Navigating a Death Claim: How to Handle Insurance Requests for Form No. 24 in Construction Projects

Dear Seniors, please help me with the following matter. One of our employees met with an accident and passed away while working on our power project. We have all our employees covered under the Workmen Compensation policy in accordance with the Employee Compensation Act of 1923. We have already submitted a claim against our Workmen's Compensation policy with all the necessary documents. However, the Insurance officer is requesting Form No. 24 with the factory inspector's signature, which we have not yet informed the factory inspector about.

Based on my understanding and knowledge, the factory act does not apply to construction companies. Please advise me on what steps I should take in this regard.

Regards,
Abhijeet Hire
[Phone Number Removed For Privacy Reasons]

It seems your power project is not commissioned, and it is still under construction. Therefore, the Factory Act is not applicable to you. However, the Building and Other Construction Workers (BOCW) Act of 1996 is applicable, and under this Act, you are liable to submit reports of accidents and dangerous occurrences to the relevant authority.

Regards

Applicability of the Factory Act to Power Plants

Factory Act is applicable for power plants. In my view, it does not matter whether it is commissioned or not. I hope you have the valid Factory License in place.

Mandatory Intimation in Form-24

Intimation in Form-24 is mandatory within 24 hours of the fatal accident to the factory inspector. You have already defaulted on this. However, you may still submit Form-24 to the factory inspector. As it is a medico-legal case, it is better to be late than never. Failing to do so may further complicate the case for your company.

I appreciate your views. The definition of a manufacturing process covers each and every activity. A manufacturing process means a process by which a form of any substance is changed to another, as defined by SC London, as told to me by someone. Then why is the construction activity not considered a manufacturing process and does not come under the ambit of the Factory Act?

Do you have any cases in which a project under construction has been granted a Factory License? If yes, please share with me as well as with this forum.

In the meantime, I am drawing your kind attention to a judgment by the Orissa High Court in 2010 on this subject. If I am not mistaken, it pertains to the matter of Sterlite. The said judgment was uploaded by me once, but right now, it is not traceable.

Regards

Mr. Keshav is very correct. A power plant project under construction does not fall within the purview of the Factories Act until it is either commissioned or the power plant is an extension project of an already running plant in the same precinct. Where the Factories Act applies, the BOCW Act does not apply, and vice versa. However, the content of the acts is almost similar, and the authority for both acts is the Inspector of Factories.

Secondly, concerning the question of informing the Factories Inspector, it is stated that both Section 88 of the Factories Act, 1948, and Section 39 of the BOCW Act, 1996, discuss informing the authorities within a stipulated time and in a prescribed form.

Now, the suggestion is to proceed and inform the Inspector of Factories in the prescribed form and hand over the written forms to the Insurance department.

Hope you might have completed other formalities of informing the death to other authorities as well as handing over the necessary supporting documents to the Insurance company.

Regards,
P. Vathiraj
Dy. Manager (Personnel)

Please check the attached PDF file of Form 24 under The Factories Act. Your insurance company will demand further documentation, including the salary and wages register, attendance roll, and Form 13 under The Payment of Wages Act, duly certified by a chartered accountant. Additionally, you will need proof of whether your company has paid half wages for accident leave, etc. Start preparing all these documents.

All the best.

Regards,
Abhijeet

One of your employees met with an accident and died while working on our power project, which is unfortunate. You have covered all our employees under the Workmen's Compensation policy as per the Employee Compensation Act of 1923, which is commendable.

Under this act, we have submitted a claim against our Workmen's Compensation policy with the required and relevant documents.

The factory is covered under the Factory Act, which is not an issue. You have the postmortem report, police panchnama report from the nearest police station, death certificate from the grampanchayat, and the last wages register for that particular month. These documents will be sufficient for the insurance claim process.

Regards,
RAMESH LAWANDE

As a matter of fact, before the construction of any factory, the occupier has to obtain approval from the Factory Inspector as per the Factories Act. Hence, the Principal Employer has to insist that the Contractor submit the Accident/Incident Report in the specified format under the BOCW Act to the Director of Industrial Safety and Health/Factories Inspector, who has been given additional responsibility (by the concerned State Government) to oversee the BOCW Act.

I hope you understand the reason behind Mr. Keshav and Mr. Vathiraja's instructions on proceeding with what the Workmen Compensation Commissioner has advised.

Dear Abhijeet,

Since the worker has passed away in the accident, you must report the fatal accident to the relevant Commissioner for Workmen's Compensation (now known as the Commissioner for Employees' Compensation) using Form E, along with a copy of the insurance policy. The Commissioner will then handle the proceedings and issue an order after conducting necessary hearings against the Insurance Company. The Insurance Company is obligated to pay the claim, along with interest from the date of the accident. Additionally, the claim amount will be paid by the Insurance Company to the Commissioner, not directly to you or the legal heirs of the deceased.

Regards,
[Name]

Dear Dixon ji / Dear Abhijeet ji / Dear All Viewers,

To supplement my earlier responses, I am attaching the judgment of Orissa HC in the matter of Sterlite Energy v. State of Orissa.

If an employee meets with an accident and dies within the factory or establishment, and the nearest police station is informed, an FIR is lodged. The rest of the formalities, such as sending the accident report, are only formalities. Section 88(2) of the Factories Act requires sending a notice within 24 hours, which has already been done if you have informed the nearest police station. Fill out the accident report, i.e., Form 24, and send it to the insurance company. If no claim is settled by the insurance company, file a claim before the Employees' Compensation Commissioner within the prescribed limitation period.

Regards,
R.L. Dhingra, Advocate, Labour Law Consultant Delhi
Contact: [Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

Dear Abhijeet,

Claim Under Workmen's Compensation Act 1923

For claiming compensation under the Act, there are two options available:

1. The legal heirs of the deceased can file a case against the employer with the Commissioner for Workmen's Compensation, which is present in every district. The Labour Court will issue a notice to the employer, who in turn can inform the Court that the compensation is payable by the Insurance Company. Normally, the Court directs the Insurance Company to pay the compensation.

2. Alternatively, the employer must submit the report of the fatal accident in Form EE to the Commissioner for Workmen's Compensation with the relevant details, enclosing a copy of the Insurance policy. The Commissioner will conduct the hearing and pass necessary orders against the Insurance Company/employer.

3. Of course, necessary papers will have to be submitted to the Insurance Company to settle the claim under the WC policy.

Whatever I have stated above is what we practice in Kerala, which I believe is applicable to the whole of India.

Regards,
N.K. Raveendran

Thank you for your kind suggestion. As I have mentioned, it is not possible to submit Form 24 now. I only have a photocopy of the wages paid voucher, not the original, as it was misplaced by my previous HR Manager. Please suggest.

Dear Seniors,

Thank you for your suggestion. I have acted as per your guidelines. However, now the insurance company is requesting a letter stating an explanation about why the Factory's Act does not apply to our company on the company's letterhead. Will this be harmful to our company? Please advise.

Regards,
Abhijeet Hire
[Phone Number Removed For Privacy Reasons]

Thank you to all of you for your valuable suggestions. Now we have received a cheque in the name of the WC Commissioner, and we need to recover the amount paid to the deceased employee's family from the cheque, as we have paid them an advance amount until receiving the cheque. The deceased employee's legal heir has provided in writing on a ₹100 Stamp paper that they do not have any objection to paying our amount from the cheque received from the insurance company. Please help us on how we can recover the amount that was paid by our company in advance to the deceased family.

Regards,
Abhijeet

You should not pay any amount to the family/legal heir of the deceased. Whatever the compensation calculated, it should be directly paid to the Workmen Compensation Commissioner. The compensation amount must be paid by the WC Commissioner after verifying the necessary proof of the legal heir. If you paid any amount directly to the family of the victim, it should be considered as Ex-gratia and not considered as compensation. Please refer to Section 8 of the WC Act for further clarification.

Regards,

As per the Employee Compensation Act, firstly, the employer has to report any fatal accident to the Workmen Compensation Commissioner within 7 days of the accident. Secondly, within a month of such an incident, the employer has to deposit the compensation amount to the Workmen Compensation Commissioner. In case of a fatal accident, no compensation can be directly paid by the employer to the heirs of the deceased. It is the WC commissioner who calls the dependents (legal heirs) of the deceased with proof/documents and, after verifying the same, distributes the compensation amount proportionately among the dependents.

In your case, you have paid the compensation directly. Therefore, please apprise your case to the workmen's compensation commissioner and show him all the documents (compensation cheque copy, declaration given by legal heirs), and try to get this settlement registered under him.

Thanks and regards,
Jaspal Negi

Dear Jaspal,

It seems that Abhijeet either has not remitted the compensation amount cheque to the WC Commissioner within the month of the fatality or failed to submit the photocopy of the cheque and the acknowledgment duly issued by the WC Commissioner along with the insurance claim application. That's the reason the cheque has been issued in the name of the WC Commissioner. If the legal heir is returning the amount paid as an advance to Abhijeet, then it is well and good. But if the legal heir denies returning the advance money paid to them, then Mr. Abhijeet cannot claim the same from the legal heir, as Section 8 of the WC Act clearly states that no amount should be given directly to the family/legal heir of the deceased, and if the same is paid, then it will be considered Ex-gratia.

Appended below is Section 8 of the WC Act:

8. DISTRIBUTION OF COMPENSATION. - (1) No payment of compensation in respect of a workman whose injury has resulted in death, and no payment of a lump sum as compensation to a woman or a person under a legal disability, shall be made otherwise than by deposit with the Commissioner, and no such payment made directly by an employer shall be deemed to be a payment of compensation:

Provided that, in the case of a deceased workman, an employer may make advances to any dependent on account of compensation of an amount equal to three months' wages of such workman, and so much of such an amount as does not exceed the compensation payable to that dependent shall be deducted by the Commissioner from such compensation and repaid to the employer.

(2) Any other sum amounting to not less than ten rupees, which is payable as compensation, may be deposited with the Commissioner on behalf of the person entitled thereto.

(3) The receipt of the Commissioner shall be a sufficient discharge in respect of any compensation deposited with him.

(4) On the deposit of any money under subsection (1), as compensation in respect of a deceased workman, the Commissioner shall, if he thinks necessary, cause notice to be published or served on each dependent in such a manner as he thinks fit, calling upon the dependents to appear before him on such a date as he may fix for determining the distribution of the compensation.

If the Commissioner is satisfied after any inquiry which he may deem necessary that no dependent exists, he shall repay the balance of the money to the employer by whom it was paid.

The Commissioner shall, on the application by the employer, furnish a statement showing in detail all disbursements made.

(5) Compensation deposited in respect of a deceased workman shall, subject to any deduction made under subsection (4), be apportioned among the dependents of the deceased workman or any of them in such a proportion as the Commissioner thinks fit, or may, in the discretion of the Commissioner, be allotted to any one dependent.

(6) Where any compensation deposited with the Commissioner is payable to any person, the Commissioner shall, if the person to whom the compensation is payable is not a woman or a person under a legal disability, and may, in other cases, pay the money to the person entitled thereto.

(7) Where any lump sum deposited with the Commissioner is payable to a woman or a person under a legal disability, such sum may be invested, applied, or otherwise dealt with for the benefit of the woman or of such person during his disability, in such a manner as the Commissioner may direct; and where a half-monthly payment is payable to any person under a legal disability, the Commissioner may, of his own motion or on an application made to him in this behalf, order that the payment be made during the disability to any dependent of the workman or to any other person, whom the Commissioner thinks best fitted to provide for the welfare of the workman.

(8) Where, on an application made to him in this behalf or otherwise, the Commissioner is satisfied that, on account of neglect of children on the part of a parent or on account of the variation of the circumstances of any dependent or for any other sufficient cause, an order of the Commissioner as to the distribution of any sum paid as compensation or as to the manner in which any sum payable to any such dependent is to be invested, applied or otherwise dealt with, ought to be varied, the Commissioner may make such orders for the variation of the former order as he thinks just in the circumstances of the case:

Provided that no such order prejudicial to any person shall be made unless such person has been given an opportunity of showing cause why the order should not be made or shall be made in any case in which it would involve the repayment by a dependent of any sum already paid to him.

(9) Where the Commissioner varies any order under subsection (8) by reason of the fact that payment of compensation to any person has been obtained by fraud, impersonation, or other improper means, any amount so paid to or on behalf of such a person may be recovered in the manner hereinafter provided in section 31.

Regards,

Dear Sir,

The company settled the complete settlement to the deceased wife without consulting the mother. Can the mother of the deceased go to the WC Commissioner to claim her rights? The nomination in the company record was for the mother. Now, neither the company is disclosing any information nor the deceased wife.

Please help.

Regards,
Aniket Kumar