Faqir Chand and Others vs Suraj Parkash and Others

Muzaffar Hussain Attar, J.—On the claim application of the appellants, the authority under Workmen's Compensation Act, 1923 (for short

the ""Act of 1923""), Assistant Labour Commissioner, Jammu (for short ""ALC"") passed an award dated 23.04.2010 holding respondent No. 1

responsible for payment of an amount of Rs. 4.15,960- (Rs. Four lac fifteen thousands nine hundred sixty only), as compensation, to the

dependants of the deceased, Vijay Kumar, Driver. It was further directed that respondent No. 1 will also pay simple interest @ 12 % as provided

under Sub-section 3(a) of Section 4-A of the Act of 1923 from 24th May, 2010 viz. one month after the passing of the award, till the amount of

compensation is paid. The insurance company was directed to pay the award amount to appellants. Learned counsel for the appellants submitted

that appellants are aggrieved of the direction of the ALC to the extent, the interest of the award amount has been ordered to be paid from 24th

May, 2010 and not from the date of the accident viz. 8th January, 2003, when Vijay Kumar, Driver of the Tempo Traveler No. JK02P-3374 died

in a vehicular accident at Achar Kund near Nandni, Tehsil Jammu. Learned counsel referred to Section 4-A(3)(a) of the Act of 1923 and

submitted that there was default in payment of compensation, and the compensation had fallen due on 8th January, 2003 when the accident took

place resulting in the death of Vijay Kumar and in view of the mandate contained in Section 4-A(3)(a), ALC was under statutory obligation to

direct for payment of interest from 8th February, 2003 within one month from the date it fell due viz. 8th January, 2003. Learned counsel in

support of his contention referred to and relied upon judgments of Hon'ble Supreme Court in case titled Pratap Narain Singh Deo Vs. Srinivas

Sabata and Another, , rendered by Bench comprising of Hon'ble four Judges of Hon'ble Supreme Court; Kerala State Electricity Board and

Another Vs. Valsala K and Another, , decision rendered by Bench comprising of Hon'ble three Judges of Hon'ble Supreme Court; Divisional

Manager v. Mohd. Sultan and another decided on 04.02.2009 in CIMA No. 123/2007 & CIMA No. 186/2007. Learned counsel accordingly,

prayed that the award be modified and interest be ordered to be paid from 8th February, 2003, which comes to one month from the date of the

accident.

Mr. R.K. Gupta, learned Sr. counsel appearing for the respondent No. 2 submitted that direction given by ALC, as simple interest @ 12%, is

correct in law, inasmuch as, in terms of award dated 23.04.2010 whereunder the claim of the appellants was adjudicated upon, the payment of

interest would become due only on 24.05.2010. Learned counsel, in support of his contention referred to and relied upon, judgments of Hon'ble

Supreme Court in case titled U.P.S.R.T.C. now Uttarakhand Transport Corporation Vs. Satnam Singh, , decision rendered by Bench comprising

of Hon'ble two Judges of Hon'ble Supreme Court; Oriental Insurance Co. Ltd. Vs. Mohd. Nasir and Another, , decision rendered by Bench

comprising of Hon'ble two Judges of Hon'ble Supreme Court; National Insurance Co. Ltd. Vs. Mubasir Ahmed and Another, , decision rendered

by Bench comprising of Hon'ble two Judges of Hon'ble Supreme Court; Kamla Chaturvedi Vs. National Insurance Co. and Others, , decision

rendered by Bench comprising of Hon'ble two Judges of Hon'ble Supreme Court and submitted that in view of the law laid down by Hon'ble

Supreme Court in these cases, ALC has not committed any legal error in awarding and directing for payment of interest from 24th May, 2010 viz.

one month after the date of the award. Learned counsel, accordingly, prayed for dismissal of the appeal.

Section 4-A of the Act of 1923 is taken note of:

4A. Compensation to be paid when due and penalty for default.-

(1) Compensation u/s 4 shall be paid as soon as it falls due.

(2) In cases where 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.

(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner

shall-

(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent, per annum or at

such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by

notification in the Official Gazette, on the amount due; and

(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest

thereon, pay a further sum not exceeding fifty per cent, of such amount by way of penalty:

Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to

show cause why it should not be passed.

Explanation.--For the purposes of this sub-section, ""scheduled bank"" means a bank for the time being included in the Second Schedule to the

Reserve Bank of India Act, 1934(2 of 1934).

It may not be out of place to mention here that CIMA No. 434/2010 filed by the insurance company against the same award has been

dismissed by the court vide its judgment dated 13.09.2012.

The expressions ""in default in paying compensation due"" from the date it fell due appearing in Sub-section 3 of Section 4-A of the Act of 1923

have been interpreted by the Hon'ble Supreme court in the following manner:

(a) Hon'ble Supreme Court in Partap Narain Singh Deo's case at paragraphs 6 and 7 have stated as under:

It has next been argued that the Commissioner committed a serious error of law in imposing a penalty on the appellant u/s 4A(3) of the Act as

the compensation had not fallen due until it was 'settled' by the Commissioner u/s 19 by his impugned order dated May 6, 1969. There is however

no force in this argument.

Section 3 of the Act deals with the employer's liability for compensation. Subsection (1) of that section provides that the employer shall be liable

to pay compensation if ''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 u/s 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 u/s 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.

(b) Bench comprising of Hon'ble three Judges of Hon'ble Supreme Court in Kerala State Electricity Board's case, while relying upon Partap

Narain Singh Deo's case, have taken the same view. Paragraphs 2, 3, 4 and 5 are taken note of:

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.

A four judge Bench of this Court in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, speaking through Shinghal. 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.

A two judge Bench of this Court in The New India Assurance Company Limited v. V.K. Neelakandan, Civil Appeal Nos. 16904-16906 of

1996, decided on 6.11.1996, however, took the view that Workmen's Compensation Act, being a special legislation for the benefit of the

Workmen, the benefit as available on the date of adjudication should be extended to the workmen and not the compensation which was payable

on the date of the accident. Two judge Bench in Neelakandan's case (supra), however, did not take notice of the judgment of the larger Bench in

Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, as it presumably was not brought to the notice of their Lordships. Be that as it may, in

view of the categorical law laid down by the larger Bench in Pratap Narain Singh Deo's case the view expressed by the two judge Bench in

Neelakandan's case is not correct.

(Emphasis supplied)

Our attention has also been drawn to a judgment of the Full Bench of the Kerala High Court in United India Insurance Co. Ltd. Vs. Alavi,

wherein the Full Bench precisely considered the same question and examined both the above noted judgments. It took the view that the injured

workmen becomes entitled to get compensation the moment he suffers personal injuries of the types contemplated by the provisions of the

Workmen's Compensation Act and it is the amount of compensation payable on the date of the accident and not the amount of compensation

payable on account of the amendment made in 1995, which is relevant. The decision of the Full Bench of the Kerala High Court, to the extent it is

in accord with the judgment of the larger bench of this Court in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, lays down the correct

law and we approve it.

(c) This court in Divisional Manager's case, while following the judgments rendered in Partap Narain Singh Deo's case and Kerala State Electricity

Board's case has also held that the claimant workman is entitled to interest from the date of receipt of injury.

(d) Paragraphs 5 and 6 of Satnam Singh's case, a decision handed down by Bench comprising of Hon'ble two Judges of Hon'ble Supreme Court

are taken note of:

The only contention urged before this court is that the direction given to the appellant to pay interest at the rate of 6% on the amount of

compensation from the date of the accident deserves to be set aside in view of the decision of this court in National Insurance Co. Ltd. Vs.

Mubasir Ahmed and Another, , wherein it is held that liability to pay the interest begins after one month from the date on which the compensation

falls due and the compensation falls due on the date on which claim of the workman is adjudicated.

This court has heard learned counsel for the parties. In National Insurance Co. Ltd. Vs. Mubasir Ahmed and Another, , this court has held that

there is not indication in section 4-A(1) as to when the compensation payable u/s 4 falls due and, therefore, it has to be taken that compensation

becomes due on the date on which the claim for compensation is adjudicated. In view of the above mentioned judgment of this court, the direction

given by the Workmen's Compensation Commissioner which is confirmed by the High Court, requiring the appellant to pay the amount of

compensation with 6% interest from the date of the accident, will have to be sustained by the direction to the appellant to pay the amount of

compensation with 6% interest from the date of the award made by Workmen's Compensation Commissioner"".

(e) Likewise paragraph 9 of the Judgment in Mubasir Ahmad's case, rendered by Bench comprising of Hon'ble two Judges of Hon'ble Supreme

Court is taken note of:

Interest is payable u/s 4-A(3) if there is default in paying the compensation due under this Act within one month from the date it fell due. The

question of liability u/s 4-A(3) was dealt with by this Court in Maghar Singh Vs. Jashwant Singh, . By Amending Act, 14 of 1995, Section 4-A of

the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest @ 12%.

In the instant case, the accident took place after the amendment and, therefore, the rate of 12% as fixed by the High Court cannot be faulted. But

the period as fixed by it is wrong. The starting point is on completion of one month from the date on which it fell due. Obviously it cannot be the

date of accident. Since no indication is there as when it becomes due, it has to be taken to be the date of adjudication of the claim. This appears to

be so because Section 4-A(1) prescribes that compensation u/s 4 shall be paid as soon as it falls due. The compensation becomes due on the

basis of adjudication of the claim made. The adjudication u/s 4 in some cases involves the assessment of loss of earning capacity by a qualified

medical practitioner. Unless adjudication is done, question of compensation becoming due does not arise. The position becomes clearer on a

reading of sub-section (2) of Section 4-A. It provides that provisional payment to the extent of admitted liability has to be made when employer

does not accept the liability for compensation to the extent claimed. The crucial expression is ""falls due"". Significantly, legislature has not used the

expression ""from the date of accident"". Unless there is an adjudication, the question of an amount falling due does not arise.

(f) And further paragraphs 9 and 10 of the judgement in Kamla Chaturvedi's case, a decision rendered by Bench comprising of Hon'ble two

Judges of Hon'ble Supreme Court:

In view of what has been stated in Mubasir Ahmed's case (supra) the liability for interest would be in terms of what has been stated in paragraph

9 of the judgment. The appeal is allowed to the aforesaid extent. There shall be no order as to costs.

Bench comprising of Hon'ble four Judges of Hon'ble Supreme Court in Partap Narain's Case have specifically ruled at paragraph 7 that

employer would be liable to pay compensation as soon as the personal injury was caused to the workman by the accident which, admittedly, arose

out of and in the course of the employment. It was emphatically stated that it would be, therefore, futile to contend that the compensation did not

fall due until after the Commissioners order was passed u/s 19 of the Act of 1923. Hon'ble Supreme Court having held that the employer would

become liable to pay the compensation when the personal injury caused to the workman by an accident and that payment could not be deferred

until such time it was adjudicated upon by the Commissioner u/s 19 of the Act of 1923, leaves no room for this court but to follow the law laid

down in Narian Singh Deo's case a decision handed down by Hon'ble Bench of Hon'ble four Judges of Hon'ble Supreme Court. The said

judgment has been followed by Bench comprising of Hon'ble three Judges of Hon'ble Supreme Court in Kerala State Electricity Board's case.

Hon'ble Supreme Court at Paragraph 4 of the judgment has referred to Neelakandan's case decided on 06.11.1996, wherein, Hon'ble Supreme

Court had taken a view that the benefit as available on the date of adjudication should be extended to the workmen and not from the date of the

accident. Hon'ble Supreme Court specifically ruled that in view of the categorical law laid down by the larger Bench in Partap Narain Singh Deo's

case, view expressed by Hon'ble two Judges Bench in Neelakandan's case is not correct. This judgment is referred to and relied upon by Mr.

R.K. Gupta learned Sr. counsel appearing for insurance company.

The point is no longer res integra that decision rendered by the larger Bench of the Hon'ble Supreme Court is to be followed, and not of the

smaller Bench of the Hon'ble Supreme Court on the same point of law. Bench comprising of Hon'ble three Judges of Hon'ble Supreme Court in

Kerala State Electricity Board's case have categorically stated that view expressed by Bench of two Judges in Neelakandan's case is not correct.

The judgments referred to and relied upon by Mr. R.K. Gupta has been rendered by Bench of Hon'ble two Judges. This court has to follow the

view taken by Bench comprising of Hon'ble four Judges of Hon'ble Supreme Court in Partap Narain Singh Deo's case and decision rendered by

the Hon'ble three Judges of Hon'ble Supreme Court in Kerala State Electricity Boards case.

Claimants are, thus, held entitled to receive interest @ 12% per annum in terms of Section 4-A(3)(a) from 8th February, 2003 on the

compensation awarded viz. within one month from the date of accident.

For the above stated reasons, the impugned award is modified and it is provided that claimants will be entitled to receive interest @ 12% per

annum on the awarded amount from 08th February, 2003 and the respondent insurance company shall be liable to pay interest as well to the

claimants as provided in this judgment. The appeal along with connected CMA(s) is disposed of accordingly.