A.N.S. Earthmovers vs Surto Devi and Others

Kuldip Singh, J.—This judgment shall dispose of F.A.O. Nos. 456, 457, 458, 459, 460 and 461 of 2003. All these appeals have arisen out of common order dated 9.7.2003 passed by Commissioner under Workmen''s Compensation Act at Jhakri in F.A. Nos. 3 of 2001, N.F.A. No. 29 of 2001, F.A. No. 6 of 2001, N.F.A. No. 28 of 2001, F.A. No. 4 of 2001 and F.A. No. 5 of 2001, respectively. The further facts are that F.A. Nos. 3, 4, 5, 6 and N.F.A. Nos. 28 and 29 of 2001 were filed by the petitioners claiming compensation under the Workmen''s Compensation Act, 1923 (for short, ''the Act''). In F.A. Nos. 3, 4, 5 and 6 of 2001, compensation was claimed by the dependants of the deceased workmen, whereas in N.F.A. Nos. 28 and 29 of 2001, the claim petitions were filed by the injured workmen. The Commissioner vide common order dated 9.7.2001 in F.A. Nos. 3, 4, 5, 6 of 2001 and N.F.A. Nos. 28 and 29 of 2001, allowed following compensation and interest:

-------------------------------------------------------------------------------- Sr. Case No. Compensation Simple interest w.e.f. Total No. awarded 1.5.2001 to the date amount of deposit @ 12 per cent per annum -------------------------------------------------------------------------------- 1. F.A. No. 3 of 2001 Rs. 3,36,245 Rs. 91,671 Rs. 4,27,916 2. F.A. No. 4 of 2001 Rs. 2,70,264 Rs. 73,682 Rs. 3,43,946 3. F.A. No. 5 of 2001 Rs. 3,74,682 Rs. 1,02,150 Rs. 4,76,832 4. F.A. No. 6 of 2001 Rs. 3,55,425 Rs. 96,900 Rs. 4,52,325 5. N.F.A. No. 28 of 2001 Rs. 1,86,854 Rs. 50,942 Rs. 2,37,796 6. N.F.A. No. 29 of 2001 Rs. 24,449 Rs. 6,666 Rs. 31,115 --------------------------------------------------------------------------------

The Commissioner held New India Assurance Co. Ltd. to pay the entire compensation along with interest to the claimants with a direction to the insurance company to deposit whole of the compensation amount Rs. 19,69,930 before the Commissioner within one month from the receipt of the order. New India Assurance Co. Ltd. has filed separate appeals being F.A.O. Nos. 464, 465, 466, 467, 468 and 469 of 2003, against the common award dated 9.7.2003. Those appeals are being disposed of by separate judgment.

The Commissioner issued notice to employer on 9.7.2001 in all the above cases being F.A. No. 3 of 2001, N.F.A. No. 29 of 2001, F.A. No. 6 of 2001, N.F.A. No. 28 of 2001, F.A. No. 4 of 2001 and F.A. No. 5 of 2001, respectively, as to why penalty u/s 4-A (3) (b) of the Act be not imposed for violating statutory provision for not settling the claim within stipulated period. Employer filed reply to the show-cause notice and has submitted that the employer had denied the liability under the Act from the very beginning which was based upon law and there was justification for the denial. The claimants were informed their right to move the court for claiming compensation. The insurance company was intimated in time and this fact was mentioned in the replies filed to the main petition. The employer was never negligent in dealing with the matter. The required information was promptly given. There was no delay on the part of the employer for finalising the cases. As per the employer, there was no liability of the employer, thus there was no question of settlement and depositing of compensation. On these grounds, employer justified non-payment/deposit, settlement of compensation.

The Commissioner, vide common order dated 6.8.2003, has imposed 50 per cent penalty on compensation amount on the employer, u/s 4-A (3) (b) of the Act, as follows:

-------------------------------------------------------------------------------- Sl. Case No. & Particulars Compensation Penalty at No. the rate of 50 per cent -------------------------------------------------------------------------------- 1. F.A. No. 3 of 2001 deceased Rs. 3,36,245 Rs. 1,68,123 Gian Chand, driver 2. F.A. No. 4 of 2001 deceased Rs. 2,70,264 Rs. 1,35,132 Anil Tyagi, helper 3. F.A. No. of 2001 deceased Rs. 3,74,682 Rs. 1,87,341 Karam Chand, driver 4. F.A. No. of 2001 deceased Rs. 3,55,425 Rs. 1,77,713 Yashpal Singh, driver 5. N.F.A. No. 28 of 2001 workman Rs. 1,86,854 Rs. 93,427 Ashok Kumar, mechanic 6. N.F.A. No. 29 of 2001 workman Rs. 24,449 Rs. 12,225 Ashok Kumar, helper ------------------ Total Rs. 7,73,961 --------------------------------------------------------------------------------

The employer was further directed to deposit Rs. 7,73,961 penalty before the Commissioner within one month from the date of the receipt of the order, failing which 12 per cent simple interest shall be charged over the amount due.

Employer has assailed the common order dated 6.8.2003, imposing penalty and interest by way of above appeals. The employer has not filed appeal against the order dated 9.7.2003 in F.A. Nos. 3, 4, 5, 6 of 2001 and N.F.A. Nos. 28 and 29 of 2001, which order has attained finality.

The above appeals were admitted on following substantial questions of law;

(1) Whether the impugned order awarding the amount of compensation by way of penalty payable to the claimants by the employer when the liability under the Workmen''s Compensation Act was not accepted from the very beginning is against the provisions of Workmen''s Compensation Act and is not sustainable in the eyes of law?

(2) Whether impugned order awarding compensation by way of penalty to the claimants under the Workmen''s Compensation Act to the extent of full 50 per cent is without any justification and the finding this fact recorded without any material, is justified?

(3) Whether the learned Commissioner after deciding the claim petition filed by the claimants vide order dated 9.7.2003 had become functus officio and was not entitled under law to make an order subsequently as regards award of penalty amount after the determination of the compensation and the impugned order is without lawful authority and jurisdiction?

I have heard the learned Counsel for the parties and have also gone through the record.

The learned Counsel for the employer appellant has submitted that as per employer the liability to pay the compensation was of the insurance company, which in fact has been ordered to deposit the compensation as per order dated 9.7.2003. The employer had justified reasons not to pay, deposit the compensation as claimed by the claimants. Therefore, employer is not liable to pay any penalty. In any case, the penalty imposed is excessive. The Commissioner, after having passed the order dated 9.7.2003, became functus officio and has no jurisdiction to impose penalty. Therefore, the impugned order is liable to be set aside. On the other hand, the learned Counsel representing the claimants and the insurance company supported the impugned order.

Substantial Question No. 3:

The learned Counsel for the appellant employer has submitted that the Commissioner has decided the claim petitions by a common order dated 9.7.2003 and once he has decided the claim petitions, he had no jurisdiction to take up the matter again and impose penalty. As per Section 4-A of the Act, if the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be without prejudice to the right of the workman to make any further claim. The Sub-section (3) of Section 4-A of the Act, prescribes that in case employer fails to pay the compensation due within 1 month from the date it fell due, the Commissioner shall direct the employer in addition to the amount of the arrears to pay simple interest at the rate of 12 per cent and in case there is no justification for the delay, direct the employer to pay penalty not exceeding 50 per cent in addition to the amount of compensation and interest. However, before imposing penalty reasonable opportunity to the employer to show-cause is to be given.

In the present case, on 9.7.2003, the Commissioner came to the conclusion that the claimants are entitled to compensation but in view of insurance, the Commissioner had directed the insurer to pay the compensation amount. Before 9.7.2003, there was no finding of the Commissioner regarding the payment of compensation to the claimants.

The Act, however, makes it obligatory on the employer to pay compensation when it fell due. The compensation falls due as soon as personal injury was caused to the workman as held by the Supreme Court in Pratap Narain Singh Deo v. Shrinivas Sabata 1976 ACJ 141 (SC). In Saraswati Press v. Nand Ram 1971 ACJ 316 (Allahabad), it has been held that the workman becomes entitled to the compensation as soon as it falls due, i.e., to say, on the date of injury and not on subsequent occasion. The non-payment of compensation by the employer is at his risk. The Commissioner on 9.7.2003, after having come to the conclusion that claimants arc entitled to compensation, but they have not been paid the compensation, issued show-cause notice to the employer for payment of compensation. This is otherwise the requirement of proviso to Sub-section (3) of Section 4-A of the Act. It cannot be said that on having decided the claim petitions on 9.7.2003, the Commissioner had become functus officio. The imposition of penalty is in continuation of the earlier proceedings and for purposes of penalty, the proceedings were not over on 9.7.2003. Rather for the purposes of penalty the proceedings started on 9.7.2003 when the Commissioner has come to the conclusion that claimants are entitled to compensation. The substantial question No. 3, is decided against the employer and in favour of the claimants.

Substantial Question Nos. 1 and 2:

The substantial question Nos. 1 and 2, are interconnected, therefore, these are being disposed of collectively.

Employer in reply to show-cause notice has justified the non-payment of compensation by taking the defence that the employer right from the very beginning was denying the liability to pay the compensation, therefore, the employer was justified in not paying/depositing the compensation as claimed by the claimants. The employer has also taken the plea that the claimants were informed about their rights, the insurance company was also informed. The employer was not negligent in dealing with the matter.

The Sub-section (2) of Section 4-A of the Act, gives the option to the employer to make provisional payment based on the extent of liability, which he accepts and such payment shall be deposited with the Commissioner or made to the workman without prejudice to the right of the workman to make any further claim. Purpose of this provision is to make provisional payment to the workman or his dependants by employer by way of immediate help to the extent employer admits the liability. The employer under this provision has no liberty to deny the liability as a whole and then take plea later on that since he had not accepted the liability, therefore, he was not liable to pay any provisional payment and consequently also not liable to pay penalty. The option given to the employer, under Sub-section (2) of Section 4-A of the Act, is subject to determination of compensation and non-payment of due amount to the workman or his dependants by way of provisional amount by the employer will attract the payment of penalty, under Sub-section (3) (b).

The employer in the present case, except for taking the plea that claimants were not entitled to payment of compensation, has not taken any factual plea to show that there was some genuine difficulty for depositing/payment of provisional compensation by the employer to the claimants. At the time of hearing, learned Counsel for the employer has submitted that Commissioner has not given enough time to the employer for depositing the compensation. It has also been submitted that there was difficulty in arranging the funds, but the employer has not taken these pleas in its reply to show-cause.

In Samuben and Others Vs. Patel Industries and Another, it has been held in para 12 of the judgment, as follows;

(12) It cannot be gainsaid that the appellants lost their sole breadwinner in the family. Their life would have been rendered full of miseries for want of regular income from the breadwinner who breathed his last on account of his meeting with the unfortunate accident in the course of his employment. Denial of the timely payment of compensation would certainly add to their miseries. In that view of the matter, the maximum penalty amount under the Act deserves to be imposed on the respondents and awarded to the appellants. The maximum amount of penalty that is permissible under the Act is 50 per cent of the compensation amount. The respondents deserve to be imposed with the penalty of Rs. 9,000 for non-payment of compensation in time.

In United India Insurance Co. Ltd. Vs. Smt. Nako alias Naiku Devi and Others and Smt. Malti Devi and Others, a Division of this Court in paras 14 and 15 of the judgment, has held as follows:

(14) The compensation amount fell due on the date of accident, that is, 27.6.1984, but it was not paid/deposited within one month. Therefore, claimants-respondents in both the appeals shall be entitled to simple interest at the rate of 6 per cent per annum on the amount of compensation.

(15) Regarding penalty, there is no finding of the Commissioner. We do not find from the record that there was any justification for not paying the amount within the above period. Therefore, the claimants in both the appeals shall be entitled to get penalty of 50 per cent on the amount of compensation awarded.

The employer has not shown justification for non-payment/depositing the compensation from the date it fell due nor even immediately after the decision dated 9.7.2003. Therefore, the Commissioner is justified in imposing 50 per cent penalty on the compensation amount and further 12 per cent interest on the penalty if it was not paid/deposited within the time granted by the Commissioner.

The employer has failed to make out any case for interference. The substantial question Nos. 1 and 2 are decided against the employer and in favour of the claimants.

The result of the above discussion is F.A.O. Nos. 456, 457, 458, 459, 460 and 461 of 2003, are dismissed.

Order dated 9.7.2003, is upheld in each appeal with costs quantified at Rs. 3,000 in each appeal to be paid by the employer appellant to the claimants-respondent''s.