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2001 DIGILAW 683 (KER)

Oriental Insurance Co. v. Mohammed

2001-11-23

J.B.KOSHY, K.PADMANABHAN NAIR

body2001
Judgment :- J.B. Koshy, J. Both these appeals are filed challenging the order of Workmen's Compensation Commissioner, Ernakulam in W.C.C. No. 117 of 1993. M.F.A. No. 547 of 1997 was filed by the workman who filed application for compensation claiming enhancement of compensation. M.F.A. No. 296 of 1997 was filed by the insurance company of the employer, who was directed to pay compensation, contending that amount ordered was arbitrary violating the provisions of the Workmen's Compensation Act, 1923 (hereinafter referred to as 'the Act'). Claimant workman while employed as a helper in a factory, met with an accident in the course of employment. As a result of the accident arising out of employment he lost his thumb, index and middle fingers. Employer immediately intimated the matter to the insurance company. The workman was only 22 years of age. Medical practitioner certified that he suffered 24% loss of earning capacity. The workman claimed compensation for'total disablement'. Commissioner awarded compensation for 100% loss of earning capacity accepting the case of the applicant and calculated compensation payable as Rs. 1,10,685/- with 6% simple interest. There was also a direction that if the amount is not paid within 30 days of the award, 50% of the compensation amount also shall be realised as penalty. Since insurance was admitted, insurance company was directed to deposit the amount in Court. 2. Facts are not disputed in these appeals by both sides. Three contentions are raised by the workman. The first contention is that Commissioner ought to have calculated the compensation at the rates applicable on the date of awarding compensation. Apex Court in K.S.E.B. v. Valsala (1999 (3) KLT 348) held that compensation has to be calculated as per the schedule existing at the time of accident. Date of accident was 23.6.1993. Commissioner calculated compensation as per the schedule existing on the date of accident as held by the Supreme Court. Hence there is no merit in this contention. 3. The second contention was that Commissioner only award 6% interest. It is true that compensation has to be calculated as per the schedule existing at the time of accident. But payment of interest rests on a different footing. Amount of compensation was deposited only after the order of the Commissioner on 13.2.1997. 3. The second contention was that Commissioner only award 6% interest. It is true that compensation has to be calculated as per the schedule existing at the time of accident. But payment of interest rests on a different footing. Amount of compensation was deposited only after the order of the Commissioner on 13.2.1997. No compensation was paid to the workman in time despite the matter was informed by the employer to the insurance company in time and claim was given in time. S.4A(3) of the Act was amended and sub-s.(3) and (3A) were substituted by Act 30 of 1995 with effect from 15.9.1995 which reads as follows: "S.4A.... (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; (a)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.' Explanation - For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934. (3A) The interest payable under sub-s.(3) shall be paid to the workman or his dependant, as the case may be, and the penalty shall be credited to the State Government". As per S.4-A(1) compensation under S.4 shall be paid as soon as it falls due. Permissible upper limit of time in depositing compensation is one month from the date of accident. As per S.4-A(1) compensation under S.4 shall be paid as soon as it falls due. Permissible upper limit of time in depositing compensation is one month from the date of accident. In Ved Prakash Garg v. Prema Devi ((1997) 8 SCC 1) the Apex Court held that once default on the part of employer in paying the compensation due takes place beyond permissible limit of one month, liability to pay interest runs automatically. Payment of interest depends upon the time of payment of compensation. Therefore, we are of the opinion that unlike the amount of compensation which is to be calculated as per the statutory provisions existing on the date of accident, interest has to be calculated on the rates prescribed as per the statute existing on the date of payment. Right to get compensation is crystallised on the date of accident itself but interest payable thereon depends upon the date of payment of compensation. Hence rate of interest and amount of interest payable are directly related to the date of payment of interest. Therefore, direction of the Commissioner for Workmen's Compensation to pay 6% interest is incorrect. We hold that workman is entitled to interest at the rate of 12% on the amount of compensation from the date when it fell due, that is, from the date of accident till the date of deposit. 4. The third point raised by the workman is that Commissioner has directed to pay penalty only if the amount is not paid within one month of the order by the insurance company. According to the applicant, Commissioner should have imposed penalty on the employer as there was default in payment of compensation. Unlike payment of interest, payment of penalty is discretionary. Here employer had taken steps to get compensation and informed the insurance company about the accident. To get compensation to the employees employed in the establishment, as and when accident happens, as a prudent employer, he had taken workmen compensation policy eventhough it is not compulsory. He requested the insurance company to pay compensation also immediately. These facts are not disputed. We also note that unlike payment of interest penalty being penal in nature can be imposed after hearing on this aspect and Commissioner is given discretion in the matter of imposing penalty and its quantum in appropriate circumstances. He requested the insurance company to pay compensation also immediately. These facts are not disputed. We also note that unlike payment of interest penalty being penal in nature can be imposed after hearing on this aspect and Commissioner is given discretion in the matter of imposing penalty and its quantum in appropriate circumstances. As decided by the Supreme Court in Ved Prakash Garg's case (supra) insurance company cannot be mulcted with liability to pay penalty. Under sub-s.3A of S.4A penalty even if imposed, cannot be paid to the claimant but it has to be credited to the State Government as if it is a fine. Considering all circumstances, we are of the opinion that no interference is required in the Commissioner's order imposing penalty. When statute gives discretionary power on Commissioner and it is exercised fairly, no appeal will lie on this point as under S.30 appeals will lie only against a substantial question of law. 5. Grievance of the insurance company is that Commissioner exceeded his jurisdiction in granting compensation for 100% of loss of earning capacity holding the injuries caused permanent total disablement, eventhough workman lost only three fingers of the right hand. It was contended that qualified medical practitioner certified only 24% disability (A2). A Full Bench of this Court in New India Insurance Company v. Sreedharan (1995 (1) KLT 275) held that in view of S.4(1)(c)(ii) of the Act, Commissioner cannot ignore the certificate of a qualified medical practitioner and fix compensation arbitrarily. The above judgment as well as S.4(1)(c)(ii) is applicable only in cases where injuries are not specified in Schedule I. Therefore, the above contention is not acceptable as here injury is specified in Schedule I. For claiming benefit for 'total disablement' there should be evidence that disablement is such that "it incapacitates the workman for all work which he was capable of performing at the time of accident" as mentioned in S.2(1) of the Act or unless it is injury specified in Part II Schedule I (deeming it as an injury resulting in total disablement). Here in this case apart from the loss of three fingers in the right hand, there is no other injuries to any part of the body or other disablement. Here in this case apart from the loss of three fingers in the right hand, there is no other injuries to any part of the body or other disablement. Certainly, loss of three fingers of right hand will not "totally incapacitate him to do all work which he was capable of performing at the time of accident is difficult to assess. Therefore, Legislation has given certain guidelines and Court cannot ignore it. 6. S.4(c) deals with such situation which is as follows: (c) Where permanent partial disablement (i) in the case of an injury specified in Part Il of Schedule 1. such percentage of the results from the injury compensation which would have been payable in the case of permanent total disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury, and (ii) in the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity (as assessed by the qualified medical practitioner) permanently caused by the injury; In case of Injuries not specified in Part II, S.4(c)(ii) proved that loss of earning capacity should be assessed by qualified medical practitioner. Explanation II to the above sub-clause further states as follows: "Explanation II - In assessing the loss of earning capacity for the purposes of sub-clause (ii), the qualified medical practitioner shall have due regard to the percentages of loss of earning capacity in relation to different injuries specified in Schedule I;" Therefore, if the injuries are mentioned in Schedule I, compensation payable under S.4 of the Act has to be calculated only as provided in the schedule and court cannot ignore statutory mandate. Commissioners and courts cannot act as benevolent Kings. Sympathy and consequent generosity cannot be exercised at the expense of others. When there is a mandatory provision in the Act, Court is bound to observe it unless that provision is set aside as unconstitutional. In this connection we refer to the decision of a Division Bench of this Court in Mar Themotheous Birth Centenary Press v. Santhosh Raj (2000 (3) KLT 270) where facts are almost identical. When there is a mandatory provision in the Act, Court is bound to observe it unless that provision is set aside as unconstitutional. In this connection we refer to the decision of a Division Bench of this Court in Mar Themotheous Birth Centenary Press v. Santhosh Raj (2000 (3) KLT 270) where facts are almost identical. Even if there is no actual loss of earnings and employer continues to employ him without reduction of wages, employer is liable to pay compensation for injuries mentioned in Schedule I as provided under S.4. Admittedly, injuries suffered by the workmen is not specified in Part I of Schedule I. 7. The workmen lost three fingers of his right hand as a result of the accident. They are thumb, index and middle fingers. Contention of the insurance company is that it will come under Schedule I Part II - serial No. 8. Loss of earning capacity fixed for loss of three fingers of the right hand is only 30%. Therefore, insurance company pleads that compensation can'be calculated in this case at 30% only. Now we may consider relevant entries in Schedule I Part H. Serial Description of injury Percentage of loss No. of earning capacity 4. Loss of hand or of the thumb and four fingers of one hand or amputation from 4 -1/2" below tip of olecranon 60 5. Loss of thumb 30 6. Loss of thumb and its metacarpal bone 40 7. Loss of four fingers of one hand 50 8. Loss of three fingers of one hand 30 9. Loss of two fingers of one hand 20 10. Loss of terminal phalanx of thumb 20 '10A. Guillotine amputation of tip of thumb without loss of bone. 10 The above will show that thumb is treated separately with other fingers. Loss of thumb alone attract 30 % of loss of earning capacity as per serial No. 5. Serial No. 8 deals with loss of three fingers of one hand other than thumb. Here there is loss of two fingers and thumb. For loss of thumb, loss of earning capacity fixed is 30% as per serial No. 5 and for loss of two fingers, loss of earning capacity is fixed as 20% as per serial No. 9. Therefore, total loss of earning capacity as per Part II Schedule I is 50%. Here there is loss of two fingers and thumb. For loss of thumb, loss of earning capacity fixed is 30% as per serial No. 5 and for loss of two fingers, loss of earning capacity is fixed as 20% as per serial No. 9. Therefore, total loss of earning capacity as per Part II Schedule I is 50%. Hence employer's obligation is to pay compensation for 50% of loss of earning capacity. Thus compensation payable is reduced by half. Instead of compensation for 100% loss of earning capacity, the workman will get compensation only for 50% of loss of earning capacity. Compensation payable will be Rs. 53,342.50, rounded to Rs. 55,350/-. The workman is entitled to get the above amount with 12% simple interest per annum from 23.6.1993, the date of accident, till 13.2.1997, the date of deposit of the compensation by the insurance company. Balance amount of compensation with interest after deducting the amount already paid should be disbursed to the workman forthwith. Excess amount deposited by the insurance company should be returned to it. The impugned award is modified accordingly and both the appeals are disposed of.