Insurance Company cannot avoid the liability for payment of accident compensation except interest

New India Assurance Company Ltd.

Vs

Mohan Singh and Another

Facts of the case:
The deceased Binod Kumar was an employee of the owner of the truck i.e. Madhuri Devi and Ramapati Devi. He was discharging the duty as a Khalashi. The death of the deceased took place not on account of any accident by the vehicle. He disappeared from the truck from which it was inferred that he was done away to death. The presiding officer of the labour court had awarded the compensation of 1, 66,800 to the claimant who is father of the deceased. The New India Assurance Company filed an appeal in the High Court against the award by the labour court.

The appellant i.e. insurance company contended before the High Court that:

1. The deceased employee was an employee of the driver of the vehicle and as the relationship of master and servant between the deceased and the employer is not established, so insurance company is not liable to indemnify the amount which was awarded to the claimant under Workmen’s Compensation Act.
2. The death of the deceased took place not on account of any accident by the vehicle, he disappeared from the truck from which it was inferred that he was done away to death.
3. The interest at the rate of 12% from the date of filing of the claim to the date of the payment should not be sustained because the amount could be held payable from the date of the award to the date of payment and not from date of filing of the claim up to the date of payment.
4. The owner the vehicle had taken the insurance policy included the risk covered under the Workmen Compensation Act. 

Decision: The Hon’ble High Court held that when the insurance company has undertaken to pay the compensation under the policy covering third party risk, it cannot avoid the liability for payment of compensation and the 12 % interest but the amount of interest at the rate of 12% shall be payable not from the date of the institution of the claim but from the date of the award passed in favour of the claimant up to the date of payment. Appeal Dismissed.