AI Structured Summary
Not yet generated for this judgment
Judgment
K. Chandru, J.—The Petitioner is the New India Assurance Company Limited represented by its Assistant Manager. They have come
forward to challenge the proceedings of the first Respondent Commissioner of Workmen Compensation (Deputy Commissioner of Labour,
Madurai), dated 25.11.2008 and seeks to set aside the same.
By the impugned order, the Petitioner was informed that in W.C. Case No. 187/94, dated 8.10.1996, on account of death of one Nagaraj, a
total amount of Rs. 83,207/-comprising of compensation of Rs. 67776/-and interest of Rs. 15431/-was directed to be paid by the third
Respondent on application filed by the second Respondent. The third Respondent filed an appeal before this Court in C.M.A. No. 1754 of 1996.
As a precondition, he had deposited the amount and filed the appeal. This Court directed the Petitioner Insurance Company to deposit the entire
Award amount along with interest and costs before the first Respondent to the credit of W.C. Case No. 187 of 1994 within one month. Therefore,
the amount of Rs. 83,207/-was deposited. But in the light of the directions issued by this Court, within 30 days the entire amount with interest
should have been deposited. But the amount of Rs. 83,207/-was deposited long after the order of the High Court and contrary to the order.
Therefore, from the date of the incident, i.e. 23.11.1992 till the date of deposit, i.e. 15.5.2008, 6% interest is liable to be paid. Hence the
Petitioner was directed to deposit the balance interest amount. Aggrieved by the said direction, dated 25.11.2008, the Petitioner Insurance
Company has filed the present writ petition.
The contention of the Petitioner was that the order was illegal. Since they have deposited the Award amount within 30 days of the order, dated
8.10.1996, there was no default. The order passed in CMA No. 1754 of 1996 was only to direct the company to indemnify the third Respondent
employer. Since they are bound to indemnify the employer only to an extent of loss, the direction to pay interest was not applicable to them.
Though they were initially advised to file a review application in the CMA, but on getting an opinion from the Senior Counsel, they have filed the
present writ petition.
The writ petition was admitted on 15.3.2010. Pending the writ petition, an interim stay was granted. On notice from this Court, the second
Respondent appeared through counsel. On behalf of the first Respondent, Mr. S.C. Herold Singh, learned Government Advocate took notice.
It must be noted that the Petitioner insurance company is the fourth Respondent in W.C. Case No. 187/94. After trial, the first Respondent
Workmen Compensation Commissioner by his order dated 8.10.1996 found that the employer is bound to pay interest from 25.11.1992 till the
date of the order at the rate of 6%. Though the Commissioner absolved from making payment. The matter was appealed against u/s 30 of the
Workmen''s Compensation Act, 1923 before this Court. The appeal was taken on file as CMA No. 1764 of 1996. The appeal was disposed of
on 9.3.2006. This Court in is judgment in paragraphs 20 and 21 observed as follows:
20.... Since, the accident had occurred only during the course of his employment, the employer as well as the Insurance Company/4th Respondent
in W.C. No. 187 of 1994 and 7th Respondent in C.M.A. No. 1754/1996 are equally liable to pay the award of compensation to the claimants.
As the insured 4th Respondent (7th Respondent in the appeal) is liable to indemnify the insured of the vehicle bearing Registration No.
K.L.6/1696, the Appellant herein. There is absolutely no dispute with regard to the quantum fixed by the Deputy Commissioner in W.C. No.
187/1994.
Hence, I hold on the point that the award passed in W.C. No. 187 of 1994 is liable to be modified only to the extent of fixation liability on the
4th Respondent in W.C. No. 187/1994. The point is answered accordingly.
The Petitioner insurance company had not challenged this finding either before the Supreme Court or by filing an appropriate review application
for reasons best known to them. In this writ petition, the Petitioner insurance company cannot collaterally attack the liability fixed by the court in the
appeal filed u/s 30 of the Workmen''s Compensation Act. The contention that their liability is only for the loss and not on interest cannot be
accepted.
Section 4A of the Workmen''s Compensation Act reads as follows:
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) omitted
(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.
A perusal of the said provision shows that only in the matter of awarding of penalty alone, the question of notice and reasonable opportunity will
arise. But insofar as the interest portion is concerned, there can be no waiver of such interest.
The Supreme Court vide its judgment in Goetze (India) Limited Vs. Employees State Insurance Corporation, has held in respect of
contributions under the ESI Act that on the matter of interest, there cannot be any private negotiations as it has been made as statutory liability
under the Act. The following passage found in paragraph 9 may be usefully reproduced below:
As there was delay in making the payment of the contribution the Corporation had issued notice on 29.6.1990 at the first instance and thereafter
the order was passed u/s 45-A of the Act on 23.7.1992. The same was challenged before the ESI Court in which an interim stay was granted on
9.10.1992. During the pendency of the matter there was reverification and the quantum payable by the Appellant was worked out. The liability to
pay interest is statutory. There is no power of waiver. The question of any compromise or settlement does not really arise. Even otherwise the
order of the ESI Court referred to and relied upon by the Appellant is of no assistance to the Appellant. It only noted statement of the Appellant
that he had deposited the contribution payable. The reference to ""no further dues"" is obviously relatable to the contribution payable and nothing
beyond that.
Therefore, the payment of interest is a necessary component even in the matter of compensation under the Workmen''s Compensation Act as
evidence from Section 4A(3) of the Workmen''s Compensation Act. In this context, it is necessary to refer to the judgment of the Supreme Court
in Hazi Lal Mohd. Biri Works v. The State of U.P. and Ors. reported in 1973 (32) STC 496. The relevant paragraph may be usefully extracted
below:
Argument has also been advanced by Mr. Sen that the interest on arrears of sales tax could not be realised for the period during which the
recovery of sales tax was stayed. We find it difficult to accede to this contention because there is nothing in the language of Section 8(1-A) of the
Act which prevents the running of interest because of the operation of any stay order. Indeed, the liability to pay interest is created by the statute
and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest.
Further, when this Court directed to deposit the entire amount as an interim measure, it did not exempt the Petitioner insurance company from
paying interest accrued under the Act. The order passed by the Commissioner with reference to interest was not only confirmed but also the
liability was shifted on the Petitioner. It is too late for them to claim any waiver on interest on the basis of the contractual arrangement between it
and the third Respondent.
In view of the above, the writ petition is misconceived and bereft of any legal reasons. Hence the writ petition will stand dismissed. However
there will be no order as to costs. Consequently, connected miscellaneous petition stands closed.