Electrocuted Mushroom-Farm Supervisor’s Family Keeps 12% Interest Award, As Madras HC Finds Insurer Had Not Supplied Policy Exclusion To Employer

H. Raman, employed as a supervisor by the fourth respondent, died by electrocution while working on the employer’s premises.

His employment, the accident arising in the course of employment, the monthly salary of ₹20,000, and the existence of an insurance policy were not disputed.

The Deputy Commissioner of Labour awarded the claimants ₹7,07,160 with interest at 12% per annum.

The insurer appealed under Section 30 of the Employees’ Compensation Act, 1923, contending that the policy excluded its liability for interest.

The appeal was confined to the insurer’s liability to pay interest on the compensation.

Section 4A(3) of the Employees’ Compensation Act, 1923 was applied as providing for interest on compensation, with the court treating 12% per annum as the minimum applicable rate.

The court also referred to Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 1 SCC 289, and Oriental Insurance Co. Ltd. v. Sibi George, (2012) 3 LLN 510 (SC), which the Commissioner had relied upon in awarding interest.

The court further invoked the general principle that a court may award interest where a liable party fails to pay an amount due.

The court noted that the policy was in force and that the insurer did not dispute its liability to indemnify the employer for the compensation.

Although the policy document contained a clause excluding interest and penalty, the employer had not been supplied with or acknowledged the relevant conditions; the insurer’s witness admitted that the attachment containing those terms had not been acknowledged by the employer.

The court also relied on the insurer’s failure to disburse the admitted amount after the employer sought payment, and on its position that the parties should approach the court.

In those circumstances, the insurer could not rely on the exclusion clause to avoid interest, and the Commissioner’s award of 12% interest was consistent with Section 4A(3).

It made no order as to costs and closed the connected miscellaneous petition.