Madras High Court
S.Nambi vs A.G.Francis
Author: P.T.Asha
Bench: P.T.Asha
C.M.A.No.3388 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON: 20.06.2022
PRONOUNCED ON:
CORAM
THE HON'BLE Ms.JUSTICE P.T.ASHA
C.M.A.No.3388 of 2017
S.Nambi ... Appellant/Appellant
Vs
1. A.G.Francis.
2. United India Insurance Co.Ltd.,
No.134, Greams Road,
Anna Salai, Chennai 600 006.
... Respondents/Opposite Parties
PRAYER : This Civil Miscellaneous Appeal is filed under Section 30G
of the Workmen's Compensation Act, against the Award dated
18.10.2016 made in W.C.No.509 of 2014 on the file of the Deputy
Commissioner of Labour-II, Chennai and the cover in which award copy
was received on 11.08.2017.
For Appellant : Ms.A. Subadra
For Respondent-1 : Mr.A.G.F.Terry Chella Raja
For Respondent-2 : Mr.J.Michael Visuvasam
1/16
https://www.mhc.tn.gov.in/judis
C.M.A.No.3388 of 2017
JUDGMENT
In this appeal, the appellant seeks to bring out the distinction with reference to the fixing of the "monthly wages" to work out the compensation as provided in Section 4(1) of the Employee's Compensation Act, 1923, (hereinafter referred to as "the Act", as it stood prior to the amendment on 18.01.2010 as per Act 45 of 2009 and the effect of the insertion of Section 4(1-B). The Act was originally called "the Workmen's Compensation Act" and the same has been renamed as "The Employees Compensation Act" by the amending Act 45 of 2010. Facts of the Case:-
2. Before proceeding to discuss this legal issue, it is necessary to briefly allude to the facts of the case, which has given rise to this appeal.
(i) The appellant had filed E.C.No.509 of 2014 before the Commissioner of Workmen's Compensation-II (Deputy Commissioner of Labour-II, Chennai), claiming compensation for the injuries sustained by him in a road accident that took place on 26.08.2014 at about 03.00 p.m, 2/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 which injuries, he had sustained during the course of his employment and arising out of the same. The appellant would state that on 26.08.2014 at about 03.00 p.m., he was driving a lorry bearing Registration No.TN-45- C-9192 and proceeding from Chennai to Thoothukudi, as he neared the Kilambakkam Junction, a Lorry bearing Registration No.TN-32-D-1822 proceeding in the same direction, suddenly turned from the left side to the right side without any indication. Although the appellant applied the brake immediately, he lost his control and dashed against the said lorry. By reason of this accident, the appellant had sustained multiple injuries all over his body and since the accident had occurred in the course of his employment, the first respondent was liable to compensate him. The appellant had further contended that the accident has totally restricted the free movement of his hands and legs. Therefore, he sought to be compensated for his injuries.
3. The first respondent had filed a counter inter alia contending that on the date of the accident, the first respondent's vehicle was insured with the second respondent and it is only the second respondent, who had 3/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 to indemnify the loss. The first respondent would submit that the appellant had worked under him and had earned a salary of Rs.16,000/- per month and a daily batta of Rs.250/-.
4. The second respondent had filed a counter denying the accident and the employment under the first respondent. The second respondent had denied the very accident. Apart from raising the plea of non-issuance of statutory notice under Section 10(1) of the Act, the appellant had also questioned the quantum that was claimed as well as the treatment that had been administered to the appellant.
5. The Deputy Commissioner of Labour-II, Chennai awarded a compensation of a sum of Rs.7,72,646/- to the appellant. The Deputy Commissioner has fixed the monthly wages at Rs.8,000/- stating that this was the maximum limit at which "monthly wages" can be taken. Aggrieved by the fixation of just a sum of Rs.8,000/-, as monthly income the appellant has filed the above appeal seeking enhancement. 4/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 Submissions:
6. Ms.A.Subadra, learned counsel for the appellant would contend that prior to the amendment, which came into effect in the year 2010, Explanation II of Section 4(1) of the Act had provided that where the monthly wage of a workman exceeded a sum of Rs.4,000/- , then the monthly wage for the purpose of calculating compensation under Section 4(1) (a) and (b) would be deemed to be a sum of Rs.4,000/-. She would further submit that prior to the amendment as per the deleted Explanation II, in the case of death resulting from the injury or in the case of a permanent disablement resulting from the injury, the monthly wage that was to be taken into account was only a sum of Rs.4,000/- irrespective of any excess salary that was being earned by the said workman. She would submit that the Explanation had expressly provided so. However, after the amendment to the Act in the year 2010, Explanation II to Section 4(1) of the Act has been deleted and in its place, Section 4(1-B) has been inserted, which would read as follows:-
"Section 4 (1-B) in The Employee's Compensation Act, 1923: The Central Government may, by notification in the Official Gazette, specify, for the purposes of sub- 5/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 section (I), such monthly wages in relation to an employee as it may consider necessary.
Therefore, it is her contention that by virtue of the amendment the cap on the monthly wages has been done away with. Therefore, the findings of the Commissioner of Labour adopting the sum of Rs.8,000/- pm as monthly wages was erroneous. The appellant was earning a sum of Rs.4,584/- as basic salary and dearness allowance of Rs.5,207/-, totalling to a sum of Rs.9,787/-, however overlooking the amendment the Commissioner has adopted the mandated limit of Rs.8,000/-. In support of her contentions, she would rely on the following judgments:
Sl.No. Judgments
1. 2020(1) TN MAC 273(SC) [K.Sivaraman and others - vs-
P.Sathishkumar and Others 2 2018(1) TN MAC 115 [Periyannan and Another -vs-
K.Udhayakumar and Another]
7. The 1st judgment of the Hon'ble Supreme Court was relied upon to state that in Para 26, the Hon'ble Supreme Court has observed that with the removal of the deeming cap on the monthly income the object was to extend compensation on the basis of monthly salary drawn. This 6/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 Judgment has been followed by a Single Judge of this Court in CMA.No.897 of 2018 dated 21.07.2021.
8. Per contra, Mr.J.Michael Visuvasam, learned counsel appearing for the second respondent-Insurance Company would submit that the argument that cap on the monthly wages has been completely done away with the introduction of Section 4(1-B) of the Act is to say the least fallacious as well as puerile. He would submit that though Explanation II has been deleted, the new Section 4(1-B) once again fixes a cap to the monthly wages. He would further submit that as per Section 4(1-B) of the Act, it is only the Central Government which can specify for the purpose of Section 4(1) the monthly wages that has to be taken in relation to an employee for quantifying compensation. He would place on record the Notification No.S.O.1258(E), Dated 31.05.2010 issued by the Central Government, pursuant to Section 4(1-B) where it is provided as follows:
"In exercise of the powers conferred by Sub-
Section (1B) of Section 4 of the Employees' Compensation Act, 1923(8 of 1923), the Central Government hereby 7/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 specifies, for the purposes of Sub section (1) of the said section, the following amount as monthly wages, with effect from the date of publication of this notification in the Official Gazette, namely:-
"Eight thousand rupees"
Therefore, the Central Government, by its notification has now placed the cap on the monthly wages for the purpose of calculating compensation under Section 4(1) (a) and (b) at Rs.8,000/-. He would rely on the following judgment:-
Sl.No. Judgment
1. C.M.A.No.1588 of 2018 dated 23.09.2020 [Kumar -vs-
M.P.Selvaraj and Another] Discussion:
9. After hearing the arguments of both the learned counsels the issue which engages this Court is whether the maximum limit of Rs.8,000/- fixed as the "monthly wages" has been done away with by reason of the amending Act 45 of 2010 or does the newly introduced Section 4(1-B) still place a cap on the monthly wages? The appellant’s contention is that with the deletion of Explanation II, the deeming cap has been removed and therefore, the word 'monthly wages' contemplated in 8/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 relation to the provisions of Section 4(1) relates to the actual monthly wages. In order to appreciate the arguments, it is necessary to extract the Explanation II of Section 4(1) which would read as follows:-
"Explanation II. - Where the monthly wages of a workman exceed [four thousand rupees'], his monthly wages for the purpose of clause (a) and clause (b) shall be deemed to be [four thousand rupees]only"
This Explanation has been deleted by amending Act 45 of 2009 which came into effect on 18.01.2010. In its place Section 4 (1-B) has been introduced would read as follows:
"Section 4 (1-B) in The Employee's Compensation Act, 1923: The Central Government may, by notification in the Official Gazette, specify, for the purposes of sub- section (I), such monthly wages in relation to an employee as it may consider necessary.
10. The deleted Explanation has expressly stipulated that the monthly wages for the purpose of calculating compensation as per section 9/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 4(1) (a) & (b) cannot exceed Rs.4,000/- even if the monthly wages of the workman was more than Rs.4,000/-. This provision has been deleted and substituted as Section 4(1-B), a reading of which indicate that the Central Government by notification in the gazette may specify the monthly wages in relation to employees for the purpose of Sub Section (1) as it may consider necessary. Therefore, while analysing the afore-stated provision thread bare the following factors emerge:-
a) It is the Central Government which is conferred the powers to fix the monthly wages in relation to an employee in order to determine the compensation under Section 4(1) of the Act.
b) The fixation of such monthly wages has to be notified in the official gazette.
c) Such fixation is with reference to the monthly wages as prescribed in Section 4(1) of the Act.
Therefore, this provision makes it clear that it is only the Central 10/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 Government which can notify the monthly wages in relation to an employee for the purpose of sub-section (1).
11. In exercise of this power the Central Government had by notification dated 31.05.2010 provided that the monthly wages for the purpose of sub Section (1) is a sum of Rs.8,000/-. Therefore, the Central Government has fixed a ceiling to the monthly wages at Rs.8,000/-. This notification has been issued after the Amendment of the Act had come into effect and in very clear words the notification states that the "monthly wages" would be Rs.8,000/-. If the intention of the legislature was to do away with the cap on monthly wages and adopt the actual wages Section 4(1-B) would not have been introduced.
12. Ms.A.Subadra, the learned counsel for the appellant has pressed into service the Judgment of the Hon’ble Supreme Court reported in 2020 (1) TN MAC 273 (SC) - K.Sivaraman and others Vs. P.Sathishkumar and others to buttress her contention that the deeming 11/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 cap has been removed and the actual monthly wages has to be taken note of. However, a perusal of the above judgement would show that the issue involved therein was as follows:-
" The question before this Court is whether the benefit of Act 45 of 2009 deleting the deeming provision in Explanation II, which capped the Monthly Wages of an Employee at Rs.4,000/- would also apply to accidents which took place prior to the coming into force of its provisions i.e., 18th January 2010 and where final adjudication is pending. In assessing whether the Act 45 of 2009 applies retrospectively, it is necessary to analyze the relevant precedents of this Court."
13. The "monthly wages" vis-a-vis Section 4(1-B) was not under consideration in the above case. The Court had not dealt with the implication of Section 4(1-B) or the notification of the Central Government dated 31.05.2010. Therefore, the observation in paragraph 26 can be treated merely as an obiter. In fact a perusal of paragraph 26 12/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 would demonstrate the same :-
" Prior to the Act 45 of 2009, by virtue of the deeming provision in Explanation II to Section 4, the Monthly Wages of an Employee were capped at Rs.4000/- even where an Employee was able to prove the payment of a monthly wage in excess of Rs.4,000/-. The legislature, in its wisdom and keeping in mind the purpose of the 1923 Act as a social welfare legislation did not enhance the quantum in the deeming provision, but deleted it altogether. The amendment is in furtherance of the salient purpose which underlies the 1923 Act of providing to all Employee's Compensation for accidents, which occur in the course of and arising out of employment. The objective of the amendment is to remove a deeming cap on the Monthly Income of an Employee and extend to them Compensation on the basis of the actual Monthly Wages drawn by them. However there is nothing to indicate that the Legislature intended for the benefit to extend to accidents that took place prior to the coming 13/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 into force of the amendment."
14. Therefore, the argument of the appellant that the deeming cap has been removed and the actual monthly wages had to be considered is not correct. Section 4(1-B) and the notification made in pursuance to the same in very clear and categoric term indicates that the maximum monthly wages that can be taken into consideration is a sum of Rs.8,000/-. The provisions of Section 4(1-B) stipulates that it is the Central Government which can fix the monthly wages and notify it in the official gazette, the monthly wages so fixed is now Rs.8,000/-. Therefore, I see no reason to interfere with the Judgment of the Tribunal and consequently, the Civil Miscellaneous Appeal is dismissed. There shall be no order as to cost.
.07.2022 Index : Yes / No speaking Order : Yes / No shr 14/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 To
1.The Deputy Commissioner of Labour-II, Chennai.
2.The Section Officer, V.R.Section, High Court, Madras -104.
15/16 https://www.mhc.tn.gov.in/judis C.M.A.No.3388 of 2017 P.T.ASHA, J., shr Pre-delivery Judgment in C.M.A.No.3388 of 2017 .07.2022 16/16 https://www.mhc.tn.gov.in/judis