JUDGMENT
1. This appeal has been preferred by the two appellants, namely, the Executive Engineer and the Superintendent Engineer, Karnataka Electricity Board, Hubli, under Section 30 of the Workmen’s Compensation Act, challenging the order dated 29-02-1996 passed by the Commissioner for Workmen’s Compensation, Hubli, in case No. WCA/NF 30 of 1989. Brief relevant facts of the case are the following.–
2. The 1st respondent was working as a cleaner in the establishment of the appellants. He was placed incharge of the duties of a driver at the relevant point of time. On 19-08-1988 at about 8.15 p.m., the Jeep which the 1st respondent was driving, met with an accident at Shadambi Cross, on the P.B. Road, while returning from Shiggaon. Due to the accident, the 1st respondent/driver sustained fracture in his right leg and some other injuries on his face. He was admitted for treatment to the K.M.C. Hospital, Hubli and was discharged after treatment on 21-11-1988. Subsequently, the 1st respondent filed an application claiming compensation under the Workmen’s Compensation Act. The appellants submitted a statement of objections disowning any responsibility for payment of compensation. On the basis of the evidence on record, the Commissioner has held that there is a disability to the extent of 30 to 40% caused to the 1st respondent by the accident. The Commissioner has also held that there is 60% loss in the earning capacity of the 1st respondent. On this basis, the Commissioner awarded compensation to the extent of Rs. 60,498. The Commissioner has also ordered the payment of penalty at the rate of 20% on the amount of compensation in addition to interest at the rate of 6% p.a. on the amount of compensation.
3. Learned Counsel for the appellant has putforth the following submissions:
“12. The finding of the Commissioner that there was loss of earning capacity of the first respondent to the extent of 60% is without any basis. The Commissioner himself has held that there is disability to the extent of 30% to 40% caused to the first respondent as a result of the accident. Even this finding is without any acceptable evidence. The appellant has established that the
first respondent was getting the same salary which he was getting earlier. There was neither any disability nor any loss in the earning capacity. However, the Commissioner has held that there is loss in the earning capacity of the first respondent to the extent of 60%. There is no correlation between the loss in earning capacity and the extent of disability sustained by the first respondent. The finding of the Commissioner that there is loss of earning capacity to the extent of 60% is without any basis.
13. The Commissioner has not given proper reasoning to come to the conclusion that the first respondent is entitled to compensation of Rs. 60, 498/-.
14. There are several other factual inaccuracies in the order of the Commissioner.
15. The order for payment of penalty by the Board is without any authority of law. The payment of penalty by an employer would arise if the employer wilfully or deliberately refuses to pay the amount of compensation. In the case under consideration, the case of the appellant was that the accident did not result in any permanent disablement of the first respondent either totally or partially and as such the question of payment of compensation did not arise. However, the amount of compensation has been deposited by the appellant immediately after order was communicated to the appellant. Penalty is payable only if the Commissioner records an opinion that there is no justification for delay in payment of compensation.
16. There is no application of mind on the part of the Commissioner while awarding penalty. The Commissioner has to frame an issue on the question of levy of penalty, hear the employer and then pass a suitable order justifying levy of penalty. In the case under consideration, the Commissioner had not framed any issue regarding the imposition of penalty. The employer did not know that he had to pay penalty in addition to the payment of compensation. The law requires that the employer should be specifically heard about the payment of penalty. The imposition of penalty otherwise would be against the principles of natural justice. Hence, the order regarding the payment of penalty is illegal and unsustainable in law.
17. Since the appellant has disputed the claim of the respondent regarding the entitlement of compensation under the Act, the order of payment of interest is also not valid”.
4. He has placed reliance on the following decisions.–
1. M.S. Rose Potteries v West Bengal Financial Corporation,
2. N.A.K. Pathan v Julekhabi Pathan,
3.M/s. Kap Steel Limited v R. Sasikala.
5. As against this, the learned Counsel for the 1st respondent has contended as under.–
The appeal itself is not maintainable in law. Since there has been no pre-requisite deposit of the compensation amount along with the penalty and interest as contemplated under Section 30 of the Act, the appeal is not maintainable in law. The operative portion of the order of the Commissioner directs the payment of compensation jointly and severally by the two opponents before the Commissioner and the present appeal having been presented by one of them only and not by both the opponents, against whom the award directs payment of the compensation amount jointly and severally, it is not maintainable in law. Challenge by one of the opponents would not absolve the other from payment of the compensation amount awarded by the Commissioner. The impugned order has become final insofar as the other opponent is concerned, namely, the opponent No. 1 before the Commissioner. In view of this, the order of the Commissioner cannot be valid or set aside at the instance of one who is jointly and severally liable with the other as per the award. The question raised and argued by the appellant relates only to the facts and appreciation of evidence and hence it involves no substantial question of law. The extent of liability is a question of fact and hence no appeal is maintainable on question of facts. Coming to the merits of the case, he contended that the evidence of the Doctor would show that the 1st respondent had sustained fracture and certain other injuries in the accident and after the accident, the 1st respondent has been demoted which has been clearly spoken to by the claimant and has not been seriously challenged by the appellant in the cross-examination. The 1st respondent is now doing the duties of an attender. In view of these peculiar facts, the loss of earning capacity has been estimated by the Commissioner at 60%, which cannot be found fault with. Though the appellant had knowledge of the disability of the 1st respondent, he did not deposit the compensation amount within the prescribed period and hence the Commissioner was justified in levying the penalty. Thus, the order of the Commissioner impugned in this appeal does not call for any interference in the appeal.
6. He has relied on the following decisions in support of his submissions.–
1.M.R. Mishrikoti v Muktumsab Hasansab Asoti,
2.Chinnaswamy S. v Periaswamy Reddy (deceased) by L.Rs.
7. I have carefully perused the decisions cited at the Bar.
8. The appellant vide para 19 of the appeal memorandum has stated that the amount ordered by the Commissioner has been deposited and a certificate of deposit is produced herewith. In accordance therewith the
appellant had also seem to have produced the certificate of deposit along with the appeal memorandum. In the case of M/s. Kap Steel Limited, supra, it has been held by this Court that “depositing of the amount of interest or penalty imposed under Section 4-A of the Act in addition to the compensation awarded or otherwise is not a condition for preferring an appeal under Section 30(1) of the Act”. It is thus clear from the above decision of this Court that the deposit of the compensation amount is only contemplated under Section 30 of the Act for preferring an appeal and it is not necessary for the appellant to deposit the interest and the penalty amount awarded by the Commissioner. In this case, it is not in dispute that the appellant has deposited the compensation amount awarded by the Commissioner and in proof thereof he has also produced a certificate of deposit.
9. Initially the appeal was filed by the 1st respondent/appellant namely, Executive Engineer on behalf of the K.E.B., but subsequently an application for impleadment of the appellant 2 was made and this Court by its order dated 10-3-1993 permitted the original appellant to implead the Superintendent Engineer, K.E.B. as a necessary party in the appeal and accordingly the cause title to the appeal memo was amended and the Superintendent Engineer, K.E.B., came to be im-pleaded or substituted in the appeal as appellant 2. Thereafter, the appeal came to be admitted for hearing and the 1st respondent/claimant was held to be entitled to withdraw 50% of the amount deposited along with the proportionate costs and interest and this was subject to the final result of the appeal.
10. In my view, therefore, this appeal cannot be dismissed on the preliminary issue of maintainability. This appeal has to be decided on merits and it cannot be shut on the preliminary grounds of maintainability, as in my view, it involves a substantial question of law.
11. Coming to the question whether the award is proper, there is no definite material brought on record about loss of earning capacity and physical disability. The Doctor K.N. Balaji has also not thrown sufficient light on it. Section 4 of the Workmen’s Compensation Act deals with the amount of compensation. In terms of Section 4(1)(c), whether the permanent or partial disablement results from an injury and the injury is not specified in the Schedule I, the compensation is relatable to loss of earning capacity as assessed by the Qualified Medical Practitioner. Section 2(1)(i) defines “a Qualified Medical Practitioner”. It needs no emphasis that loss of earning capacity and percentage of disability are conceptually and intrinsically different. However, the latter generally provides a material for determination of the former. Explanation II to Section 4(1)(c) is also a guiding factor. Since the assessment by a Qualified Medical Practitioner has been statutorily prescribed, duty is cast on the Commissioner to ratiocinate and justify the conclusion. Such assessment cannot be divorced from basis. It cannot be the result of guess work, surmise, conjecture and cannot be without basis or reason. Since the statute reposes a responsibility and attaches sanctity to such assessment, it cannot be made arbitrarily. Doctor K.N. Balaji has stated that
the disability of the 1st respondent may be about 30 to 40% on account of the injuries suffered by him in the accident. He had not treated the 1st respondent for his injuries and he had only seen him subsequently. The Commissioner in the circumstances has however fixed the loss of earning capacity of the 1st respondent at 60%, which has no basis. The Doctor K.N. Balaji, who has examined the 1st respondent subsequently, assessed the percentage of disability to be 30% to 40%, without keeping in view the provisions contained in Section 4(1)(c)(ii) and Explanation II of the Act. It is not in dispute that the injuries sustained by respondent 1 do not find place in the list of Schedule I of the Act. Therefore, the learned Counsel for the appellant was right in his submission that the compensation assessed in the present case by the Commissioner is vitiated as the same is without any basis and is arbitrary. It has to be mentioned that in a case where the workman sustained non-scheduled injury, he will have to adduce evidence regarding the loss of earning capacity suffered by him on account of the accident. If the employer wants to prove that he is not liable to pay compensation, the onus is upon him to establish that there were circumstances in the case which confer immunity against the liability to pay compensation. In the ease of non-scheduled injuries falling under Section 4(1)(c)(ii) of the Act, workman is required to establish the loss of earning capacity, one of such evidence would certainly be that of the Qualified Medical Practitioner and the certificate issued by him in that behalf. In the case in hand, as the injuries suffered by the claimant is a non-scheduled one, compensation has to be awarded as per the provisions of Section 4(1)(c)(ii) of the Act. As the medical evidence showed only 30 to 40% disability and does not mention the loss of earning capacity of the 1st respondent, there was really dearth of evidence to assess the compensation under the Act; the injury being a non-scheduled one. Of course, the Commissioner can adopt the mode prescribed under Section 20(3) of the Act. But without adopting that mode, the Commissioner cannot on his own assess the compensation on mere conjecture. The power is there to the Commissioner to refer the workman to any expert for opinion. He can very well refer the workman to a Medical Board for examination and report. Despite all these powers to hold that the Commissioner without having recourse to them, can assess compensation on his own surmise would be too far fetched. The plea of the appellant that in case of continuance of employment and non-reduction in earning, compensation is not payable cannot be accepted. Incapacity in work is not the same thing as incapacity to work. It means, the loss or diminution of wage earning capacity and it includes inability to work if that be the result of the accident. In considering the loss of earning capacity in case of permanent partial disablement, the comparison between the wages drawn by the workman before and after the accident from his employer at the time of the accident is not a determinative factor. If that be so, a cunning employer to tide over liability may offer a temporary employment to the workman to deprive the latter his entitlement under the Act. That would be against the legislative intent. Therefore, merely because the employer pays the same salary to the workman, it cannot be said that there is no loss of
earning capacity. If the law were to be so, the employer can easily evade the provisions of the Act by continuing the employment on the same terms as were enjoyed by the workman prior to the accident. Nor again can it be said that if in future the workman is compelled to seek employment at reduced rates, he can claim compensation. Therefore, the plea that there being no loss in the wages, compensation could not have been awarded to the 1st respondent is not acceptable. In this connection, a reference may be made to a decision in 1996 ACJ 444, wherein, it has been held that continuation of employment and non-reduction in earnings is not a ground to deny compensation to the workman who suffered permanent partial disablement. But for the reasons stated by me as above, the compensation assessed in the present case by the Commissioner is clearly vitiated and it cannot be sustained in law. It has to be stated that the Commissioner had absolutely no basis to assess the loss of earning capacity of the 1st respondent at 60%. There was no material before him to assess the loss of earning capacity at 60%. Therefore, the finding of the Commissioner was based on no evidence and it was perverse finding when the finding based on no evidence and the finding which is perverse give raise to a question of law. Therefore, in my view, the order made by the Commissioner cannot be sustained in law. Then the proper course is to remand the matter to the Commissioner for fresh adjudication. But remanding the matter to the Commissioner for a fresh adjudication at this length of time would certainly prolong the agony of the claimant/workman. Therefore, instead of remanding the matter back to the Commissioner for fresh adjudication, an overall view of the matter can be taken and a reasonable compensation may be worked out on the basis of the materials available on record. Considering the nature of the injuries as is evident from the documents on record and having regard to the disability suffered by the 1st respondent on account of the injuries sustained by him in the accident as spoken to by the Doctor and the medical treatment undergone and the other relevant considerations, I determine the compensation payable to the 1st respondent/claimant at Rs. 35,000/- together with interest thereon at 6% p.a., from the date of the accident.
12. I shall now take up the question regarding the penalty. Section 4-A(3) deals with the three aspects namely, the compensation due to the workman, the interest thereon and the penalty. The delay in making the payment of the compensation on the due date is taken care of by the provisions of award of interest at 6% p.a. on the amount of compensation. The provision for penalty is intended to act as deterrent on the employer from raising frivolous or contumacious pleas and delaying the payment of compensation without justification. In the case of N.A.K. Pathan, supra, it has been held by this Court at page 2415 as under.–
“An order imposing penalty for failure to carry out a statutory obligation, it is in the nature of a quasi-criminal proceeding, and penalty may not be imposed unless the party obliged has either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is
lawful to do so. It is a matter of discretion of the authority to be exercisedjudicially and on a consideration of the relevant
circumstances”.
13. The imposition of penalty without framing an issue or without affording the appellant an opportunity to be heard regarding the imposition of penalty or its quantum is in my view not valid in law. The question of framing of an issue or putting the appellant on notice of the proposal are really matters of fair play and fair procedure relating to the principles of natural justice. No doubt, Section 4-A(3) on its terms does not contain any provision for framing of an issue or for hearing of an employer before imposing penalty or regarding its quantum. But that is a requirement of natural justice. That apart, the proviso to Section 4-A(3) prescribes 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. Section 4-A(3) mandates that no order for payment of penalty to be passed under clause (b) without affording an opportunity to the employer to show cause why it should not be passed. Infact, as a quasi-judicial authority exercising statutory powers involving determination of rights of parties, it is elementary that the Commissioner should observe the rules of natural justice in the performance of his functions. Though the Act or the rules do not envisage a full pledged trial as in a Civil Court a regular hearing and determination of rights is contemplated therein- Infact, Rule 28 of the Rules framed under Act requires the Commissioner to frame and record the issues upon which the right decision of the case appears to depend. This is evidently intended to put the parties on notice of the points arising for consideration and on which they are expected to adduce evidence. It is a matter for the Commissioner to decide whether penalty should be imposed or not. Therefore, the question of imposition of penalty may arise for consideration even without a specific plea in that behalf by the workman. Since the question of imposition of penalty is thus a matter which will necessarily arise for consideration while passing an award, it will be prudent and advisable for the Commissioner to frame an issue as to whether the penalty is itnposable under Section 4-A(3) and if so, the quantum thereof to enable the parties to address themselves on these aspects as well at the hearing. Section 4-A(3) is a penal provision imposing penalty on the employer. The satisfaction of the Commissioner contemplated therein should be based on materials. It has to be reached on a conspectus of all the facts and circumstances of the case. There may be various reasons why the employer is not liable for the penalty. There can be various reasons for non-payment of the amount of compensation on the due date or for its delayed payment. The employer may be able to point out justifiable reasons for the delay or the non-payment. In any case he may also be able to make out sufficient reasons why the penalty should either be waived or to be fixed at a low amount. Infact, the Section vests a discretion in the Commissioner in the matter of penalty, the prescription being only the maximum. The reasons made out by the employer may have an impact not only on the question of imposition of penalty, but also on its
quantum. All these cannot be effectively decided unless the attention of the parties is focused on the question of imposition of penalty and the exercise of the discretion in which event the employer can place his materials in justification of the delay or atleast plead in mitigation for lesser amount of penalty, which he will not able to do unless he would be given an opportunity to be heard in the matter. The hearing to be afforded need not necessarily have the trappings of a regular trial or an hearing. The framing of an issue under Rule 28 however suffice but that may not be obligatory though desirable. The Commissioner may even in the course of hearing draw the attention of the parties on the question of penalty and hear them. If such an opportunity to produce their materials and to be heard is afforded, that will be sufficient to meet the requirements of the natural justice and the proviso appended to Section 4-A(3). What is essential and what is required is compliance with the rules of natural justice so that the affected party namely, the employer gets an opportunity to produce his materials and to plead that there was justification for the delay or for imposition of a lesser amount than the maximum prescribed. Essentially it is a question of complying with the rules of natural justice as well as the proviso to Section 4-A(3). So far as this case is concerned, there was no issue framed on the point. There is also no case that the Commissioner heard the parties on the question of penalty after appraising them of his proposal to impose the same or about the quantum. The order impugned, therefore, suffers from the vice of violation of the principles of natural justice insofar as it relates to the imposition of penalty. It is also contrary to the proviso appended to Section 4-A(3) of the Act. This would normally require a remit to the Commissioner but avoid further protracted proceedings before the Commissioner it may be decided here itself. Learned Counsel for the appellants pleads that the appellant has acted bona fide. He had a plea of non-liability. The learned Counsel for the 1st respondent would however contend that the appellant had knowledge of the disability and hence liable to pay the penalty. In the facts and circumstances of the case, I find that it cannot be said that the conduct of the appellant was so contumacious or unreasonable as to require imposition of the penalty under Section 4-A(3). It is stated that at the time of the accident, the 1st respondent was only an incharge driver and he still continues to be in employment with the owner without loss of pay, though of course no evidence was tendered before the Commissioner. Having regard to the facts and circumstances of this case, the penalty should be minimal. The Commissioner has imposed penalty at 20%. But having regard to the facts and circumstances of the case, I feel that a penalty of 10% of the amount of compensation payable to the respondent 1 will meet the ends of justice.
14. The case in hand is one where interference is called for because the Commissioner did not consider the relevant provision in right perspective, made perfunctory analysis of materials on record and his conclusions are contrary to the material on record. The imposition of penalty at 20% is without any basis and opposed to the principles of natural justice as well as to the proviso appended to Section 4-A(3).
15. In the result, therefore, the appeal filed by the appellants is allowed in part. The compensation to the 1st respondent/workman is determined at Rs. 35,000/- together with interest thereon at 6% p.a. The penalty under Section 4-A(3) is reduced from 20% to 10% of the compensation amount determined by this Court in the appeal. The award made by the. Commissioner is modified accordingly to the extent as indicated above. There will be no order as to costs in this appeal.