Mahindra Giri vs Pati Ram Sahu

D.R. Deshmukh, J.—This appeal u/s 30 of the Workmen''s Compensation Act, 1923 (hereinafter refered to as ''the Act'') is directed against the order dated 19th June, 1997 passed by the Commissioner under the Workmen''s Compensation Act (hereinafter referred to as ''the Commissioner''), Labour Court, Bilaspur awarding a compensation of Rs. 29,633 to the claimant with a further direction that in default of deposit of the aforesaid amount within two months from the date of order, the non-applicant-respondent shall also be liable to penalty of Rs. 5,000 and interest at the rate of 6% per annum on the compensation awarded from the date accident. Quantum of compensation awarded is not under challenge.

On 14th November, 2002, the appeal was admitted on the following substantial questions of law:

(1) Whether the Commissioner, Workmen''s Compensation Act is justified in not imposing penalty u/s 4A, Sub-section Clause (b) in view of the decision in State of M.P and Anr. v. Chitrekha wd/o Shyamji and Ors. 2000 (1) MPLJ 85?

(2) Whether under the facts and circumstances of the case, awarding the interest at the rate of 6% that too with conditions, is sustainable and in case the interest is payable then in what rate?

It is not disputed in this appeal that the claimant/appellant Mahendra Giri while being in the employment of the respondent-non-applicant Patiram Sahu had suffered amputation of the right hand from below the elbow due to an accident arising out of and during the course of employment.

Heard.

Mr. Sanjay K. Agrawal relying upon Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, mainly contended that penalty and interest ought to have been awarded from the date of accident in the event of the default by the employer in depositing the compensation as soon as the personal injury was caused to the workman by the respondent. He also contended that penalty awarded should not have been less than 50% of the amount of compensation awarded u/s 4A(3)(b). However, he conceded that u/s 4A(3) of the Act, as it existed on the date of accident, interest at the rate of 6% per annum could alone be awarded by the Commissioner as held in State of M.P. v. Chitrekha and Ors. (supra) and Divisional Forest Officer and Another Vs. Baijanti Bai and Others, .

A perusal of the record shows that the amount of compensation was deposited as under by the respondent-non-applicant:

7th August, 1997 Rs. 7,500 7th October, 1997 Rs. 4,000 30th December, 1997 Rs. 18,133 __________ Total: Rs. 29,633 __________

Section 4A(3) of the Act as it stood at the relevant time reads as under:

(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 may direct that in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty.

It is manifest from a plain reading of the above that interest at the rate of 6% is to be awarded from the date of accident in the event there is default on the part of an employer in paying the compensation due under the Act within one month from the date it fell due i.e. from the date of accident. In the case of State of M.P. v. Chitrekha (supra), at para 14, it was observed that the interest is automatic once default, on the part of employer in paying the compensation due, takes place beyond the permissible limit of one month. It becomes part and parcel of statutory law, which is legally liable to he-discharged.

Although the learned Commissioner has rightly awarded interest at the rate of 6% on the compensation awarded to the claimant from the date of accident, it ought not to have been made payable only in the event of default within two months from the date of order.

So far as the imposition of penalty is concerned, the eventuality arises only when any employer is in default of paying the compensation due under the Act within one month from the date it fell due, as held in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, and case of Chitrekha, (supra). In the event there is no justification for delay, the Commissioner is also empowered u/s 4A(3) of the Act to direct that the employer shall, in addition to the amount of compensation and interest, pay a further sum not exceeding 50% of such amount by way of penalty. No doubt, the Commissioner has discretion to award penalty upto 60% and not beyond in case of a default by the employer it has to be supported by reasons. Considering the amount of compensation awarded, the Commissioner was, in my opinion, not justified in imposing a meagre penalty of Rs. 5,000. There is nothing on record to arrive at a conclusion that imposition of the low penalty of Rs. 5,000 was supported by justifiable reasons. The penalty is, therefore, enhanced to Rs. 10,000 in view of the injury caused to the claimant/appellant and the default in depositing the compensation when it fell due. Payment of interest and penalty could in no case be imposed in the eventuality of a default within two months from the date of impugned order. This direction of the Commissioner is contrary to law.

In the result, question No. 1 is answered accordingly that the Commissioner was not justified in awarding a meagre penalty of Rs. 5,000 on the employer. The penalty, in the circumstances of the case, is enhanced to Rs. 10,000.

Question No. 2 is answered accordingly that there is no infirmity in the award of interest at the rate of 6% on the compensation awarded, from the date of accident. This question is now only of academic interest since the employer did not deposit the compensation, when it fell due, and was u/s 4A(3) of the Act liable to payment of interest at the rate of 6% per annum from the date of accident on the compensation awarded.

Consequently, the order dated 19th June, 1997 passed by the Commissioner is modified to the extent that the condition of deposit of the compensation awarded by the Commissioner within a period of two months is set g aside. Since the employer did not deposit the compensation, when it became due under the Act, he was liable to imposition of penalty and award of interest at the rate of 6% per annum from the date of accident till realisation. Penalty imposed by the Commissioner is enhanced to Rs. 10,000

With the aforesaid observations, the appeal stands disposed of.