award amount, wherein, the contract between the appellant and the fourth respondent is only for liability and not for interest. The said counsel referred the insurance policy in Ex.R2 in which as per the policy conditions in the caption of endorsement, it is stated that the policy coverage shall not extend to indemnify the insured in respect of any interest or penalty arising on account of the insured's failure to comply with the requirements laid down under the Employees' Compensation Act, 1923.

9. The policy in Ex.R2 is a computer generator policy, there is no signature from the insurance company and the policy holder is the fact admitted by both sides. As far as the conditions and liabilities, attachment document, it was not acknowledged by the fourth respondent is also admitted by the witness R.W.2 from the insurance company. When the conditions of the policy has not been supplied to the fourth respondent and the liability is admitted by the insurance company and having no disbursement of claim, since the employer submitted form to the insurance company, they are liable

to pay interest as per the common law. The case facts also reveal that when the employer has submitted form with the insurance company to honour the policy amount to the victim, the insurance company orally directed, let the parties may approach the Court of law and as per Court order, the amount would be paid, as per the arguments of the respondents 1 to 3 in this case, which is not disputed by the learned counsel for the appellant.

10. The finding of the Labour Commissioner that the deceased Raman died during the course of the employment is not disputed. There is an employer and employee relationship between the fourth respondent in this appeal and the deceased H.Raman. Therefore, there is no dispute about it. The only submission made by the appellant before this Court is that the Insurance Company is not liable to pay interest on the compensation amount, even though there was a delay on the part of the Insurance Company in disbursing the admitted amount. In this regard, the Labour Commissioner under the impugned order discussed the same and referred the Hon’ble Supreme Court decisions in Pratap Narain Singh Deo v. Srinivas Sabata (1976) 1 SCC 289 and Oriental Insurance Company Limited v. Sibi George & Ors. (2012) 3 LLN 510 (SC) and imposed

interest at the rate of 12% per annum on the award amount directing the insurance company to deposit the same.

11. When the deceased Raman died during the course of employment, the policy was in force, which is not disputed by the insurance company. Having the policy was in force, the insurance company is liable to pay the policy amount. The facts of the case reveal that, when the employer submitted the form seeking disbursement of the policy amount, the Insurance Company directed the parties to approach the Court of law and assured them that the compensation amount, along with interest, would be paid in accordance with the orders of the Court. Having taken such a stand, the appellant cannot now contend in the grounds of appeal that the Insurance Company is not liable to pay interest. Hence, the said contention cannot be accepted.

12. When the condition of the policy was not known to the employer, who was availed policy for the employees, the condition that the insurance company is not liable to pay interest cannot be accpeted. Whenever the amount is involved in a litigant, if the opponent party failed to pay that amount and when it come to the Court, the Court may order the opponent party to pay interest from

the date of liability till the date of realisation is the common law procedure. Though there is a contract as per Ex.R2, but the conditions of the contract was not supplied to the employer, when the policy was taken, therefore, the insurance company cannot be permitted to plead that they may not pay any interst.

13. In such view of the matter, the substantial questions of law framed by this Court are answered against the appellant, wherein, as per section 4A(3) of the Employee’s Compensation Act, 1923, the Labour Commissioner has power to order minimum interest at the rate of 12% as simple interest or higher rate of interest as determined in the scheduled bank. Here, in this case, the Labour Commissioner awarded 12% simple interest per annum, which is minimum as per section 4A(3) of the 1923 Act, thereby, the said finding is in consonance with the law and it cannot be set aside by the appellate Court.

14. In view of the above, all the substantial questions of law are answered in the negative and against the appellant.

15. In the result, this Civil Miscellaneous Appeal fails and is accordingly dismissed. The impugned order dated 29.08.2022 passed by the Labour Commissioner, Madurai, in E.C.No.110 of

2017 is confirmed. Considering the nature of the case, there is no order as to costs. Consequently, connected Miscellaneous Petition is closed. Internet : Yes/No 02.11.2026 Index : Yes/No NCC : Yes/No LS

To The Labour Commissioner, Madurai. Copy To : The Section Officer, VR Section, Madurai Bench of Madras High Court, Madurai.

DR. P. MURUGAN, J. LS Pre-delivery Judgment made in CMA(MD) No. 57 of 2023 and CMP(MD) No. 721 of 2023 02.11.2026