IQBAL KHAN vs SURJEE DEVI & ORS

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 13th December, 2023
Judgment pronounced on: 07th February, 2024
+ FAO 366/2018 and CM APPL. 31263/2018 (Stay), CM APPL.
31264/2018 (Delay of 90 days in filing)
IQBAL KHAN ….. Appellant
Through: Mr. Madhu Sudan Bhayana,
Mr. Madahv Shah, Mr.
Pradhuman, Mr. Vikrant Rana
and Mr. Arjun Khatri, advs.
versus
SURJEE DEVI & ORS ….. Respondents
Through: Mr. Pankaj Gupta, Advs. for R-
1 to R-5
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T

1. This judgment shall decide an appeal preferred by the
appellant/employer under Section 30(1) (aa) of the Employee’s
Compensation Act, 19231 r/w Section 151 Code of Civil Procedure,
19082for setting aside the impugned judgment-cum-order dated
21.03.2018, whereby the learned Commissioner, Employee’s
Compensation imposed a penalty upon the appellant, in terms of
Section 4A(3)(b) of The Act.

1 The Act

2 CPC

FACTUAL BACKGROUND:
2. Briefly stated that one workman, Pappu Kamti, died in the
course of his employment as a driver of the truck, which is owned by
the respondent No.1 and was insured by the insurance policy issued by
the respondent No.2. A claim petition was filed by his wife/widow
and four children bearing No. WCD299/North-West/15/238 dated
26.03.2018. After due enquiry, it was decided vide judgment-cum-
award dated 30.01.2017, whereby the respondent No.2 i.e. M/s.
Oriental Insurance Co. Ltd. was directed to pay the compensation of
Rs. 8,31,920/- along with interest @ 12% p.a. from 08.08.2015 till
date of actual payment to the claimants.

3. Subsequently, the present complaint WCD299/North-
West/15/238 dated 26.03.2018, was filed by the wife/widow of the
deceased against employer/respondent No.1, as well as respondent
No.2/Insurance Company, for consideration of imposition of penalty
upon them in terms of Section 4A(3)(b) of The Act. This penalty is for
the default in paying the compensation to the claimant on the death of
her husband in the course of employment within one month from the
date it fell due on them. The main challenged before the learned
Compensation Commissioner by the respondent/employer, who is
now the appellant, was that no independent proceedings can be
launched for imposition or payment of penalty, as the said aspect was

a part and parcel of the earlier judgment-cum-award dated 30.01.2017
passed by the learned Commissioner, Employee’s Compensation. The
appellant relied on the decision in the case of Delhi Development
Authority v. Raju3, decided on 27.10.2017.

3 FAO 327/2016
4 AIR 1963 SC 375
5 AIR 1963 SC 874
6 FAO No. 385/2013

4. The Learned Commissioner, Employee’s Compensation
referred to a preamble of the Act besides Section 3, 4, 10,10(A),10(B),
11, 17 and 19 of the Act, and it was observed that the Act was a piece
of social beneficial legislature and has to be construed liberally in
favour of the claimant. Holding that provisions of CPC are not
applicable to the Act besides holding that the decision in Delhi
Development Authority v. Raju was per incuriam, in view of the
judgment of the State of Mysore v. SS. Makapur4, besides Engineering
Mazdoor Sabha & Anr. v. Hind Cycles Ltd5., and the decision of the
Delhi High Court in case of The New India Assurance Co. Ltd. v.
Puran Lal & Ors.6 , the claim was allowed and it would be relevant to
reproduce the operative part of the impugned judgment-cum-award
dated 21.03.2018, wherein the following observations are made: –

“28. From the above discussion I am of the opinion that
Commissioner under the Act can issue show cause notice for imposition of
penalty even suo moto i.e. even when the Claimants has not prayed for
payment of penalty in their claim petition and the employer could not be
excused from payment of penalty only because Claimant has not claimed
the same in the claim petition as the principle of waiver/acquiescence is
not applicable under the Act and also in a case where in the main order
allowing the claim petition no order on prayer of the claimant for
imposition of penalty upon the Respondents is passed. Otherwise also the

facts of this case are different. In this case the Claimant has prayed for
imposition of penalty upon the Respondents and it is a different matter that
my Ld. Predecessor who passed the award granting compensation did not
deal with said prayer of the Claimant in the award dated 30.01.2017.
Consequently, the Claimant has been compelled to move another
application dated 02.06.2017 for imposition of penalty upon the
Respondents on which a notice for imposition of penalty has been
separately issued on 16.06.2017 to the Respondents.

29. To my opinion this is a clear case where penalty is required to
be imposed upon as the Respondents have failed to pay the amount of
compensation to the dependents when the amount fell due. Now the
question would be who should pay the penalty: the employer or the
insurer. In this case there is a piquant, situation as my Ld. Predecessor
passed an award against Respondent No. 2 i.e insurer and the name of the
employer / Respondent No. 1 does not figure in the award but to my mind
this cannot be a ground for considering imposition of penalty upon the
Respondent No. 1 as the principal liability of payment of compensation is
that of the employer and the insurer is only liable to indemnify the insured.
The employer / Respondent No. 1 has taken the defence that he intimated
M/s Oriental Insurance Co. Ltd., / Respondent No. 2 immediately after the
occurrence of the alleged accident of deceased Pappu Kamat but he has
not led any evidence to prove his said statement. Further that the deceased
driver was negligent in driving and he suffered death due to his own
negligence for which Respondent No. 1 has not led any evidence. I find
that in written statement filed by Respondent No. 1 it has not been said
that insurance company was informed about the insurance company
immediately after the accident. Even otherwise Respondent No. 1 has not
examined himself as a witness and thus written statement filed by him is of
no help to him. Further it is not a case of Respondent No. 1 that he has
taken a comprehensive policy from Respondent No. 2 wherein Respondent
No. 2 was required to indemnify the Respondent No. 1 even for payment
of penalty to the dependents of deceased employee under the Employee’s
Compensation Act. Similar view has been taken by the Hon’ble Apex
Court in the case of Ved Prakash Garg Vs. Premi Devi cited at AIR 1997
SC 3854. Accordingly to my opinion penalty has to be imposed upon the
employer. In the facts and circumstances of the case and in the interest! of
justice to my opinion a penalty equal to 40% of the amount of
compensation awarded in the award dated 30.01.2017 i.e. Rs. 8,31,920/-
would meet the end of justice. Accordingly Respondent No. 1 / employer
is directed to deposit amount of Rs. 3,32/768/- (Rupees Three Lacs
Thirty Two Thousand Seven Hundred Sixty Eight Only) with further
interest @ 12% per annum from the date of this order through demand
draft in favour of “Commissioner Employee’s Compensation, District
North-West” within a period of thirty (30) days from the date Of issue of

this order, failing which the amount of penalty as above shall be recovered
as arrears of revenue under the Revenue Recovery Act.”
5. On filing of the present appeal, the operation of the impugned
judgment-cum-award dated 07.08.2018 was stayed by this Court.
Further vide order dated 13.02.2020, the appellant was directed to
deposit the entire amount of compensation with the Commissioner and
produce the certificate on the next date of hearing. It appears that the
said order has not been complied with. Nevertheless, on notice to the
respondents, except for the insurance company which is now arrayed
as respondent No.6, no other party has appeared.
ANALYSIS AND DECISION

6. I have given my thoughtful consideration to the submissions
advanced by the learned counsels for the rival parties at the Bar and on
perusal of the record, besides the written submissions filed on behalf
of respondent Nos. 1 to 57, I find that the present appeal is bereft of
any merits.

7 Written Submissions filed on 12.01.2024.

7. First things first, although a prayer for invoking the penalty
clause was indeed made in the earlier claim petition filed by the
claimants, it appears that the said relief was overlooked when passing
the judgment-cum-award dated 30.10.2017. However, since there was
an “error apparent on the face of record”, a curative claim petition was
filed, indeed in the nature of a review, which culminated in the
impugned judgment-cum-award. It was rightly canvassed by the
learned counsel for respondent Nos. 1 to 5, that it is not that such

relief was rejected, but rather it was not discussed, which was not in
conformity with the penalty clause vide Section 4A(3)(b) of the Act.

8. In any case, it is now well ordained in compensatory
jurisprudence, insofar as Employees Compensation Act is concerned,
that the issue of imposing a penalty would only arise after the main
claim for compensation is determined by the competent Authority.
Reference in this context can be invited to the decision in the case of
The Oriental Insurance Company Ltd. v. Siby George & Ors.8,
wherein it was held as under:-
“5. I am unable to agree with the aforesaid argument urged on
behalf of the appellant because the Supreme Court in the case of
Siby George (supra) has clarified that penalty proceedings cannot
take place simultaneously along with adjudication of compensation
to be awarded to the employee, and penalty proceedings are only
post/subsequent to awarding of Compensation and after giving a
specific show cause notice for the penalty aspect. The observations
of the Supreme Court in Siby George’s case (supra) in view of the
language of the proviso to Section 4A(3) of the Act which requires
a specific show cause notice on the aspect of penalty upto 50% if
the penalty is proposed to be imposed. Therefore, the contention of
the appellant is misconceived that since the original order of
compensation dated 13.11.2013 did not award penalty, in spite of
the same having been prayed in the main petition, there could
hence not take place subsequent proceedings for imposition of
penalty post the passing of the main order of compensation on
13.11.2013.”

8 (2012) 12 SCC 540
9 FAO No. 168/2014
10 FAO No. 385/2013

9. Incidentally, the aforementioned view has been upheld by this
Court in the cases of M/s. Focus Energy Limited v. Neelam Devi &
Ors.9 and The New India Assurance Co. Ltd. v. Puran Lal &
Ors.10.

10. In view of the forgoing discussion, I find that the learned
Commissioner, Employees Compensation has not committed any
illegality, perversity, nor has taken any incorrect approach in law.
Hence, the present appeal is dismissed. All the pending applications
are disposed of accordingly.
DHARMESH SHARMA, J.
FEBRUARY 07, 2024
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