Madras High Court
D.Panneer Selvam vs K.Loganathan on 18 September, 2012
Author: Aruna Jagadeesan
Bench: Aruna Jagadeesan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 18.09.2012
CORAM:
THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN
CMA.NO.1665/2001
D.Panneer Selvam .. Appellant
Vs
1.K.Loganathan
2.The United India Insurance Company Limited
Chennai-2 .. Respondents
Prayer:- This Civil Miscellaneous Appeal is filed against the Judgement and Decree dated 6.11.2000 made in WC.No.102/1998 by the learned Labour Commissioner I for Workmen's Compensation, Chennai-6.
For Appellant : Mr.A.Shanmugaraj
For Respondent : Mr.K.S.Narasimhan-R2
JUDGEMENT
This Civil Miscellaneous Appeal is filed against the Judgement and Decree dated 6.11.2000 made in WC.No.102/1998 by the learned Labour Commissioner I for Workmen's Compensation, Chennai-6, wherein the claim of the Appellant was allowed, awarding compensation of Rs.2,16,026/-, however directing the Insurance Company to deposit the amount within a period of 30 days from the date of receipt of a copy of the order with a further stipulation that in default of such payment within the said period, the awarded sum would carry simple interest at the rate of 12 per cent p.a. from the date of the claim petition till the date of deposit.
2. Mr.A.Shanmugaraj, the learned counsel for the Appellant would contend that the interest is payable at a minimum rate of 12 per cent p.a., as provided under Section 4A(3) of the Workmen's Compensation Act, 1923 (herein after referred to as the Act) and from the date of the accident, which, according to him, is the date on which the compensation payable fell due and the interest is payable along with the principal amount of compensation by the Insured employer and the Insurance Company jointly and severally. His contention is that interest is payable irrespective of the fact whether there was default on the part of the Insurance Company in making payment of the awarded sum within the time stipulated in the award.
3. On the other hand, Mr.K.S.Narasimhan, the learned counsel for the 2nd Respondent Insurance Company would contend that the rate of interest prescribed under Section 4(A)(3) of the Act is payable only in the event of default in payment of the compensation amount within a period of 30 days from the date of adjudication and in such event of default, the interest is payable at the minimum prescribed rate of 12 per cent from the due date i.e. the date on which the period of 30 days expired. He would further contend that the Insurer is not liable for payment of interest for any period prior to the date of the adjudication. According to the learned counsel for the Insurance Company, the amount cannot fall due so long the same is not assessed.
4. Both the learned counsel have relied on certain decision of the Honourable Supreme Court and this court in support of their respective contentions which are referred to herein below.
5. It would be useful to extract Section 4-A of the Act which deals with 'Compensation to be paid when due and penalty for default' which states as follows:
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 payment shall be deposited with the Commissioner or made to the workman, 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 shall-
a. direct that the employer shall, in addition to the amount of arrears, pay simple interest thereon at the rate of twelve per cent p.a. 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 per cent of such amount by way of penalty;"
A plain reading of the above provision would disclose that under sub-section (1) the amount of compensation which is determined in accordance with Section 4 shall be paid as soon as it falls due. Sub-section (2) stipulates that in case where the employer does not accept the liability for the compensation, as claimed, he would make provisional payment of such amount as admitted by him and deposit the same with the Commissioner or make the payment to the workman without prejudice to the right of the workman to make any further claim. Sub Section (3) states that where the 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 addition to the amount of the arrears, simple interest at the rate of twelve per cent p.a. on the amount due shall be recovered from the employer. Sub Section (3) also empowers the Commissioner to direct that a further sum not exceeding fifty per cent of such amount shall be recovered from the employer by way of penalty, if in the opinion of the Commissioner there is no justification for the delay. It is however not disputed and is established by a catena of decisions that the liability to pay any such penalty imposed in a given case is that of the employer alone and such liability for payment of penalty cannot be fastened on the Insurer.
6. The words 'falls due' occurring in sub section (1) and the expression 'fell due' occurring in sub-section (3) are significant.
7. The learned counsel for the Appellant/workman contends that the said expression signifies the date of accident itself because the amount is payable by the employer the moment the workman suffers personal injuries arising out of the accident in the course of employment.
8. The learned counsel for the Insurer, on the other hand, would contend that in the event of the employer not admitting his liability, for any reason, the amount of compensation has to be necessarily ascertained only upon adjudication and it is only on such adjudication and in the event of default in payment of such amount within the period of 30 days from the date of adjudication that interest becomes payable from the date of adjudication and not before.
9. In Pratap Narain Singh Deo Vs. Shrinivas Sabata (1976-ACJ-141-SC) a four Judge Bench of the Honourable Supreme Court held as follows:-
"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 6.5.1969 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 compensation 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 the compensation as soon as the aforesaid personal injury was caused to the Appellant and there is no justification for the argument to the contrary."
In the facts and circumstances of the above case, the Honourable Supreme Court upheld the order passed by the Commissioner awarding penalty to the extent of fifty per cent and interest at six per cent.
10. In Maghar Singh Vs. Jashwant Singh (1997-ACJ-517-SC) a three judge Bench of the Honourable Supreme Court awarded interest at 9 per cent p.a. from the date of the accident i.e. 26.7.1984 till the date of recovery or actual payment under the provisions of the Act.
11. In Ved Prakash Garg Vs. Premi Devi (1998-ACJ-1-SC) the question which arose before the Honourable Supreme Court was as follows:-
"Where an employee receives a personal injury in a motor accident arising out of and in the course of his employment while working on the motor vehicle of the employer, whether Insurance Company which has insured the employer owner of the vehicle against third party accident claims under the Motor Vehicles Act, 1988, ((herein after referred to as the M.V.Act)) and against claims for compensation arising out of proceedings under the Workmen's Compensation Act ((herein after referred to as the compensation Act) in connection with such motor accidents, is liable to meet the awards of Workmen's Commissioner imposing penalty and interest against the insured employer under Section 4A(3) of the compensation Act."
After reviewing the case law on the subject, the Honourable Supreme Court held as under:-
"19. As a result of the aforesaid discussion it must be held that the question posed for our consideration must be answered partly in the affirmative and partly in the negative. In other words, the Insurance Company will be liable to meet the claim for compensation along with interest as imposed on the Insured employer by the Workmen's Commissioner under Compensation Act on the conjoint operation of Section 3 and Section 4A sub-section (3)(a) of the Compensation Act. So far as additional amount of compensation by way of penalty imposed on the Insured employer by the Workmen's Commissioner under Section 4A(3) (b) is concerned, however, the Insurance Company would not remain liable to reimburse the said claim and it would be the liability of the insured employer alone."
In the above case, the Honourable Supreme Court set aside the impugned judgements to the extent to which they exonerated the Insurance Companies from payment of interest awarded on the principal compensation amounts by the Workmen's Commissioner on account of default of the Insured in paying up the compensation amount within the period prescribed under Section 4A(3) and accordingly held that the Insurance Company would be liable to pay interest at 6 per cent p.a. from the date of the accident till the date of payment.
12. In Kamla Chaturvedi Vs. National Insurance Company Limited (2009-ACJ-115-SC) the Insurance Company sought to avoid its liability to pay interest on the ground that there was no contract by the Insured for payment of interest. However, there was no exception stipulated in the policy regarding payment of interest by the Insurance Company. It was therefore held following Ved Prakash Garg's case 1998-ACJ-1-SC) that the Insurance Company was liable to pay interest along with compensation.
13. In LR.Ferror Alloys Limited Vs. Mahavir Mahto (2001-ACJ-645-SC) the Honourable Supreme Court following the decision in Ved Prakash Garg's case, 1998-ACJ-1-SC, held that payment of interest and penalty are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of the legal liability to pay compensation upon default of payment of that amount within one month. Therefore, claim for compensation along with interest will have to be made good jointly by the Insurance Company with the insured employer. But so far as the penalty imposed on the insured employer is on account of his personal fault, the Insurance Company cannot be made liable to reimburse penalty imposed on the employer. Hence, the compensation with interest is payable by the Insurance Company but not penalty.
14. In Kerala State Electricity Board Vs. Valsala (2000-ACJ-5-SC) while upholding the view taken by a Full Bench of the Kerala High Court in United India Insurance Co. Limited Vs. Alavi (1998-ACJ-1048-Kerala) the Honourable Supreme Court held as follows:-
"Our attention has also been drawn to a judgement of the Full Bench of Kerala High Court in United India Insurance Co. Limited Vs. Alavi (1998-ACJ-1048-Kerala) wherein the Full Bench precisely considered the same question and examined both the above noted judgements. It took the view that the injured workman becomes entitled to get compensation the moment he suffers personal injuries of the types contemplated by the provisions of the Workmen's Compensation Act and it is the amount of compensation payable on the date of the accident and not the amount of compensation payable not of the amendment made in1995, which is relevant. The decision of the Full Bench of Kerala High Court to the extent it is in accord with the judgement of the larger Bench of this court in Pratap Narain Singh Deo Vs. Shrinivas Sabata (1976-ACJ-141-SC) lays down the correct law and we approve it."
15. Reference was made to a two judge bench decision of the Honourable Supreme Court in UPSRTC now Uttarkhand Transport Corporation Vs. Satnam Singh by the learned counsel for the Insurance Company wherein a contrary view has been taken to the effect that compensation becomes due on the date on which the claim for compensation is adjudicated referring to its earlier decision of the Honourable Supreme Court in National Insurance Company Limited Vs. Mubasir Ahmed (2007-ACJ-845-SC) .
16. It has to be pointed out that the two judges Bench referred to above did not take notice of the larger Bench decision in Pratap Narain Singh Deo Vs. Shrinivas Sabata (1976-ACJ-141-SC), as it presumably was not brought to the notice of the Honourable Supreme Court .
17. In a recent judgement of the Honourable Supreme Court in the case of The Oriental Insurance Company Limited Vs. Siby George and others Civil Appeal No.5669/2012 arising out of SLP(C)No.9516/2010 dated 31.7.2012, it is held that the relevant date for determination of the rate of compensation is the date of the accident and not the date of adjudication of the claim. The Honourable Supreme Court has referred to a Full Bench decision of the Kerala High Court in United India Insurance Company Limited Vs. Alavi (1998-1-KerLT-951-FB) and approved it in so far as it followed the decision in Pratap Narain Singh Deo. It further held that the decision in Pratab Narain Singh Deo's case was by a Four Judge Bench and in Valsala by a Three Judge Bench of the Honourable Supreme Court and both the decisions were fully binding on the court in Mubasir Ahamed and Mohd. Nasir, each of which was heard by two Judges. It is held as under:-
"12. In the light of the decisions in Pratap Narain Singh Deo and Valsala, it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed and Mohd. Nasir in so far as they took a contrary view to the earlier decisions in Pratap Narain Singh District Educational Officer and Valsala do not express the correct view and do not make binding precedents."
18. It is, therefore, clear from the above decisions that the compensation becoming payable immediately after the accident is contemplated under the Act and it was so held in Pratab Narain Singh Deo's case.
19. In view of the above decisions of the Honourable Supreme Court, interest is payable at the statutory minimum rate of 12 per cent p.a. in terms of Section 4A(3) of the Act from the date of expiry of one month period from the date of the accident. The Respondent Insurance Company is liable to pay interest on compensation of Rs.2,16,026/- as contemplated under Section 4A(3) of the Act from the date of the accident more particularly on completion of 30 days from the date of the accident. Accordingly, the impugned award is modified by directing the Insurance Company to pay the interest at the rate of 12 per cent p.a. from the expiry of one month from the date of the accident till deposit of the awarded amount before the Commissioner.
20. With the above observations, this Civil Miscellaneous Appeal is disposed of No costs.
Srcm To:
1.The Labour Commissioner I for Workmen's Compensation, Chennai-6
2.The Record Keeper, VR Section, High Court, Madras