KAMLA CHATURVEDI versus NATIONAL INSURANCE CO. & ORS.

Citation: [2008] 16 S.C.R. 143 · Decided: 18-11-2008 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Case Partly allowed
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Judgment (excerpt)

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[2008] 16 S.C.R. 143 
KAMLA CHATURVEDI 
v. 
NATIONAL INSURANCE CO. & ORS. 
(Civil Appeal No. 6691 of 2008) 
NOVEMBER 18, 2008 
[DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM 
SHARMA, JJ.] 
Insurance Act, 1938: 
Interest on award of compensation - Liability of insurer 
to pay - Effective date - Held: Parties are free to choose the 
terms. of the contract - A contract ofinsurance is governed 
by the provisions of the Insurance Act - In the instant case, 
in the insurance policy no exception to payment of interest 
was stipulated - Hence; insurer is liable to pay interest - In 
· terms of s.4~A of the Workmen's Compensation Act, the 
interest would be payable from the date of adjudication of 
the Claim - Workmen's Compensation Act, 1923 - SAA. 
Words and Phrases: 
'falls cue' - Meaning of, in the context of payment of 
interest on amount of compensation in terms of s.4-A of the 
Workmen's Compensation Act, 1923. 
The issue which arose for determination in this 
appeal was as to whether in a claim arising under the 
Workmen's Compensation Act, 1923, an Insurer was 
liable to pay interest on the amount of Award in the 
absence of any contract entered into between the Insurer 
and the company with regard to payment of interest. 
Appellant contended that the High Court has 
erroneously held that the Insurance company had no 
liability to pay. 
143 
A 
B 
c 
D 
E 
F 
G 
H 
144 
SUPREME COURT REPORTS 
[2008] 16 S.C.R. 
A 
Respondent-company submitted that the decision by 
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this Court in the case of New India Assurance Co. Ltd. vs. 
Harshabhai Amratbhai Modhiya has clear application to the 
facts of the case. 
B 
Partly allowing the appeal, the Court 
HELD: 1.1 In New India Assurance Co. 's case this 
Court found as a matter of fact that a contract itself 
provided that the interest and/or penalty imposed on the 
insurer on account of his/her failure to make payment of 
c amount payable under the Workmen's Compensation Act 
is not to be paid by the insurer. [Para 5] [146-E] 
New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai 
Modhiya (2006) 5 SCC 192, referred to. 
D 
1.2. A contract of Insurance is governed by the 
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provisions of the Insurance Act, 1938, unless the said 
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contract is governed by the provisions of a statute. The 
parties are free to enter into a contract as per their own 
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volition. The Act does not contain a provision like Section 
148 of the MV Act Where a statute does not provide for a 
compulsory insurance or accident thereof. The parties 
are free to choose their terms of contract. In that view of 
the matter contracting out so far as the reimbursement 
of amount of interest is concerned is not prohibited by a 
F statute. In the instant case the position is different. The 
accident in question arose on account of vehicular 
accident and provisions of MV Act are clearly applicable. 
After going through the policy of insurance in the instant 
case, it is found that no such exception as was the case 
G in New India Assurance Co.'s case was stipulated in the 
policy. Therefore, the Insurance Company is liable to pay 
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the interest. [Para 6] [149~C-F] 
New India Assurance Co. Ltd. v. Harshadbhai Amrt.itbhai 
H Modhiya (2006) 5 SCC 192; Ved Prakash Garg v. Premi Devi 
 
KAMLA CHATURVEDI v. NATIONAL INSURANCE CO. & 
145 
ORS. 
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and others (1997) 8 SCC 1; P.J. Narayan v. Union of India 
A 
and others (2006) 5 SCC 200 and National Insurance co. Ltd. 
v. Mubasir Ahmed & Anr. (2007) 2 SCC 349, relied on. 
Case Law Reference : 
(2006) s sec 192 
referred to 
Para 3 
B 
(1997) a sec 1 
referred to 
Para 6 
(2006) s sec 200 
referred to 
Para 6 
(2007) 2 sec 349 
relied on 
Para 8 
c 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
6691 of 2008. 
From the Order dated 28.7.2006 of the High Court of 
, 
Madhya Pradesh, Jabalpur, Bench at Gwalior in M.A. No. 105 D 
of 2004. 
Ankur Mody and Vikas Mehta for the Appellant. 
Dr. Meera Agarwal and Ramesh Chandra Mishra for the 
Respondents. 
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The Judgment of the Court was delivered by 
DR. ARIJIT PASAYAT, J. 1. Leave granted. 
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2. Challenge in this appeal is to the judgment of a learned 
Single Judge of the Madhya Pradesh High Court, Jabalpur 
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Bench, allowing the Misc. Appeal filed by the respondent No.1 
(hereinafter referred to as the 'Insurance Company'). The 
controversy lies within a very narrow compass. 
3. Challenge in the Misc. Appeal before the High Court G 
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was to the Award made by the Commissioner for Workmen's 
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