Kerala High Court
Mathai.K.P vs Santha on 10 September, 2015
Bench: Antony Dominic, Dama Seshadri Naidu
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE ANTONY DOMINIC
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
&
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
THURSDAY, THE 31ST DAY OF AUGUST 2017/9TH BHADRA, 1939
MFA.No. 23 of 2016
-------------------
AGAINST THE ORDER IN ECC 369/2014 (Old WC 32/11) of INDU.TRIBUNAL,
KOZHIKODE DATED 10-09-2015
APPELLANT/1ST OPPOSITE PARTY:
MATHAI.K.P, PWD CONTRACTOR, ONDAYANGADI,
VEMAM P.O., WAYANAD DISTRICT
BY ADVS.SRI.B.ASHOK SHENOY
SRI.P.S.GIREESH
SRI.RIYAL DEVASSY
SRI.SAJI P.THOMAS
RESPONDENTS/APPLICANTS & OPPOSITE PARTIES NOS.2 & 3:
1. SANTHA
WIFE OF LATE HARIDASAN, CHERIKKA PARAMBIL HOUSE,
P.O.KOKKALLUR, BALUSSERY, KOZHIKODE 673 612.
2. SARIKA
DAUGHTER OF LATE HARIDASAN, AGED ABOUT 13 YEARS,(MINOR),
CHERIKKA PARAMBIL HOUSE, P.O.KOKKALLUR, BALUSSERY,
KOZHIKODE 673 612.
3. SHONIMA
DAUGHTER OF LATE HARIDASAN, AGED ABOUT 10 YEARS (MINOR),
CHERIKKA PARAMBIL HOUSE, P.O.KOKKALLUR, BALUSSERY,
KOZHIKODE 673 612.
4. SNEHA
DAUGHTER OF LATE HARIDASAN, CHERIKKA PARAMBIL HOUSE,
P.O.KOKKALLUR, BALUSSERY, KOZHIKODE 673 612
5. CHATHUKUTTY
SON OF UNNICHATHAN, THATTARAKUZHIYIL HOUSE,
P.O.CHEEKKIKODE, ATHOLI, KOZHIKODE DISTRICT 673 315
6. JANU,WIFE OF CHATHUKUTTY, THATTARAKUZHIYIL HOUSE,
P.O.CHEEKKIKODE, ATHOLI, KOZHIKODE DISTRICT 673 315
7. SUPERINTENDING ENGINEER
PWD BUILDING AND LOCAL WORKS, NORTH CIRCLE,
KOZHIKODE 673 006
8. STATE OF KERALA
REPRESENTED BY DISTRICT COLLECTOR, KOZHIKODE 673 006
R BY GOVERNMENT PLEADER SRI.V.MANU
THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON
31-08-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
ANTONY DOMINIC,
DAMA SESHADRI NAIDU &
DEVAN RAMACHANDRAN, JJ.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
M.F.A.(E.C.C.)No.23 of 2016
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Dated this the 31st day of August, 2017
JUDGMENT
Antony Dominic, J.
The question that is referred for the consideration of this Full Bench is whether "the amount payable under the order appealed against" specified in the third proviso to Section 30 of the Employee's Compensation Act, 1923 (hereinafter referred to as 'Act' for short) include interest or penalty levied under Section 4A, in addition to lump sum compensation ordered under Section 4 of the Act.
2. In this case, suffice it to say that the Industrial Tribunal and Employees Compensation Commissioner, Kozhikode, passed order in ECC 369/14 directing the appellant, being the opposite party No.1, to deposit before the court a lump sum compensation of Rs.1,97,060/- with 12% interest with effect M.F.A.(E.C.C.)No.23 of 2016 : 2 : from 11.5.1997 till deposit. In this appeal, in the purported compliance of the third proviso to Section 30, the appellant has produced a certificate of the Commissioner that a lump sum compensation has been deposited. Thereupon, relying on the judgment of this court in New Indian Assurance Co. Ltd. v. Biju [2011 (2) KLT 142], the Registry noted a defect that the interest awarded also has to be deposited and a certificate of the Commissioner should be produced. That was contested by the appellant, relying on the Division Bench judgment in Manager, Madupetty Estate, Idukki v. Packialetchmy and Others [2013 (3) KHC 24]. Noticing that the Division Bench judgments are contradictory, the case was referred to be heard by a Larger Bench for an authoritative pronouncement on the issue. Accordingly,the case is before us.
M.F.A.(E.C.C.)No.23 of 2016
: 3 :
3. We heard the counsel for the appellant and the learned Government Pleader.
4. The Employee's Compensation Act, 1923 (previously the Workmen's Compensation Act, 1923) is an Act to provide for payment by certain classes of employers to their employees of compensation for injury by accident. Section 3 of the Act provides that if personal injury is caused to an employee by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II. Section 4 provides for the amount of compensation payable by the employer. A perusal of this Section shows that compensation varies with the nature and gravity of the accident and injury, in that, where death results from the injury, where permanent total disablement results from the injury, where permanent partial disablement M.F.A.(E.C.C.)No.23 of 2016 : 4 : results from the injury and where temporary disablement, whether total or partial, results from the injury. Section 4A, inserted by Act 8 of 1959, provides that compensation under Section 4 shall be paid as soon as it falls due. Sub Section 2 of this Section provides that in cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound 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 employee, as the case may be, without prejudice to the right of the employee to make any further claim. While Sub Section 2 thus provides for the obligation of the employer to make payment, Sub Section 3 provides for the consequences of the employers default. Clause (a) of Sub Section 3 provides that where any employer is in default in paying the compensation due under M.F.A.(E.C.C.)No.23 of 2016 : 5 : the Act within one month from the date it fell due, the Commissioner shall direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of 12% per annum or at such higher rates not executing the maximum of lending rates of any scheduled bank as may be specified by the Central Government, by notification in the the gazette. Sub Clause (b) further provides that if, in his opinion, there is no justification for the delay, the Commissioner shall 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.
5. Section 30 of the Act provides for appeals. In terms of this provision an appeal on substantial question of law shall lie to the High Court from the orders enumerated therein. Since answer to the reference to the Full Bench depends on the M.F.A.(E.C.C.)No.23 of 2016 : 6 : manner in which this provision is understood, we consider it relevant to extract this provision and, therefore, it is extracted hereunder for reference:
"30. Appeals-(1) An appeal shall lie to the High Court from the following orders of a Commissioner, namely:-
(a) an order awarding as compensation a lump sum whether by way of redemption of a half-
monthly payment or otherwise or disallowing a claim in full or in part for a lump sum;
(aa) an order awarding interest or penalty under Section 4A;]
(b) an order refusing to allow redemption of a half monthly payment;
c) an order providing for the distribution of compensation among the dependents of a deceased [employee], or disallowing any claim of a person alleging himself to be such dependant;
(d) an order allowing or disallowing any claim for the amount of an indemnity under the provisions of sub-section (2) of Section 12; or
(e) an order refusing to register a memorandum M.F.A.(E.C.C.)No.23 of 2016 : 7 :
of agreement or registering the same or providing for the registration of the same subject to conditions:
Provided that no appeal shall lie against any order unless a substantial question of law is involved in the appeal, and in the case of an order other than an order such as is referred to in clause (b), unless the amount in dispute in the appeal is not less than three hundred rupees:
Provided further that no appeal shall lie in any case in which the parties have agreed to abide by the decision of the Commissioner, or in which the order of the Commissioner gives effect to an agreement come to by the parties:
[Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against.] (2) The period of limitation for an appeal under this Section shall be sixty days.
(3) The provisions of Section 5 of the Limitation Act, 1963 (36 of 1963), shall be applicable to appeals under this section.M.F.A.(E.C.C.)No.23 of 2016 : 8 :
6. Reading of this provision shows that, clause (a) provides for an appeal against an order awarding as compensation a lump sum whether by way of redemption of half monthly payment or otherwise or disallowing claim in full or in part for a lump sum. By clause (aa), inserted by Act 8 of 1959, appeal is also provided against an order awarding interest or penalty under Section 4A. The third proviso to this Section further provides that no appeal by an employer under Clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant had deposited with him the amount payable under the order appealed against. This provision was also introduced by Act 15 of 1933.
7. Interpreting these provisions in Biju's case (supra), Division Bench of this court held that to maintain an appeal M.F.A.(E.C.C.)No.23 of 2016 : 9 : under Section 30(1)(a), it is necessary that the appellant should deposit with the Commissioner the lump sum compensation and interest awarded. However, Division Bench in Packialetchmy's case (supra), after noticing Biju's case (supra), held to the contrary. It is this conflict, which is required to be resolved.
8. Section 4A, providing for compensation for employer's default, was inserted in the Act by Act 8 of 1959. Subsequently, Sub Section 3 was substituted by Act 30 of 1995. Section 4A, as it now stands reads thus:
"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 be bound to make provisional payment based on the extent of liability which he accepts, and such M.F.A.(E.C.C.)No.23 of 2016 : 10 : payment shall be deposited with the Commissioner or made to the employee, as the case may be, without prejudice to the right of the employee 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 at the rate of twelve percent 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 a reasonable opportunity to the employer to show cause why it should not be passed."
M.F.A.(E.C.C.)No.23 of 2016 : 11 :
9. It is Sub Section 3 to Section 4A, which provides for the levy of interest and penalty on an employer who has committed default in paying the compensation on the due date. Though the Act does not expressly specify the due date, in Pratap Narain Singh Deo v. Shrinivas Sabata and another [AIR 1976 SC 222], interpreting the provisions of the Act, the Apex Court has held that the compensation will be payable on the date of accident and that interest will fall due and be payable if there is default of payment of compensation within one month of date of accident. Thus, statutory liability to pay interest and penalty was fastened on the employer with the insertion of Section 4A by Act 8 of 1959. Sub Section 3 of Section 4A as introduced by 1959 provided that where any employer is in default in paying the compensation due under the Act within one month from the date it fell due, the Commissioner may direct that, in M.F.A.(E.C.C.)No.23 of 2016 : 12 :
addition to the amount of arrears, simple interest at the rate of 6% per annum on the amount due together with interest further provided that if in the opinion of the Commissioner, there is no justification for the delay, a further sum not exceeding 50% of such amount shall be recovered from the employer by way of penalty. By Act 8 of 1959 itself, an amendment was also made to Section 30 by introducing clause (aa) providing an independent appellate remedy against an order awarding interest or penalty under Section 4A. The language of Section 4A shows that while levy of interest was directory, once the Commissioner finds that delay is not justified, recovery of penalty was mandatory.
10. However, with effect from 15.9.95, Section 4A(3) was substituted by Act 30 of 1995. The conspicuous difference in the language of the provision shows that with effect from M.F.A.(E.C.C.)No.23 of 2016 : 13 : 15.9.95, interest is statutory and mandatory and the levy of penalty, though statutory, is subject to the satisfaction of the Commissioner that there was no justification for the delay.
11. When the question whether the deposit contemplated under the third proviso to Section 30 includes deposit of the interest and penalty, if any, ordered under Section 4A(3) is examined, we have to necessarily make reference to Section 30 in detail. The right to file appeal, it is trite, is a statutory right and Parliament may not provide such a right at all. It is also trite that the right to file appeal can be hedged with conditions and a limited right can also be conferred. [(Om Prakash Batish v. Ranjit Alias Ranbir Kaur and Others (2008) 12 SCC 212)]. Reading of this provision shows that, insofar as it is relevant, clause (a) provides for appeal against an order awarding as compensation a lump sum. M.F.A.(E.C.C.)No.23 of 2016 : 14 : Similarly, clause (aa) introduced by Act 8 of 1959 along with Section 4A, provides for an independent appeal against an order awarding interest or penalty under Section 4A. Having regard to the provisions of Section 4A, since interest is statutory, in every case where appeal is filed under Section 30 (1)(a) disputing the lump sum compensation awarded, the adjudication would also involve adjudication of the interest awarded or penalty, if ordered. However, at the same time, under clause (aa) of Section 30(1) it is now open to an employer to file an appeal confining his challenge against interest or penalty or both, awarded under Section 4A. Therefore, it is futile to contend that an appeal under Section 30(1)(a) is confined to lump sum compensation and not against interest or penalty or both or that an appeal against an order awarding compensation, interest and/or penalty,in effect M.F.A.(E.C.C.)No.23 of 2016 : 15 : are separate appeals filed under Section 30(1)(a) and 30(1) (aa) respectively. When such an appeal under clause (a) is filed, the certificate which the appellant has to produce in terms of the third proviso to Section 30 is a certificate of deposit with the Commissioner, "the amount payable under the order appealed against". Such amount payable under the order appealed against, as is plain from the language of the proviso, includes not only the lump sum compensation but also interest and penalty, if any, ordered. Therefore, there is no warrant to interpret the provisions of clause (a) as providing for filing of appeal only against a lump sum compensation, even in a case where interest or penalty or both are awarded. Therefore, Section 30(1)(a) or the third proviso does not exclude interest or penalty from the requirement of deposit as contemplated under the third proviso. Such an interpretation would be M.F.A.(E.C.C.)No.23 of 2016 : 16 : against the language of the statute and detrimental to the interest of the injured employees, for whose benefit the statute itself has been enacted by the legislature.
12. However, when we come to clause (aa), as already stated above, that provision was introduced by Act 8 of 1959 providing for an independent appellate remedy against orders awarding interest or penalty and as a consequence to the introduction of Section 4A(3) providing for levy of interest and penalty. Therefore, if an appellant feels aggrieved by the interest levied or penalty ordered, it is open to him to challenge the order to that extent in an appeal under clause (aa). In such an appeal, legislature has not prescribed that the appellant should deposit the amount as provided in the third proviso. This is because, in the appeal there is no challenge against the lump sum compensation awarded and therefore the appellant M.F.A.(E.C.C.)No.23 of 2016 : 17 :
is duty bound to comply with that part of the order and pay the amount awarded.
13. Now, turning to the judgment in Biju's case (supra), we find that the Division Bench has surveyed all relevant precedents and statutory provisions and came to the following conclusion as seen from paragraphs 22, 29 and 30.
22. We are afraid the above contention is totally misconceived. As has been noticed already, the third proviso refers to the amount payable under the order appealed against. The amount payable necessarily will include interest awarded by the Commissioner. Therefore, we are not able to agree with with the view taken by the Allahabad, Karnataka and Orissa High Courts in the decisions referred to above.
x x x x x x x
29. As has been noticed already, Clause (aa) of sub Section (1) of Section 30 deals with appeals against orders awarding interest or penalty under Section 4A of the Act. In other words the legislature has put the order relating to interest or penalty under Section 4A in a separate category of its own. Section 30 does not provide for pre-deposit in the case of an M.F.A.(E.C.C.)No.23 of 2016 : 18 : appeal under Clause (aa), whereas in an appeal under Clause (a), the statute provides that the appellant will have to deposit "the amount payable under the order appealed against" as a condition precedent. In short, appeals contemplated under Clause (a) and Clause (aa) are treated differently under Section 30 of the Act. The amount payable under the order appealed against, in our view, will include interest also.
30. Interest is an integral and inseparable part of compensation. Therefore, the express language used in the third proviso leaves no room for any doubt that "the amount payable under the order" will include interest also. Kr.L.R.Ferro Alloys Ltd. v. Mahavir Mahto & Another ((2002) 9 SCC 450), the Apex Court has reiterated the earlier view taken in Ved Prakash Garg v. Premi Devi & Ors. ((1997) 8 SCC 1) the interest and penalty are two distinct liabilities arising under the Act. Liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment within one month.
14. However, insofar as the judgment in Packialetchmy's case (supra) is concerned; we are unable to approve the ratio laid down. First of all when the Division Bench had noticed that the issue has already been answered by another Division M.F.A.(E.C.C.)No.23 of 2016 : 19 : Bench in Biju's case (supra) and if it was in disagreement with the principles laid down in Biju's case (supra), judicial discipline demanded it ought to have referred the matter to be heard by a Larger Bench, instead of taking a contrary view. Reading of this judgment shows that the subject matter of the appeal was an order awarding lump sum compensation and interest. The Division Bench has proceeded as if the appeal virtually was two separate appeals filed both under Section 30 (1)(a) and 30(1)(aa). It is on that basis, the Division Bench has appreciated the case and finally concluded that the requirement under the third proviso to Section 30(1) to deposit the amount payable under the order appealed against, obliged deposit of lump sum compensation alone. We have already held that the order appealed against under Section 30 (1)(a) includes interest and penalty, if any, ordered. 3rd proviso M.F.A.(E.C.C.)No.23 of 2016 : 20 : prescribes deposit of the "amount payable under the order appealed against". Amount payable under the order appealed under Section 30(1)(a), includes interest and penalty, if any. This, therefore, means that in an appeal filed under Section 30 (1)(a), the appellant shall deposit not only the lump sum compensation awarded but also the interest and penalty, if any, ordered. According to us, such an interpretation along would be consistent with the language of the Section and the object that is sought to be achieved. Therefore, the Division Bench in Manager, Madupetty Estate, Idukki v. Packialetchmy and Others [2013 (3) KHC 24] is unsustainable and is, therefore, overruled.
The reference is, therefore, answered affirming the judgment in New Indian Assurance Co. Ltd. v. Biju [2011 (2) KLT142] and overruling the judgment of the Division Bench in M.F.A.(E.C.C.)No.23 of 2016 : 21 : Manager, Madupetty Estate, Idukki v. Packialetchmy and Others [2013 (3) KHC 24] and holding that in an appeal filed by the employer under Section 30(1)(a) of the Employee's Compensation Act, 1923, the memorandum of appeal shall be accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable namely, the lump sum compensation awarded, interest and penalty, if any, under the order appealed against.
SD/-
ANTONY DOMINIC, JUDGE SD/-
DAMA SESHADRI NAIDU, JUDGE SD/-
DEVAN RAMACHANDRAN, JUDGE jes // TRUE COPY // P.S. TO JUDGE