An insurer is not liable for statutory interest absent policy coverage.

The deceased, Somashekhar Bilagi, worked in the electrical department of Renuka Sugars Ltd. On 21 September 2018, he suffered fatal electrocution while performing electrical work at the factory.

His legal representatives sought compensation under the Employees’ Compensation Act, 1923. The Commissioner awarded ₹12,83,826 with 12% annual interest, directing the insurer to pay.

The insurer appealed, challenging the wage assessment and its liability for interest.

1. Whether the Commissioner was justified in assessing the deceased’s monthly income at ₹16,425 and fastening liability on the insurer.

2. Whether the Commissioner was justified in awarding interest at 12% per annum and directing the insurer to pay it.

3. Whether the Commissioner’s findings and award required appellate interference.

Section 4 of the Employees’ Compensation Act, 1923 prescribes compensation for death as 50% of monthly wages multiplied by the relevant age factor, subject to the statutory minimum.

Section 4-A requires the employer to pay compensation when it falls due and provides for interest in the event of default; the court held that interest liability rests with the employer unless the insurance contract covers it.

Relying on New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya, the court held that the insurer’s obligation to indemnify depends on the policy terms, and the insurer may exclude liability for interest.

The court also referred to Branch Manager, National Insurance Co. Ltd. v. Sabu and National Insurance Co. v. Smt. Lakshmamma on policy-based limits to insurer liability.

The court found that the salary slip for August 2018 established gross monthly wages of ₹20,951, and used the age of 50 years shown in the post-mortem report, corresponding to a factor of 153.9.

Applying the statutory formula—50% of wages multiplied by the relevant factor—it calculated compensation at ₹16,12,179.45.

It then deducted ₹6,00,000 already paid by the employer, leaving ₹10,12,179.45 payable.

As the policy did not provide for insurer liability for interest, the court held the employer responsible for interest at 12% per annum; the insurer was not liable for that interest.

The Court fixed total compensation at ₹16,12,179.45 with interest at 12% per annum from the date of the petition until realization.

After crediting the employer’s payment of ₹6,00,000, it directed the employer to pay the balance of ₹10,12,179.45, with the principal amount to be reimbursed by the insurer; interest was payable by the employer, not the insurer.