AI Structured Summary
Not yet generated for this judgment
Judgment
Aruna Jagadeesan, J.—This Civil Miscellaneous Appeal is filed at the instance of the claimant and directed against the order dated 7.1.2003
made in W.C. No. 179/2001 by the learned Commissioner for Workmen''s compensation-I, Chennai, whereby a sum of Rs. 2,03,318/- was
awarded as compensation with a direction to the 2nd Respondent Insurance Company to pay the said amount within a period of 30 days from the
date of receipt of a copy of the award, in default, the award amount would carry simple interest at 12 per cent p.a. from the date of the claim
petition i.e. 4.6.2001 till the date of realization. The only point taken by Mr. A. Shanmugaraj, the learned counsel for the Appellant is that in view
of the provisions contained in Section 4(A)(3) of the Workmen''s Compensation Act, it was the duty of the Commissioner to award interest at the
rate of 12 per cent p.a. from the expiry of one month from the date of the accident till the actual deposit of the amount irrespective of the fact
whether there was default on the part of the Insurance Company in making payment of the awarded sum within the time stipulated.
The learned counsel for the Appellant drew the attention of this court to the decision of the Division Bench of this court reported in 2012-2-
TNMAC-80-DB (N. Ganesan Vs. Thilagavathi and others) wherein it has been held that the word ''falls due'' occurring u/s 4A of the Workmen''s
Compensation Act, 1923 in the light of the ratio laid down in the Larger Bench decision of the Honourable Supreme Court of India reported in
Pratap Narain Singh Deo Vs. Srinivas Sabata and another (1976-1-SCC-289) and Kerala State Electricity Board Vs. Valsala (2000-ACJ-5-SC
= 2000-2-L.W. 77) means that interest for compensation amount would accrue 30 days after the date of the accident and not from the date of
quantification/orders passed by the Commissioner for Workmen''s Compensation.
The question that arises for consideration in this appeal is as to what should be the starting point of computation of the amount of interest in a
proceeding for compensation under the Workmen''s Compensation Act, 1923. In order to arrive at the aforesaid question, it will be appropriate to
refer to the provisions contained in Section 4(A)(3) of the Act as under:-
4A. Compensation to be paid when due and penalty for default:-
(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.
Explanation:- For the purposes of this sub section, ''scheduled bank'' means a bank for the time being included in the Second Schedule to the
Reserve Bank of India Act, 1934 (2 of 1934).
A plain reading of the aforesaid section makes it clear that if the employer is in default in paying the compensation due under the Act within one
month from the date it fell due, the Commissioner should pass orders of payment of interest in addition to the amount of arrears at least at the rate
of 12 per cent p.a. or at such higher rate not exceeding the maximum of the lending rate of any scheduled bank as may be specified by the Central
Government, by notification in the Official Gazette on the amount due.
At this stage, it may be relevant to refer to the decision of the four Judges Bench of the Honourable Supreme Court reported in Pratap Narain
Singh Deo Vs. Srinivas Sabata and Another, which has been referred by the Division Bench of this court in its decision reported in 2012-2-
TNMAC-80-DB cited supra by the learned counsel for the Appellant, where the aforesaid question was answered by the said Bench in the
following manner:-
It has next been argued though the Commissioner committed a serious error of law in imposing a penalty on the Appellant u/s 4(A)(3) of the Act
as the compensation had not fallen due until it was ''settled'' by the Commissioner u/s 19 by his impugned order dated 6.5.1969. There is,
however, no force in this argument.
Section 3 of the Act deals with the employer''s liability for compensation. Sub Section (1) of that section provides that the Petitioner shall be
liable to pay compensation if ''personal injury is caused to a workman by accident arising out of and in the course of his employment''. It was not
the case of the employer that the right to compensation was taken away under sub section (5) of section 3 because of the institution of a suit in a
civil court for damages, in respect of the injury, against the employer or any other person. The employer therefore became liable to pay the
compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course
of the employment. It is therefore futile to contend that the compensation did not fall due until after the Commissioner''s order dated 6.5.1969 u/s
What the section provides is that if any question arises in any proceeding under the Act as to the liability of any person to pay compensation or
as to the amount or duration of the compensation it shall in default of agreement, be settled by the Commissioner. There is, therefore, nothing to
justify the argument that the employer''s liability to pay compensation u/s 3, in respect of the injury, was suspended until after the settlement
contemplated by section 19. The Appellant was thus liable to pay compensation as soon as the aforesaid personal injury was caused to the
Appellant and there is no justification for the argument to the contrary.
(Emphasis supplied)
The aforesaid question again came up for consideration before three-judge Bench of the Honourable Supreme Court in the case of Kerala State
Electricity Board Vs. Valsala (2000-ACJ-5-SC) where the said Bench made the following observations in paragraphs 2 and 3 of the said
judgement:-
(2) Various High Courts in the country while dealing with the claim for compensation under the Workmen''s Compensation Act have uniformly
taken the view that the relevant date for determining the rights and liabilities of the parties is the date of the accident.
(3) A four-Judge Bench of this court in Pratap Narain Singh Deo Vs. Shrinivas Sabata (1976-ACJ-141-SC) speaking through Shinghal, J., has
held that an employer become liable to pay compensation as soon as the personal injury is caused to the workman by the accident which arose out
of and in the course of employment. Thus, the relevant date for determination of the rate of compensation is the date of the accident and not the
date of adjudication of the claim.
In view of what has been stated above, I am of the considered opinion that it was the duty of the Labour Commissioner to award interest on the
award of sum from the expiry of one month from the date of the accident till actual deposit of the amount by the Insurance Company.
Accordingly, the impugned award is modified by directing the Insurance Company to pay interest at the rate of interest at 12 per cent p.a. from the
expiry of one month from the date of the accident till the actual deposit of the award amount before the Commissioner within a period of one
month from today. With the above directions, this Civil Miscellaneous Appeal is disposed of. No costs.