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IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO.1044 OF 2009
Udhav Rangnathrao Pawar,
Age 53 years, Occ. Business,
r/o Sambar, Tq. Parbhani,
District Parbhani. ..Appellant
Versus
1. Sheshrao Ramji Jogdand,
Age 48 years, Occ. Labour,
R/o Gour, Taluka Purna,
District Parbhani.
2. The Branch Manager,
New India Assurance Co.Ltd.,
Yashodeep Buioding,
Nanalpeth, Parbhani. ..Respondents
...
Advocates appearing for :
Appellant: Shri Girish Rane,
Respondent No.1 : Shri S.B.Ghatol Patil,
Respondent No.2 : Served.
...
CORAM : R.K.DESHPANDE, J.
Reserved on : August 17, 2009
Pronounced on : September 2, 2009.
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JUDGMENT :-
1. This appeal is filed by the original respondent No.1, who is
the owner of the Tempo No. MH-22-2167, challenging the judgment and
award dt. 7.2.2009 passed by the learned Civil Judge S.D. and Ex-officio
Commissioner for Workmen’s Compensation, at Parbhani in N.F.A. No.20 of
2007. By this award the appellant / owner is directed, along with
respondent No.2 New India Assurance Company Ltd., to pay the amount of
Rs.90,000/- jointly and severally to respondent No.1 claimant. It has further
directed the appellant to pay simple interest at 12 per cent per annum on
the decretal amount of Rs.90,000/- from the date of the incident i.e. .
12.2005 till its full liquidation. It has further directed the appellant to pay
Rs.45,000/- towards penalty.
2. The appellant has challenged this award to the extent of
directing the appellant to pay simple interest at the rate of 12 per cent per
annum on the decretal sum from the date of incident i.e. 2.12.2005 and
also to the extent it directs the appellant to pay penalty of Rs.45,000/-,
which is 50% of the total amount of compensation. The order to the extent
it holds the appellant and respondent No.2 jointly and severally liable to
pay the compensation o the tune of Rs.90,000/- to respondent No.1, has
not been challenged.
3. The facts, in brief, leading to the present appeal are as
under:-
Respondent No.1 / claimant filed a petition on 24.4.2007,
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under Section 19 read with Section 22 of the Workmen’s Compensation Act,
1923 (hereinafter, “the said Act”, for brevity), registered as N.F.A.No. 20 of
2007 in which the appellant was added as respondent No.1 and the
insurance company was added as respondent No.2. Respondent No.1, in
his claim petition, alleged that the appellant is the owner of the Tempo
bearing No. MH-22-2167, which was insured with respondent No.2
insurance company. Respondent No.1 alleged that he was employed by
the appellant as a cleaner / labour on the said Tempo. While the said
Tempo was proceeding towards Parbhani, one Balasaheb Pawar, who was
driving the said Tempo, lost his control at 1.15 a.m. on 2.12.2005, near
Deogaon Phata, as a result, the Tempo toppled down and respondent No.1,
who was in Tempo, sustained injuries to his hand, ribs and spinal cord. It
was alleged that the report was lodged at Police Station Jintoor, where the
offences under sections 279 and 337 of the Indian Penal Code were
registered against the driver Balasaheb, vide Cr.No. 218 of 2005. It was
alleged that respondent no.1 was admitted at Civil Hospital Parbhani, for
two days and thereafter, was shifted to Bhandari Hospital, Nanded.
4. The Respondent No.1 claimed that he was aged about 45
years on the day of the incident and was earning Rs.4,000/- per month. He
claimed total compensation of Rs.4,06,656/- inclusive of Rs.50,000/-
towards the medical expenses incurred by him. He alleged that he
suffered an injury due to rash and negligent driving of said Balasaheb
Pawar. He alleged that he suffered an injury, as a result of accident, which
occurred out of and in the course of his employment with the appellant.
Respondent No.1 further claimed an amount of interest at the rate of 12
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per cent per annum on the amount of compensation, from the date of
accident i.e. 2.12.2005 and also claimed penalty to the extent of 50 per
cent of the total amount of compensation.
5. The appellant / owner filed his written statement and denied
the claim. Appellant denied that the accident occurred out of and in the
course of an employment of respondent No.1 as a Cleaner / Labour, as
alleged. The appellant denied his liability and also disputed the
relationship of master and servant or employer and employee between the
appellant and respondent No.1. Alternatively, the appellant submitted that
the tempo was insured with respondent No.2 insurance company and if at
all any liability to pay compensation arises, it is respondent No.2 company,
which is liable to pay the same in terms of the policy, in respect of the
vehicle.
6. The Commissioner decided the claim of respondent No.1 by
his judgment and award dt.7.2.2009. It was held that respondent No.1 was
an employee of the appellant and he sustained injuries out of and during
the course of the employment. It was also recorded that respondent No.1
suffered injuries due to rash and negligent act of the driver of the vehicle.
The Commissioner, although assessed the compensation payable to the
respondent No.1 at Rs.40,665/- directed to pay the compensation of Rs.
90000/- jointly and severally by the appellant and respondent No. 2, in view
of the provisions of Section 4(1)(b) of the said Act, to respondent No.1. The
Commissioner recorded a finding that the appellant and respondent No.2
have neglected to pay the said amount of compensation to the respondent
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No.1 and no satisfactory explanation was offered by the appellant about
non payment of compensation within one month from the date of incident.
Hence, the appellant was held liable to pay 50 per cent penalty i.e. Rs.
45,000/- and also interest at the rate of 12 per cent per annum on decretal
sum of Rs.90,000/- from the date of incident till its full liquidation.
The aforesaid award is the subject matter of challenge in this
appeal at the instance of the owner of the vehicle.
7. The factual position, which remains un-disputed, as a result
of the findings recorded by the Commissioner is that the accident occurred
on 2.12.2005, the claim petition was filed on 24.8.2007, the award was
passed on 7.2.2009, one month’s period specified in the award to pay the
compensation expired on 7.3.2009, the amount of compensation of Rs.
90,000/- was deposited in terms of the award on 2.6.2009, the respondent
No.1 claimed the interest at the rate of 12 per cent per annum as provided
under clause (a) of sub-section (3) of section 4-A of the said Act @ 12 per
cent per annum on the amount of compensation awarded from the date of
accident i.e. 2.12.2005 and that the respondent No.1 also claimed the
penalty of Rs.2,02,328/-, which is 50 per cent of the total compensation
claimed in the petition. The relationship of the employer and employee
between the appellant and respondent No.1 is established. It is also true
that the accident arose out of and in the course of the employment of
respondent No.1 with the appellant. The appellant was the owner of the
Tempo and the Tribunal has recorded a finding that it was being driven in
the rash and negligent manner by said Balasaheb, as a result of which the
respondent No.1 sustained the injuries.
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8. The learned counsel for the appellant relying upon the
judgment of the Apex Court in the case of National Insurance Co.Ltd. Vs.
Mubasir Ahmed and another [AIR 2007 SC 1208], urged that in cases,
where the employer totally denies his liability to pay compensation, the
expression “fell due” occurring in sub-section (3) of section 4-A of the said
Act has to be construed in relation to the date of adjudication of claim or
determination of liability by the Commissioner, under Section 19 of the
said Act. It is urged that in the instant case, the employer has totally
denied his liability to pay compensation. The Commissioner, for the first
time, adjudicated the claim or determined the liability by the impugned
award dated 7.2.2009 and hence the Commissioner was wrong in directing
the payment of interest at the rate of 12 per cent per annum with
retrospective effect from 2.12.2005 i.e. the date of incident, more
particularly when claim petition itself is filed after about one year and eight
months. According to learned counsel, at the most, the interest under sub
clause (a) of sub-section (3) of section 4-A of the said Act could be levied
only from the date of expiry of one month, from the date of passing of the
award. In support of this plea learned counsel also relied upon the
judgment of this Court delivered on 5.8.2009 in First Appeal No.1562 of
2009 in the case of The Nandi Sahakari Sakhar Karkhana Vs. Dnyanoba.
Relying upon another judgment of the Apex Court in the case of Oriental
Insurance Co. Ltd. Vs. Mohd. Nasir and another [2009 AIR SCW 3717],
learned counsel for the appellant, alternatively urged that the provision
regarding higher rate of interest as contemplated by sub-section (3) of
section 4-A of the said Act would be attracted only from the date of passing
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of the award and the Commissioner could, at the most, have levied
interest at the rate of 7.5 per cent per annum from the date of filing of the
application till the date of award.
9. So far as the challenge to imposition of penalty is concerned,
it is the contention raised by the learned counsel for the appellant that no
order imposing penalty could have been passed under sub-clause (b) of
sub-section (2) of section 4-A of the said Act, without issuing a show cause
notice and giving the appellant reasonable opportunity of being heard in
the matter. According to the learned counsel, the appellant was entitled to
have an opportunity to furnish an explanation to satisfy the Commissioner
about the delay caused in making the payment and it is only upon the
Commissioner finding the explanation to be un-satisfactory, the order
imposing penalty could have been passed. In support of his contention,
learned counsel for the appellant relies upon the decision of this Court
delivered on 5.8.2009 in First Appeal No.1562 of 2009 – The Nandi Sahakari
Sakhar Karkhana Limited Versus Dnyanoba Kashinath Aare and others.
Learned counsel submitted that this Court has taken a view that it is only if
the appellant fails to make the payment within the period of one month, a
show cause notice calling upon the appellant to explain the delay, is
required to be issued and thereafter, the Commissioner can pass an order
imposing the penalty. Learned counsel also relies upon the decision of this
Court in the case of State of Maharashtra Vs. Aarti Ashok Kapshikar and
others reported in [2008(1) Bom. C.R. 919].
10. On the contrary, learned counsel for respondent No.1 relying
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upon the provisions of section 4-A read with sections 3 and 4 of the said
Act, contended that the amount of compensation “falls due” on the date of
an accident, which arises out of and in the course of employment. He
further submitted that the mere adjudication of the claim by the
Commissioner on a future date would not absolve the appellant from
paying the amount of interest with effect from the date of incident (or even
the penalty). According to learned counsel for respondent No.1 / claimant,
the employer becomes liable to pay the compensation as soon as the
personal injury is caused to the workman as a result of an accident which
arises out of and in the course of an employment. Learned counsel, in
support of his contention, relied upon the decisions of the Apex Court in the
cases of Pratap Narain Singh Deo Vs. Shrinivas Sabata and another [AIR
1976 SC 222] and Ved Prakash Garg Vs. Premi Devi and others [AIR 1997
SC 3854]. Learned counsel urged that even in a cases where the employer
totally disputes his liability to pay the compensation, upon determination of
the compensation by the Commissioner, it should be deemed that the
compensation so determined had “fallen due” on the date of accident and
hence the interest was liable to be paid with effect from the date of the
accident. Learned counsel further relied upon the unreported decision of
the learned Single Judge of this Court delivered in First Appeal No.1030 of
2007 M/s Muley Brothers Pvt. Ltd. Vs. Samindrabai, dated 25.6.2002 and
another judgment of the learned Single Judge of this Court in the case of
Danial Nana Pathare Vs. M/s Tilaknagar Industries Ltd. [2009 (4) ALL MR
787. In support of his contention that no show cause notice was required to
be given, the learned counsel relies upon the reported decision of this
Court in the case of United Insurance Co. Ltd. Vs. Sarsabai Kishanrao
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Sontakke and others [2006 (3) Mah.L.R.438].
11. In order to deal with the rival submissions made by the
parties, it is necessary to reproduce the provisions of section 4-A of the
said Act, which reads as under:-
“4A. Compensation to be paid when due and penalty for
default. –(1) Compensation under section 4 shall be paid as soon
as it falls due.(2) In cases where the employer does not accept the
liability for compensation to the extent claimed, he shall bebound to make provisional payment based on the extent of
liability which he accepts, and, such payment shall be
deposited with the Commissioner or made to the workman,
as the case may be, without prejudice to the right of theworkman to make any further claim.
(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 atthe 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 percent 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 as
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 bank for the time being included in
the Second Schedule to the Reserve Bank of India Act, 1934
(2 of 1934).
(3A) The interest payable under sub-section (3) shall be
paid to the workman or his dependent, as the case may be.”
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The first question, in this context, which arises is regarding
the day/date on which, the compensation under section (1) of section 4-A
of the said Act “falls due”. The second question, which arises is the
day/date on which the interest under clause (a) of sub-section (3) of section
4-A of the said Act would start running on the amount which fell due. The
answer to both these questions are not simple and for that purpose the
scheme of the relevant provisions of the said Act will have to be
understood.
12.
Section 3 of the said Act deals with the employers liability for
compensation. Sub-section (1) of section 3 of the said Act states that if
personal injury is caused to a workman by an accident arising out of and in
the course of his employment, his employer shall be liable to pay the
compensation in accordance with this chapter. What is the amount of
compensation, which is required to be paid by the employer to the
workman under sub-section (1) of section 3, is specified under section 4.
Section 4-A of the said Act deals with the compensation to be paid when
due and the penalty for default. Sub-section (1) of section 4-A states that
the compensation shall be paid as soon as it “falls due”. Sub-section (3) of
section 4-A states that where any employer is in default in paying the
compensation under this Act, within one month from the date it “fell due”,
the Commissioner can direct in terms of clause (a) that the employer shall,
in addition to the amount of arrears, pay simple interest thereon, at the
rate of 12 per cent per annum. Clause (b) further empowers the
Commissioner to direct the employer to pay, in addition, a further sum not
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exceeding 50 per cent of such an amount by way of penalty, if, in his
opinion, there is no justification for delay in payment of arrears and
interest. However, the only rider on imposition of penalty under clause (b)
is that the employer has to be given a reasonable opportunity to show
cause why the order imposing the penalty should not be passed.
13. In absence of section 4-A (1) of the said Act specifying the
date on which the compensation under section 4 “falls due”, what would be
date when the compensation under section 4 would “fall due”, is the
question to be decided in this case. In this respect, the decision of the
Apex Court in the case of Pratap Narain (supra) needs to be considered. It
was an appeal preferred by the owner of the vehicle challenging the
imposition of penalty as well as the interest on the amount of
compensation determined by the Commissioner under section 19 of the
said Act. The Apex Court found no force in the argument that the
Commissioner committed a serious error of law in imposing the penalty on
the appellant, under section 4-A(3) of the said Act for the reason that the
compensation had “fallen due”, only when it was settled by the
Commissioner under section 19 of the said Act. It was held that the
employer became liable to pay the compensation, as soon as the personal
injury was caused to the workman by the accident, which admittedly arose
out of and in the course of an employment. The Apex Court observed that
it is, therefore, futile to contend that the compensation did not “fall due”
until after Commissioner order. It was further held that there is nothing to
justify the argument that the employers liability to pay the compensation
under section 3 in respect of the injury sustained arises, only after the
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settlement as contemplated by section 19 of the said Act.
14. The judgment of the Apex Court in Ved Prakash’s case
(supra) considered the provisions of sub-section (2) of section 4-A of the
said Act. It was an appeal preferred by the owner of the vehicle,
challenging the judgment and order of the High Court, exonerating the
insurance company from payment of interest and penalty, under clauses
(a) and (b) of sub-section (3) of section 4-A of the said Act, and holding the
owner liable to pay the interest from the date of accident and also the
penalty under clause (d) at the rate of 50 per cent on the compensation
payable. It was held that the insurance company is liable to pay the
interest, however, it was exonerated from payment of penalty, it being the
liability only that of an employer. So far as the imposition of interest was
concerned, the owner as well as the insurance company, both were held
liable to pay the interest on the amount of compensation determined by
the Commissioner under section 19 of the said Act, with effect from the
date of occurrence of an accident.
15. While construing the provisions of sub-section (2) of section 4-A of
the said Act, the Apex Court in Ved Prakash’s case held that it
contemplates a situation wherein the employer, though accepted his
liability to pay the compensation to his injured workman, disputes the
extent of claim of compensation and in such case, sub-section (2) enjoins
him to make a provisional payment based on the extent of accepted
liability by depositing it, with the Commissioner or paying it directly to the
workman. It was observed that it is obvious that such an obligation of the
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employer would not arise under section 4-A(2), if he totally disputes his
liability to pay on the grounds like the injured person being not his
employee or that the accident was caused to him at the time when he was
not in the course of the employment. It was held that if such disputes are
raised by the employer, then his obligation to make the provisional
payment under sub-section (2) of section 4-A of the said Act would not
arise and his liability would depend upon the final adjudication by the
Workmen’s Commissioner at the end of the trial.
16. It was further held in Ved Prakash’s case that one month’s
period, as contemplated under section 4-A(3), may start running for the
purpose of attracting interest under sub-clause (a) thereof, in a case where
the provisional payment becomes due. But when the employer does not
accept his liability as a whole, under the circumstances enumerated
earlier, then section 4-A(2) would not get attracted and one month’s period
would start running from the date on which the compensation payable by
the employer is adjudicated upon by the Commissioner. Significantly, it
was held by the Apex Court that in either case, the Commissioner would be
justified in directing the payment of interest in such a contingency, not only
from the date of the award but also from the date of accident concerned. It
was held that such an order passed by the Commissioner would remain
perfectly justified on the scheme of section 4-A(3)(a) of the said Act.
17. The learned counsel for the appellant has relied upon the
judgment of the Division Bench of the Apex Court in the case of Mubasir
Ahmed (supra). It was an appeal filed by the insurance company and the
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Apex Court was considering the question of payment of interest under
clause (a) of sub-section (3) of section 4-A of the said Act. It was held that,
the compensation becomes due only on the basis of the adjudication of the
claim and unless such adjudication is done, it was held that the question of
compensation becoming due does not arise. It was further held that the
Legislature has not used the expression “from the date of accident” but has
used the expression “falls due”, and in the light of this, it was held that
obviously the interest cannot be charged from the date of accident but it
has to be charged from the date of adjudication by the Commissioner. The
Apex Court, therefore, set aside the date of accident, as the date, fixed by
the High Court for charging the interest. This decision does not refer to the
earlier judgments delivered by the Apex Court in cases of Pratap Narain
and Ved Prakash cited supra.
18. The learned counsel for the appellant, thereafter, relied upon
the latest decision of the Apex Court in the case of Oriental Insurance Co.
Ltd. Vs. Mohd. Nasir and another [2009 AIR SCW 3717]. In this judgment,
the Apex Court considered the question with regard to the payment of
interest and it was held that there cannot be any doubt, whatsoever, that
the interest would be from the date of default and not from the date of
award of compensation It was held that the provision of interest, as it
appears from the plain reading, is penal in nature. It has been held that
the said Act does not prohibit grant of interest at a reasonable rate from
the date of filing of the claim petition, till the order is passed. It has been
held that only when sub-section (3) of section 4 would be attracted, an
higher rate of interest would be payable, where for, a finding of fact as
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envisaged therein has to be arrived at. The Apex Court opined that the
interest will also be payable at the rate of 7.5 per cent per annum from the
date of filing of the application till the date of award and the rate of interest
thereafter, shall be payable in terms of the order passed by the
Commissioner. This judgment, although refers to Mubasir’s case, it does
not deal with the point decided in the said case nor it refers to decisions in
Pratao Narain or Ved Prakash’s case
19. In respect of the aforesaid view of the Apex Court, it may, be
pointed out that the view taken by the Apex Court in paragraph No.23 of
this judgment in Mohd. Nasir’s case, to the effect that the provisions
regarding interest, as it appears from it’s plain reading, is penal in nature,
is exactly contrary to the decision of the coordinate Bench in Ved Prakash’s
case (supra), wherein, it has been held that so far interest is concerned, it
is almost an automatic, once default on the part of the employer in paying
the compensation due, takes place beyond the permissible limit of one
month. It has been further held specifically that no element of penalty is
involved therein. It was held that the liability to pay the interest on the
principle amount under the said provision of section 4-A(3)(a) of the said
Act remains part and parcel of the statutory liability which is legally liable
to be discharged by the insured employer. It was held that the imposition
of interest on principle amount would certainly partake the character of
liability of the insured employer to pay the compensation amount with due
interest, as imposed upon him under the said Act.
20. From the decisions of the Apex Court cited supra, the
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following principles emerge.
(a) Employer’s liability to pay compensation arises
under section 3(1) of the said Act as soon as the
personal injury is caused to a workman by an
accident which arises out of and in the course of
employment (Pratap Narain’s case).
(b) Where the question arises in any proceedings
under the Act as to the liability of any person to pay
the compensation or as to the amount or the duration
of the compensation, it has to be settled by the
Commissioner, in default of the agreement. However,
there is nothing to justify the arguments that the
employer’s liability to pay the compensation under
section 3(1) of the said Act in respect of the injury
gets suspended or deferred until after the settlement
by the Commissioner under section 19 of the said Act
(Pratap Narain’s case).
(c) In case, where the employer accepts his
liability to pay the compensation, but disputes the
extent of the claim, sub-section (2) of section 4-A
requires him to make provisional payment based on
the extent of accepted liability by depositing it with
the Commissioner or paying directly to the workman
injured (Ved Prakesh’s case).
(d) Where the employer totally denies his liability
to pay the compensation and does not accept it, then
his liability to make provisional payment under sub-
section (2) of section 4-A of the said Act would not
arise and his liability to pay the compensation would
depend upon the final adjudication by the
Commissioner under section 19 of the said Act (Ved
Prakesh’s case).
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(e) Once the compensation due under the Act
becomes ascertained, either provisionally under sub-
section (2) of section 4-A or finally on the adjudication
by the Commissioner under section 19, the same
would “fall due” immediately after expiry of one
month from the date of adjudication under section 19
of the said Act (Ved Prakash’s case).
(f) In Mubasir’s case, it was held that since no
indication is there as to when the compensation
becomes due, it has to be taken to be the date of
adjudication of the claim, as it becomes due on the
basis of such adjudication of claim and unless the
adjudication is done the question of compensation
becoming due does not arise. It has been held that
significantly the legislature has not used the
expression, “from the date of accident”, but has used
the expression, “falls due” under sub-section (1) of
section 4-A.
(g) So far as the payment of interest under clause
(a) of sub-section (3) of section 4-A of the said Act is
concerned, it has been held in Ved Prakash’s case
that in either case, where the employer does not
accept his liability as a whole or where he disputes
the extent of the claim, the Commissioner would be
justified in directing payment of interest from the
date of accident concerned and such order would
perfectly be justified on the scheme of section 4-A (3)
(a) of the said Act.
(h). In Ved Prakash’s case it has been held that
once the compensation “falls due” and within one
month, it is not paid by the employer, then as per
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section 4-A (3)(a), interest at the permissible rate
gets added to the said principal amount of the
compensation as the claimants would stand deprived
of their legally due compensation for a period beyond
one month which is statutorily granted to the
employer concerned to make good his liability for the
benefit of the claimants whose bread winner might
have either been seriously injured or lost his life. The
interest is almost automatic, once the default is
committed and there is no element of penalty
involved in it. The principal amount as well as the
interest made payable thereon would remain part and
parcel of the legal liability of the injured to be
discharged under the Compensation Act and not
divorce it.
(i) So far as the payment of interest under
section 4-A (3) is concerned, it was held in Mubasir’s
case that the High Court was wrong in granting
interest at the rate of 12% per annum from the date
of accident. It was held that the interest at the rate of
12% per annum was payable from the date of
completion of one month from the date of
adjudication of the claim for compensation by the
Commissioner, as according to it, the compensation
“falls due” under section 4-A (1) on the date of
adjudication (Mubasir’s case).
(j) In Mohd. Nasir’s case, it was held that the
interest under section 4-A (3) of the said Act would be
from the date of default and not from the date of
award of compensation. It was held that the provision
of interest, as it appears from a plain reading is penal
in nature. It was also held that the interest will also be
payable at the rate of 7.5% per annum from the date
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of filing of the application till the date of award and
thereafter, it shall be as per the rate of interest
determined by the Commissioner as per his order
under section 19 of the said Act.
It would be apparent from the principles laid down by the
Apex Court as are summarized above that the first decision rendered by
the Apex Court in the Pratap Narain’s case is by larger bench whereas the
remaining three judgments in Ved Prakash’s case, Mubasir’s case and
Mohd. Nasir’s case are rendered by the co-ordinate benches of two judges.
The employer’s liability to pay compensation under section 3(1) of the said
Act arises, as soon as the personal injury is caused to a workman by an
accident, which arises out of and in the course of employment, as has been
held in Pratap Narain’s case. Even the liability to make provisional payment
under sub-section (2) of section 4-A, to the extent of accepted sum arises
on the date of occurrence of an accident, as has been held in Ved Prakash’s
case. The question arises only in cases of total denial of liability, raised by
an employer or in respect of the balance sum, to the extent of disputed
liability under sub-section (2) of section 4-A which is required to be
determined by the Commissioner under section 19, on a date latter than
the date of the accident. The decision of the larger Bench in Pratap Narain’s
case states that there is nothing to justify the arguments that the
employer’s liability to pay compensation under section 3(1) of the said Act,
in respect of the injury gets suspended or deferred until after the
settlement by the Commissioner under section 19 of the said Act. However,
in Ved Prakash’s case and Mubasir’s case, it has been held that the
compensation shall fall due only upon adjudication by the Commissioner
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under section 19 on a latter date.
21. Thus, the decision of the larger bench in Pratap Narain’s case
would bind this Court and hence, it is held that the compensation payable
in such cases would be on the date of accident, irrespective of any dispute
regarding total denial of liability or denial of liability to the extent claimed
as against the accepted sum. The expression “falls due” employed under
sub-section (1) of section 4-A of the said Act shall have to be, therefore,
construed with reference to the date of accident only. Any other
construction would defeat the object of sub-section (1) of section 3 of the
said Act, which is to make the compensation immediately available for the
benefit of the claimants, whose bread winner might have been seriously
injured or might have lost his life.
22. So far as the payment of interest on the amount of compensation,
which has fallen due under sub-section (3) of section 4-A is concerned, Ved
Prakesh’s case holds that once the compensation “falls due” and it is not
paid within one month, by the employer then the interest as per clause (a)
of sub-section (3) of section 4-A, at permissible rate of interest, gets added
to the principal amount and it is automatic upon occurrence of default and
the principal amount as well as the interest thereon would remain part and
parcel of legal liability of the employer. It has been held that the interest is
not by way of penalty and hence, the Commissioner would be justified in
directing the payment of interest from the date of accident and such an
order would be perfectly justified on the scheme of section 4-A(3)(a) of the
said Act.
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23. In view of above, the expression “fell due” employed under
sub-section (3) of section 4-A of the said Act will have to be construed with
reference to the date of expiry of one month from the date of accident,- (1)
where the employer does not deny the liability and (2) where, the dispute
raised only to the extent of liability, it shall be in respect of the accepted
partial liability. However, where there is total denial of the liability by the
employer, or where the dispute is raised in respect of extent of liability, the
expression “fell due” employed under sub-section (3) of section 4-A will
have to be construed with reference to the date of expiry of one month,
from the date of adjudication of claim by the Commissioner under section
19 of the said Act. In case of default, in all the aforesaid cases to pay
compensation, the interest will start running from the date on which the
compensation “falls due” under sub-section (1) of section 4-A of the said
Act, which is the date of accident only and not from any other subsequent
date, much less the date either of the adjudication of the claim or of filing
of the claim petition.
24. What is postponed or deferred in case of total denial in
respect of the liability to pay the compensation, is the determination or
ascertainment of the amount of compensation payable by the employer
and not the date of incurring the liability. The liability to pay compensation
is either incurred or not at all incurred. If it is incurred, it is incurred on the
date of accident and if it is not incurred, it is not incurred on any date.
Where the Commissioner determines the liability on any future date under
section 19 of the said Act, it is deemed to have incurred on the date of
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accident and the interest and penalty shall become payable as per Clause
(a) and (b) of sub-section (3) of section 4-A of the said Act. If the
Commissioner holds that there is no liability at all to pay any
compensation, the question of payment of interest and penalty as per
Clause (a) and (b) of sub-section (3) of section 4-A will not arise.
25. Where the employer does not accept the liability for
compensation to the extent claimed, he is bound to make provisional
payment based on the extent of liability which he accepts, in the manner
stated in sub-section (2) of section 4-A of the said Act and in that event
also such accepted liability, he incurs or accrues to him, on the date of
accident. If he does not deposit the amount of accepted liability within one
month from the date of accident, he will have to pay interest from the date
of accident, as contemplated by clause (a) and penalty as contemplated by
clause (b) of sub-section (3) of section 4-A. What is postponed, suspended
or deferred, is the ascertainment of liability by the Commissioner under
section 19 to the extent it is disputed. If the Commissioner accepts the plea
of the employer that he has incurred the liability only to the extent he has
accepted, then the liability to pay further amount of compensation or
interest or penalty thereon does not arise. Where the Commissioner holds
the employee liable under section 19 of the said Act, to pay compensation
to the extent of disputed liability, and if he fails to make the payment of
determined sum, within a period of one month from the date of the order of
Commissioner under section 19 of the said Act, then the employer would
be liable to pay interest on such determined amount from the date of
accident.
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26. The decision of the Apex Court in Mubasir’s case that since
no indication is there as to when the compensation becomes due, it has to
be taken to be the date on which the adjudication is done by the
Commissioner under section 19 of the said Act and construing the
expression “falls due” under sub-section (1) of section 4-A with reference to
such date, is contrary to the view taken by the larger bench of the Apex
Court in Pratap Narain’s case where it has been held that there is nothing
to justify the argument that the employer’s liability to pay compensation
under sub-section (1) of section 3 of the said Act gets suspended until after
the settlement by the Commissioner under section 19 of the said Act, in
case of denial of liability to pay the compensation. This view in Mubasir’s
case is also in conflict with the view taken by the Apex Court in Ved
Prakash’s case wherein it has been held that in either case of default, the
Commissioner would be justified in directing payment of interest from the
date of the accident. There exists such conflict in between the two
judgments of the Apex Court namely Ved Prakash’s case and Mubasir’s
case, is also noted by the learned Single Judge of this Court (Mr. A.S. Oka,
J.) in his unreported judgment delivered in first appeal No. 1030 of 2007,
Mrs. Mule Brothers Private Limited Vs. Sou. Samindarabai, decided on
25.6.2008. Following the ratio of the full bench of this Court in case of
Kamleshwar Vs. Union of India, reported in 1994 Mh.L.J. 1669, it has been
held that it is not necessary to follow the decision rendered later in point of
time.
27. In the present case, the accident occurred on 2.12.2005, on
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which date the liability of the employer to pay the compensation arose.
The period of one month from the date of occurrence of the accident
expired on 2.1.2006. The employer did not accept the liability for
compensation and he totally denied the claim as contemplated by sub-
section (2) of section 4-A of the said Act. The Commissioner passed an
award on 7.2.2009. In view of the judgments of the Apex Court in Ved
Prakash’s case (supra) so also Mubasir’s case (supra), it is on the date of
the order of the Commissioner i.e. 7.2.2009, the amount of arrears of
compensation “fell due” under sub-section (3) of section 4-A of the said Act.
The period of one month as specified in sub-section (3) of section 4-A
expired on 7.3.2009 but the employer did not make the payment on/or
before the said date. Hence the simple interest at the rate of 12 per cent
per annum became payable by the employer on the amount of arrears of
compensation with effect from the date of accident / incident on 2.12.2005.
The Commissioner in the instant case was, therefore, right in directing
payment of interest on the sum of Rs.90,000/- adjudicated towards
compensation payable to the claimant from the date of incident i.e.
2.12.2005.
28. It is the contention raised by the learned counsel for the
appellant that although the accident occurred on 2.12.2005, the claim
petition was filed on 24.8.2007 and it was adjudicated upon by the
Commissioner on 7.2.2009 and therefore, it would cause great hardship to
the employer if the interest at the rate of 12 per cent per annum is directed
to be paid with effect from 2.12.2005. According to the learned counsel for
the appellant, it was the fault of the respondent No.1 / claimant in not
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preferring the claim petition for the period of almost one year and eight
months from the date of the accident and he is also not responsible for
pendency of the proceedings before the Commissioner from 24.8.2007 to
7.2.2009. Relying upon the decision of the Apex Court in Mohd. Nasir’s
case (supra), it is urged by the learned counsel that the provision of
interest is penal in nature and therefore, various aspects are required to be
taken into consideration in respect of the changeability of interest including
the aspect of delay in filing the claim petition by the respondent No.1 and
adjudication of the claim by the Commissioner. The learned counsel,
therefore, contended that at the most the interest at the rate of 7.5 per
cent per annum from the date of filing of the application till the date of
award would be levied and the rate of interest payable thereafter, shall be
in terms of the order passed by the Commissioner.
29. The contention as raised aforesaid is also required to be
rejected for the reason that the Apex Court in Ved Prakash’s case has in
clear terms held that there is no element of penalty involved in imposition
of interest and it is automatic once the default is committed by the
employer in payment of compensation within the permissible limit of one
month. No doubt, the view taken by the two coordinate Benches of the
Apex Court in Ved Prakash’s case and Mohd. Nasir’s case to that extent is
in conflict with each other. The judgment of the Apex Court in Mohd.
Nasir’s case does not take into consideration the view taken by the larger
Bench in Pratap Narain’s case and also the earlier view taken by the
coordinate Bench in Ved Prakash’s case. In view of this, relying upon the
Full Bench decision of this Court in the case of Kamaleshkumar (supra), it is
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not necessary to follow the view taken by the Apex Court in the later
judgment. It is open for the High Court to follow the view taken by the
coordinate Bench of the Apex Court, which it deems fit and more in
conformity with the provisions of law. In view of this, the claim of the
appellant that the interest at the rate of 7.5% per annum be granted from
the date of filing of the petition till its adjudication and expiry of period of
one month therefrom, at such higher rate as has been specifically under
clause (a) of sub-section (3) of section 4-A of the said Act, cannot be
accepted.
30.
Now, turning to my own judgment delivered on 5.8.2009 in
First Appeal No.1562 of 2009 (supra), upon which the reliance is placed by
the learned counsel for the appellant to urge that the interest at the rate of
12 per cent per annum has to be calculated upon failure of the employer to
deposit the amount of compensation within the period of one month from
the date of the award passed by the Commissioner. It has to be stated
that the larger Bench view of the Apex Court in Pratap Narain’s case
(supra) was not brought to my notice, which is a binding precedent under
Article 141 of the Constitution of India. The law laid down in the said
judgment shall prevail over the decisions given by the smaller Benches of
the Apex Court, which delivered the judgment in the cases of Ved Prakash,
Mubasir and Mohd. Nasir (supra) and none of these three Judgments refer
to the view taken by the larger Bench in Prakash Narain’s case (supra).
Hence, the view taken by me in First Appeal No.1562 of 2009 to that extent
it runs contrary to law laid down in Prakesh Narayan’s case, and the same
is therefore, rendered per incuriam.
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31. Now, turning to the question of imposition of penalty under
sub-clause (b) of sub-section (3) of section 4-A of the said Act, the Apex
Court has held in Ved Prakash’s case (supra) that the penalty is required to
be levied under the said provision after issuing show cause notice to the
employer concerned who will have a reasonable opportunity to show cause
why, on account of some justification on his part for the delay in payment
of the compensation amount, he is not liable for this penalty. It has further
been held that if ultimately, the Commissioner after giving reasonable
opportunity to the employer to show cause, takes a view that there is no
justification for such a delay on the part of the insured employer and
because of his unjustified delay and due to his personal fault he is held
responsible for the delay, then the penalty would be imposed on him. It
has further been observed that so far penalty is concerned, the same is not
automatic flowing from the main liability incurred by the insured employer
under the said Act.
32. This judgment in Ved Prakash’s case has been followed in
un-reported judgment of this Court in F.A.No. 1562/2009, Nandi Sahakari
Sakhar Karkhana’s case (supra). It has been held that a show cause notice
was required to be issued to the employer calling upon him to furnish the
explanation for the delay caused in making the payment of arrears. Upon
receipt of the explanation from the employer, if the Commissioner is not
satisfied then the penalty to the extent of maximum 50 per cent of the
amount of compensation determined is required to be paid by the
employer. The order impugned in the present case is a composite order
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determining the compensation payable by the employer imposing the
interest on the arrears of the amount of compensation and imposing
penalty for failure to furnish the satisfactory explanation. The show cause
notice contemplated by clause (b) of section 3 of section 4-A of the said Act
is with reference to the arrears of the amount of compensation determined
to be payable by the employer along with the interest payable thereon.
This finding would arise only upon determination of the compensation by
the Commissioner under section 19 of the said Act. Hence, the show cause
notice contemplated is after passing of the order by the Commissioner
determining the compensation. In view of this order imposing penalty of
Rs.45,000/- to the extent of 50% of the amount of compensation of Rs.
90,000/- determined by the Commissioner, needs to be quashed and set
aside with a direction to the Commissioner to issue a show cause notice
providing the appellant / employer a reasonable opportunity of being heard
in the matter and to furnish the explanation for the delay caused in making
the payment of arrears of compensation and interest, and thereafter to
pass an appropriate order.
33. The learned counsel for the respondent No.1, however, relied
upon the another decision of the learned Single Judge of this Court in
Sarsabai’s case (supra), wherein, it was held that no separate show cause
notice was required to be issued and the pleadings in the application gives
reasonable opportunity to the employer to defend the question of
imposition of penalty. The learned counsel for the respondent No.1 /
claimant invited my attention to the pleadings in paragraph No.4 of the
claim petition and mere denial to it submitted in the written statement by
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the appellant. In my view, the judgment of the Apex Court in Ved Prakash’s
case on this aspect of imposition of penalty upon issuance of separate
show cause notice has not been taken into consideration by the learned
Single Judge in the said judgment. The binding precedent in this respect of
the Apex Court, under Article 141 of the Constitution of India, in Ved
Prakash’s case is clear and unambiguous. Hence, the submission made by
the learned counsel for the respondent No.1 is rejected.
In the result, this first appeal is partly allowed.
(i) The impugned judgment and award dated 7.2.2009 passed
in N.F.A.No. 20 of 2007 to the extent of imposing penalty of Rs.45,000/- on
the appellant is quashed and set aside.
(ii) The appellant is directed to appear before the Commissioner,
Workmen’s Compensation at Parbhani and to show cause in respect of the
penalty of Rs. 45,000/- proposed to be levied by the Commissioner. Upon
receipt of explanation, the Commissioner for Workmen’s Compensation
shall hear the appellant and pass an appropriate orders in accordance with
law.
(iii) Rest of the order passed by the Commissioner for Workmen’s
Compensation at Parbhani on 7.2.2009 in N.F.A.No. 20 of 2007 is
maintained.
(iv) There shall be no order as to costs.
(R.K.DESHPANDE, J.)
ssc/fa1044.09
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