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Workmen Win Compensation, Interest, and Penalty After Quarry Accident; Insurer Not Liable for Delay

Four workers injured in a quarry accident at Trumboo Cement Industries filed for compensation under the Employees’ Compensation Act, 1923. The Commissioner awarded them compensation but did not grant interest or penalty. Both the insurer and the workmen appealed. The High Court upheld the compensation, directed the employer to pay interest and a penalty, but ruled the insurer was not liable for these additional amounts.

Get the full picture - access the original judgement of the court order here

Case Name

Mohd. Abdullah & Others v. Manager, Trumboo Cement Industry Limited & Another (High Court of Jammu & Kashmir and Ladakh at Jammu)

MA No. 155/2007 C/w MA No. 152/2007, MA No. 153/2007 & MA No. 154/2007

Date: 11th July 2023

Key Takeaways

Compensation for Injured Workers: The court confirmed the workers’ right to compensation for injuries suffered during employment.
Interest and Penalty: The employer must pay 12% interest from the date of the accident and a 10% penalty on the awarded amount, as per Section 4-A of the Employees’ Compensation Act, 1923.
Insurer’s Liability Limited: The insurance company is only liable for the compensation, not for interest or penalty due to the employer’s delay, unless the insurance contract specifically covers these.
Framing of Issues: Failure to frame issues under Rule 28 of the Workmen Compensation Rules, 1924, does not vitiate proceedings if no prejudice is caused.
Medical Evidence: An MBBS doctor can testify about injuries if relying on medical records and disability certificates from treating doctors.

Issue

Was the Commissioner correct in not awarding interest and penalty to the injured workmen, and is the insurer liable for these amounts under the Employees’ Compensation Act, 1923?

Facts

The Accident: On July 26, 2004, four workers (Mohd. Abdullah, Mohd. Rafiq, Mohd. Yousuf, and Ab. Rashid Drabu) were seriously injured during blasting operations at a quarry associated with Trumboo Cement Industries.
Claims Filed: Each worker filed a claim under Section 3 of the Employees’ Compensation Act, 1923, against the employer and the insurer (United India Insurance Company Ltd.).
Commissioner’s Award: The Commissioner awarded a total of Rs. 12,79,130 to the workers but did not grant interest or penalty.
Appeals: The workers appealed for interest and penalty. The insurer appealed, arguing the policy did not cover quarry workers and raised other technical objections.

Arguments

Workmen

Sought interest at 12% per annum and a penalty of up to 50% of the compensation, as per Section 4-A(3) of the Act.
Argued that the Commissioner’s failure to award these was contrary to law.

Insurer

Claimed the insurance policy only covered cement plant workers, not quarry workers.
Argued that the Commissioner failed to frame issues as required by Rule 28 of the Workmen Compensation Rules, 1924.
Challenged the competence of the MBBS doctor who testified about the injuries.
Asserted that interest and penalty, if any, should be paid by the employer, not the insurer.

Key Legal Precedents

Section 4-A of the Employees’ Compensation Act, 1923: Mandates payment of compensation as soon as it falls due, with interest and penalty for delay.
Rule 28 of the Workmen Compensation Rules, 1924: Requires framing of issues when parties are at variance.
Pratap Narain Singh Deo v. Shrinivas Sabata and Another (1976) 1 SCC 289: Compensation becomes payable on the date of the accident, not the date of adjudication.
Kerala State Electricity Board and Another v. Varsala K and Another (1999) 8 SCC 254: Reiterates the above principle.
P. Meenaraj v. P. Adigurusamy and another, Civil Appeal No. 209/2022 (Supreme Court, 06.01.2022): Confirms the obligation to pay interest from the date of the accident.
Divisional Manager, New India Assurance Company Ltd. and Ors v. Bishit Barman and others (Full Bench, Orissa High Court): Insurer not liable for interest and penalty unless specifically contracted.
United India Insurance Co. Ltd. v. Faroz Begum and Ors., 1998 ACJ 42 (Himachal Pradesh High Court): Same principle as above.
North East Karnataka Road Transport Corporation v. Smt. Sujatha AIR 2018 (SC) 5593: Distinguishes between questions of fact and law for appeals under Section 30.

Judgement

Insurer’s Appeal Dismissed: The court found no merit in the insurer’s objections. The insurer failed to prove that the policy excluded quarry workers and did not suffer prejudice from the lack of framed issues.
Workmen’s Appeal Allowed: The court held that the Commissioner erred in not awarding interest and penalty. The employer must pay 12% interest from the date of the accident (26.07.2004) and a penalty of 10% of the awarded amount.
Insurer Not Liable for Interest/Penalty: Unless the insurance contract specifically covers interest and penalty, the insurer is not liable for these amounts; only the compensation itself.
Orders: Employer to deposit interest and penalty within two months; compensation to be released to the workmen after verification.

FAQs

Q1: Why did the court order interest and penalty?

A: Because Section 4-A of the Employees’ Compensation Act, 1923, requires compensation to be paid promptly. If delayed, the employer must pay interest (12% per annum) and possibly a penalty (up to 50%).

Q2: Why isn’t the insurer liable for interest and penalty?

A: The insurer’s liability is limited to what is specified in the insurance contract. Unless the contract specifically covers interest and penalty, these are the employer’s responsibility for failing to pay on time.

Q3: What if the Commissioner doesn’t frame issues as required by Rule 28?

A: If both parties know the case they have to meet and no prejudice is caused, failure to frame issues does not invalidate the proceedings.

Q4: Can an MBBS doctor testify about permanent disability?

A: Yes, if the doctor relies on medical records and disability certificates from treating doctors, their testimony is valid.

Q5: What is the significance of this judgment?

A: It reinforces the statutory right of workers to timely compensation, clarifies the limits of insurer liability, and provides practical guidance on procedural issues in compensation claims.

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Workmen Win Compensation, Interest, and Penalty After Quarry Accident; Insurer Not Liable for Delay

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<a href="https://thakurani.sgp1.digitaloceanspaces.com/media/data/RBI-HC-JK-155-2007.pdf" target="_blank" style="color: rgb(0, 102, 204);">Get the full picture - access the original judgement of the court order here</a><h3>Case Name</h3>Mohd. Abdullah &amp; Others v. Manager, Trumboo Cement Industry Limited &amp; Another (High Court of Jammu &amp; Kashmir and Ladakh at Jammu) MA No. 155/2007 C/w MA No. 152/2007, MA No. 153/2007 &amp; MA No. 154/2007Date: 11th July 2023<h3>Key Takeaways</h3><ul><li>Compensation for Injured Workers:&nbsp;The court confirmed the workers’ right to compensation for injuries suffered during employment.</li><li>Interest and Penalty:&nbsp;The employer must pay 12% interest from the date of the accident and a 10% penalty on the awarded amount, as per Section 4-A of the Employees’ Compensation Act, 1923.</li><li>Insurer’s Liability Limited:&nbsp;The insurance company is only liable for the compensation, not for interest or penalty due to the employer’s delay, unless the insurance contract specifically covers these.</li><li>Framing of Issues:&nbsp;Failure to frame issues under Rule 28 of the Workmen Compensation Rules, 1924, does not vitiate proceedings if no prejudice is caused.</li><li>Medical Evidence:&nbsp;An MBBS doctor can testify about injuries if relying on medical records and disability certificates from treating doctors.</li></ul><h3>Issue</h3>Was the Commissioner correct in not awarding interest and penalty to the injured workmen, and is the insurer liable for these amounts under the Employees’ Compensation Act, 1923?<h3>Facts</h3><ul><li>The Accident:&nbsp;On July 26, 2004, four workers (Mohd. Abdullah, Mohd. Rafiq, Mohd. Yousuf, and Ab. Rashid Drabu) were seriously injured during blasting operations at a quarry associated with Trumboo Cement Industries.</li><li>Claims Filed:&nbsp;Each worker filed a claim under Section 3 of the Employees’ Compensation Act, 1923, against the employer and the insurer (United India Insurance Company Ltd.).</li><li>Commissioner’s Award:&nbsp;The Commissioner awarded a total of Rs. 12,79,130 to the workers but did not grant interest or penalty.</li><li>Appeals:&nbsp;The workers appealed for interest and penalty. The insurer appealed, arguing the policy did not cover quarry workers and raised other technical objections.</li></ul><h3>Arguments</h3>Workmen<ul><li>Sought interest at 12% per annum and a penalty of up to 50% of the compensation, as per Section 4-A(3) of the Act.</li><li>Argued that the Commissioner’s failure to award these was contrary to law.</li></ul> Insurer<ul><li>Claimed the insurance policy only covered cement plant workers, not quarry workers.</li><li>Argued that the Commissioner failed to frame issues as required by Rule 28 of the Workmen Compensation Rules, 1924.</li><li>Challenged the competence of the MBBS doctor who testified about the injuries.</li><li>Asserted that interest and penalty, if any, should be paid by the employer, not the insurer.</li></ul><h3>Key Legal Precedents</h3><ul><li>Section 4-A of the Employees’ Compensation Act, 1923:&nbsp;Mandates payment of compensation as soon as it falls due, with interest and penalty for delay.</li><li>Rule 28 of the Workmen Compensation Rules, 1924:&nbsp;Requires framing of issues when parties are at variance.</li><li>Pratap Narain Singh Deo v. Shrinivas Sabata and Another (1976) 1 SCC 289:&nbsp;Compensation becomes payable on the date of the accident, not the date of adjudication.</li><li>Kerala State Electricity Board and Another v. Varsala K and Another (1999) 8 SCC 254:&nbsp;Reiterates the above principle.</li><li>P. Meenaraj v. P. Adigurusamy and another, Civil Appeal No. 209/2022 (Supreme Court, 06.01.2022):&nbsp;Confirms the obligation to pay interest from the date of the accident.</li><li>Divisional Manager, New India Assurance Company Ltd. and Ors v. Bishit Barman and others (Full Bench, Orissa High Court):&nbsp;Insurer not liable for interest and penalty unless specifically contracted.</li><li>United India Insurance Co. Ltd. v. Faroz Begum and Ors., 1998 ACJ 42 (Himachal Pradesh High Court):&nbsp;Same principle as above.</li><li>North East Karnataka Road Transport Corporation v. Smt. Sujatha AIR 2018 (SC) 5593:&nbsp;Distinguishes between questions of fact and law for appeals under Section 30.</li></ul><h3>Judgement</h3><ul><li>Insurer’s Appeal Dismissed:&nbsp;The court found no merit in the insurer’s objections. The insurer failed to prove that the policy excluded quarry workers and did not suffer prejudice from the lack of framed issues.</li><li>Workmen’s Appeal Allowed:&nbsp;The court held that the Commissioner erred in not awarding interest and penalty. The employer must pay 12% interest from the date of the accident (26.07.2004) and a penalty of 10% of the awarded amount.</li><li>Insurer Not Liable for Interest/Penalty:&nbsp;Unless the insurance contract specifically covers interest and penalty, the insurer is not liable for these amounts; only the compensation itself.</li><li>Orders:&nbsp;Employer to deposit interest and penalty within two months; compensation to be released to the workmen after verification.</li></ul><h3>FAQs</h3>Q1: Why did the court order interest and penalty?A: Because Section 4-A of the Employees’ Compensation Act, 1923, requires compensation to be paid promptly. If delayed, the employer must pay interest (12% per annum) and possibly a penalty (up to 50%). Q2: Why isn’t the insurer liable for interest and penalty?A: The insurer’s liability is limited to what is specified in the insurance contract. Unless the contract specifically covers interest and penalty, these are the employer’s responsibility for failing to pay on time. Q3: What if the Commissioner doesn’t frame issues as required by Rule 28?A: If both parties know the case they have to meet and no prejudice is caused, failure to frame issues does not invalidate the proceedings. Q4: Can an MBBS doctor testify about permanent disability?A: Yes, if the doctor relies on medical records and disability certificates from treating doctors, their testimony is valid. Q5: What is the significance of this judgment?A: It reinforces the statutory right of workers to timely compensation, clarifies the limits of insurer liability, and provides practical guidance on procedural issues in compensation claims.

<a href="https://thakurani.sgp1.digitaloceanspaces.com/media/data/RBI-HC-JK-155-2007.pdf" target="_blank" style="color: rgb(0, 102, 204);">Get the full picture - access the original judgement of the court order here</a><h3>Case Name</h3>Mohd. Abdullah & Others v. Manager, Trumboo Cement Industry Limited & Another (High Court of Jammu & Kashmir and Ladakh at Jammu) MA No. 155/2007 C/w MA No. 152/2007, MA No. 153/2007 & MA No. 154/2007Date: 11th July 2023<h3>Key Takeaways</h3><ul><li>Compensation for Injured Workers: The court confirmed the workers’ right to compensation for injuries suffered during employment.</li><li>Interest and Penalty: The employer must pay 12% interest from the date of the accident and a 10% penalty on the awarded amount, as per Section 4-A of the Employees’ Compensation Act, 1923.</li><li>Insurer’s Liability Limited: The insurance company is only liable for the compensation, not for interest or penalty due to the employer’s delay, unless the insurance contract specifically covers these.</li><li>Framing of Issues: Failure to frame issues under Rule 28 of the Workmen Compensation Rules, 1924, does not vitiate proceedings if no prejudice is caused.</li><li>Medical Evidence: An MBBS doctor can testify about injuries if relying on medical records and disability certificates from treating doctors.</li></ul><h3>Issue</h3>Was the Commissioner correct in not awarding interest and penalty to the injured workmen, and is the insurer liable for these amounts under the Employees’ Compensation Act, 1923?<h3>Facts</h3><ul><li>The Accident: On July 26, 2004, four workers (Mohd. Abdullah, Mohd. Rafiq, Mohd. Yousuf, and Ab. Rashid Drabu) were seriously injured during blasting operations at a quarry associated with Trumboo Cement Industries.</li><li>Claims Filed: Each worker filed a claim under Section 3 of the Employees’ Compensation Act, 1923, against the employer and the insurer (United India Insurance Company Ltd.).</li><li>Commissioner’s Award: The Commissioner awarded a total of Rs. 12,79,130 to the workers but did not grant interest or penalty.</li><li>Appeals: The workers appealed for interest and penalty. The insurer appealed, arguing the policy did not cover quarry workers and raised other technical objections.</li></ul><h3>Arguments</h3>Workmen<ul><li>Sought interest at 12% per annum and a penalty of up to 50% of the compensation, as per Section 4-A(3) of the Act.</li><li>Argued that the Commissioner’s failure to award these was contrary to law.</li></ul> Insurer<ul><li>Claimed the insurance policy only covered cement plant workers, not quarry workers.</li><li>Argued that the Commissioner failed to frame issues as required by Rule 28 of the Workmen Compensation Rules, 1924.</li><li>Challenged the competence of the MBBS doctor who testified about the injuries.</li><li>Asserted that interest and penalty, if any, should be paid by the employer, not the insurer.</li></ul><h3>Key Legal Precedents</h3><ul><li>Section 4-A of the Employees’ Compensation Act, 1923: Mandates payment of compensation as soon as it falls due, with interest and penalty for delay.</li><li>Rule 28 of the Workmen Compensation Rules, 1924: Requires framing of issues when parties are at variance.</li><li>Pratap Narain Singh Deo v. Shrinivas Sabata and Another (1976) 1 SCC 289: Compensation becomes payable on the date of the accident, not the date of adjudication.</li><li>Kerala State Electricity Board and Another v. Varsala K and Another (1999) 8 SCC 254: Reiterates the above principle.</li><li>P. Meenaraj v. P. Adigurusamy and another, Civil Appeal No. 209/2022 (Supreme Court, 06.01.2022): Confirms the obligation to pay interest from the date of the accident.</li><li>Divisional Manager, New India Assurance Company Ltd. and Ors v. Bishit Barman and others (Full Bench, Orissa High Court): Insurer not liable for interest and penalty unless specifically contracted.</li><li>United India Insurance Co. Ltd. v. Faroz Begum and Ors., 1998 ACJ 42 (Himachal Pradesh High Court): Same principle as above.</li><li>North East Karnataka Road Transport Corporation v. Smt. Sujatha AIR 2018 (SC) 5593: Distinguishes between questions of fact and law for appeals under Section 30.</li></ul><h3>Judgement</h3><ul><li>Insurer’s Appeal Dismissed: The court found no merit in the insurer’s objections. The insurer failed to prove that the policy excluded quarry workers and did not suffer prejudice from the lack of framed issues.</li><li>Workmen’s Appeal Allowed: The court held that the Commissioner erred in not awarding interest and penalty. The employer must pay 12% interest from the date of the accident (26.07.2004) and a penalty of 10% of the awarded amount.</li><li>Insurer Not Liable for Interest/Penalty: Unless the insurance contract specifically covers interest and penalty, the insurer is not liable for these amounts; only the compensation itself.</li><li>Orders: Employer to deposit interest and penalty within two months; compensation to be released to the workmen after verification.</li></ul><h3>FAQs</h3>Q1: Why did the court order interest and penalty?A: Because Section 4-A of the Employees’ Compensation Act, 1923, requires compensation to be paid promptly. If delayed, the employer must pay interest (12% per annum) and possibly a penalty (up to 50%). Q2: Why isn’t the insurer liable for interest and penalty?A: The insurer’s liability is limited to what is specified in the insurance contract. Unless the contract specifically covers interest and penalty, these are the employer’s responsibility for failing to pay on time. Q3: What if the Commissioner doesn’t frame issues as required by Rule 28?A: If both parties know the case they have to meet and no prejudice is caused, failure to frame issues does not invalidate the proceedings. Q4: Can an MBBS doctor testify about permanent disability?A: Yes, if the doctor relies on medical records and disability certificates from treating doctors, their testimony is valid. Q5: What is the significance of this judgment?A: It reinforces the statutory right of workers to timely compensation, clarifies the limits of insurer liability, and provides practical guidance on procedural issues in compensation claims.

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Workmen Win Compensation, Interest, and Penalty After Quarry Accident; Insurer Not Liable for Delay