Rajasaheb Goyenka vs Ajabro Mahalle

H.D. Patel, J.—This appeal by the employer is directed against the order dated August 25, 1988 passed by the Commissioner of Workmen Compensation in W.C.A. Case No. 63 of 1987 levying maximum penalty and directing payment of interest at 6 per cent per annum on the amount of compensation awarded.

The respondents who are dependents of deceased workmen Maroti Mahalle were ordered to be paid compensation amounting to Rs. 44,786/-. Since there was some delay in depositing the amount of compensation, the Commissioner of Workmen''s Compensation ordered payment of penalty taking recourse to the provisions of Sub-section (3) of Section 4A of the Workmen''s Compensation Act, 1923. A sum of Rs. 22,393/- was hence awarded against the appellant. This was the maximum penalty which could be awarded, under the aforesaid provisions. Besides the penalty, interest at 6 per cent per annum was also awarded from February 22, 1987 till the time the amount of compensation was deposited.

It was contended on behalf of the appellant that the learned Commissioner of Workmen''s Compensation could not have awarded the penalty in the absence of any claim made in that behalf. It was also urged that the levy of penalty was illegal because in the absence of any claim, no justification could be offered for the delay in payment of amount of compensation and hence no finding could be recorded by the authority below. The learned Counsel for the respondents, however, tried to support the findings by urging that the authority below was subjectively satisfied that there was no justification for the delay in depositing the compensation and, therefore, he could impose the penalty and his decision is not liable to be questioned in appeal, more so it being a question of fact.

Sub-section (3) of Section 4A of the Workmen''s Compensation Act reads as under:

4A(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.

A plain reading of sub-section shows that the Commissioner is empowered to grant an interest at the rate not exceeding 6 per cent per annum on the amount of compensation if it remains unpaid for a period exceeding one month after it has fallen due. It also empowers the Commissioner to impose the penalty not exceeding 50 per cent of the amount of compensation if he is further satisfied that there was no justification for the delay in making the payment of compensation. In other words, if it is shown that there was sufficient cause for the delay in making the payment of compensation, no penalty can be levied, though it is not so in respect of awarding the interest. Now, the reason or justification for non-payment of compensation after it has fallen due is in the knowledge of the appellant who is required to make the payment. Unless, therefore, the appellant is given a chance to explain the delayed payment, it is not reasonably possible for the Commissioner to come to the conclusion whether or not I here is any justification for the delay. No claim for penalty is made by the respondents in their application. Correspondingly, no justification is offered by the appellant for the delay caused in depositing the amount. In this situation, it is not open for the concerned authority to reach his satisfaction at his whim and caprice, more so, when an appeal is provided against his order imposing the penalty. The approach of the Commissioner must be objective. Notice to the employer can assume many forms. Framing of an issue can be one such form, but for framing an issue there must be a claim or at least a prayer in the application. Recording reasons in the order as to why the Commissioner considered that the delay in payment of compensation as being without any justification, in the absence of any reasonable opportunity being granted to the appellant, would be, in my opinion, a violation of principles of natural justice, thus giving rise to a substantial question of law necessitating interference in the order of penalty impugned in this appeal. The respondents will, however, be entitled to claim interest awarded by the learned authority below.

In the result, the appeal is partly allowed. The order imposing the penalty is set aside, but in the peculiar circumstances of the case, without any order as to costs.