Judgment :- Koshy, J. The second opposite party insurance company before the Commissioner for Workmen's Compensation, Ernakulam is the appellant herein. The application for compensation was filed by the first respondent herein, under Section 22 of the Workmen's Compensation Act, in respect of personal injury sustained to him in an accident which occurred at about 8.40 p.m. on 31.8.1995. According to the applicant, while he was in the course of his employment as wire drawing operator under the second respondent herein during second shift, his right hand got caught in the machine and sustained serious injuries to his right hand resulting in traumatic amputation of right hand thump, index and middle fingers. The applicant claimed a total compensation of Rs.1,53,090/-. Second respondent admitted the employer employee relationship and also admitted that the accident arose in the course of employment. But, contended that vide cheque dated 2.7.1996 an amount of Rs.35,210/- was also paid to the applicant in full and final settlement of the claims. Accordingly a memorandum of agreement dated 18.6.1996 evidencing settlement of the claim was also entered into. 2. By Ext.A6 disability certificate dated 9.11.95, doctor assessed physical disability at 46%. Based on that certificate, considering Schedule I and Section 4 of the Workmen's Compensation Act, Commissioner assessed loss of earning capacity at 60%. Ext.A5 medical certificate shows that he had traumatic crush amputation of right thumb index and middle fingers with three percent deep dermal burn on right hand forearm. Therefore, Commissioner observed as follows: "..... In oral evidence the applicant stated that he sustained injuries to the extent of amputation of thumb, whole of the index finger, two phalanxes of middle finger, fracture of ring and index fingers. He had also burns on the palm and forearm. So he held that the right hand had become totally out of use. The injuries listed in the medical documents would amount to 53% deemed loss of earning capacity with reference to items 5, 27 and 32 of Part II of Schedule I to the Act. He also had sustained severe burns on his hand and forearm and the scars still persist. The medical documents does not speak of the criterion for assessment of 46% loss of earning capacity. He also had sustained severe burns on his hand and forearm and the scars still persist. The medical documents does not speak of the criterion for assessment of 46% loss of earning capacity. The note to Schedule I to the Act says that complete and permanent loss of the use of any limb or member referred to in this Schedule shall be deemed to be the equivalent of the loss of that limb or member. In this pertinent case, it is a fact that over and above the amputation of thumb and two other fingers, there was burn injuries on his right hand, that hand had become totally and permanently out of use. Therefore, in reference to the item 4 of the Schedule I, the loss of earning capacity deemed to have resulted from the injuries can be fixed at 60% in relation to the note to the Schedule I." 3. Even though there is a settlement for payment of compensation, when it is sent for registration under section 28, Commissioner has a duty to verify whether due compensation has been paid. Section 17 of the Workmen's Compensation Act says as follows: "17. Contracting out. - Any contract or agreement whether made before or after the commencement of this Act, whereby a workman relinquishes any right of compensation from the employer for personal injury arising out of or in the course of the employment, shall be null and void in so far as purports to remove or reduce the liability of any person to pay compensation under this Act." Therefore, for accepting the settlement also Commissioner has to consider whether due compensation has been paid, and if not paid, Commissioner must compel the employer to pay balance amount even without an application by the party. Therefore, question is what is the amount of compensation payable. Commissioner found from evidence that the monthly salary of the workman was Rs.1,860/=. Accident occurred on 31.8.1995. Explanation II to Section 4(1) of the Workmen’s Compensation Act was amended by Act 30 of 1995 with effect from 15.9.1995. Therefore, question is what is the amount of compensation payable. Commissioner found from evidence that the monthly salary of the workman was Rs.1,860/=. Accident occurred on 31.8.1995. Explanation II to Section 4(1) of the Workmen’s Compensation Act was amended by Act 30 of 1995 with effect from 15.9.1995. Before that, maximum monthly salary that can be taken into account for calculation of compensation was Rs.1,000/= and 50% of the same multiplied by the relevant factor is the amount of compensation payable for 100% loss of earning capacity 60% of the above is the compensation payable as Commissioner assessed 60% loss of earning capacity in this case. Appellant was aged 50 at the time of the accident and as per section 4, relevant factor is 153.09. In K.S.E.B. v. Valsala (1999 (3) KLT 348 (SC), Apex Court held that compensation has to be calculated only on the basis of statutory provisions on the date of the accident. Hence, compensation payable will be Rs.36,741.60 (1000 x 40/100 x 60/100 x 153.09) rounded to Rs.36,742/=. Employer paid Rs.35,210/= as compensation by agreement. Balance will be Rs.1,532/=. 4. Section 4-A(3) provides as follows: "4-A. Compensation to be paid when due and penalty for default. " xx xx xx (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;" Since award and deposit were after the amendment of the Act and payment of interest is related till deposit of compensation, the above, amount should be paid with 12% interest from the date of accident (31.8.95) till deposit of the same by the insurance company. 5. Commissioner has also ordered that balance amount should be deposited within 30 days from the date of receipt of the order, failing which the amount and interest together with a penalty to the extent of 25% of the total compensation amount shall be recovered from them invoking revenue recovery proceedings. Section 4-A(3)(b) authorizes the Commissioner to impose penalty. 5. Commissioner has also ordered that balance amount should be deposited within 30 days from the date of receipt of the order, failing which the amount and interest together with a penalty to the extent of 25% of the total compensation amount shall be recovered from them invoking revenue recovery proceedings. Section 4-A(3)(b) authorizes the Commissioner to impose penalty. Section 4-A(3)(b) reads as follows: "4-A. Compensation to be paid when due and penalty for default.- xx xx xx (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- xx xx xx (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: 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." Unlike payment of interest from the date of accident till the deposit, which is mandatory, imposition of penalty is discretionary and penal in nature. Here, the agreement was executed and substantial part of the amount was paid on the basis of assessment of disability by medical board even before an application was filed before the Commissioner on the basis of agreement. Hence, order imposing penalty is set aside. Amount as ordered was also deposited without much delay. Balance amount due to the claimant should be disbursed to the claimant and excess amount in deposit should be refunded to the appellant insurance company. Appeal is allowed in part.