C. Thippeswamy vs United India Insurance Co. Ltd.

Aravind Kumar, J.—Heard Sri. N. Spoorthy Hegde, learned counsel appearing for appellant and Sri. Srikanta Rao, learned counsel appearing for respondent No. 1/insurer. Notice to respondent No. 2 has been dispensed with vide order dated 26.11.2014. This Court by order date 26.11.2014 while directing notice on the counsel appearing for insurer had made clear that only issue involved in the present appeal is with regard to awarding rate of interest and as such, said issue is only being examined.

It is the contention of Sri. N. Spoorthy Hegde, learned counsel appearing for appellant that Commissioner for Workmen''s Compensation has committed a serious error in awarding interest @ 7.5% p.a., which is contrary to statutory provision namely, Section 4A of Workmen''s Compensation Act, 1923 and hence, he prays for suitable modification of award.

Per contra, Sri. Srikanta Rao, learned counsel appearing for respondent No. 1/Caveator would submit that interest awarded by Commissioner is just and proper and prays for dismissal of the appeal.

Having heard the learned advocates appearing for parties, I am of the considered view that following substantial question of law would arise for my consideration:

Whether Commissioner was justified in awarding interest @ 7.5% p.a. from the date of petition and 12% p.a. after 30 days after the date of award?

A perusal of award would indicate that Commissioner after having awarded a compensation of Rs. 1,33,455/- to appellant, has awarded interest @ 7.5% p.a. from 15.07.2007 to 31.05.2013 and @ 12% p.a. from 01.06.2013 till date of deposit. Said issue is no more res intigra . Same is covered by the judgment of Hon''ble Apex Court in the case of The Oriental Insurance Company Ltd. Vs. Siby George and Others, , whereunder it has been held that when compensation falls due on the date of accident and interest starts accruing one month after the date of accident and as such, it has been held by the Hon''ble Apex Court to the following effect:

"8. Now, coming back to the question when does the payment of compensation fall due and what would be the point for the commencement of interest, it may be noted that neither the decision in National Insurance Co. Ltd. Vs. Mubasir Ahmed and Another, , nor the one in Mohd. Nasir, 2009 ACJ 2742 (SC) , can be said to provide any valid guidelines because both the decisions were rendered in ignorance of earlier larger Bench decisions of this Court by which the issue was concluded. As early as in 1975 a four-Judge Bench of this Court in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, directly answered the question. In paras 7 and 8 of the decision it was held and observed as follows:--

"(7). Section 3 of the Act deals with the employers liability for compensation. Sub-section (1) of that section provides that the employer shall be liable to pay compensation if a personal injury is caused to a workman by accident arising out of and in the course of his employment. It was not the case of the employer that the right to compensation was taken away under sub-section (5) of section 3 because of the institution of a suit in a civil court for damages, in respect of the injury, against the employer or any other person. The employer therefore became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is therefore futile to contend that the compensation did not fall due until after the Commissioner''s order dated May 6, 1969 under Section 19. What the section provides is that if any question arises in any proceeding under the Act as to the liability of any person to pay compensation or as to the amount or duration of the compensation it shall, in default of agreement, be settled by the Commissioner. There is therefore nothing to justify the argument that the employer''s liability to pay compensation under Section 3, in respect of the injury, was suspended until after the settlement contemplated by Section 19. The appellant was thus liable to pay compensation as soon as the aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary.

(8). It was the duty of the appellant, under Section 4-A(1) of the Act, to pay the compensation at the rate provided by Section 4 as soon as the personal injury was caused to the respondent. He failed to do so. What is worse, he did not even make a provisional payment under sub-section (2) of Section 4 for, as has been stated, he went to the extent of taking the false pleas that the respondent was a casual contractor and that the accident occurred solely because of his negligence. Then there is the further fact that he paid no heed to the respondent''s personal approach for obtaining the compensation. It will be recalled that the respondent was driven to the necessity of making an application to the Commissioner for settling the claim, and even there the appellant raised a frivolous objection as to the jurisdiction of the Commissioner and prevailed on the respondent to file a memorandum of agreement settling the claim for a sum which was so grossly inadequate that it was rejected by the Commissioner. In these facts and circumstances, we have no doubt that the Commissioner was fully justified in making an order for the payment of interest and the penalty."

(emphasis added)

The matter once again came up before the Court when by amendments introduced in the Act by Act No. 30 of 1995 the amount of compensation and the rate of interest were increased with effect from 15.9.1995. The question arose whether the increased amount of compensation and the rate of interest would apply also to cases in which the accident took place before 15.9.1995. A three Judge Bench of the Court in Kerala State Electricity Board and Another Vs. Valsala K and Another, answered the question in the negative holding, on the authority of Pratap Narain Singh Deo, that the payment of compensation fell due on the date of the accident. In paragraphs 1, 2, and 3 of the decision the Court observed as follows:

"(1). The neat question involved in these special leave petitions is whether the amendment of Ss. 4 and 4A of the Workmen''s Compensation Act, 1923, made by Act 30 of 1995 with effect from 15.9.1995, enhancing the amount of compensation and rate of interest, would be attracted to cases where the claims in respect of death or permanent disablement resulting from an accident caused during the course of employment, took place prior to 15.9.1995?

(2). Various High Courts in the country, while dealing with the claim for compensation under the Workmen''s Compensation Act have uniformly taken the view that the relevant date for determining the rights and liabilities of the parties is the date of the accident.

(3). A four Judge Bench of this Court in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, , speaking through Singhal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workmen by the accident which arose out of and in the course of employment. Thus, the relevant date for determination of the rate of compensation is the date of the accident and not the date of adjudication of the claim."

In the light of law laid down by the Hon''ble Apex Court in the case of Oriental Insurance Co''s referred to herein supra, this Court is of the considered view that Commissioner was not justified in awarding interest @ 7.5% p.a. from the date of petition till date of award and @ 12% p.a. from the date of award till date of deposit and it is hereby held that claimant was entitled to interest @ 12% p.a. payable after 30 days after accident. Hence, substantial question of law formulated hereinabove is answered in the negative i.e., in favour of appellant/claimant and against respondent No. 1/insurer.

Hence, I proceed to pass the following:

ORDER

"(i) Appeal is hereby allowed in part.

(ii) Judgment and award dated 31.05.2013 passed by the Labour Officer and Commissioner for Workmen''s Compensation, Chitradurga, in WAC:WCA:NF:CR: No. 111/2010, is hereby modified and it is hereby ordered that claimant would be entitled to interest @ 12% p.a. from one month after the date of accident till date of payment or deposit, whichever is earlier."

Sri. L. Srikanta Rao, learned counsel appearing for respondent No. 1/Caveator is permitted to file vakalathnama within four weeks from today.