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2010 DIGILAW 804 (KER)

New India Assurance Co. Ltd. v. Biju

2010-10-19

A.K.BASHEER, P.Q.BARKATH ALI

body2010
ORDER : A.K. Basheer, J. An interesting preliminary question has come up for consideration in this appeal filed under Section 30 of the Workmen's Compensation Act, 1923. The question : Is not the employer (or the insurer as the case may be) bound to deposit the interest portion of the amount payable under the impugned order as a condition pre-requisite to maintain an appeal under Section 30 of the Act? 2. Respondent No. 1-workman allegedly sustained certain injuries in an accident which arose out of and in the course of his employment under respondent No.2 herein. According to the workman he was a loading and unloading worker and he sustained the injury while unloading some goods from the vehicle which belonged to respondent No. 2. The vehicle was admittedly insured with the appellant - Insurance Company. Therefore he claimed compensation from the employer and the Insurer of the vehicle. 3. The Tribunal after hearing the parties awarded a sum of Rs. 1,19,540/- to the workman towards compensation and directed the appellant/insurer to pay the same with 12% interest from the date of accident viz., June 9, 2001. 4. The appellant/Insurance Company has challenged the said order in this appeal filed under Section 30 of the Act. While preferring the appeal the appellant has deposited only the principal amount of compensation. In other words, the appellant has not deposited the interest payable on the compensation amount @ 12% per annum from June 9, 2001 till the date of deposit. 5. The question that has cropped up is whether or not the deposit of the amount of compensation sans interest would satisfy the statutory mandate contained in the second proviso to Section 30 of the Act. 6. For the sake of convenience the relevant clauses of Section 30, and in particular, the third proviso are extracted hereunder: "30. 5. The question that has cropped up is whether or not the deposit of the amount of compensation sans interest would satisfy the statutory mandate contained in the second proviso to Section 30 of the Act. 6. For the sake of convenience the relevant clauses of Section 30, and in particular, the third proviso are extracted hereunder: "30. Appeals.- (1) An appeal shall lie to the High Court from the following orders of a Commissioner, namely: (a) An order as awarding as compensation a lump sum whether by way of redemption of a half-monthly payment or otherwise or of disallowing a claim in full or in part for a lump sum; [(aa) An order awarding interest or penalty under Section 4A;] (b) An order refusing to allow redemption of a half-monthly payment; (c) An order providing for the distribution of compensation among the dependents of a deceased workman, or disallowing any claim of a person alleging himself to be such dependant; (d) An order allowing or disallowing any claim for the amount of an indemnity under the provisions of sub-section(2) of Section 12; or (e) An order refusing to register a memorandum of agreement or registering the same or providing for the registration of the same subject to conditions: xx xx xx xx xx xx Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against, (emphasis supplied) (2) xx xx xx (3) xx xx xx (2) xx xx xx (3) xx xx xx". 7. It is contended by Sri Rajan P. Kaliyath, learned counsel for the appellant that the deposit contemplated and mandated by the third proviso under Section 30 of the Act is only the amount of compensation; nothing more nothing less. According to the learned counsel sub-section (1)(a) of Section 30 mandates pre-deposit only in the case of appeals in which the Commissioner has ordered the employer to pay "a lump sum" as compensation. He points out that under clause (aa) the employer is entitled to challenge the order passed by the Commissioner awarding interest or penalty under Section 4A. In such appeals, deposit is not made a condition pre-requisite. He points out that under clause (aa) the employer is entitled to challenge the order passed by the Commissioner awarding interest or penalty under Section 4A. In such appeals, deposit is not made a condition pre-requisite. Similarly in an appeal against an order refusing to allow redemption of a half monthly payment under clause (b) or in other appeals as provided under sub-clauses (c), (d) and (e) of Section 30, pre-deposit is not mandatory. What is sought to be safeguarded by insisting for pre-deposit is only that the workman is assured of getting the "lump sum compensation" receivable by him from his employer under the Act. Therefore, the appellant is bound to deposit only the "lump sum compensation" and not the interest that has accrued on the principal amount. In this context learned counsel has invited our attention to a few decisions of various High Courts and of the Apex Court to which we will refer a little later. 8. Section 3 of the Act casts a liability on the employer to pay compensation to the workman if any personal injury is caused to him by the accident arising out of and in the course of his employment and also in various other contingencies. Section 4 deals with the amount of compensation payable (a) in the case of death, (b) permanent disablement either total or partial and (c) temporary disablement whether total or partial. A perusal of the various clauses contained in Section 4 will show that the Legislature has taken care to ensure that a workman is not left in the lurch by his employer in case he meets with an accident arising out of or in the course of his employment, whether it be minor or major. Section 22 of the Act enables the workman to approach the Commissioner for award of compensation. 9. As has been noticed already, Section 30 provides for an appeal against certain categories of orders passed by the Commissioner. Sub-Clause (a) of sub-section (1) deals with an appeal against an order awarding a lump sum compensation either in the case of death or injury. The third proviso under Section 30 stipulates that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against. The third proviso under Section 30 stipulates that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against. The bone of contention in this case revolves around the words "amount payable" in the above proviso. 10. The contention of the appellant is that the "amount payable" referred to in the third proviso is only the principal amount of compensation. Liability to pay interest was statutorily fastened on the employer, on his failure to pay the compensation within one month from the date when it fell due, only in the year 1959. Later by Act 30 of 1995 the rate of interest was enhanced from 6% to 12% per annum. However, the third proviso to Section 30 was incorporated in the Act under Act 15 of 1933 before the introduction of Section 4A dealing with penalty. 11. It may at once be noticed that the appellant/insurance company does not have a case that it is not liable to pay interest on the amount of compensation under the terms of the policy issued by it. But the argument of the appellant appears to be that interest portion of the award need be paid only after exhausting the remedy under Section 30 of the Act. In short, the contention of the appellant is that the scheme of the Act does not contemplate or envisage deposit of interest on the amount of compensation as a pre-condition for maintainability of the appeal. We are unable to agree. 12. In an appeal under Section 30(1)(a) deposit of the amount awarded by the Commissioner is mandated as a condition precedent to maintain the appeal. The above provision will clearly indicate that the legislature wanted to ensure that the right of the beneficiary of the order, namely, the workman, is not put in jeopardy in any manner. 13. The whole idea behind insisting for pre-deposit is obviously to avoid procrastination in making available the compensation to the victim. Chapter 11 deals with compensation. While Section 3 speaks about employer's liability to pay compensation, Section 4 enumerates and elucidates how compensation is to be computed in the case of death, permanent total/partial disablement etc. 14. 13. The whole idea behind insisting for pre-deposit is obviously to avoid procrastination in making available the compensation to the victim. Chapter 11 deals with compensation. While Section 3 speaks about employer's liability to pay compensation, Section 4 enumerates and elucidates how compensation is to be computed in the case of death, permanent total/partial disablement etc. 14. Section 4A mandates that compensation under Section 4 shall be paid as soon as it falls due and if 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 by depositing the same before the Commissioner. Sub-section (3) of Section 4A empowers the Commissioner to levy penalty from the employer in addition to interest if he commits default in paying the compensation to the workman within one month from the date it fell due. 15. That the employer is liable to pay interest from the date of the accident is beyond any controversy now, in view of the decision rendered by a Constitution Bench of the Apex Court in Pratap Narain Singh Deo v. Srinivas Sabata & Anr. ( 1976 (1) LLJ 235 ). In our view, the words "amount payable under the order appealed against" in the third proviso will include not only the principal amount of compensation, but interest as well. 16. Though learned counsel has cited a large number of decisions in support of his contention, many of those decisions are not relevant for the purpose of this case. In M/s. Sasa Enterprises v. Pramod Kumar (1983 ACJ 677), a learned Single Judge of the Allahabad High Court has held that the appellant/employer need not deposit the interest or cost on the amount of compensation awarded by the Commissioner, while preferring appeal under Section 30 of the Act. According to the learned Judge, award of interest arises only if the employer fails to make the payment as soon as it falls due. While claim for compensation arises under Section 4 of the Act, award of interest is postulated under Section 4(a) of the Act. According to the learned Judge, award of interest arises only if the employer fails to make the payment as soon as it falls due. While claim for compensation arises under Section 4 of the Act, award of interest is postulated under Section 4(a) of the Act. The learned Judge proceeded to hold that the claim for interest stands entirely on a different footing as compared to the claim for compensation that arises under Section 4 and therefore the appellant is not bound to deposit interest and cost along with the amount of compensation awarded by the Commissioner while preferring the appeal. We are unable to agree with the above view taken by the learned Single Judge of the Allahabad High Court. 17. In Executive Engineer (Electrical), Karnataka Electricity Board, Hubli & Another v. Hajarat Ali Mailasab & Anr. (1992 (1) LLJ 61), a learned Single Judge of the Karnataka High Court also took a similar view. The learned Judge held that what is contemplated under Section 30 of the Act is only deposit of the compensation amount and it is not necessary for the appellant to deposit interest and penalty awarded by the Commissioner. 18. In Kap Steel Ltd. v. R. Sasikala ( 1990 ACJ 913 ), a Division Bench of the Karnataka High Court had occasion to consider the same question. The Division Bench, after referring to the facts leading to the appeal in that case, took the view that since the appeal in that case was one under Clause (aa) of Section 30 (1) of the Act, deposit of amount of interest or penalty imposed under Section 4(A) of the Act in addition to the compensation did not arise for consideration. In other words, the question whether or not interest in addition to the principal amount of compensation was liable to be deposited in an appeal under Clause (a) of sub-section (1) of Section 30 of the Act was not decided in the above case. 19. Learned counsel for the appellant placing heavy reliance on the above Single Bench decisions of the Allahabad and Karnataka High Courts submits that the above view is worthy of acceptance by this court also. 20. In Ramakant Rout alias Routras v. Prafulla Kumar Das & Anr. 19. Learned counsel for the appellant placing heavy reliance on the above Single Bench decisions of the Allahabad and Karnataka High Courts submits that the above view is worthy of acceptance by this court also. 20. In Ramakant Rout alias Routras v. Prafulla Kumar Das & Anr. (1993 ACJ 496), a learned Single Judge of the Orissa High Court held that an award imposing penalty under Section 4-A as provided under Section 30(1)(aa) requires no certificate to be furnished. The learned Judge further held that where the award is composite being one under Section 30(1)(a) and Section 30 (1)(aa) of the Act no certificate is necessary, if the appellant confines his challenge only to the imposition of penalty. If, however, the entire award is assailed a certificate of deposit relating to the amount falling under Section 30(1)(a) of the Act would be required. 21. Learned counsel for the appellant submits that the learned Single Judge in the above decision has laid emphasis on the words "amount of compensation" which would only mean that a certificate from the Commissioner would not be necessary if the challenge is directed only against penalty under Section 4-A of the Act. But if the challenge is directed only against "the amount of compensation" under Section 30(1)(a), the deposit contemplated is only the amount of compensation and nothing more. 22. We are afraid the above contention is totally misconceived. As has been noticed already, the third proviso refers to the amount payable under the order appealed against. The amount payable necessarily will include interest awarded by the Commissioner. Therefore, we are not able to agree with the view taken by the Allahabad, Karnataka and Orissa High Courts in the decisions referred to above. 23. In Kap steel (supra) the above issue had not come up for consideration directly. But Sri. Rajan P. Kaliyath, learned counsel for the appellant, submits that the view taken by the Division Bench in the said decision will support his argument. 24. The question which came up for consideration before the Division Bench in Kap Steel (supra) was formulated thus : "Whether depositing of the amount of interest or penalty imposed under Section 4-A of the Act in addition to the compensation awarded or otherwise, is a condition precedent for preferring an appeal ?" 25. 24. The question which came up for consideration before the Division Bench in Kap Steel (supra) was formulated thus : "Whether depositing of the amount of interest or penalty imposed under Section 4-A of the Act in addition to the compensation awarded or otherwise, is a condition precedent for preferring an appeal ?" 25. The contention raised by the appellant in the above case was that pre-deposit prescribed under the third proviso to sub-Section (1) of Section 30 of the Act applies only to appeal falling under Clause (a) of Section 30 of the Act and therefore the condition precedent for depositing the amount before preferring an appeal applies only to the amount of compensation awarded and not to an appeal falling under Section 30(1)(aa) of the Act. 26. The case of the appellant was that he had deposited the amount of compensation even while the proceedings were pending before the Commissioner. But though the appellant was required to deposit the amount within thirty days from the date of the accident, the deposit was made only after 11 months. Therefore interest and penalty had been imposed on the appellant under Section 4-A of the Act. The contention raised by the appellant was that since he had deposited the entire amount of compensation there was no question of his making any further deposit while preferring this appeal. 27. The Division Bench accepted the above contention. However, it was noticed that the appeal was preferred only against the interest and penalty imposed under Section 4-A of the Act. The condition of depositing the amount prescribed under the third proviso to Section 30 (1) of the Act was not attracted, as the appeal before the Division Bench did not fall under Clause (a) of Section 30 (1) of the Act. On the contrary, the appeal was under Clause (aa) of the said section. Therefore, the Division Bench answered the question extracted by us thus : "Depositing of the amount of interest or penalty imposed under Section 4-A of the Act in addition to the compensation awarded or otherwise, is not a condition for preferring an appeal under Section 30(1) of the Act." 28. It is contended by the learned counsel for the appellant that the principle laid down by the Division Bench in the above decision would squarely apply in this case also. We cannot agree. 29. It is contended by the learned counsel for the appellant that the principle laid down by the Division Bench in the above decision would squarely apply in this case also. We cannot agree. 29. As has been noticed already, Clause (aa) of sub-section (1) of Section 30 deals with appeals against orders awarding interest or penalty under Section 4A of the Act. In other words the legislature has put the order relating to interest or penalty under Section 4-A in a separate category of its own. Section 30 does not provide for pre-deposit in the case of an appeal under Clause (aa), whereas in an appeal under Clause (a), the statute provides that the appellant will have to deposit "the amount payable under the order appealed against" as a condition precedent. In short, appeals contemplated under Clause (a) and Clause (aa) are treated differently under Section 30 of the Act. The amount payable under the order appealed against, in our view, will include interest also. 30. Interest is an integral and inseparable part of compensation. Therefore, the express language used in the third proviso leaves no room for any doubt that "the amount payable under the order" will include interest also. Mr. L.R. Ferro Alloys Ltd. v. Mahavir Mahto & Anr. ( (2002) 9 SCC 450 ), the Apex Court has reiterated the earlier view taken in Ved Prakash Garg v. Premi Devi & Ors. ( (1997) 8 SCC 1 ) the interest and penalty are two distinct liabilities arising under the Act. Liability to pay interest is part and parcel of legal liability to pay compensation upon default of payment within one month. 31. In any view of the matter, we have no hesitation to hold that the contention raised by the appellant that he need deposit only the principal amount of compensation cannot be accepted at all. The appellant has to deposit the principal amount of compensation as well as interest that has been ordered to be paid by the Commissioner. 32. At this stage, learned counsel for the appellant submits that the appellant may be given some reasonable time to deposit the interest portion of the award passed by the Commissioner. In the facts and circumstances of the case, the appellant is granted one months' time to make the deposit of the interest portion. 32. At this stage, learned counsel for the appellant submits that the appellant may be given some reasonable time to deposit the interest portion of the award passed by the Commissioner. In the facts and circumstances of the case, the appellant is granted one months' time to make the deposit of the interest portion. The appellant shall produce the requisite certificate from the Commissioner within one month from today. The preliminary question is answered as above. Registry shall post the appeal for hearing once the appellant makes the deposit and produces the certificate from the Commissioner in this regard. Order accordingly.