Kerala High Court
Oriental Insurance Co. Ltd. vs Abdul Nazar P.C. on 27 November, 1996
Equivalent citations: (1998)IIILLJ488KER
Author: G. Sivarajan
Bench: G. Sivarajan
JUDGMENT Usha, J.
1. These appeals are filed by Oriental Insurance Company Ltd., and United India Insurance Company Ltd., challenging the orders passed by Commissioner for Workmen's Compensation in different Workmen's Compensation cases on application filed under Section 22 of the Workmen's Compensation Act, 1923, claiming compensation for personal injuries sustained by the applicants in accidents arising out of and in the course of their employment. The main common contention raised in these appeals is that the Workmen's Compensation Commissioner should not have applied the amended provisions contained in Sections 4 and 4-A of the Workmen's Compensation Act, 1923 while assessing quantum of compensation, interest etc. in respect of claims arising from accidents happened before the amended provisions came into force.
2. By virtue of the provisions contained under Sections 4 and 5 of the Workmen's Compensation (Amendment) Act, 1995 (Act 30 of 1995), there had been enhancement in the rate of compensation as well as rate of interest provided under Sections 4 and 4-A of the Workmen's Compensation Act, 1923. The amended provisions came into force only with effect from September 15, 1995. It is contended on behalf of the appellants that since the accidents, out of which arose the claims in these cases, happened before September 15, 1995, the quantum of compensation should have been fixed on the basis of the unamended provisions of Sections 4 and 4-A. We had upheld similar contentions in our judgment in M.F.A. 298/1996. We had followed the above view in the other appeals also. Therefore, in these appeals, we are inclined to accept the contention raised by the appellants that the quantum of compensation and the rate of interest should have been fixed by the Workmen's Compensation Commissioner on the basis of the unamended provisions of Sections 4 and 4-A of the Workmen's Compensation Act, 1923. Two consequential issues have come up in these appeals, which we had no occasion to consider in M.F. A. 298/1996 or other appeals where we had followed the decision in M. F. A. 208/1996. They are (1) whether the power to grant interest vested in the Commissioner is discretionary and (2) which is the date from which the employer can be made liable to pay interest. Section 4-A as it stood before the amendment reads as follows:
"4-A -- 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 event of liability which he accepts, and, such payment shall be deposited with Commissioner or made to the workmen, as the case may be, without prejudice to the right of the workman 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 may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no-justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty."
We have already made it clear that in these cases, the above provisions are to be applied in the matter of payment of interest. In all these cases, the Workmen's Compensation Com-missioner had directed the respective Insurance Companies to deposit the amount of compensation computed in the order, within 30 days of receipt of the order, failing which the amount would bear simple interest at the rate of 12% per annum from the date of the accident.
3. According to the claimants-respondents, since this Court has taken the view that the unamended provisions of Section 4-A are applicable to their cases while allowing the appeals on that ground, appellants should be made liable to pay interest from the date of the accident. They would submit that the compensation becomes due oh the date of the accident and Sub-section (3) of Section 4-A provides that if the employer defaults in paying compensation due within one month from the date it fell due, he is liable to pay interest at the rate of 6%. One month's time is granted under Sub-section (3) from the date on which the compensation fell due which, according to counsel, is the date of accident and not from the date on which the amount was computed. In support of their contention, they relied on number of decisions, which we would consider later.
4. Appellants took objection to the above contention raised by the claimants-respondents, mainly on two grounds. It was submitted that respondents cannot be allowed to contend as above, since they have not filed appeals from the orders passed by the Workmen's Compensation Commissioner which are challenged in these appeals. Secondly, they submitted, on a reading of Sub-section (3) of Section 4-A, direction to pay interest is left to: the discretion of the Commissioner and if he has exercised such discretion in directing payment only with effect from a date after 30 days of the receipt of communication of the order, this Court will not interfere with such direction. There was also a contention raised on behalf of Oriental Insurance Co. Ltd., that under no circumstances, the Insurance Company can be made liable to pay interest.
5. We do not find any merit in the objection raised by the appellants that since the claimants-respondents have not filed an appeal from the orders passed by the Workmen's Compensation Commissioner, they cannot contend that the amount of compensation should carry interest at 6% from the date of accident.
It is true that in the orders under challenge in these appeals, the Commissioner for Workmen's Compensation has granted interest only on default of depositing the amount within 30 days of receipt of copy of the order. We had occasion to consider in M.F. A. 298/1996 an order where the Workmen's Compensation Commissioner had directed payment of interest from the date of the accident. In our judgment, that part of the order was not interferred with. In number of other cases which were disposed on the basis of the judgment in M.F.A. 298/1996 also, the direction was to pay interest from the date of accident. While accepting the contention of the appellants in the present appeals that they are not liable to pay interest at the rate of 12% as ordered by the Workmen's Compensation Commissioner, we are reducing the quantum of award in favour of the claimants. Under such circumstances, it is open to the claimants-respondents to contend that while applying the unamended provisions of Sub-section (3) of Section 4-A, this Court should implement the provisions to full extent giving all the benefits due to them on a proper interpretation of the provisions contained therein. The fact that they have not filed appeals should not stand in the way of this Court moulding the relief so as to do justice to both sides. We therefore reject the preliminary objection raised by the appellants.
6. We are also not inclined to accept the contention raised by the appellants. It cannot be said that Sub-section (3) of Section 4-A allows a discretion in favour of the Commissioner for Workmen's Compensation to award interest against a defaulting employer. The use of the word 'may' cannot be treated as permissive in the nature of the provisions contained in Workmen's Compensation Act, 1923. The Act is intended to mitigate the effect of accidents involving the workmen in the course of their employment and to provide suitable medical treatment and for cheaper and quicker disposal of dispute relating to compensation through special Tribunals. A plain reading of the provisions contained under Subsection (3) of Section 4-A would show that the essential requirement for directing payment of interest at 6% and for payment of penalty are entirely different. The employer who defaults to make the payment of compensation due under the Act within one month from the date it fell due is made liable to pay interest at the rate of 6% per annum. On the other hand, liability to pay penalty does not arise merely on the ground of delay in making the payment. Only when the Commissioner is of the opinion that there was no justification for the delay, he can direct payment of penalty not exceeding 50% of the amount of compensation. While the interest directed to be paid is fixed at 6%, there is a discretion given to the Commissioner to fix the amount of penalty by not exceeding 50% of the compensation.
7. Compensation becomes due on the date of the accident itself, vide Pratap Narain Singh Deo v. Shrinivas Sabata, (1976-I-LLJ-235) (SC). One month's time is granted to the employer to satisfy the claim of the workman. Any delay in making payment beyond the time granted by the Statute would make the employer liable to compensate the employee by paying interest. It is, therefore, the right of the workman to get interest on the amount of compensation for the period in which it was not made available to him by the employer. Even though the word used is 'may', we are of the view that the provisions contained under Sub-section (3) of Section 4-A would satisfy the test laid down in the often quoted dictum of Lord Cairns in Julius v. Lord Bishop of Oxford, (1974-80)5 AC 214, as follows:
"There may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something jn the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so."
8. In the context of the provisions as it is found in Sub-section (3) of Section 4-A the word 'may' would mean 'must'. In Maxwell on Interpretation of Statutes. 11th Edn. at page 231, the principle is stated thus :
"Statutes which authorise persons to do acts for the benefit of others, or, as it is some times said, for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In enacting that they "may" or "shall, if they think fit", or, "shall have power", or that "it shall be lawful" for them to do such acts, a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have--to say the least -- a compulsory force, and so would seem to be modified by judicial exposition".
This is the same view taken by the Supreme Court in the following decisions,: Ramji Missar v. State of Bihar, AIR 1963 SC 1088, Punjab Sikh Regular Motor Service, Moudhapara, Raipur v. Regional Transport Authority, Raipur, AIR 1966 SC 1318, State (Delhi Admn.) v. I.K. Nangia, AIR 1979 SC 1979 and Ambica Quarry Works v. State of Gujarat, AIR 1987 SC 1073.
9. It is true that after the amendment in the year 1995, the wording of Sub-section (3) is changed and "shall" is used instead of "may". But, that, by itself, in our view, would not go to show that the earlier provision was not mandatory. Learned counsel appearing on behalf of the appellants referred to a Bench decision of this Court in Koch Vein v. Purakkatu Joseph, 1984 All CJ 630, and submitted that the observations contained in paragraph 8 of the judgment would show that even in the case of liability to pay interest, the Commissioner has to find that there was no justification for the delay on the part of the employer to make the payment and it would therefore indicate a discretionary power vested in the Commissioner. We have carefully gone through the above-mentioned judgment. We do not find that this question as such was raised or discussed in the above judgment. It was a case where the Commissioner for Workmen's Compensation totally overlooked the entire provisions contained under Section 4-A regarding payment of interest and penalty. The Court found that the employer was liable to pay interest at 6% and also penalty. While discussing the above aspect, it is true that there is an observation that 'while compensation has to be paid as soon as it is due, the Commissioner may award interest if there was no justification for the delay in making the payment'. The above observation was made while finding fault with the Commissioner in not referring to the provisions contained under Section 4-A at all. As mentioned earlier, the specific question which is raised in the present appeals was not as such before the Bench for consideration. A plain reading of Sub-section (3) would show that the requirement of unjustified delay is relevant only for ordering penalty and not awarding interest. We therefore, reject the contention taken by the appellants that there is a discretion vested in the Commissioner for Workmen's Compensation either to direct or not to direct payment of interest at 6% for delayed payment of compensation.
10. Once it is found that the amount of compensation falls due on the date of the accident, it has necessarily to be held that the defaulting employer shall pay interest on the compensation from the date of the accident. The wording of the Section is very clear that mere failure to pay compensation would saddle the employer with the liability to pay interest unlike in the case of penalty. Employer will be liable to pay penalty only in cases where the Commissioner is satisfied that there was no justification for the delay. The contumacious conduct on the part of the employer in not making the payment has relevance only in the case of his liability to pay penalty. As far as interest is concerned, there is no requirement to prove that the employer was not honestly contesting his liability. Ultimately, when it is found that he has liability to pay compensation by the Commissioner for Workmen's Compensation, the workman has to be compensated for not having the advantage of receipt of the amount of compensation on the date on which the accident happened. On the other hand, it has to be noted that the employer was retaining the amount with him all the time when the proceedings were going on. The fact that he has been granted one month's time from the date on which compensation fell due to make the payment would not in any way postpone the date from which interest would start running. Therefore, we are of the view that the liability to pay interest would run from the date on which the right to receive compensation accrued in favour of the workman, namely, the date of the accident and not when orders are issued by the Commissioner for Workmen's Compensation. The above view of ours is fortified by decisions of several other High Courts, vide The Municipal Com-missioner, Baroda v. Patel Engineering Co. Ltd. 1976 Acc CJ 104, Jayamma v. Executive Engineer, P. W.D., Madhugiri, 1982 Lab IC Noc 61 (Kant), Madan Mohan Verma v. Mohan Lal, (1983-II-LLJ-322) (All) Sitaram v. Chief Executive Officer, Zilla Parishad, Nanded, 1986 Acc CJ 303 (Bombay), Green Roadways (Regd.) v. Nirmal Singh, 1988 Acc CJ 361 (Delhi) and Baria Guman Hamji v. Rajanikant J. Shah, 1992(2) TAC 667. Even though the specific question as such was not raised in 1984 Acc CJ 630 supra, Bench of this Court had also held that interest at 6% p. a. shall be paid from the date of the accident till the date of payment.
11. The last contention of the appellants to be considered is whether the Insurance Company can be made liable to pay interest. According to the appellants, the Insurance Company is not liable to reimburse interest part of the liability of the employer. In support of the above contention, they relied on certain decisions also. We do not propose to go into the correctness of the contention as we find no such case was put forward by the Insurance Companies before the Commissioner for Workmen's Compensation nor have they taken such a ground in the memorandum of appeals. The questions of law raised in none of the appeals would take in the above question. Under these circumstances, we do not propose to deal with the question of liability of the Insurance Companies to pay interest in these appeals.
12. In the light of the above discussion, we hold that while fixing the Quantum of compensation in respect of the injuries sustained in accidents happened before September 15, 1995, the unamended provisions contained in Sections 4 and 4-A of the Workmen's Compensation Act, 1923 are to be applied. In all cases where the employer had defaulted to make payment of the compensation within 30 days from the date on which it fell due, namely, the date of the accident, the employer shall be directed to pay interest at the rate of 6%. The interest shall run with effect from the date of accident till the date of payment. In cases where the Commissioner is satisfied that there was no justification for the delay in making the payment of compensation, the employer can be directed to pay penalty of an amount not exceeding 50% of the compensation fixed by the Commissioner. In the result, the orders under appeal are modified as follows:
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In the result, the appeals are partly allowed as above. There will be no order as to costs.