1. The 3rd opposite party in WCC No.326 of 2003 of the Court of the Commissioner for Workmen’s Compensation has filed this appeal challenging the order passed by the Commissioner.

2. The 1st respondent herein filed the compensation case. According to him he was employed under the 3rd respondent as welder in connection with dismantling guarder work of an overbridge at Didarganj, New Patna, for the East Central Railway. While he was engaged in the work on 01.08.2002 at about 4.30 p.m. he fell from a height of 7 meters and sustained serious injuries. He was treated in various hospitals for a long time and in spite of the treatments availed he is now bedridden and his lower limb is totally paralysed. He has no sensation below T 9 region. He sought compensation of Rs.10 lakhs.

3. The 2nd respondent filed a written statement contending that it was not liable to pay compensation to the 1st respondent. The work was awarded to the 3rd respondent and as per the terms and conditions of the agreement, the 2nd respondent was not liable to pay any amount to the 1st respondent. The Railway contended that in case it was found that the 1st respondent was entitled for compensation, the 3rd respondent as well as the appellant were to be held liable. The 3rd respondent did not appear before the Commissioner and it was declared exparte. The appellant filed written statement admitting insurance coverage for seven welders with wages less than Rs.4000/- under the 3rd respondent. Other averments in the claim petition were disputed by the appellant.

4. On conclusion of the proceedings, the learned Commissioner found that the 1st respondent was a worker under the 3rd respondent and sustained injuries in the accident happened on 01.08.2002. The Commissioner also found that the 1st respondent was a workman under Section 2(1)(n) of the Workmen’s Compensation Act and sustained personal injuries out of an accident occurred during and in the course of his employment on 01.08.2002. The Commissioner concluded that the permanent disability was 100%. Workman was found entitled for a compensation of Rs.4,61,136/-. It was further held that the 1st respondent shall be entitled to receive simple interest @ 12% from the date of accident. The 3rd respondent was held liable to pay compensation and the appellant being the insurer was directed to pay the compensation along with simple interest at the rate of 12% with effect from 11.08.2002 within 30 days from the date of receipt of the order, failing which the amount was directed to be recovered with 30% penalty.

5. Case of the appellant is that as per the terms of the policy, the appellant was not liable to pay interest. Further it was also not liable to pay any penalty. Moreover, the appellant contended that the policy covered only 7 welders with monthly wages of Rs.4,000/- and as the 1st respondent claimed that he was drawing Rs.15,000/- per month as wages the appellant was not liable to indemnify the contractor with respect to the 1st respondent.

6. Heard the learned counsel for the appellant and the learned counsel for the 1st respondent.

7. The learned counsel for the appellant invited attention of the Court to an additional document produced along with I.A.No.3 of 2018. He pointed out that the said document, certified copy of the full-text of the Insurance Policy, would show that it was made clear in the policy that the insurer shall not be liable to indemnify the insured in respect of any interest and/or penalty which may be imposed on him/them on account of his/their failure to comply with the requirements laid down under the Workmen’s Compensation Act, 1923 and subsequent amendments of the said Act. He hence contended that the liability to pay interest and penalty was specifically omitted from the purview of the policy. He, therefore, contended that the appellant is not liable to pay interest or penalty. The learned counsel relied on the following judgments in support of the contention that the insurer cannot be held liable to pay interest ignoring the terms of the policy:

                  (1)      Kunnel Engineers and Contractors Private Limited v. New India Assurance Company Limited and Another [(2023) 15 SCC 776]

                  (2)      New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya and Another [(2006) 5 SCC 192]

8. Pertaining to the objections raised by the respondents during the course of hearing regarding production of the certified copy of the policy the learned counsel relied on a judgment of this Court in General Manager, BSNL v. P.J. Saramma (died) and Others [2017 (3) KHC 502]. He contended that in the said case additional documents produced by the appellant were accepted, taken note of and the appeal was decided taking in to account those documents also.

9. Learned counsel for the 1st respondent contended that the appeal is devoid of merits and the appellant Company is liable to pay the compensation penalty and interest. He submitted that insurer cannot be permitted to avoid the payment of any component of the liabilities under the impugned order. The learned counsel submitted that the Commissioner cannot be found fault with for passing the impugned order. There was no material before the learned Commissioner to hold otherwise. He took strong exception to accepting the additional document and relying on the same. The learned counsel asserted that no substantial question of law is involved in the instant appeal and hence the same is only to be rejected. The learned counsel relied on the judgments of the Hon’ble Supreme Court in the following cases:

                  (1).     North East Karnataka Road Transport Corporation v. Sujatha [(2019) 11 SCC 514]

                  (2).     L.R. Ferro Alloys Ltd. v. Mahavir Mahto and Another [(2002) 9 SCC 450]

                  (3).     Ved Prakash Garg v. Premi Devi and Others [AIR 1997 SC 3854]

                  (4).     Commissioner of Survey, Settlements and Land Records, A.P., Hyderabad and Others v. Kunsam Saranarayana and Others [AIR 1997 SC 3867]

10. Though various challenges have been raised in the instant appeal, submissions at the time of hearing were mainly pertaining to the liability to pay interest. The learned counsel for the appellant had raised a contention that the policy issued by the appellant covered only seven welders with monthly wages of Rs.4,000/-. The 1st respondent had contended that he was drawing Rs.15,000/- per month as wages. The learned counsel therefore submitted that the Company was not liable with respect to the 1st respondent who was drawing monthly wages above Rs.4,000/-. I don’t find any merit in the contention. Solely for the reason that the 1st respondent claimed that he was drawing Rs.15,000/- as monthly wages, the insurance company cannot be permitted to deny the coverage. The Commissioner has accepted the monthly wages of the 1st respondent as Rs.4,000/- only. That being so, the appellant cannot be permitted to be heard that the 1st respondent was not within the coverage of the policy.

11. Now I shall deal with the prime issue, the liability to pay interest. I.A.No.3 of 2018 was filed to produce certified copy of the full text of the insurance policy. The same was not produced before the Commissioner and the reason stated by the appellant is that the same occurred due to an inadvertent omission. Though the 1st respondent has objected to accepting of the additional evidence, he has no case that the same is not a genuine document or a relevant piece of evidence. The policy certificate as well as the premium receipts were produced before the Commissioner. The additional evidence sought to be placed on record is the full text of the insurance policy. For a proper adjudication of the dispute involved in this appeal perusal of the full text is helpful. Therefore, I am of the view that in the interest of justice, the additional evidence produced along with the I.A. can be accepted on record. Hence, I allow the I.A. and accept the documents produced as additional evidence.

12. Perusal of the policy document shows that compensation payable as per the Workmen’s Compensation Act 1923, Indian Fatal Accidents Act 1855 and their subsequent amendments are covered under the policy. This is specifically stated in the policy scheduled itself which was marked as Annexure A2 during trial. The policy document contains certain exceptions, an endorsement and conditions. The endorsement reads as under:

                  “ 10717 Warranted that in case of dishonour of premium 3/18/2002 cheque(s), the said document stands automatically cancelled abinitio (from Inception) Compensation Payable as per WC Act 1923, Indian Fatal Accident Act 1855 and their subsequent Amendments”

13. Therefore, it is clear that the cover provided under the policy was not extended to indemnify the insured in respect of any interest and/or penalty which may be imposed on account of failure to comply with the requirements under the Workmen’s Compensation Act, 1923 and subsequent amendments of the said Act.

14. The Hon’ble Supreme Court in New India Assurance Co. Ltd. (Supra) held as under:

                  “14. By reason of the provisions of the Act, an employer is not statutorily liable to enter into a contract of insurance. Where, however, a contract of insurance is entered into by and between the employer and the insurer, the insurer shall be liable to indemnify the employer. The insurer, however, unlike under the provisions of the Motor Vehicles Act does not have a statutory liability. Section 17 of the Act does not provide for any restriction in the matter of contracting out by the employer vis-à-vis the insurer.

                  15. The terms of a contract of insurance would depend upon the volition of the parties. A contract of insurance         is governed by the provisions of the Insurance Act. In terms of the provisions of the Insurance Act, an insured is bound to pay premium which is to be calculated in the manner provided for therein. With a view to minimise his liability, an employer can contract out so as to make the insurer not liable as regards indemnifying him in relation to certain matters which do not strictly arise out of the mandatory provisions of any statute. Contracting out, as regards payment          of interest by an employer, therefore, is not prohibited in law.

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                  19. As indicated hereinbefore, a contract of insurance is governed by the provisions of the Insurance Act. Unless the said contract is governed by the provisions of a statute, the parties are free to enter into a contract as for their own volition. The Act does not contain a provision like Section 147 of the Motor Vehicles Act. Where a statute does not provide for a compulsory insurance or the extent thereof, it will bear repetition to state that the parties are free to choose their own terms of contract. In that view of the matter, contracting out, so far as reimbursement of amount of interest is concerned, in our opinion, is not prohibited by a statute.”

15. The Hon’ble Court took note of the judgments in Ved Prakash Garg and L.R. Ferro Alloys Ltd. (Supra) and held that the law laid down in those cases with respect to insurance governed by the provisions of the Motor Vehicles Act, 1988 cannot be applied as such with respect to insurance for coverage of liabilities under the Employees Compensation Act. The Hon’ble Supreme Court held that the insurance company was not liable to pay interest in the said case.

16. It is also worthy to note the following paragraphs of the judgments of the Hon’ble Supreme Court in Kunnel Engineers and Contractors Private Limited (Supra).

                  14. Notably, liability of the Insurance Company does not fall under the Act and the same is governed only by the terms of the contract. When parties have agreed upon the terms of the insurance contract, the Court cannot interpret the clauses in the contract, by adverting to equity principles. It is because in commercial transactions, the question of lack of bargaining power does not arise. This was the view taken by a three-Judge Bench of this Court in Oriental Insurance Co. Ltd. v. Narbheram Power and Steel (P) Ltd. (2018) 6 SCC 534 : (2018) 3 SCC (Civ) 484 wherein this Court held as under : (SCC p. 541, para 10)

                  “10. The aforesaid principles are in the realm of settled position of law. The natural corollary of the said propositions is that the parties are bound by the clauses enumerated in the policy and the court does not transplant any equity to the same by rewriting a clause. The court can interpret such stipulations in the agreement. It is because they relate to commercial transactions and the principle of unconscionability of the terms and conditions because of the lack of bargaining power does not arise. The said principle comes into play in a different sphere.”

                  15. In view of the foregoing discussion and having regard to the exception clause incorporated in the insurance contract between the employer and the Insurance Company as extracted above, we see no infirmity with the view taken by the High Court in declaring that the insurer is not liable to satisfy the interest component payable by the employer, in terms of the award of the Commissioner.

                  16. The employer is therefore required to satisfy the balance sum payable towards the interest component and we see no reason to disturb such finding of the High Court. The appeal accordingly stands dismissed.”

17. The Hon’ble Supreme Court upheld the judgment of this Court directing the employer to pay interest on compensation as against the order of the Commissioner directing the insurer to pay compensation with interest under the provisions of the Workmen’s Compensation Act, 1923.

18. Therefore, the legal position is clear. It is not mandatory for an employer under any provision of law to obtain a policy to cover liabilities that may arise under the Employees Compensation Act. The insurance policy is a contract. The insurer and the insured are bound by the terms and conditions of the policy. It is not for the Courts to rewrite/overwrite the terms and conditions of the insurance policies. In the case at hand, the endorsement noted above clearly excludes the liability to pay interest and penalty. That being so there is considerable merit in the contentions of the appellant in this regard.

19. The learned counsel for the respondent had relied on the judgment of the Hon’ble Supreme Court in Ved Prakash Garg and L.R. Ferro Alloys Ltd. (Supra). However, those judgments have been considered and distinguished in New India Assurance Co. Ltd. (Supra) as already noticed.

20. The learned counsel for the respondent had contended relying on North East Karnataka Road Transport Corporation (Supra) that no question of law is involved as according to him the questions raised in this appeal are purely questions of fact. I am unable to accept this contention. Whether the Commissioner was legally correct in directing the appellant company to pay the compensation as well as interest despite there being an exclusion of the liability to pay interest in the policy is a substantial question of law. In the light of the discussions in the foregoing paragraphs, I find this question of law in favour of the appellant.

                  In the result, the directions in the impugned order are modified. The appellant is liable to pay only the compensation granted by the Commissioner and the 3rd respondent shall be liable to pay the interest due under the impugned order. With the said modification, the appeal is disposed of.