New India Assurance Company Limited vs Rakesh

P.G. Ajithkumar, J.

This is an appeal under Section 30 of the Workmen's Compensation Act, 1923 (now renamed as Employees Compensation Act, 1923). The appellant was the 2nd respondent in W.C.No.7 of 2008 before the Commissioner for Workmen's Compensation, Kozhikode. The order dated 29.11.2012 in that compensation case allowing the 1st respondent–claimant compensation of Rs.7,17,239/- and its interest at the rate of 12% per annum is under challenge in this appeal.

There was a delay of 66 days in filing this appeal. As per the order dated 26.06.2013, the delay was condoned. As per the order dated 02.07.2013 in I.A.No.1664 of 2013, the amount deposited in terms of the impugned order was directed not to be paid to the 1st respondent-claimant the amount of compensation, which was in deposit, in excess of Rs.4,78,159/- and its interest at the rate of 12% per annum.

When this matter came up for consideration on 10.09.2013, this Court referred this matter to a Full Bench along with M.F.A.(ECC) No.124 of 2011. That appeal was referred expressing doubt about the correctness of the decision of the Division Bench of this Court in United India Insurance Co.Ltd. v. Abdul Razak [2012 (1) KLT 818] and referred the matter for a decision by a Larger Bench. The relevant portions of the reference order dated 23.08.2013 reads as follows:

“3. In this case, compensation has been ordered on the basis that the applicant was entitled to calculate wages at Rs.5,400/- per month. Compensation has been determined under Section 4(1)(c)(ii) of the Act. In answer to our query as to whether the appellant would be justified in invoking the said Explanation in regard to the compensation ordered under Section 4(1)(c)(ii) as the embargo against reckoning a higher sum than is provided holds good in respect of cases under clauses

(a) and (b), the answer was that the legislature intended the maximum limit even with regard to compensation ordered under Section 4(1)(c)(i) or (ii). The compensation under Section 4(1)(c)(i) is determined with reference to clause (b). Therefore, it cannot be any the different from the law for determining compensation under clause (b). He would submit that this result would inevitable if we see the phraseology used in clause (c):

"(c) where permanent partial disablement result from the injury

(1) in the case of an injury specified in Part II of Schedule I, such percentage of the compensation which would have been payable in the case of permanent total disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury; and

(ii) in the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity (as assessed by the qualified medical practitioner) permanently caused by the injury;"

He points out that what the law giver contemplates is that the compensation under 4(1)(c) must be a percentage of the compensation payable in respect of the permanent total disablement which is to be determined on the basis of the percentage of loss of earning capacity caused by the injury with respect to clause (i) and the percentage of such compensation again with reference to the permanent total disablement which is proportionate to the loss of earning capacity, which is assessed by the qualified Medical Officer, in respect of clause (ii). In other words, the case is that even though only clauses (a) and (b) are referred to in Explanation II, the legislature did not expressly refer to clause (c) as compensation payable even under clause (c) is relatable and based on the compensation to be payable under clause (b). The learned counsel for the appellant would bring to our notice, however a judgment of Division Bench of this court in United India Insurance Co. Ltd. v. Abdul Razak [2012 (1) KLT 818]. Therein we notice that the question engaged the attention of the court and it held as follows:

“5. We first proceed to consider the primary plea of the insurer that the monthly income of the workman ought to have been pegged at 4,000/- and the argument on its behalf with reference to Explanation II occurring after clauses (a) and (b) of sub-section (1) of Section 4. A survey of the Act shows that the legislature visualised five contingencies, to start with. They are (1) death; (2) permanent total disablement; (3) permanent partial disablement; (4) temporary total disablement; and, (5) temporary partial disablement. We also see the legislation categorising the injuries as those included in the Schedules, also with deeming provisions. Section 4(1)(a) deals with cases where death results from the injury. Fortunately, this is not such a case. Section 4(1)(b) deals with cases where permanent total disablement results from the injury. To his fortune, the claimant in this case is not permanently totally disabled. It is a case of permanent "partial" disability. The determination of compensation due to the applicant would not, therefore, fall within Section 4(1)(b). It falls, squarely under Section 4(1) (c), which governs cases where permanent partial disablement results from the injury. The limit of 4,000/- fixed in Explanation II to Section 4(1)(a) & (b) is not applicable to cases which fall under Section 4(1)(c). The appealing insurer's plea that the Commissioner ought to have pegged the monthly income of the workman at 4,000/- applying Explanation II occurring after clauses (a) and (b) of Section 4(1) of the Act, therefore fails."

Learned counsel for the appellant would submit that the said decision is erroneous.

We are also of the view that we may not be justified in subscribing to the view expressed by the Division Bench. We are of the view that there is considerable substance in the argument of the learned counsel for the appellant that even though clause (c) is not expressly mentioned in Explanation II, in view of the fact that clause (c) contemplates compensation payable which in turn is to be determined with reference to compensation under clause 4(1)(b), the legislature has left out reference to clause (c) in Explanation II and any other interpretation is likely to result in an anomalous situation as for a person who suffered total disablement, the wages would be at the maximum of Rs.4,000/-, while if it is a case of permanent partial disablement the person would get compensation but with reference to higher monthly wages. This we would think is not the intention of the legislature. In said circumstances, as we are in disagreement with the view expressed by the Division Bench, we would think that the matter has to be decided by a Larger Bench.”

A Full Bench of this Court accordingly considered the matter. The Full Bench as per the order dated 16.10.2014 affirmed the view taken by the Division Bench in the reference order and overruled the law laid down in United India Insurance Co.Ltd. [2012 (1) KLT 818]. The operative part of the order dated 16.10.2014 [New India Assurance Company Ltd. v. Balachandran (2014 (4) KLT 499)] by which the reference was answered, reads:

“10. There cannot be any dispute to the proposition as laid down by the Apex court in the above case in which there is a casus omissus supplied by the Court. Clause (c)(i) applies to computation of compensation with regard to permanent total disablement as referred to in Section 4(1)(b). Hence there is no case of casus omissus so as to add any word in the Statute by the court. It has lastly been submitted that the Explanation II has suffered several amendment in the Act and ultimately with effect from 18.01.2010 it has been deleted. Explanation II is relevant for the present case since at the relevant time the provision was in the statute book. The fact that it has been deleted may be relevant for subsequent cases but that has no relevance for determining the issues which have arisen in the present case. The Division Bench in United India Insurance (supra) had held that since there is no mention of Explanation II in clause (c), it will not fall in Section 4(1)(b). We are of the view that the views expressed by the Division Bench in United India Insurance (supra) does not lay down the correct law. The view expressed by the Division Bench in the reference order is to be approved.”

The first contention raised by the appellant that the Commissioner went wrong in computing the compensation taking the monthly income as Rs.6,000/- is vindicated by the view taken by the Full Bench. The amount of compensation therefore has to be recomputed applying the monthly income as Rs.4,000/-. The compensation payable to the 1st respondent while computing so is Rs.4,000/- x 60/100 x 221.37 x 90/100 = Rs.4,78,159/- (Rupees four lakhs, seventy eight thousand, one hundred and fifty nine only).

The learned counsel appearing for the respondent would contend that the injury sustained by the respondent in the accident were so serious and the disability he had sustained is total. The learned counsel would submit that the respondent is still undergoing treatment and he is not in a position to take care of his daily pursuits without the help of another. In such circumstances, the disability should have been taken as 100%. The learned counsel urges that the compensation entitled by the respondent may be recomputed taking into account the disability as 100%. The appellant did not appeal against the impugned order. In the appeal preferred by the 2nd opposite party in W.C. the plea of the claimant to enhance the amount of compensation cannot be entertained. Therefore, the claim of the respondent for enhancement of the compensation amount is declined.

The appellant raised another contention that in terms of the agreement, in Ext.R1 insurance policy, the liability to pay penalty for delayed payment cannot be fastened with the appellant. Such a question has only a limited ramification in this case; since the appellant had deposited the amount of compensation before the Commissioner and as per the order dated 02.07.2013, this Court allowed the amount of eligible compensation along with interest at the rate of 12% per annum to be released to the respondent. Since the compensation amount was deposited soon after determination of the liability, the question of penalty on account of the delayed payment under Section 4A of the Act also does not arise in this case.

This appeal is allowed in part and the order of the Workmen's Commissioner is modified as above. The appellant insurer is liable to pay the compensation amount of Rs.4,78,159/-along with interest at the rate of 12% per annum from 13.06.2007. Since the respondent-claimant was allowed to receive the said amount of compensation and interest from the amount in deposit, balance amount in deposit shall be refunded to the appellant.