Gujarat High Court
National Insurance Company vs Jayashreeben Nandulal Nerkar (Patil) ... on 6 May, 2008
Equivalent citations: 2008 LAB. I. C. 2989, 2008 (3) AJHAR (NOC) 1122 (GUJ.) = 2008 LAB. I. C. 2989, (2008) 4 LAB LN 847, (2008) 3 GUJ LR 2004, (2010) 4 ACC 589, (2011) 2 TAC 237, (2010) 2 ACJ 1346, (2008) 3 CURLR 826
Author: M.R. Shah
Bench: M.R. Shah
JUDGMENT M.R. Shah, J.
1. As common question of law arises in both these appeals, they are being disposed of by this common judgement and order.
2. First Appeal No. 4717 of 2006 is by the appellant herein - original respondent No. 2 - National Insurance Company, challenging the judgement and order dtd.20/1/2006 passed by the Commissioner for Workmen Compensation, Vadodara in Workmen Compensation Case No. 67 of 2001 in so far as directing the appellant - Insurance Company to pay an amount of Rs. 4,27,140 towards the Workmen Compensation with interest at the rate of 12% per annum from the date of accident till realisation.
3. First Appeal No. 1044 of 2007 is by the appellant herein - original respondent (employer) challenging the judgement and order dtd.25/9/2006 passed by the learned Commissioner for Workmen Compensation, Bharuch in Workmen Compensation Application No. 63 of 1994 in so far as directing the appellant to pay an amount of Rs. 67,139 towards workmen compensation with 50% penalty with interest at the rate of 6% per annum from the date of accident till realisation.
4. In both these appeals, following short but interesting question of law arises for determination of this Court:
Whether the claimant/workman, under the Workmen Compensation Act, 1923, is entitled to the interest on the Workmen Compensation from the date of accident or from the date of judgement and order passed by the learned Commissioner for Workmen Compensation?
5. In First Appeal No. 4717 of 2006, accident took place on 29/5/2001 in which workman named Nandulal Tulsiram Nelkar (Patil) - husband of the original applicant No. 1, father of the original applicant No. 2 and son of the original applicant No. 3, who was serving as Tanker Driver, died. A notice under Section 10 of the Workmen Compensation Act (hereinafter shall be referred as "the Act" for short) was served upon the original respondents on 16/8/2001 for compensation. However, as the workmen compensation was not paid either by the Insurance Company or by the original owner/employer, the respondent Nos.1 to 3 herein - original claimant Nos.1 to 3 filed Workmen Compensation Case No. 67 of 2001 before the Commissioner for Workmen Compensation, Vadodara on 1/11/2001 claiming compensation of Rs. 4,27,140=00 with interest at the rate of 12% per annum from the date of accident and penalty under the Act. The learned Commissioner for Workmen Compensation, Vadodara by the impugned judgement and order dtd.20/1/2006 directed both the original respondents to pay an amount of Rs. 4,27,140 by way of compensation with interest at the rate of 12% per annum from the date of accident and further directed the respondent No. 4 herein - original employer to pay an amount of Rs. 2,13,570=00 towards penalty required to be paid under the Act. Being aggrieved by and dissatisfied with the impugned judgement and order dtd.20/1/2006 in so far as directing the appellant herein - Insurance Company to pay compensation with interest at the rate of Rs. 12% per annum from the date of accident, the appellant - Insurance Company has preferred the present First Appeal No. 4717 of 2006.
6. So far as First Appeal No. 1044 of 2007 is concerned, the same is filed by the appellant herein - original employer challenging the judgement and order passed by the Commissioner for Workmen Compensation, Bharuch in Workmen Compensation Application No. 63 of 1994. The said application was filed by the heirs of workmen - Somabhai Panchiyabhai Vasava, contending inter-alia that while on duty on 29/9/1994 in an accident Somabhai died and the said claim application was filed claiming compensation of Rs. 67,139.70 ps. with penalty and interest at the rate of 6% per annum from the date of accident. The Commissioner for Workmen Compensation by the impugned judgement and order dtd.25/9/2006 allowed the said claim application directing the appellant - original respondent to pay an amount of Rs. 67,139 towards compensation along with penalty of Rs. 33,569=00 with interest at the rate of 6% per annum from the date of accident till realisation. Being aggrieved by and dissatisfied with the impugned judgement and order dtd.25/9/2006 in so far as directing the appellant to pay the aforesaid amount of compensation with penalty and interest on compensation from the date of accident, the appellant herein has preferred the present appeal under Section 30 of the Workmen's Compensation Act, 1923 (hereinafter shall be referred to as 'the Act' for short).
7. Mr. D.B. Mehta, learned advocate has appeared on behalf of the appellant - Insurance Company in First Appeal No. 4717 of 2006 and Mr. H.M. Thakkar, learned advocate has appeared on behalf of the appellant of First Appeal No. 1044 of 2007. Mr.MTM Hakim, learned advocate has appeared on behalf of the original claimants.
8. The learned advocates appearing on behalf of the respective appellants i.e. Insurance Company as well as owner/employer have vehemently submitted that the respective Commissioners have materially erred in awarding the interest from the date of accident. It is submitted that unless and until the amount of compensation is determined by the Commissioner for Workmen Compensation, there was no determined liability of the owner/employer and/or the Insurance Company to pay the compensation and therefore, the Commissioner for Workmen Compensation ought to have awarded the interest from the date of determination of compensation i.e. judgement and order passed by the Commissioner for Workmen Compensation, and not from the date of accident. It is further submitted that as such to pay compensation with interest from the date of accident is contrary to Section 4 of the Act. The learned advocates appearing on behalf of the respective appellants have heavily relied upon the decision of the Hon'ble Supreme Court in the case of National Insurance Company v. Mubasir Ahmed . Mr. Thakkar, learned advocate appearing on behalf of the appellant of First Appeal No. 1044 of 2007 and Mr.Mehta, learned advocate appearing on behalf of the appellant of First Appeal No. 4717 of 2006 have submitted that Section 3 of the Act provides for employer's liability to pay compensation and Section 4 of the Act provides for the amount of compensation payable in case of loss of earning capacity or death on account of accident occurred during the course of the employment. It is submitted that Section 4-A of the Act provides for payment of interest and penalty in case of default. It is also further submitted that Section 10 of the Act provides for notice and claim to be sent to the employer or workmen or the claimant, as the case may be. It is also further submitted that prior to 15/9/1995 i.e. the Amendment of 1995 came into force, the commissioner was given a discretionary power whether to award interest or not to award interest on the amount of compensation payable. It is submitted that as per the Scheme of the Workmen Compensation Act, the employer is liable to pay compensation in case of an accident arising out of and in the course of employment as per Section 3 of the Act and the Section 3 does not provide the time limit within which the payment of compensation has to be made. Section 4 of the Act provides for payment of compensation depending upon the nature of accident namely death, permanent total disablement or permanent partial disablement etc. and the Section 4 also does not provide time limit within which the compensation has to be paid to the workmen or to the claimant, as the case may be.
9. It is submitted that Section 4-A of the Act provides that compensation Under Section 4 shall be paid as soon as it falls due and in Section 4-A also there is no reference made of Section 3. Section 4-A provides for amount of compensation which is mentioned in Section 4, to be paid as soon as it falls due. Thus, Section 4-A also does not provide time limit within which the amount of compensation is to be made. It is also submitted that the language employed in Section 4-A(1) says that 'as soon as it falls due'.
10. It is further submitted that Section 4-A(2) provides that where employer accepts liability, he will be required to deposit the amount to the extent he accepts the liability. Section 4-A(3) provides that where the employer is in default in paying the compensation due under the Act within one month from the date it falls due, the Commissioner may (upto 14/9/1995) and after 15/9/1995 shall direct the employer to pay interest as provided under Section 4-A(3)(a) and penalty as provided under Section 4-A(3)(b). It is submitted that reading Section 4-A(1) and 4-A(3) of the Act together, it becomes clear that the compensation has to be paid as soon as it falls due and if the compensation is not paid within one month from the date it falls due, the Commissioner will be at his discretion to award interest and/or penalty. Thus, Section 4-A(1) or Section 4-A(3) does not provide the time limit within which compensation has to be paid i.e. within one month from the date of accident or within one month from the date of adjudication. It is submitted that the Legislature has not employed the language that the compensation has to be paid within one month from the date of accident and therefore, the liability of the employer does not arise for payment of compensation as provided in Section 4 in case of accident arising out of and in course of employment within one month from the date of accident.
11. It is submitted that there are different types of accidents which results into injury or death like accidental death, permanent total disablement, permanent partial disablement, scheduled injury, non-scheduled injury etc. and in each cases the adjudication is required. It is submitted that for the purpose of adjudication in case of a death, the learned Commissioner is required to ascertain as to whether the accident has occurred out of and in course of employment; whether there was relationship of employer and employee; whether there was an accidental death or a death on account of heart-attack or a natural death; the amount of wages paid by the employer to the employee; the age of the employee; whether the notice as required Under Section 10 of the Act was issued by the employee concerned.
12. It is further submitted that in cases of disablement whether it is permanent disablement or permanent partial disablement or scheduled injury or non-scheduled injury or in case of non-scheduled injury whether the Doctor was examined and the age of the claimant; wages of the claimant and whether notice under Section 10 was issued. It is submitted that these are the disputes which are required to be adjudicated by the Commissioner in order to decide the amount of compensation. It is submitted that looking to the scheme of the Act, without adjudication in either case i.e. either death or disablement, the Commissioner cannot come to the conclusion in respect of the amount payable to the workman or the claimant as the case may be in case of an accident arising out of and in course of employment.
13. The learned advocates appearing on behalf of the respective appellants have submitted that the Hon'ble Supreme Court has held in para 14 in the case of Ved Prakash Garg v. Prerna Devi that if the employer accepts the liability as provided under Section 4-A(2) then the interest is payable from the date of accident. However, if the liability is disputed by the employer, then Section 4-A(3) comes into play. In that case the amount of compensation has to be paid from the date of adjudication i.e. from the date of order passed by the Commissioner for Workmen Compensation under the Act.
14. Relying upon the decision of the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra), it is submitted that now it is held by the Hon'ble Supreme Court that interest has to be paid after one month from the date of adjudication and not after one month from the date of accident. It is submitted that in para 9 the Hon'ble Supreme Court has categorically observed that the legislature has not used the expression 'from the date of accident' and unless there is an adjudication, the question of amount falling due does not arise. It is submitted that the Hon'ble Supreme Court in the said decision has interpreted Sub sections (1), (2) and (3) of Section 4-A of the Act and has specifically held that unless there is an adjudication, the question of amount falling due does not arise. It is submitted that as held by the Hon'ble Supreme Court in the said decision, adjudication under Section 4 in some cases involve assessment of loss of earning capacity by qualified medical practitioner and unless adjudication is done, the question of compensation becoming due does not arise. It is submitted that position becomes clear on reading Sub-section (2) of Section 4-A which provides that provisional payment to the extent of admitted liability has to be made when the employer does not accept the liability for compensation to the extent claimed. It is submitted that the crucial expression is 'falls due' and the legislature has not used the expression 'from the date of accident'.
15. Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev. v. Srinivas Sabata by the learned advocate appearing on behalf of the claimant, it is submitted by the learned advocates appearing on behalf of the Insurance Company as well as the employer that in the said decision the Hon'ble Supreme Court has interpreted Section 3 read with Section 19. However, Section 3 does not provide time limit within which compensation has to be paid. It is submitted that in the said decision, the Hon'ble Supreme Court has not interpreted the words 'falls due' as employed in Section 4-A(1) read with Section 4-A(3). It is further submitted that even in the said decision, there was no dispute that the injury in question was caused to the respondent by an accident which arises out of and in the course of employment with the appellant. It is submitted that in the said decision it was also not in dispute that the injury resulted in an amputation of his left arm in the elbow and therefore, the position was very much clear that the case falls in Section 4A(2) and does not fall in Section 4-A(3). It is submitted that, therefore, in the facts and circumstances of that case, the Hon'ble Supreme Court has held that the employer became liable to pay compensation as soon as the injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is submitted that having held so, the Hon'ble Supreme Court has observed that the employer did not make any provisional payment under Sub-section (2) of Section 4, therefore, in the said decision the Hon'ble Supreme Court had not interpreted Sub-sections (1), (2) and (3) of Section 4-A and therefore, the ratio laid down in that case is not applicable, more particularly the issue decided in the case of Mubasir Ahmed (supra) and Pratap Narayan Singh Dev (supra) are altogether different.
16. It is also further submitted that even the decisions of the Hon'ble Supreme Court in the case of Kerala State Electricity Board v. Valsala K. decided the issue whether the amount of compensation falls due from the date of accident or from the date of adjudication.
17. Mr.Thakkar, learned advocate appearing on behalf of the employer - the appellant of First Appeal No. 1044 of 2007 has, in addition, submitted that in the present case, no notice under Section 10 was issued by the workman to the employer and the employer has disputed the liability to pay the compensation on the ground that there was no relationship of employer and employee and therefore, in this case, adjudication was required to be made by the learned Commissioner and therefore, even if the compensation falls due, it will fall due from the date of adjudication and not from the date of accident. It is further submitted that in fact the accident occurred in the year 1994 and the claimant deposed in the year 2003 i.e. after a period of nine years from the date of alleged accident and therefore, the delay has been caused on the part of the claimant and there was no fault on the part of the employer and therefore also the employer is not required to be saddled with the liability to pay interest and/or penalty for the said period. Making above submissions, learned advocates appearing on behalf of the respective appellants have prayed to quash and set aside and/or modify the impugned judgement and order passed by the learned Commissioner for Workmen Compensation, by directing to pay interest on the compensation from the date of adjudication i.e. from the date of judgement and order and not from the date of accident.
18. Mr.MTM Hakim, learned advocate appearing on behalf of the original claimants has submitted that the learned advocate appearing on behalf of the original appellants have heavily relied upon the decision of the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra) by which the Hon'ble Supreme Court has held that starting point for payment of compensation in the Workmen's Compensation Act, 1923 is the date of adjudication of the claim and not the date of accident and hence the liability to pay interest and liability would arise after the date of adjudication and not from the date of accident. It is submitted by Mr.Hakim that prima facie in consideration of the judgement in the case of Mubasir Ahmed (supra), it appears that the said submissions seems to be true but the proposition of law laid down in the case of Mubasir Ahmed (supra) is in direct conflict with the earlier decisions of the Hon'ble Supreme Court and that too of a Larger Benches i.e. in the cases of Pratap Narayan Singh Dev (supra) and Kerala State Electricity Board (supra). It is submitted that it is not true that in the case of Pratap Narayan Singh (supra), the Hon'ble Supreme Court has not considered Sections 4-A(1) and 4-A(3) of the Act. It is submitted that in the case of Pratap Narayan Singh (supra), considering the provisions of Sections 3, 4-A(1), 4-A(3) and 19 of the Act, in para 7 the Hon'ble Supreme Court has held that Sthe employer, therefore, became liable to pay 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 employment. Therefore, it is futile to contend that the compensation did not fall due until after the Commissioner's order dated May 6, 1969 under Section 19. It is further observed by the Hon'ble Supreme Court in the said decision that Sthere is therefore nothing to justify the argument that the employer's liability to pay compensation under Section 3, in respect of injury, was suspended until after the settlement contemplated by Section 19.
19. It is further submitted that even in the subsequent decision the Hon'ble Supreme Court in the case of Valsala K. (supra), considering the question whether the amendment of Sections 4 and 4-A of the Act w.e.f.15/9/1995 enhancing the amount of compensation and rate of interest would be applicable to the cases where the claims are made from accident which took place prior to 15/9/1995 and the Hon'ble Supreme Court, after considering the proposition of law laid down in the case of Pratap Narayan Singh (supra), in para 3 has held that 'thus the relevant date for determination of the rate of compensation is the date of accident and not the date of adjudication of the claim.' It is also submitted that in the case of Valsala K. (supra) the Hon'ble Supreme Court has also approved the decision of the Full Bench of the Kerala High Court to the extent it is in accord with the judgement in the case of Pratap Narayan Singh (supra). It is submitted that from the aforementioned decisions of the Larger Bench of the Hon'ble Supreme Court i.e. Four Hon'ble Judges Bench in the case of Pratap Narayan Singh (supra) and Three Hon'ble Judges Bench in the case of Valsala K. (supra), it is apparent that there is clear conflict between the said decisions and decision in the case of Mubasir Ahmed (supra) pronounced by the Two Hon'ble Judges of the Supreme Court and therefore, it is requested that in view of the aforementioned conflict, this Court should follow the principle of law laid down by the Larger Benches of the Hon'ble Supreme Court as the same would be binding. It is also further submitted that the aforesaid dispute is also covered by the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd. v. Khajuni Devi and Ors. .
20. It is submitted that thus from the aforesaid decisions of the Hon'ble Supreme Court it can be seen that the proposition of law that the compensation falls due on the date of accident is consistently adopted by the Hon'ble Supreme Court from 1976 onwards and hence, considering the principles of 'stare decisis', the settled proposition of law as laid down in the case of Pratap Narayan Singh (supra) is required to be adopted, applied and implemented. It is submitted that since the said proposition of law has remained unchanged onwards and has been also adopted, applied and implanted by all the courts of law through out the country and therefore, there is no reason to deviate from the same. It is submitted that it is, therefore, best to adhere the decision and not to disturb questions put at rest.
21. Mr. Hakim, learned advocate appearing on behalf of the claimants has relied upon upon the following decisions of this Court (i.e. decisions of the Division Bench as well as Single Judge) in support of his submission that the liability to pay interest on compensation is from the date of accident:
i. New India Assurance Company Limited v. Badrudin Karmalibhai Ramani reported in 2000-JX(Guj) : 2000-GLHEL-0-208638.
ii. Vagher Mamad Husein Gandh v. Secretary, Gujarat Electricity Board, Baroda reported in 1995-GLH-2-752 : 1995-GCD-2-435.
iii. Ahmed Harun Gori v. Abbas Ibrahim Kara .
iv. Radhabehn Wd/o. Narasibhai S.Patel and Anr. v. Mulji Kanji Dhord .
v. Baria Gaman Hamji v. Rajnikant J. Shah .
vi. Jayantilal & Corporation, Rajkot v. Garasia Rajvirba Udesinh .
vii. Natwarsinh A.Chauhan v. Niranjanbhai K. Shah .
viii. Chavan Ramji Mavji v. Khavas Shantilal Kanji .
ix. Bharatkumar Premji Chauhan v. Gurukrupa Alluminium Corporation reported in 1985-GLH-0-128 : 1986-ACJ-0-416.
x. Union of India v. Shantaben wd/o.Vithaldas Gobardas Patel reported in 1985-GLH-0-754 : 1985-ACJ-0-818.
xi. Jiviben Chana and Ors. v. Shah Karsan Lakha reported in 1983-GLH-0-14 : 1983-GLH-1-134.
xii. Municipal Corporation, Baroda v. V.Patel Engineering Co. Ltd. reported in 1976-ACJ-0-104 : 1975-GLHEL-0-216329.
22. It is also submitted by Mr.Hakim, learned advocate appearing on behalf of the applicants that as such the scheme of the Workmen's Compensation Act also does not support the decision in the case of Mubasir Ahmed (supra). It is submitted that considering the phrase 'compensation falls due', in relation to the provisions of Sections 4-A(1), (2), (3) and Section and (4), it is held that there is no indication as to when it becomes due and from the date of the accident hence it has to be taken on the date of adjudication of claim. However, Section 4 provides for amount of compensation, vide explanation-I to Sub-section (1), Clauses (a) and (b) provides for applying of 'relevant factor' and uses the phrase completed years of the age of workman on his last birth day immediately preceding the date on which the compensation fell due. It is submitted that the Schedule-IV referred to in Explanation-I also uses the entire phrase reproduced hereinabove and contains the phrase the compensation fell due. It is submitted that Section 4-A provides that compensation under Section 4 shall be paid as soon as it falls due, the phrase used is falls due. It is submitted that Section 4-A(3) the most important provision which provides for award of interest and penalty, the phrase used therein are:
(A) default in paying compensation due under this Act.
(B) From the date it fell due.
(C) In addition to the amount of arrears pay simple interest thereon.
(D) In addition to the amount of arrears and interest thereon pay a further sum...penalty.
Thus, if the legal meaning of aforesaid phrases used in Section-4 Explanation-I, Schedule-IV and Section 4-A(3) are considered, the same are as follows:
(A) Default in paying compensation due under this Act. In the said phrase the word specifically used i.e. 'default'. The phrase default in payment in legal terminology means non-payment on the due time and place. Moreover, a failure to pay at the due time is also default. The word default also means omission, neglect or failure. Thus, it can be seen that the default in payment compensation due used in the Act is in reference to non-payment of compensation at a particular time in past and which is committed.
(B) From the date it fell due: The phrase from the date on fell due contains the phrase 'fell due'. The word 'fell' is past tense of word 'fall'. Hence, again in reference to particular time in past when the payment of compensation fell due.
(C) In addition to amount of arrears pay simple interest & (D) In addition to the amount of arrears and interest thereon pay further sum...penalty. The phrases used in Section 4-A(3) Clauses (a) and (b) refers to amount of arrears. The word arrears in legal terminology means money not paid on the due date or proper time as payment of arrears of rent. It also means that which is behind in payment, or which remains unpaid, though due. It further involves the idea not merely of money unpaid, but of money unpaid at the due time. Thus, involves the acceptance of some default on the part of debtor. The word arrears also proposes time fixed for payment of some of money and the lapse of time thereafter without payment. Thus, it can be seen that as both in Section 4-A(3) Clauses (a) and (b) the phrase in amount of arrears is used, the same refers to non-payment of amount when it fell due. Hence provides that in addition to the same, simple interest be paid and when there is no justification in delay, the amount of penalty be also paid in addition to the amount of arrears and interest thereon.
Therefore, it is submitted that on the conjoint and constructive reading of Section 4-A(3)(a) and (b) the only conclusion that can be arrived at, is that the compensation falls due on any day prior to the date of adjudication and does not fall due on the date of adjudication. It is submitted that if the date of adjudication is considered to be the date when the compensation falls due, then the Commissioner will not be required to undertake exercise to award simple interest or penalty on the amount of arrears on the compensation due, as on the date of adjudication there will neither be any default in payment nor amount of arrears.
23. It is further submitted that Schedule-IV also lends support to the reason and fact that the compensation is to be awarded in consideration of the date of accident and not the date of adjudication. For illustration the facts of First Appeal No. 1044 of 2007 may be considered which would make things explicitly clear. Thus, if the date of the accident is taken as the date when the compensation fell due. In First Appeal No. 1044 of 2007, the deceased workman was aged 31 years on the date of accident i.e. on 29/9/1994. Hence, in view of the same the relevant factor provided for completed age 31 years would be 205.95. Thus, the compensation is required to be calculated on the basis thereof, in relation to the monthly income of the deceased of Rs. 815 and 40% thereof i.e. Rs. 326. Therefore, the said amount of Rs. 326 is required to be multiplied by relevant factor of 205.95 which would yield an amount of Rs. 67,139.70. As against the same if the date of adjudication is taken as the date when the compensation falls due, then as the judgement was pronounced on 25/9/2006 and since the deceased was aged 31 years on 29/9/1994, he would have been approximately aged 43 years on 25/9/2006. Hence, the relevant factor provided for the completed age of 43 years would be 175.54. Therefore, in view of the same, adopting method of calculation as provided vide Section 4, the amount of compensation payable would be Rs. 57,226.04. Similar shall be the result in the cases of injuries also, as the same amount of compensation would be reduced if the same is considered in relation to the date of adjudication, rather than the date of accident, because as per Section 4, 60% of the wages are required to be multiplied by the relevant factor and further multiplied by disablement sustained by the workman.
Therefore, it is submitted that it may be seen that merely on consideration of the fact of compensation falling due on the date of adjudication rather than on the date of accident, the compensation amount payable gets reduced that too for no fault of the claimants. Further, as a consequences thereof the amount of penalty would also be reduced, as maximum penalty of 50% of the principal amount of compensation is required to be awarded as per Section 4-A(3)(b). It is submitted that the amount of interest also shall be drastically reduced as the claimants would be entitled to interest only from the date of adjudication and loose all interest for the waiting period from the date of accident till adjudication. It is also submitted that the date of adjudication shall be highly uncertain event and hence the computation of compensation shall be fraught of several fluctuation.
24. It is further submitted that even the submission on behalf of the appellant in respect to adjudication in case of injuries under Section 4(1)(c)(ii) i.e. cases involving the assessment of loss of earning capacity by qualifying medical practitioner, and that unless adjudication is done, question of compensation becoming due does not arise, also does not appear to be in consonance with the scheme of the Act. As the adjudication of the dispute is governed by Section 19 of the Act wherein the Commissioner is vested with the jurisdiction to settle the question under the Act with respect to (i) as to liability of any person to pay compensation (including any question as to whether a person is or is not a workman) or (ii) as to the amount or (iii)duration of compensation (including any question as to the nature or extent of disablement). It is submitted that thus, from the language of Section 19, it becomes clear that all the disputes that may arise, in default of agreement are to be adjudicated and settled by the Commissioner and the dispute with respect to nature or extent of disablement is also one of the ingredient of Section 19 in relation to amount or duration of compensation. It is also submitted that moreover there appears to be no justification why only the claims falling under Section 4(1)(c)(2) must be treated differently as compared to claims falling under Section 4(1)(a), 4(1)(b) and 4(1)(c)(1) when adjudication under Section 19 arises in all claims. It is also further submitted that even in the case of Pratap Narayan Singh (supra) it was a case of injury and it is held that even in case of injuries,employer's liability to pay compensation does not get suspended through the adjudication and becomes crystal clear only after settlement but gets crystalised on the date of accident.
25. It is also further submitted that there is one another reason also for not treating cases falling under Section 4(1)(c)(ii) differently. It is submitted that Section 11(1) of the Act provides for medical examination of the workman, on service of notice and before expiry of 3 days therefrom, by qualified medical practitioner, free of charge offered by an employer. Sections 11(2) and 11(3) provide for suspension of right to compensation on refusal or obstruction from submission of workman for examination by qualified medical practitioner. Thus, as Sections 11(2) and 11(3) of the Act provides for statutory suspension of right to compensation on contingencies as provided in the said sub sections. Therefore, in cases where contingencies of Sections 11(2) and 11(3) are not established by the employer, the right to compensation cannot be suspended otherwise then as provided vide Sections 11(2) and 11(3) of the Act. Hence on the ground of medical examination and assessment of disability by the qualified medical practitioner and consequent adjudication of claim falling under Section 4(1)(c)(ii) of the Act also the compensation would not fall due on the date of adjudication, but would fall due on the date of accident.
26. It is also further submitted that even otherwise payment of interest and penalty as provided vide Section 4-A(3)Clauses (a) and (b) of the Act is on account of two distinct principles of law. First payment of interest as provided vide Section 4-A(3)(a), is part and parcel of a legal liability to pay compensation upon default of payment of that amount which ought to have been paid to the workman as soon as the compensation fell due i.e. the date of accident. The same is not penal in nature but an amount paid for the forbearance, non-payment of amount when it ought to have been paid and keeping the claimant out of the use of money for the period it remains unpaid.
27. It is further submitted that for consideration of the said issue, note may be taken of the decision of the 5 Hon'ble Judges Bench of the Hon'ble Supreme Court as in the case of Central Bank of India v. Ravindra, wherein considering the issue of Section 34 of the Code of Civil Procedure and interest pendente lite, the Hon'ble Supreme Court in para 37 and 38 has considered classes of interest and noted from Black's Law Dictionary inter-alia that 'interest is a corollary to the principle amount and paid for forbearance and keeping out of use of money being not paid when it fell due. As against the same penal interest is a penalty.' Thus, the distinction between the two is clarified vide the said decision also. Hence, in view of the aforementioned, it is evident that the distinction between Sections 4-A(3)(a) and 4-3(b) is legally recognised and therefore, the interest provided vide under Section 4-3(a) becomes payable from the date as soon as the compensation fell due i.e. the date of accident and paid along with the amount of arrears. Whereas, the penalty as provided vide Section 4-3(3)(b) becomes payable on account of the unjustified delay and default of the employer and paid in addition to the amount of arrears i.e. principal amount on compensation and interest thereon.
28. It is further submitted that award of interest pendente lite, during the course of adjudication is a settled proposition of law applied to all the cases of payment of amounts, damages and compensation. The said principle is universally applied in case of Motor Accident Claims Petition, Railway Accident Claim Petition, Employees State Insurance Claim Petition, Suit under law of Torts, Suit for damages, Suit for Compensation and Suit for accounts. Therefore, there is no justification in not awarding interest pendente lite in proceedings arising from the Act.
29. It is also further submitted that in exercise of Writ Jurisdiction also wherein the legitimate amount is not paid or made available to the petitioners, the award of interest for the period when the claim remains pending both before the process of adjudication and during the process of adjudication is awarded. Hence, in view of the same it is also legally justified to hold that the compensation fell due from the date of accident and award interest from the period pending adjudication.
30. Mr. Hakim, learned advocate appearing on behalf of the original claimant has relied upon the following decisions of the Hon'ble Supreme Curt in support of his submission and prayer to follow the decision of the Larger benches when the same are in conflict with the decision of the smaller benches in respect of the same being in later point of time:
i. Mattulal v. Radhe Lal .
ii. Union of India and Anr. v. K.S. Subramanian .
iii. Union of India v. Raghubir Singh and iv. Bhogilal Manilal Parmar v. Commissioner of Police, Baroda (Decision of the Full Bench of the Gujarat High Court).
Making the above submissions, relying upon the decisions aforesaid, it is requested to dismiss both the appeals by holding that the liability to pay the interest would arise immediately on completion of one month of the date of accident and not from the date of adjudication.
31. Heard the learned advocates appearing on behalf of the respective parties.
32. The short question which has arisen for the consideration of this Court is what would be the starting point for awarding interest as required to be paid under Section 4-A(3) and 4-A(1) of the Workmen's Compensation Act, 1923. Whether the period starts on completion of one month from the date of adjudication of the claim i.e. from the date of judgement and order of Commissioner for Workmen Compensation or after one month of the date of accident?
33. It can not be disputed that the liability to pay the interest would arise under Section 4-A(3) of the Act. Under the Workmen Compensation Act, the liability to pay the compensation would arise under Section 4 of the Act and it is required to be paid as soon as it falls due. It cannot be disputed that the Workmen's Compensation Act is benevolent Act which has been enacted for the benefit of the workmen who has either sustained injury and/or permanent partial disability while on duty and/or who has died while on duty. It is also required to be noted that prior to Amended Act No. 30 of 1995, the payment of interest was not mandatory but it was discretionary and thereafter there is amendment in Section 4-A(3) and the Commissioner for Workmen Compensation has no discretion but the Commissioner shall direct that the employer shall in addition to the amount of arrears, pay simple interest thereon at the rate of 12% per annum. It is apparent that Sub-section (3) of Section 4-A is beneficial provision made for the benefit of the employee and having regard to the scheme of the Act, the provision for payment interest and penalty have been enacted with a view to deter the employer from taking plea and avoiding compensation which becomes payable. It is also required to be noted that the Workmen's Compensation Act is a Special Legislation for the benefit of the workmen. In the background of above, the question involved in these appeals is required to be considered.
34. Section 4-A of the Act reads as under:
Section 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 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 the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates or 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 to the arrears, and interest thereon pay a further sum not exceeding fifty per cent of such amount by way of penalty;
Provided that an order for the payment of penalty shall not be passed under Clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.
35. Identical question came to be considered by the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra) and Larger Bench (Four Hon'ble Judges) of the Hon'ble Supreme Court considered the question that when it can be said that the compensation has fallen due. The question which fell for consideration before the Hon'ble Supreme Court was whether the payment of compensation if becomes due only on settlement under Section 19? Considering the scheme of the Act and the relevant provisions more particularly Sections 4-A(1) and 19 of the Act, the Hon'ble Supreme Court has held that the employer becomes liable to pay compensation as soon as the personal injury causes to the workman by the accident arising out of and in the course of the employment. The Hon'ble Supreme Court has categorically negatived the contention that the compensation does not fall due until after the Commissioner's order under Section 19. Para 6, 7 and 8 of the said judgement, which are relevant, read as under:
6. It has next been argued that the Commissioner committed a serious error of law in imposing a penalty on the appellant under Section 4-A (3) of the Act as the compensation had not fallen due until it was 'settled' by the Commissioner under Section 19 by his impugned order dated May 6, 1969. There is however no force in this argument.
7. Section 3 of the Act deals with the employer's liability for compensation. Sub-section (1) of that section provides that the employer shall be liable to pay compensation if "personal injury is caused to a workman by accident arising out of and in the course of his employment." It was not the case of the employer that the right to compensation was taken away under Sub-section (5) of Section 3 because of the institution at a suit in a Civil Court for damages, in respect of the injury, against the employer or any other person. The employer therefore became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is therefore futile to contend that the compensation did not fall due until after the commissioner's order dated May 6, 1969 under Section 19. What the Section provides is that if any question arises 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 compensation as soon as the aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary.
8. It was the duty of the appellant, under Section 4-A (1) of the Act. to pay the compensation at the rate, provided by Section 4 as soon as the personal injury was caused to the respondent. He failed to do so. What is worse, he did not even make a provisional payment under Sub-section (2) of Section 4 for, as has been stated, he went to the extent of taking the false pleas that the respondent was a casual contractor and that the accident occurred solely because of his negligence. Then there is the further fact that he paid no heed to the respondents personal approach for obtaining the compensation. It will be recalled that the respondent was driven to the necessity of making an application to the Commissioner for settling the claim, and even there the appellant raised a frivolous objection as to the jurisdiction of the Commissioner and prevailed on the respondent to file a memorandum of agreement settling the claim for a sum which was so grossly inadequate that it was rejected by the Commissioner. In these facts and circumstances, we have no doubt that the commissioner was fully justified in making an order for the payment of interest and the penalty.
Now, the contention on behalf of the appellants that in the case before the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra), it was not disputed that the injury in question so caused to the respondent when accident which arose out of and in the course of employment in the appellant and the case falls under Section 4-A(2) and does not fall under Section 4-A(3) and keeping the aforesaid facts and circumstances in mind, the Hon'ble Supreme Court has held that the employer became liable to pay the compensation as soon as the injury was caused to the workmen by the accident. It is also the contention on behalf of the appellants that the provisions of Section 4-A(1), (2) and (3) are directly interpreted and considered by the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra) wherein the Hon'ble Supreme Court has specifically held that the starting point to pay compensation is on completion of one month from the date of adjudication of the claim. Learned advocates appearing on behalf of the appellants have heavily relied upon para 9 of the said judgement.
On the other hand, it is the contention on behalf of the original claimants that the decision in the case of Mubasir Ahmed (supra) is of a bench consisting of Two Judges against which the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra) is of a Larger Bench consisting of Four Hon'ble Judges of the Supreme Court and even in the case of Mubasir Ahmed (supra), earlier decision of Larger Bench in the case of Pratap Narayan Singh Dev (supra) has not been considered and the attention of the Hon'ble Supreme Court was not drawn to the said decision and therefore, there was no occasion for the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra) to consider the decision in the case of Pratap Narayan Singh Dev (supra). Therefore, it is submitted that as the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra) is of a Larger Bench and is directly on the point, the same should have been binding upon this Court and therefore, this Court should consider the said judgement.
36. In the case of Mattulal v. Radhe Lal , the Hon'ble Supreme Court has observed and held that when there are conflicting decisions of the Hon'ble Supreme Court, former decision of a Larger Bench then later should be followed (para 11).
37. In the case of Union of India and Anr. v. K.S. Subramanian , the Hon'ble Supreme Court has observed that when there is a apparent conflict between the decisions of the Hon'ble Supreme Court, the opinion expressed by the Larger Bench of the Supreme Court must be followed in preference to those of Smaller Benches, unless the former can be distinguished by giving reasons.
38. Even the Full Bench of this Court in the case of Bhogilal Manilal Parmar v. Commissioner of Police, Baroda and Ors. , has held that if there are conflicting decisions of different Benches of the Supreme Court, then, the High Court is bound to follow the decisions of a Larger Benches of later decisions of the Supreme Court.
Therefore, considering the above decisions, this Court is of the opinion that the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra) would have a binding effect and is binding to this Court.
39. It is also required to be noted that even the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra) fell for consideration subsequently by the Three Judges Bench of the Hon'ble Supreme Court in the case of Kerala State Electricity Board and Anr. v. Valsala K. and the Hon'ble Supreme Court had approved the decisions in the case of Pratap Narayan Singh Dev (supra). The Hon'ble Supreme Court also approved the decisions of the Full Bench of the Kerala High Court in the case of United India Insurance Co. v. Alavi, wherein the Full Bench of the Kerala High Court took the view that the inured workman becomes entitle to get compensation moment he suffers personal injury of the types contemplated by the provisions of Workmen Compensation Act and it is the amount of compensation payable on the date of accident.
40. It is also required to be noted that even in the case of Mubasir Ahmed (supra) the Hon'ble Supreme Court has referred to the decisions in the case of Maghar Singh v. Jaswant Singh , and even in the case of Maghar Singh (supra) also the Supreme Court has awarded interest from the date of accident. It is also required to be noted that even yet in another decision in the case of Ved Prakash Garg v. Prerna Devi , after considering the provisions of Section 4-A itself, the Hon'ble Supreme Court has awarded interest on the compensation from the date of accident till the date of payment (para 20).
41. Yet in another decision in the case of Oriental Insurance Co.Ltd. v. Khajuni Devi and Ors. , the Hon'ble Supreme Court has held that the relevant date for determining the rights and liability of the parties concerned would be the date of accident and not the date of adjudication of the claim.
42. It is the contention on behalf of the appellants - Insurance Company and employer that when a dispute is raised and unless that dispute is settled on adjudication, it cannot be said that the amount of compensation falls due. It is submitted by the learned advocates appearing on behalf of the respective appellants that there can be number of disputes / objections raised on behalf of the employer and/or Insurance Company such as relationship of employer and employee; whether injury has been caused in an accident during the course of employment; amount of compensation; permanent partial disability etc. If the contentions on behalf of the appellants is accepted, in that case, each and every employer and insurance company would raise frivolous disputes and make out a case that a dispute has arisen and thereby, can contend that unless the dispute is adjudicated upon, there is no liability to pay the compensation and in that case the employer and the insurance company would be tempted to raise false, frivolous and unnecessary disputes and it can be said to give a premium to such dishonest employer / insurance company who would raise such type of disputes. This aspect is also required to be considered keeping in mind the object and purpose for which the Workmen's Compensation Act is enacted and the amendment is made in the year 1995 by which now the Commissioner has to award compensation along with interest.
43. It is also required to be noted that fastening the liability to pay interest is on account of two distinct principles of law. Payment of interest as provided under Section 4-A(3)(a) is now part and parcel of legal liability to pay the compensation upon default on payment of that amount which ought to have been paid to the workmen as soon as the compensation fell due and the same is required to be paid for the forbearance, non-payment of amount when it ought to have been paid and keeping the claimant out of the use of money for the period it remains unpaid. So far as interest is concerned, it is almost automatic. Once default on the part of the employer in paying the compensation due takes place beyond the permissible limit of one month, it is the statutory liability of employer to make good the principal amount of compensation within the permissible time limit during which the interest amount may not run but otherwise, the liability of paying interest on delayed compensation will follow. Even on conjoint and constructive reading of Section 4-A(3)(a) and (b), it appears that the compensation falls due on any day prior to the date of adjudication and does not fall due on the date of adjudication, as if the date of adjudication is considered to be the date when the decision falls due, then the Commissioner will not be required to undertake exercise to award simple interest or penalty on the amount of arrears on the compensation due as on the date of adjudication there will neither be any default in payment nor in arrears.
44. Even otherwise if the contention on behalf of the appellants - Insurance Company and owner to award interest from the date of adjudication by the Commissioner is accepted, in that case, there will be uncertainty, as nobody knows the period within which the Commissioner may decide the claim. In many cases it takes more than five years. The date of accident is certain and therefore, even to avoid the uncertainty, the liability to pay the interest is to be saddled from the date of accident rather than the date of adjudication which is not certain.
45. It is also required to be noted that as stated above, the Workmen's Compensation Act is a Special Act for the benefit of workmen and amount of compensation is required to be paid under the Act either to the workman in case of permanent partial disability and/or permanent disablement or to the heirs in case of death and within stipulated time. If the amount of compensation is not paid, application for compensation is to be filed. As stated above, it is not certain when the application will be decided by the Commissioner. Considering the backlog, it may take years in deciding the compensation by the Commissioner and in adjudicating the claim and for the said delay, the workman would not be at fault and/or cannot be held responsible. No workman would be interested in delaying the proceedings and/or adjudication, as the workman would be interested in getting the compensation as early as possible and therefore, there is no reason for him to delay the adjudication. On the other hand, the employer and/or insurance company can be said to be interested in delaying the proceedings / adjudication, therefore, if it is considered that the liability to pay interest would arise on completion of one month from the date of adjudication, in that case, the workmen / claimants will have to suffer for no fault of them and the employer / insurance company who is interested in delaying the adjudication would be the beneficiary and it would tantamount to giving a premium to those persons who would indulge into delaying tactics. Under the circumstances also, the contention on behalf of the insurance company and owner that the liability to pay the interest under Section 4-A(3)(a) would arise on completion of one month from the date of adjudication of the claim and not from the date of accident, cannot be accepted.
46. It is also required to be noted that the consistent view taken by the Hon'ble Supreme Court as well as by this Court and various High Courts is to award the interest on compensation from the date of accident till realisation and the some of the decisions of the Hon'ble Supreme Court as well as by this Court are referred to hereinabove.
47. For the reasons stated hereinabove and the binding decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev (supra), it has to be held that the starting point for payment of compensation in the Workmen's Compensation Act would be the date of accident and not from the date of adjudication of the claim and therefore, the liability to pay the interest and penalty would arise from the date of accident and the interest on the amount of compensation as required to be paid under Section 4-A(3)(a) of the Act, is required to be paid on completion of one month from the date of accident and not from the date of adjudication.
48. Now so far as the other submissions on behalf of the owner in First Appeal No. 1044 of 2007 such as, there was no relationship of employer and employee and/or accident has not occurred during the course of employment etc. are concerned, the same are questions of facts and on appreciation of evidence the learned Commissioner for Workmen Compensation has held against the owner and the said finding is not required to be considered, dealt with and/or interfered with by this Court in an appeal under Section 30 of the Workmen's Compensation Act.
49. For the reasons stated above, both the appeals fail and it is held that the appellants herein in both the appeals i.e. Insurance Company and the Owner would be liable to pay interest on compensation as contemplated under Section 4-A(3)(a) of the Act from the date of accident more particularly on completion of one month from the date of accident and not from the date of adjudication of claim. Both the appeals are accordingly dismissed. However, in the facts and circumstances of the case, there shall be no orders as to costs.