Madras High Court
Marimuthuammal @ Marimuthu And M. ... vs R.P.P. Construction (P) Ltd. And Ors. on 3 August, 2007
Author: R. Banumathi
Bench: R. Banumathi
JUDGMENT R. Banumathi, J.
1. Aggrieved against the award of interest from the date of application and not from the date on which the compensation amount "fell due", the parents of deceased workman Ramesh have filed this appeal.
2. Factual background in nutshell are as follows : Respondents 1 and 2 entered into contract with respondents 3 and 4 to construct a building at SIPCOT premises situated at Gummidipoondi, Tiruvallur District. The deceased Ramesh was employed under respondents 1 and 2. Second appellant, father of the deceased Ramesh, had also worked as watchman with the respondents 1 and 2 for about one year prior to the accident. On 12.01.1999, while Ramesh was at work at SIPCOT premises, he met with an accident while loading cement bags and barrels in a tractor. In the said accident, Ramesh sustained internal injuries and he died on his way to hospital. A case was registered in Cr.No.9/1999. Respondents 1 and 2 had taken insurance policy for the said work with respondents 5 and 6. As the death of Ramesh was during the course of employment, appellants prayed for compensation of Rs. 3,00,000/-.
3. Refuting the claim, respondents 1 and 2 denied employment of the deceased Ramesh. According to the respondents 1 and 2, only the second appellant worked as a watchman under them and left the job on his own from 13.01.1999 and deceased Ramesh met with an accident somewhere and succumbed to the injuries. Since Ramesh was not employed under the respondents 1 and 2, they are not liable to pay any compensation. The Insurance Company also resisted the claim.
4. Before the Tribunal/Commissioner for Workmen's Compensation, second appellant examined himself as PW-1. Exs. A-1 to A-5 were marked. Onbehalf of the respondents, RW-1 was examined and Exs. R-1 to R-4 were marked. In consideration of oral and documentary evidence, the Tribunal held that accident and death arose out of and in course of employment and ordered compensation of Rs. 1,25,000/- with interest @ 12% p.a. from the date of application.
5. Aggrieved against the award of interest from the date of application, and not from the date when it "fell due", appellants have preferred this appeal. The only ground raised is that Commissioner for Workmen's Compensation ought to have awarded interest @ 12% from the date of accident under Section 4A(3) of Workmen's Compensation Act.
6. The learned Counsel for the appellants contended that interest would accrue thirty days after the accident and not from the date of application or quantification of compensation. The learned Counsel placed reliance upon the following Judgments , 1976 ACJ 141 (SC) : 1997 Lab Insurance Company 891, 1995 Lab Insurance Co. 677, 2000 (1) ACC 125.
7. Placing reliance upon National Insurance Co. Ltd. v. Mubasir Ahmed and Anr., the learned Counsel for the respondents has submitted that the question of compensation becoming due does not arise on the date of accident and the compensation becomes due on the basis of adjudication of the claim made and therefore, interest is payable only from the date of adjudication under Section 4A(3).
8. The question raised revolves on the point as to what is the meaning to be ascribed to the expression "fell due", occurring in Section 4A(3) of W.C. Act. The question for determination is as to when the compensation may be said to fall due.
9. The amended Section 4A(3) reads as under:
4-A(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 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.
(3-A). The interest payable under Sub-section (3) shall be paid to the workman or his dependent, as the case may be, and the penalty shall be credited to the State Government.
10. Two fold liabilities attached to the employer, as per the Section that stood prior to amendment are:
(i) to pay interest from the date on which it fell due; and
(ii) to pay penalty if there is undue delay in making payment.
Both prior to and after amendment, Section 4A contains the word "fell due" and the question revolves on the interpretation of the expression "fell due".
11. In Pratap Narain Singh Deo v. Srinivas Sabata 1976 ACJ 141 : 1976 TAC 348 (SC), also a case arising due to personal injury cause to the workman under Workmen's Compensation Act, Four Judge Bench of the Supreme Court held that it was the duty of the employer under Section 4A(1) to pay the compensation at the rate provided under Section 4A as soon as the personal injury was caused to the workman. The employer having failed to do so the liability incorporated for payment of interest and penalty as contemplated under Sub-section (3).
12. In Pratap Narain Singh Deo's cited supra, their Lordships have considered the very same question viz., payment of "interest" and "penalty" under Workmen's Compensation Act. In paragraph 7, the Supreme Court has held thus:
7. ...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.... 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.
The above conclusion of their Lordships makes it clear that the employer or person liable to pay compensation need not wait till formal determination by the Commissioner under the Workmen's Compensation Act. On the other hand, it was held that the employer or any other person is liable to pay compensation as soon as personal injury was caused or death occasioned in the course of employment.
13. Considering the question of "interest payable" under the Workmen's Compensation Act, and agreeing with the Pratap Narain Singh Deo's case, in Kerala State Electricity Board v. Valsala, three Judge Bench of the Supreme Court has held that "Various High Courts in the country, while dealing with the claim for compensation under the Workmen's Compensation Act have uniformly taken the view that the relevant date for determining the rights and liabilities of the parties is the date of accident."
14. Observing that the relevant date for determination of the right of compensation is the date of the accident and not the date of adjudication of the claim, the Valsala's case the Supreme Court has further observed as under:
5. Our attention has also been drawn to a judgment of the Full Bench of the Kerala High Court in United India Insurance Co. Ltd v. Alavi (Kerala), wherein the Full Bench precisely considered the same question and examined both the above noted judgments. 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 on account of the amendment made in 1995, which is relevant. The decision of the Full Bench of the Kerala High Court, to the extent it is in accord with the Judgment of the larger Bench of this Court in Pratap Narain Singh Deo v. Srinivas Sabata 1976 ACJ 141 (SC), lays down the correct law and we approve it.
15. Referring to various decisions of the Supreme Court, Division Bench of this Court in 2002 (4) CTC 469 The Oriental Insurance Co. Ltd. v. Kaliya Pillai and two Ors., considered the meaning of the term "fell due" and Justice P. Sathasivam, speaking for the Bench, has held thus:
9. ...The term "fell due" in Sub-section (1) of Section 4A is to mean the time when the right to claim compensation accrued due. The employee or his dependents would be gained by means of interest for the amount due as well as the penalty for the delay. As stated earlier, the interest has to be paid to the employee or to his dependent from one month after the date on which it was actually fell due and the penalty amount has to be credited to the account of the State Government. We hold that the interest would accrue 30 days after the date of accident and not from the date of quantification as argued by the learned Counsel for the insurance Company. In this regard, it is relevant to refer a Division Bench decision of the Kerala High Court in Oriental Insurance Co. Ltd. v. Abdul Nazar 1997 Lab. I.C. 891. The conclusion arrived at therein is as follows : (para 10)
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 is 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 dates 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 accrue 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 Commissioner, Baroda v. Patel Engineering Co. Ltd. 1976 ACC CJ 104; Jayamma v. Executive Engineer P.W.D. Madhugiri 1982 ACC CJ 361 : 1982 Lab Insurance Company Noc 61 (Kant), Madan Mohan Verma v. Mohan Lal 1983 ACC CJ 231. 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.
As stated earlier, the Workmen's Compensation Act, being a beneficial legislation, considering the object and scheme of the Act, particularly after insertion of 4A, we hold that interest for the compensation amount would accrue 30 days after the date of accident and not from the date of quantification. To make it clear that we are of the view that the liability to pay interest would run from the date on which the right to receive compensation accrues in favour of the workman namely the date of the accident and not on the date of issuance of orders by the Commissioner for Workmen's compensation.
16. The Supreme Court and various High Courts have held that under Section 4A(3), the workman becomes entitled to compensation as it falls due i.e. to say, on the date the injury is caused and not at any subsequent dates. In the present case, injuries were caused to the deceased workman on account of the accident on 12.01.1999. Immediately upon the injuries being caused resulting in death, compensation became due to the appellants within the meaning of Section 4A(1) liability to pay interest would run from the date 30 days after the accident i.e. 11.02.1999. This is not kept under suspense or deferred until the determination made by the Commissioner under Section 19 of the Act.
17. The main contention of the respondent is that interest is payable only from the date of adjudication of the claim, for which reliance is placed upon . Referring to Maghar Singh v. Jashwant Singh, two Judge Bench of the Supreme Court has held as under:
9. Interest is payable under Section 4A(3) if there is default in paying the compensation due under this Act within one month from the date it fell due. The question of liability under Section 4A was dealt with by this Court in Maghar Singh v. Jashwant Singh . By Amending Act, 14 of 1995, Section 4A of the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest @ 12%. In the instant case, the accident took place after the amendment and, therefore, the rate of 12% as fixed by the High Court cannot be faulted. But the period as fixed by it is wrong. The starting point is on completion of one month from the date on which it fell due. Obviously, it cannot be the date of accident. Since no indication is there as when it becomes due, it has to be taken to be the date of adjudication of the claim. This appears to be so because Section 4A(1) prescribes that compensation under Section 4 shall be paid as soon as it falls due. The compensation becomes due on the basis of adjudication of the claim made. The adjudication under Section 4 in some cases involves the assessment of loss of earning capacity by a qualified medical practitioner. Unless adjudication is done, question of compensation become due does not arise. The position becomes clearer on a reading of Sub-section (2) of Section 4A. It provides that provisional payment to the extent of admitted liability has to be made when employer does not accept the liability for compensation to the extent limited. The crucial expression is "falls due". Significantly, legislature has not used the expression "from the date of accident". Unless there is an adjudication, the question of an amount falling due does not arise.
18. In Mubasir Ahmed case their Lordships did not take notice of the Judgment of the larger Bench in Pratap Narain Singh Deo's case. Presumably, it was not brought to the notice of their Lordships. Mubasir Ahmed's case is at variance with at least two Judgments of the Supreme Court of larger Bench.
19. In such situation, duty of High Court is to follow opinion expressed by the larger Bench of the Supreme Court. In Union of India v. K.S. Subramanian and State of Uttar Pradesh v. Ram Chandra the Supreme Court was analyzing the position of the High Court when it is faced with conflicting views of the Supreme Court and laid down the principles to be followed by the High Court in such circumstances. In , cited supra, the Supreme Court has held that the proper course for a High Court is to try to find out and follow the opinions expressed by Larger Benches of the Supreme Court in preference to those expressed by smaller Benches of the Court. That is the practice followed by the Supreme Court itself. The practice has now crystallized into a rule of law declared by the Supreme Court. If however, the High Court is of the opinion that the views expressed by Larger Benches of the Supreme Court are not applicable to the facts of the case it should say so giving reasons supporting its point of view.
20. In AIR 1976 SC 2547 the Supreme Court has held that "constitutional position as regards the powers of Court to go behind the orders or termination to find out motive of Government is clear. Even in cases where a High Court finds any conflict between the views expressed by larger and smaller Benches of this Court, it cannot disregard or skirt the views expressed by the Larger Benches. The proper course for a High Court in such a case is to try to find out and follow the opinion expressed by Larger Benches of the Supreme Court in preference to those expressed by the small benches of the Court which practice, hardened as it has into a rule of law, is followed by the Supreme Court itself.
21. In Pratap Narain Singh Deo's case, larger Bench of the Supreme Court has held that the employer is liable to pay compensation as soon as personal injury was caused to the workman by an accident, which arose out of and in course of the employment. In my view, Judgment of the larger Bench of the Supreme Court has to be followed. As Workmen's Compensation Act is a social security legislation, various provisions of the Act ought to receive a liberal interpretation. Interest @ 12% is payable from 11.2.1999 i.e. 30 days from the date of accident in which workman sustained injuries, resulting in death and to that extent, the order of the Commissioner is modified.
22. This Civil Miscellaneous Appeal is partly allowed. It is held that interest on the compensation amount of Rs. 1,25,000/- is payable at the rate of 12% p.a. 30 days from the date of accident i.e. on 11.02.1999. Eight weeks time is granted for the respondents to deposit balance amount payable.