IN THE HIGH COURT OF KERALA AT ERNAKULAM
MFA.No. 198 of 2008()
1. THE MANAGER, NATIONAL INSURANCE COMPANY
... Petitioner
Vs
1. BINSON THOMAS, S/O. THOMAS,
... Respondent
2. O.C. THOMAS,
For Petitioner :SRI.LAL GEORGE
For Respondent : No Appearance
The Hon'ble MR. Justice J.B.KOSHY
The Hon'ble MR. Justice THOMAS P.JOSEPH
Dated :11/12/2008
O R D E R
J.B. Koshy & Thomas P.Joseph, JJ.
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M.F.A. (WCC) No.198 of 2008
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Dated this the 11th day of December, 2008
Judgment
Koshy,J.
Only contention raised by the insurance company in this
appeal is that rate of interest awarded by the Commissioner for
Workmen’s Compensation in the impugned order from the date of
accident was illegal and interest should have been granted only
from the date of adjudication. Award of interest is statutory .
Section 4A (3) reads as follows:
“4A.Compensation to be paid when due
and penalty for default:- xx xx xx(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; andM.F.A.(WCC) No.198/2008 2
(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 reading of the above section shows that compensation has to be
paid within one month from the date it fell due and if it is not paid,
interest at the rate of 12% or on a higher rate not exceeding the
maximum of the rate of interest of the schedule bank should be paid
from the date when compensation ‘fell due’. So, the only question
to be decided is when the compensation fell due. A Constitution
Bench of the Hon’ble Apex Court in Pratap Narain Singh Deo v.
Shrinivas Sabata and another (AIR 1976 SC 222 = ((1976) 1 SCC
289) held that even a reference under section 19 of the Act does
not have the effect of suspending the liability of an employer to pay
compensation under section 3 till after adjudication or settlement.
M.F.A.(WCC) No.198/2008 3
It is the duty of the employer to pay/deposit compensation as soon
as personal injury is caused to the workman in an accident during
the course of employment. If the employer fails to do so within one
month of the accident and also makes no provisional payment, he is
liable to pay interest from the date of accident. Apex Court held as
follows:
“7. Section 3 of the Act deals with the
employer’s liability for compensation. Sub-
section (1) of that section provides that the
employer 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 May 6,
1969 under section 19. 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 compensationM.F.A.(WCC) No.198/2008 4
under section 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.”
Apex Court at paragraph 8 it was observed as follows:
“8. It was the duty of the appellant,
under section 4-A (1) of the Act to pay the
compensation at the rate provided by
section 4 as soon as the personal injury was
caused to the respondent. He failed to do
so. What is worse, he did not even make a
provisional payment under sub-section (2)
of section 4 for, as has been stated, he went
to the extent of taking the false pleas that
the respondent was a casual contractor and
that the accident occurred solely because of
his negligence. Then there is the further
fact that he paid no heed to the
respondent’s personal approach for
obtaining the compensation. It will be
recalled that the respondent was driven to
the necessity of making an application to
the Commissioner for settling the claim and
even there the appellant raised a frivolous
objection as to the jurisdiction of the
Commissioner……”
2. The Workmen’s Compensation Act was amended in
1995 by Act No.30 of 1995 and the rate of compensation amount
was enhanced. Until that time, maximum monthly income that can
be taken for calculation of compensation was only Rs.1,000/-. By
M.F.A.(WCC) No.198/2008 5
the above amendment Act, that amount was increased to
Rs.2,000/-. It was the contention of the workmen that compensation
falls due on the date of adjudication. Therefore, even if the accident
was before the amendment of the Act, when adjudication was over
and order was passed only after the amendment, they are entitled
to the benefit of the amendment and to a higher rate of
compensation. On the other hand, the employers and insurance
companies contended that compensation ‘fell due’ on the date of
accident itself and not on the date of adjudication or the date of
application. Therefore, compensation has to be calculated as per the
statutory provisions existing as on the date of accident. The matter
was referred to a three-member Bench. In K.S.E.B. v. Valsala
((1999) 8 SCC 254), a three member Bench of the Supreme Court
held that relevant date for determination of the rights and liabilities
of the parties concerned is the date of accident and not the date of
adjudication of the claim. Workmen’s Compensation Act is a welfare
legislation and it cannot be stated that whenever an interpretation
beneficial to the workman is possible, that should be avoided and
only interpretation that is injurious to the workman should be
adopted. Employers and insurance companies cannot contend that
when the quantum of compensation is calculated, it should be
M.F.A.(WCC) No.198/2008 6
calculated on the basis of the statutory provisions and facts as
compensation falls due on the date of accident and not on the date
of adjudication but with regard to the award of interest, it can be
awarded only from the date of award. What is the compensation
payable on the date of accident is calculated. Now, considering the
reduction of money value, interest is to be calculated from that date
itself.
3. In Ved Prakash Garg v. Premi Devi and others
((1997) 8 SCC 1), the Apex Court calculated interest from the date
of accident. In Maghar Sing v. Jashwant Singh ((1998) 9 SCC 134)
the accident occurred on 26.7.1984. Application filed by the
workman was rejected by the commissioner and the High Court.
Apex Court held that workman was entitled to get compensation at
the rate applicable on the date of accident. But, when Supreme
Court allowed the claim, the Act was amended and rate of interest
payable was enhanced from 6% to 12% in 1995 by Act No.30 of
1995. Hon’ble Apex Court by using constitutional power, in the
interest of justice and considering the long delay, reduced the rate
of interest from 12% to 9%, but, directed the employer to pay
interest from 26.7.1984 (date of accident) till payment. Apex Court
observed as follows:
M.F.A.(WCC) No.198/2008 7
“6. The accident occurred way back in
1984 and, therefore,we must decide the rate
of interest keeping that factor in mind. We
think that it would be appropriate to grant
interest at the rate of 9% per annum.
7. In the result, we allow this appeal,
set aside the orders of the courts below and
hold that the appellant is entitled to
compensation of Rs.24,000 with interest at
the rate of 9% per annum from the date of
accident, i.e., 26.7.1984 till the date of
recovery or actual payment.”
Following the decision of the larger bench in M.F.A.No.84 of 2007, a
Division Bench of this court, in which one of us (J.B.Koshy, J) was a
party held that as per the provisions of the Workmen’s
Compensation Act, interest on the amount of compensation is
payable from the date of accident. The SLP filed from the above
judgment was dismissed as can be seen from the order of the
Supreme Court in S.L.P.(C) No.10696/2008 in National Insurance Co.
Ltd. v. N. Khadeeja & Others. In these circumstances, there is no
merit in the appeal. Appeal dismissed.
J.B.Koshy
Judge
Thomas P. Joseph
Judge
vaa
M.F.A.(WCC) No.198/2008 8
J.B. KOSHY
AND
THOMAS P.JOSEPH,JJ.
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M.F.A.(WCC)No.198/2008
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Judgment
Date:11th December,2008