The Himachal Pradesh High Court reaffirms that while insurers are liable to pay compensation and statutory interest under the Employee’s Compensation Act, they are not liable to pay penalties; upholds settled law as governing precedent for all subordinate courts in the state in motor accident compensation claims involving employees.
Summary
| Category | Data |
|---|---|
| Case Name | FAO/41/2023 of ICICI LOMBARD GENERAL INSURANCE COMPANY LTD Vs RAJ KUMARI AND ORS |
| CNR | HPHC010436652022 |
| Date of Registration | 04-03-2023 |
| Decision Date | 28-10-2025 |
| Disposal Nature | Disposed Off |
| Judgment Author | HON’BLE MR. JUSTICE VIVEK SINGH THAKUR |
| Court | High Court of Himachal Pradesh |
| Bench | Single Judge (HON’BLE MR. JUSTICE VIVEK SINGH THAKUR) |
| Precedent Value | Binding on subordinate courts in Himachal Pradesh; persuasive elsewhere |
| Overrules / Affirms | Affirms Supreme Court and High Court precedent (Ved Prakash Garg, Chief Manager, RSRTC v. Durga Ram) |
| Type of Law | Employee’s (Workmen’s) Compensation, Insurance law |
| Questions of Law |
|
| Ratio Decidendi | The Court held that an insurer is not liable for penalty imposed under the Employee’s Compensation Act in a claim filed by dependents of a deceased employee. Only compensation and statutory interest are recoverable from the insurer. The Court examined the employment relationship, the actual wage of the deceased, and clarified the standards of proof for those elements. It further clarified, on facts, that no prior notice under Section 21 of the EC Act was required when the insurer had independent notice and knowledge owing to processing of an own damage claim. The award was modified to exclude the insurer’s liability to pay penalty, but liability for compensation and apportionment among claimants was upheld. |
| Judgments Relied Upon | Ved Prakash Garg v. Premi Devi (1998 ACJ 1); Chief Manager, Rajasthan State Road Transport Corp v. Durga Ram (2009 ACJ 2732) |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Admissions do not require further proof. Only claims admitted or established by evidence can be relied upon. Pleadings unsupported by evidence, or vice versa, are not sufficient. Precedents of Supreme Court and High Court regarding insurer’s liability for penalty under the EC Act. |
| Facts as Summarised by the Court | Deceased Pawan Kumar, employee of a jeweller, died in a car accident while driving a borrowed vehicle for work assigned by his employer to another. The claimants sought compensation under the EC Act. The car was insured with the appellant insurance company. The Commissioner, Employee’s Compensation, awarded compensation, interest, and penalty against the insurer. The insurer appealed, challenging employee-employer relationship, quantum of wages, lack of notice, and liability to pay penalty. The High Court upheld the compensation but exempted the insurer from penalty, confirming insurer liability for compensation and interest alone. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Himachal Pradesh |
| Persuasive For | Other High Courts, Supreme Court, and tribunals deciding similar EC Act and insurance claims |
| Follows | Ved Prakash Garg v. Premi Devi (1998 ACJ 1); Chief Manager, RSRTC v. Durga Ram (2009 ACJ 2732) |
What’s New / What Lawyers Should Note
- The insurer’s liability under the Employee’s Compensation Act is strictly limited: the insurer cannot be made liable for payment of any penalty imposed under the EC Act; only compensation and statutory interest are recoverable from the insurer.
- Mere assertion of reduced wages by the employer in the reply is not treated as admission unless substantiated by evidence; the claimant’s uncontradicted evidence on actual earnings prevails if no evidence is led to the contrary.
- Where the insurer has already processed an own damage claim under the insurance contract arising from the same accident and is thus aware of the occurrence, a separate notice under Section 21 of the EC Act is unnecessary for maintainability of the claim.
- Admissions in pleadings or evidence are binding and do not require further evidence; negative averments or denials without evidence do not help the party making them.
- Lawyers acting for insurers should cite this judgment to resist penalty claims, and for claimants, to focus on proving quantum of wages and employment relationship through direct evidence.
Summary of Legal Reasoning
- The Court reviewed the relationship of employer–employee between the deceased and the relevant respondents, holding that admissions in pleadings and uncontradicted evidence established the deceased’s employment status and the circumstances of the journey as “in the course of employment.”
- With respect to quantum of compensation, the Court found that claimants’ assertion of ₹9,000/month salary stood unrebutted by any evidence—mere pleading or assertion by the employer of a reduced amount (₹6,000/month) absent any oral or documentary evidence does not suffice.
- The Court rejected the insurer’s arguments about lack of notice under Section 21 of the EC Act, noting that prior participation and knowledge through own damage insurance claim proceedings sufficed to give constructive notice to the insurer.
- Key legal issue: In interpreting the liability of insurers for penalty under the EC Act, the Court followed Supreme Court and High Court precedents, holding the insurer is not liable for penalties but only compensation and interest.
- The impugned award was modified only to exclude penalty liability for the insurer; all other findings upheld.
Arguments by the Parties
Petitioner (Insurance Company):
- Challenged the existence of employee-employer relationship between the deceased and respondent No. 4.
- Objected to the calculation of income of deceased as ₹8,000 per month, asserting it should be ₹6,000 as per employer’s reply.
- Argued that the Commissioner misinterpreted evidence.
- Denied liability to pay penalty, citing relevant precedent.
- Objected to maintainability due to lack of notice under Section 21 of the EC Act.
- Contended that deceased did not possess a valid driving licence at time of accident (not substantiated by evidence).
Respondents:
- Respondent No.1 (Owner): Admitted ownership of the vehicle; claimed to have permitted use to a relative; not acquainted with deceased; admitted deceased was driving at the time and held a valid driving licence.
- Respondent No.2: Admitted to having borrowed the vehicle and being in charge at the time; stated that he took services of deceased from respondent No. 3 for the journey; confirmed deceased was not his direct employee; acknowledged deceased’s employment with respondent No. 3.
- Respondent No.3 (Employer): Admitted employment of deceased; claimed deceased was on half-day leave on accident date and was paid ₹6,000/month salary.
- Claimants: As wife and children, asserted employment relationship, salary of ₹9,000/month, and all accident facts in the course of employment.
Factual Background
Deceased Pawan Kumar, employed as a driver-cum-skilled worker with a jeweller (respondent No. 3), died in a car accident on 18 January 2014 while driving a car borrowed by a relative of the car’s owner and for the purpose of work assigned by his employer to a third party, respondent No. 2. A claim for compensation under the Employee’s Compensation Act was filed by his wife and children. The car was insured at the relevant time. The Commissioner directed the insurer to pay compensation, interest, and penalty. The insurer appealed, disputing employee-employer relationship, quantum of wages, liability for penalty, and procedure followed.
Statutory Analysis
- Section 30, Employee’s Compensation Act: Provides for appeals to the High Court on substantial questions of law.
- Section 21, Employee’s Compensation Act: Provides for notice as a condition precedent to maintainability of proceedings; Court holds notice not mandatory if respondent/insurer has prior notice and participation (as in the present case).
- The Court interpreted the scope of insurer’s liability under the EC Act as excluding penalty orders against the insurer, consistent with Supreme Court and High Court precedent (Ved Prakash Garg; Chief Manager, RSRTC v. Durga Ram).
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions noted in this single-judge decision.
Procedural Innovations
None specifically noted; the Court applied established procedural and evidentiary rules, emphasizing the binding effect of admissions and proper legal burden regarding quantum of wages and notice.
Alert Indicators
- ✔ Precedent Followed – When existing law is affirmed.