FAO-1301-2022 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA The New India Assurance Co. Ltd. Vs. Jeenat and others CORAM: HON’BLE MR. JUSTICE HARKESH MANUJA Present: Mr. Anshul Sharma, Advocate for the appellant Mr. Digvijay, Advocate for Mr. Ashish Gupta, Advocate for respondents No.1 to 5. Mr. Rakesh Dhiman, Advocate for respondent No.6 HARKESH MANUJA, J. (ORAL) By way of present appeal, challenge has been laid to the order dated 02.02.2022 passed by the learned Employee’s Compensation Act, Circle as “the Commissioner”), whereby penalty to the extent of 30% of the compensation amount, i.e. Rs. 2,49,576/ annum from 20.11.201 to satisfy the said amount was fastened upon the appellant Company on account of the alleged failure to deposit the compensation within the period prescribed under Section 4 Compensation Act, 1923. 2. Briefly stating claim petition under the provisions of the Employees' Compensation Act, 1923 seeking compensation on account of the death of Sirajuddin, who (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO Date of Decision: 27.07.2026 Assurance Co. Ltd. Jeenat and others HON’BLE MR. JUSTICE HARKESH MANUJA Anshul Sharma, Advocate for the appellant. Mr. Digvijay, Advocate for Mr. Ashish Gupta, Advocate respondents No.1 to 5. Mr. Rakesh Dhiman, Advocate for respondent No.6. **** HARKESH MANUJA, J. (ORAL) By way of present appeal, challenge has been laid to the order dated 02.02.2022 passed by the learned Employee’s Compensation Act, Circle-4, Gurugram (hereinafter referred to as “the Commissioner”), whereby penalty to the extent of 30% of the compensation amount, i.e. Rs. 2,49,576/-, along with interest @ 12% per annum from 20.11.2015 till realization, came to be imposed and the liability to satisfy the said amount was fastened upon the appellant Company on account of the alleged failure to deposit the compensation within the period prescribed under Section 4 Compensation Act, 1923. Briefly stating, respondents No.1 to 5 claim petition under the provisions of the Employees' Compensation Act, 1923 seeking compensation on account of the death of Sirajuddin, who IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO-1301-2022 (O&M) Date of Decision: 27.07.2026 …Appellant …Respondents HON’BLE MR. JUSTICE HARKESH MANUJA By way of present appeal, challenge has been laid to the order dated 02.02.2022 passed by the learned Commissioner under the 4, Gurugram (hereinafter referred to as “the Commissioner”), whereby penalty to the extent of 30% of the , along with interest @ 12% per 5 till realization, came to be imposed and the liability to satisfy the said amount was fastened upon the appellant-Insurance Company on account of the alleged failure to deposit the compensation within the period prescribed under Section 4-A of the Employee’s , respondents No.1 to 5-claimants instituted a claim petition under the provisions of the Employees' Compensation Act, 1923 seeking compensation on account of the death of Sirajuddin, who By way of present appeal, challenge has been laid to the order Commissioner under the 4, Gurugram (hereinafter referred to as “the Commissioner”), whereby penalty to the extent of 30% of the , along with interest @ 12% per 5 till realization, came to be imposed and the liability Insurance Company on account of the alleged failure to deposit the compensation ee’s claimants instituted a claim petition under the provisions of the Employees' Compensation Act, 1923 seeking compensation on account of the death of Sirajuddin, who SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document FAO-1301-2022 (O&M) allegedly died in an accident dated 20.10.2015 arising out of and in the course of his employment as a paid driver under respondent No.6- employer. Vide award dated 31.08.2016, the learned Commissioner allowed the claim petition and awarded compensation amounting to ₹8,31,920/-, fastening the liability upon the appellant-Insurance Company. While passing the said award, the learned Commissioner also directed issuance of a show-cause notice under Section 4-A(3)(b) of the Employees' Compensation Act, 1923 to consider imposition of penalty for failure to deposit the compensation within the prescribed period. 3. Pursuant thereto, penalty proceedings were initiated. Initially, an ex parte order dated 01.07.2020 came to be passed; however, the same was subsequently set aside on the application moved by respondent No.6- employer vide order dated 09.03.2021, whereafter the parties were afforded opportunity to file their respective replies and address arguments. The employer asserted that the accident was duly intimated to the appellant-Insurance Company immediately after its occurrence and that an additional premium was paid under the insurance policy covering the legal liability of the paid driver. On the other hand, the appellant-Insurance Company disputed its liability to satisfy the penalty, contending that penalty under Section 4-A of the Act could not be fastened upon the insurer. 4. Upon consideration of the rival submissions, the learned Commissioner, vide the impugned order dated 02.02.2022, imposed penalty to the extent of 30% of the compensation amount, i.e. ₹2,49,576/-, along with interest at the rate of 12% per annum from 20.11.2015 till realization, and directed the appellant-Insurance Company to satisfy the said liability on the premise that an additional premium was received under the policy covering the legal liability of the paid driver. Aggrieved against SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document FAO-1301-2022 (O&M) the aforesaid order fastening the liability of penalty and interest upon it, the appellant-Insurance Company preferred the present appeal. 5. Learned counsel for the appellant submits that the impugned order suffers from patent illegality inasmuch as the learned Commissioner not only imposed penalty but also awarded interest thereon. It is contended that Section 4-A of the Act does not envisage levy of interest upon penalty and the impugned order, to that extent, is contrary to the statutory scheme. It is further argued that even otherwise the liability to pay penalty is personal to the employer and cannot be shifted upon the insurer merely because an additional premium was paid. Accordingly, prayer is made for setting aside the impugned order. 6. On the other hand, learned counsel for the respondent/ employer opposes the prayer made on behalf of the appellant and submits that immediately after the accident, respondent No.6 informed the appellant-Insurance Company regarding the death of the workman and also called upon it to satisfy the statutory liability. Despite having complete knowledge of the accident and despite the policy covering the legal liability of the paid driver by receipt of an additional premium of ₹100/-, the appellant failed to discharge its statutory obligation within the period prescribed under Section 4-A of the Act. It is, thus, submitted that the learned Commissioner rightly fastened the liability of penalty upon the appellant and no interference is called for. 7. I have heard learned counsel for the parties and gone through the paper-book. 8. In the facts and circumstances of the present case, the accident took place on 20.11.2015. As per the records, the employer informed the appellant Insurance Company on very next day i.e. 21.11.2015. The SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document FAO-1301-2022 (O&M) appellant Insurance Company having not released the amount of compensation in terms of the provisions of Section 23 of the Act, a claim petition came to be filed at the instance of respondents No.1 to 5 which was allowed by the learned Commissioner vide decision dated 31.08.2016 with the following observations: - “In view of the above, I hereby order that a show-cause notice be issued separately to respondent no. 1 u/S 4A(3)(b) of the Act and after reply of the said show-cause notice a separate order to this effect be passed in the case. I therefore, direct the Respondent no. 2 to deposit the above said amount of Rs. 8,31,920/- along with an interest @12% per annum from the date it fell due as discussed above within a period of 30 days failing which the said amount shall be recovered as an arrear of land revenue as per law.” 9. The abovementioned order was challenged before this Court at the instance of claimants vide appeal No. FAO-108-2017 titled as “Jeenat and others vs. Heera Lal and another”, which came to be disposed of vide order dated 09.05.2019 The operative part thereof is extracted hereunder:- “The sole submission made by counsel for the appellants is that the Commissioner has allowed interest from the date it fell due but it has not been clarified as to from which date it is to be paid. Taking into consideration judgment of Hon'ble the Supreme Court Oriental Insurance Company Ltd. Vs. Siby George, 2012(4) RCR (Civil) 617, interest shall be payable from the date of accident till realization. In view of what has been discussed hereinabove, the appeal is partly allowed. The Commissioner concerned shall dispose of proceedings with regard to imposition of penalty expeditiously.” SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document FAO-1301-2022 (O&M) 10. In pursuance thereof, show cause notice of payment of penalty was served upon the employer which came to be disposed of vide order dated 01.07.2020 passed by the learned Commissioner, imposing penalty to the tune of 50% of the compensation amount. The aforesaid being an ex-parte order was challenged by respondent No.6- owner and the proceedings arising therefrom were decided by the learned Commissioner vide order dated 02.02.2022 which has been assailed before this Court. The operative part thereof is extracted hereunder:- “8. In view of the above discussion, as the respondents did not deposit the compensation amount within one month from the date of accident, therefore, I hereby imposed a penalty to the tune of 30% of the compensation amount i.e.Rs.831920 X 30/ 100 = Rs.249576/- (Rupees Iwo Lacs Forty Nine Thousand Five Hundred Seventy Six Only) along with interest @ 12% per annum from one month after the date of accident i.e. 20-11-2015 when it fell due and till the date of actual payment. As the respondent No.2 has received additional premium of Rs. 100/-, therefore, in view of the observations made above the respondent No. 2, (insurance company) is directed to pay this amount to the applicants by depositing in this court within 60 days from the date of this order. The penalty notice is disposed of accordingly.” 11. In the present case, the accident took place on 20.11.2015. Admittedly, the information with respect to the said accident was conveyed by respondent No.6-employer to the appellant Insurance Company on the very next date i.e. 21.11.2015. Soon thereafter, the proceedings under 2023 Act were initiated for compensation by respondent No.5 on an award passed by the learned Commissioner on 31.08.2016. The payment in pursuance thereof was deposited by the Insurance Company on 27.09.2016. In such circumstances, the appellant Insurance Company SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document FAO-1301-2022 (O&M) having failed to act in pursuance to the statutory sachem of 2023 Act, regarding disbursal of compensation in favour of the dependents of the employee/ workman (respondents No.1 to 5 herein) for a period of almost 10 months, no interference is called for. 12. Despite being admitted about the factum of accident, the imposition of penalty to the tune of 30% on account of unexplained delay in payment of compensation amount, calls for no interference. 13. Furthermore, in the exceptional facts and circumstances of the act in hand, since the appellant Insurance Company had received an additional premium of Rs.100/- to cover the legal liability towards the workman/ driver, the liability to deposit penalty was rightly imposed upon the appellant Insurance Company. 14. Moreover, under the Scheme of the Act, 2023, there is no statutory or legal bar towards the imposition of penalty in addition to the award of interest. 15. No jurisdictional error, perversity or substantial question of law has been pointed out by learned counsel for the appellant warranting interference by this Court in exercise of appellate jurisdiction under Section 30 of the Employees' Compensation Act, 1923. 16. Consequently, finding no merit in the present appeal, the same is dismissed. The impugned order dated 02.02.2022 passed by the learned Commissioner is affirmed. 17. Pending miscellaneous application(s), if any, shall also stand disposed of. 27.07.2026 (HARKESH MANUJA) sanjay JUDGE Whether speaking/reasoned? Yes/No Whether Reportable? Yes/No SANJAY GUPTA 2026.08.01 11:07 I attest to the accuracy and integrity of this document