Gujarat High Court
National Insurance Co. Ltd vs Shivubhai Sangramji Jadeja on 7 July, 2025
NEUTRAL CITATION
C/FA/3308/2007 JUDGMENT DATED: 07/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3308 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
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NATIONAL INSURANCE CO. LTD.
Versus
SHIVUBHAI SANGRAMJI JADEJA & ANR.
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Appearance:
MR SUNIL B PARIKH(582) for the Appellant(s) No. 1
MR MEHUL S SHAH(772) for the Defendant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 07/07/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant – National
Insurance Company Limited against the judgment and award
dated 24.04.2006 passed by the learned Commissioner for
Workmen’s Compensation at Bhuj-Kachchh in Workmen’s
Compensation Case (N.F.) No.5 of 1998, whereby the learned
Commissioner has awarded compensation of Rs.2,58,336/-
with interest @ 12% p.a. in favour of original claimant and also
directed the appellant Insurance Company to pay 40% penalty
alongwith other expenses.
2. The short facts giving rise to present appeal are that, the
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respondent No.1 – original claimant was employed with
respondent No.2 and was working as a vehicle driver of
respondent No.2. That, on 13.12.1996, the respondent No.1
was on duty and was returning from Bhujpur sim to Bhupur
with Chhakada bearing registration No. GJ-12-U-6436 of
respondent No.2 owned by respondent No.1. That, he was
driving the said Chhakada on the left hand side of the road
with moderate and controllable speed. That, around 15-30
hours, the said Chhakada was about 1 km away from Bhujpur
towards Mundra on Mundra-Bhujpur-Mandvi road, at that time,
a Jeep bearing registration No. GJ-X-964 came from the
opposite direction in full speed and in zig-zag manner. That,
the Jeep driver lost control over his Jeep and dashed and
collided with Chhakada. In the result, the respondent No.1
sustained serious injuries on different parts of he body
resulting into permanent and total disability. At the time of
accident, the respondent No.1 was aged 26 years and
therefore, he had claimed compensation by filing Workmen’s
Compensation Case being Workmen’s Compensation Case
(N.F.) No.5 of 1998, whereby the learned Commissioner has
awarded compensation of Rs.2,58,336/- with interest @ 12%
p.a. and also directed the appellant Insurance Company to pay
40% penalty alongwith other expenses.
3. Being aggrieved and dissatisfied with the aforesaid
judgment and award passed by the learned Commissioner, the
appellant Insurance Company has filed the present First Appeal
under Section 30 of the Workmen’s Compensations Act, 1923.
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4. Heard learned advocate Mr. Sunil B. Parikh, appearing for
the appellant – National Insurance Company Ltd. and learned
advocate Mr. Mehul S. Shah, appearing for the respondent
No.1 – original claimant.
5. Learned advocate Mr. Parikh has submitted that the
impugned judgment and award is challenged mainly on two
counts viz., the direction fasten against the appellant
Insurance Company to pay penalty and the interest awarded
by the learned Commissioner @ 12%. He has submitted that
now it is well settled that so far as the liability of penalty is
concerned, it cannot be fastened against the Insurance
Company but, it is required to be borne by the employer who
failed to pay the awarded amount within 30 days from the date
of award and it is now covered by various decisions of the
Hon’ble Apex Court as well as this Court and therefore, the
directions qua payment of penalty @ 40% is absolutely illegal,
unjust and against the settled principles of law. He has further
submitted that the rate of interest awarded by the learned
Commissioner is also unjust and disproportionate. Learned
advocate Mr. Parikh has submitted that the issue relating to
liability of payment of penalty is directly covered by the
decisions of the Hon’ble Apex Court and therefore, urged that
the present appeal be allowed and the directions qua payment
of penalty be appropriately modified. He has also submitted
that so far as the interest awarded by the Commissioner @
12% is concerned, it is on very higher side and therefore, he
has requested to decrease the rate of interest from 12% to 9%
and urged that the present appeal be allowed. In support o his
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submissions, learned advocate Mr. Parikh has referred and
relied upon the decision of the Hon’ble Apex Court rendered in
case of New India Assurance Company Ltd. vs.
Harshadbhai Amrutbhai Modhiya and another, reported
in [2006] 5 SCC 192.
6. As against that, learned advocate Mr. Shah appearing for
the respondent No.1 – original claimant, has submitted that so
far as the penalty is concerned, he has nothing to say further
as it is already covered by numbers of decisions but, so far as
the rate of interest is concerned, it is subsequently amended
by the Act itself where the rate of interest is from 6% to 12%
and therefore, there is no any infirmity in the impugned award
passed by the learned Commissioner and therefore, so far as
the interest part is concerned, no altercation is required to be
made in the impugned award. Learned advocate Mr. Shah has
submitted that so far as the rate of interest is concerned, the
issue is already decided by the Hon’ble Apex court in various
decisions and therefore, urged that the rate of interest be
maintained as observed by the learned Commissioner in the
impugned award and no interference is required to be called
for in the impugned award passed by the learned
Commissioner.
7. I have heard the learned advocates appearing for the
respective parties and perused the material placed on record.
So far as the amount of penalty is concerned, it is already
covered by the decision of this Court in First Appeal No.4211 of
2006 relying upon various decisions of the Hon’ble Apex Court,
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wherein, it has been observed that the liability to pay the
penalty is on the insured and not on the Insurance Company.
The relevant paragraphs are reproduced hereunder :
“9. At this stage, it is appropriate to take into account the
observations made by Hon’ble Apex Court in case of Fulmati
Dhramdev Yadav vs. New India Assurance Co. Ltd. reported
in 2023 (12) Scale 71, wherein Hon’ble Apex Court has held as
under:-
“Analysis and Consideration
14. The act governing the present dispute, i.e., the Workmen
Compensation Act, 1923, has been, vide The Workmen’s
Compensation (Amendment) Act, 2009, amended, by which
the word “workmen” has been substituted by “employees”
rechristened as the Employees Compensation Act, 1923.
15. What this Court must consider is whether the impugned
judgement is sustainable in law? On merits, the consideration
would be whether the order of the Commissioner, in light of
the materials on record, can stand or not? In other words, the
impugned judgement must stand true on two grounds, (i)
statutory text; and (ii) whether the materials on record
support the conclusion drawn therein or not?
16. Appeals within the act are governed by Section 30 which
is extracted below for reference: –
“30. Appeals. — (1) An appeal shall lie to the High
Court from the following orders of a Commissioner,
namely :– an order awarding as compensation a lump
sum whether by way of redemption of a half monthly
payment or otherwise or disallowing a claim in full or in
part for a lump sum; 1 [(aa) an order awarding interest
or penalty under section 4A;]
(b) an order refusing to allow redemption of a half-
monthly payment;
(c) an order providing for the distribution of
compensation among the dependants of a deceased 6
[employee], or disallowing any claim of a person
alleging himself to be such dependant;
(d) an order allowing or disallowing any claim for the
amount of an indemnity under the provisions of sub-
section (2) of section 12; or
(e) an order refusing to register a memorandum of
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agreement or registering the same or providing for the
registration of the same subject to conditions:
Provided that no appeal shall lie against any order
unless a substantial question of law is involved in
the appeal and, in the case of an order other than
an order such as is referred to in clause (b),
unless the amount in dispute in the appeal is not
less than 2 [ten thousand rupees or such higher
amount as the Central Government may, by
notification in the Official Gazette, specify]:
Provided, further, that no appeal shall lie in
any case in which the parties have agreed to
abide by the decision of the Commissioner, or in
which the order of the Commissioner gives effect
to an agreement come to by the parties:
[Provided further that no appeal by an
employer under clause (a) shall lie unless the
memorandum of appeal is accompanied by a
certificate by the Commissioner to the effect that
the appellant has deposited with him the amount
payable under the order appealed against.] (2)
The period of limitation for an appeal under this
section shall be sixty days.
(3) The provisions of section 5 of 4 [the Indian
Limitation Act, 1963 (36 of 1963)] shall be
applicable to appeals under this section.”
(Emphasis Supplied)
17. The Act is unequivocal in stating that an appeal from
an order of Commissioner can be entertained only if
there exists a substantial question of law to be
considered. It has been observed by this Court that the
phrase “substantial question of law” within this Act shall
be understood by its general meaning. When
considering the general meaning of this phrase,
naturally, the reference is to the Code of Civil Procedure
(CPC). The rule therein is that framing of a substantial
question of law is of cardinal importance.
18. A bare perusal of the impugned judgement shows
that the Court did not frame any such question.
19. The wording of the Act indicates that the existence
of such a question is a prerequisite to the appeal being
entertained.
20. Illustratively, in North – East Karnataka Road Transport
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Corporation v. Sujatha7 (Two-Judge Bench) amongst
numerous other cases, this Court has observed:
“12. In other words, the appeal provided under
Section 30 of the Act to the High Court against
the order of the Commissioner is not like a regular
first appeal akin to Section 96 of the Code of Civil
Procedure, 1908 which can be heard both on facts
and law. The appellate jurisdiction of the High
Court to decide the appeal is confined only to
examine the substantial questions of law arising
in the case.”
21. The other ground making the order under challenge,
amenable to interference when the scope of jurisdiction is
circumscribed by it being exercised only in cases of
“substantial question of law”, is perversity in the findings.
Here, the impugned judgement does not, even remotely,
reflect the observation that the findings arrived at by the
Commissioner are perverse. The difference, between the two
judgements, i.e., the order of the Commissioner and the
judgment in First Appeal, was on the point of the employer-
employee relationship having been established. The
Commissioner held such relationship to have been
established however, the appeal Court observed that
“claimants have clearly failed to prove this aspect” 7 (2019)
11 SCC 514
22. It may here only be noted that the Commissioner had not
returned any findings in respect of the validity of non-
availability of the license of the deceased nor was it one of
the questions framed by the Commissioner for consideration.
In such a situation, while exercising powers within the limited
purview allowed by section 30 of the Act, the learned Court
below erred in making observations and giving a holding in
that regard.
23. It has also been observed by this Court that the
Commissioner is the last authority on facts involved in a case.
In Golla Rajamma & Ors. v. Divisional Manager & Anr.8 (2-
Judge Bench) it was observed that “under the scheme of the
Act, the Workmen’s Compensation Commissioner is the last
authority on facts. Parliament has thought it fit to restrict the
scope of the appeal only to substantial questions of law,
being a welfare legislation. Unfortunately, the High Court has
missed this crucial question of limited jurisdiction and has
ventured to reappreciate the evidence and recorded its own
findings on 8 (2017) 1 SCC 45 percentage of disability for
which also there is no basis. The whole exercise made by the
High Court is not within the competence of the High Court
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under Section 30 of the Act.”
24. Keeping in view the said principles, the impugned
judgement, ex-facie, appears to be in contravention thereto.”
10. It appears that at the time of admission of the Appeal, the
Court has not framed any substantial question of law however,
considering the submission advanced by Mr. Mazmudar, learned
counsel for the appellant and in view of above referred decision of
the Hon’ble Apex Court, the substantial question of law arises for
consideration before this Court is, whether the insurance company
is liable to pay the penalty @ 50% upon failing to deposit the
amount of compensation within 30 days or not?
11. For that, the submission of learned counsel for the appellant is
that so far as the liability to pay the penalty is concerned, if the
awarded amount is not paid to the claimants within 30 days from
the date of accident, then only they are entitled for 50% of penalty,
as provided under the statute but that liability is cast upon the
insurer by virtue of the contractual relationship and thus, liability to
pay 50% of penalty is upon the insurer and not on the insurance
company.
12. In view of the discussion made by the Hon’ble Apex Court in the
above referred judgment, the contention raised by learned
advocate for the appellant qua liability to pay penalty @ 50% is
required to be considered. Therefore, present appeal is entertained
only qua two aspects one is liabilities to pay the penalty and second
is rate of interest.
13. At this stage, it is also relevant to take into account provision
of Section 30 of the Workmen’s Compensation Act, which reads as
under:-
“30. Appeals.–
(1) An appeal shall lie to the High Court from the following
orders of a Commissioner, namely:
(a)an order awarding as compensation a lump sum whether
by way of redemption of a half-monthly payment or otherwise
or disallowing a claim in full or in part for a lump sum;(aa)an
order awarding interest or penalty under section 4A;
(b)an order refusing to allow redemption of a half-monthly
payment;
(c)an order providing for the distribution of compensation
among the dependants of a deceased employee, or
disallowing any claim of a person alleging himself to be such
dependant;
(d)an order allowing or disallowing any claim for the amount
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of an indemnity under the provisions of sub-section (2) of
section 12; or
(e)an order refusing to register a memorandum of agreement
or registering the same or providing for the registration of the
same subject to conditions:
Provided that no appeal shall lie against any order
unless a substantial question of law is involved in the appeal,
and in the case of an order other than an order such as is
referred to in clause (b), unless the amount in dispute in the
appeal is not less than thousand rupees or such higher
amount as the Central Government may, by notification in
the Official Gazette, specify:
Provided further that no appeal shall lie in any case in
which the parties have agreed to abide by the decision of the
Commissioner, or in which the order of the Commissioner
gives effect to an agreement come to by the parties:
Provided further that no appeal by an employer under
clause (a) shall lie unless the memorandum of appeal is
accompanied by a certificate by the Commissioner to the
effect that the appellant has deposited with him the amount
payable under the order appealed against.
(2)The period of limitation for an appeal under this section
shall be sixty days.
(3)The provisions of section 5 of the Limitation Act, 1963 (36
of 1963), shall be applicable to appeals under this section.”
14. The provision of Section 30 of the Workmen’s Compensation
Act establishes that the High Court cannot interfere in the award
passed by the Commissioner unless and until it is satisfied that the
substantial question of law is involved in the appeal. The statutory
provision restricts the interference of the High Court. However,
considering the fact and the limitation to entertain present appeal,
more particularly Section 30 of the Workmen’s Compensation Act,
only the circumstance which is enumerated under Section 30 of the
Workmen’s Compensation Act, High Court can interfere with the
award passed by the Commissioner.
15. It appears that so far as the amount awarded towards the
quantum of compensation is concerned, the insurance company is
unable to point out any illegality or irregularity in the impugned
judgment and order. Hence, so far as the amount of compensation
awarded by the learned Commissioner to the tune of Rs.4,15,960/-
is concerned, this Court is not interfered in the said amount. This
Court is of the opinion that the said amount is just and proper.”
7.1 At this stage, it would also be fruitful to refer to the
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decision of this Court in case of New India Assurance
Company Ltd. vs. Harijan Dalabhai Jemal and Others,
reported in [2010] 4 GLR 3192, relevant paras 8 and 9.
8. Considering the submissions and considering the
aforesaid decisions, I am of the opinion that the present appeal
is required to be partly allowed and the impugned award
passed by the learned Commissioner is required to be modified
to the extent that the direction qua liability fasten upon the
appellant Insurance Company to pay the penalty @ 40% is
hereby quashed and set aside and it is modified to the extent
that the it is open for the respondent No.1 – original claimant
to recover the penalty amount from the respondent No.2
herein – original opponent No.1 by way of filing appropriate
proceedings. So far as the rate of interest awarded by the
learned Commissioner is concerned, since it is covered by the
decisions of the Hon’ble Apex Court, I am of the opinion that
the rate of interest awarded by the learned Commissioner is
just and proper and no interference is required to be called for.
8.1 In view of above, the amount of 40% penalty deposited
by the appellant Insurance Company, which was invested in
cumulative FDR by order dated 26.11.2007 passed by this
Court, is to be refunded to the appellant Insurance Company
alongwith interest accrued on it and remaining amount, if any,
lying with the learned Commissioner, is to be disbursed in
favour of the original claimant through RTGS/NEFT, after due
verification.
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8.2 In view of the aforesaid the impugned judgment and
award dated 24.04.2006 passed by the learned Commissioner
for Workman’s Compensation at Bhuj-Kachchh in Workman’s
Compensation Case (N.F.) No.5 of 1998, is hereby modified to
the aforesaid extent.
9. Accordingly the appeal is party allowed. No order as to
costs.
10. Record and proceedings, if any, be sent back to the
concerned Court forthwith.
(HEMANT M. PRACHCHHAK,J)
Dolly
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