Mohd.Shafi vs Commissioner and Others

The petitioner sustained injuries while on duty. He was allowed compensation under the Workman's Compensation Act. The operative part of

the order passed by the Commissioner under the Workmen's Compensation Act on 30.12.1986 reads as under

In view of the above, an award in terms of Schedule IV of the Workmen's Compensation Act is accordingly issued in favour of the applicant and

against the nonapplicant for an amount of Rs. 15,2007 only including costs assessed at Rs. 80/. The nonapplicant is directed to arrange for the

deposit of Rs. 15,2007 (Rupees Fifteen Thousand and Two Hundred) as compensation with this court within 30 days from the date of

announcement of this award failing, which the same shall be recovered by invoking Section 31 of the Workmen's Compensation Act, 1923"".

No order as to penalty and interest is made. File to go to records after due completion.

Payment of this amount was not made within the stipulated period of one month. The petitioner preferred an application for execution. He

pleaded that as the awarded amount was recovered through execution, he should be paid penalty and interest in terms of Section 4(A) of the

Workmen's Compensation Act, 1923. This claim of his was rejected on the ground that such a relief was not granted to him when application

preferred by him came to be decided on 30.12.1986. The Commissioner, accordingly, refused to pass an order for payment of penalty and

interest. It is against this order the present petition has been preferred.

The learned counsel for the petitioner submits that under the law compensation was supposed to be paid when it fell due and if it is not paid,

then penalty for this denial is a must. It is submitted that Section 4A(2) provides in mandatory terms that in case where the employer does not

accept the liability of compensation to the extent claimed, he shall be bound to make provisional payment based to the extent of liability which he

accepts and such payment has to 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. It is further submitted that if SubSection (3) is taken into consideration, then wherever any employer is

in default in paying compensation due under this Act within one month from the date it fell due, the Commissioner is to direct that in addition to the

amount of arrears pay simple interest @ 6% per annum thereon or at such higher rate not exceeding the maximum of the lending rules of any

Scheduled Bank. Section 4A as it existed when cause of action arises reads under.

Section 4A. Compensation to be paid, when due and penalty for default (1) compensation under section 4 shall be paid as soon as its fails due.

(2) In cases where the employer does not accept the liability for compensation to 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 may direct that, in addition to the amount of the arrears, simple interest at the rate of six percent per annum on the amount due

together with, if in the opinion of the Commissioner there is no justification for delay, a further sum not exceeding fifty percent of such amount shall

be recovered from the employer by way of penalty"".

The learned counsel for the petitioner submits that the amount fell due not only when the accident took place but it fell due also when the

Commissioner gave its award on 31.12.1986. It is accordingly, submitted that the workman was entitled to penalty and interest and to that extent

relief could not be denied to him.

The question which is required to be gone into is as to what would be the amount of compensation, that would be deemed to have fallen due.

Under normal circumstances, compensation would be due as soon as accident takes place, causing death or disablement of the workman. There is

not reason or postponement of accrual of this right to a future date. There can be no two options regarding this. The argument which has been

raised by the learned counsel for the petitioner is that compensation would again fall due when it is actually determined by the Commissioner on the

application of the workman and if a time limit is fixed for payment and the payment is not made, even then a presumption would be that

compensation has fallen due. It is accordingly, submitted that the workman was entitled to claim interest and its denial is not justified. In case

reported as ACJ 1975 84 Smt. Vimlaben Vashrambhai and Others Vs. The Gujarat Housing Board and Others employer failed to make

provisional payment based to the extent of liability inspite of receipt of notice. The employer was held liable to pay penalty and interest. Rate of

interest was fixed at 6% and penalty was fixed at 50% of the amount due. In case reported as 1994 Labour and Industrial Cases 2561 Divisional

Forest Officer, Gwalior vs. Baijnatibai. A Division Bench of Madhya Pradesh High Court imposed a penalty @ 50% when compensation was not

deposited. In case reported as 1981 Labour and Industrial 1399 Divnl. Engineer M.RE.B. Morena vs. Mantobai the view expressed was that

payment of penalty and interest is a question which depends upon the interpretation of the Act and is a natural consequence, and even if no issue

was framed in this regard, this would not debar the grant of interest. In case reported as 1981 Labour and Industrial Cases 1281 Ramlal and

Others Vs. Regional Manager Food Corporation of India, Jaipur and Others it was observed that liability of payment arises on the date of accident

and not on expiry of 30 days of service of a notice. In case reported as 1998 Labour and Industrial Cases 2316 Traffic Manager, New Mangalore

Port Trust vs. B. Radhda where the claimant was deprived of lawful benefit, interest and penalty was allowed.

In the present case, the petitioner suffered an injury on 19.6.1984. he preferred a petition, as he was not paid, compensation. No doubt, the

Commissioner under Workman Compensation Act did not pass an order for payment of penalty, nevertheless when prayer in this regard was

made before the Court which was to execute it, it could have taken note of the fact that the order dated 30.12.1986 was not complied with and

for this noncompliance, it could have done what the authority acting on original application could have not done. The amount fell due when the

payment was not made as per order dated 30.12.1986. Therefore, the prayer of the petitioner that as compensation was not paid within one

month from 30.12.1986, therefore, with effect from 1.2.1987 he was entitled to interest till payment was made to him, is a plea which is not

without merit. The payment fell due on the date of accident. It positively fell due on the expiry of the period fixed in the order dated 30.12.1986.

Therefore, with effect from 1.2.1987 till payment is made, the petitioner is held entitled to interest @ 6% p.a. that is the rate which was indicated in

the Act as in force. So far as penalty is concerned, the petitioner is also entitled to the same. This would be 50% of the amount assessed i.e. Rs.

7.600/.

This position is allowed in the manner indicated above.