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Madhya Pradesh High Court · body

2011 DIGILAW 623 (MP)

National Insurance Co. Ltd. v. Najma

2011-05-19

P.K.JAISWAL

body2011
JUDGMENT P.K. Jaiswal, J. 1. All these appeals by the insurance companies arise out of order made by the Commissioner for Workmen's Compensation, Labour Court, Indore, MP, whereby learned Commissioner directed for payment of interest at the rate of 12 per cent per annum from the date of accident. 2. Whether interest would be payable at the rate of 12 per cent per annum from the date of filing of the application till the date of award or from the date of accident till the date of payment if deposit of compensation is delayed for more than a month or from the date of default is the question involved in all these appeals. 3. Section 4-A of the Workmen's Compensation Act, 1923 reads as under : 4-A. Compensation to be paid when due and penalty for default.--(1) Compensation under section 4 shall be paid as soon as it falls due. (2) In cases where 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, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (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; (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. 4. 4. On a plain reading of section 4-A(3), it becomes obvious that the Commissioner has power to direct the employer to pay interest at the rate of 12 per cent per annum on the amount due where the employer is found to be in default in paying the compensation due under the Act within one month from the date it fell due. Perusal of clause (a) of sub-section (3) shows that interest has been directed to be paid in addition to amount of arrears and the direction can be issued to the employer. There is no dispute about the fact that the insurance company has been directed on behalf of the employer to pay the amount and as such according to the statutory provision, the amount of interest shall have to be paid by the employer and has to be indemnified by the insurance company. 5. In the case of Ved Prakash Garg v. Premi Devi, 1998 ACJ 1 (SC), the Hon'ble Apex Court has interpreted the provision of section 4-A(3) (a) of the Workmen's Compensation Act and has observed as under: A conjoint reading of these provisions in the insurance policy shows that the insurance company insured the employer-owners of the insured motor vehicles against all liabilities arising under the Workmen's Compensation Act for which statutory coverage was required under section 95 of the Motor Vehicles Act, 1939 which is analogous to section 147 of the present Motor Vehicles Act, 1988, as noted earlier. Section 149 deals with 'duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks'. The moot question is whether the insurance coverage as available to the insured employer-owners of the motor vehicles in relation to their liabilities under the Workmen's Compensation Act on account of motor accident injuries caused to their workmen would include additional statutory liability foisted on the insured employers under section 4-A (3) of the Workmen's Compensation Act. On a conjoint operation of the relevant schemes of the aforesaid twin Acts, in our view, there is no scope from the conclusion that the insurance companies will be liable to make good not only the principal amounts of compensation payable by insured employers but also interest thereon, if ordered by the Commissioner to be paid by the insured employers. Reason for this conclusion is obvious. Reason for this conclusion is obvious. As we have noted earlier, the liability to pay compensation under the Workmen's Compensation Act gets foisted on the employer provided it is shown that the workman concerned suffered from personal injury, fatal or otherwise, by any motor accident arising out of and in the course of his employment. Such an accident is also covered by the statutory coverage contemplated by section 147 of the Motor Vehicles Act read with the identical provisions under the very contracts of insurance reflected by the policy which would make the insurance company liable to cover all such claims for compensation for which statutory liability is imposed on the employer under section 3 read with section 4-A of the Workmen's Compensation Act. All these provisions represent a well-knit scheme for computing the statutory liability of the employer in cases of such accidents to their workmen. As we have seen earlier while discussing the scheme of section 4-A of the Workmen's Compensation Act, the legislative intent is clearly discernible that once compensation falls due and within one month it is not paid by the employer then as per section 4-A(3) (a) interest at the permissible rate gets added to the said principal amount of compensation as the claimants would stand deprived of their legally due compensation for a period beyond one month which is statutorily granted to the employer concerned to make good his liability for the benefit of the claimants whose breadwinner might have either been seriously injured or might have lost his life. Taking into consideration the aforesaid judgment of the Apex Court and law laid down by the Apex Court while interpreting the provisions of the enactment, the interest part is in addition to the compensation and as such the Commissioner is free to impose the interest part in addition to the compensation, since the liability has been extended on the employer. The insurance company being the indemnifier of the employer, cannot escape from the liability to pay the interest along with compensation itself. 6. From the perusal of section 4-A of the Act it is clear that where the employer failed to pay the amount of compensation within a period of one month from the date of accident, the claimant is entitled to interest of 6 per cent per annum from the date of accident till the amount is paid. 6. From the perusal of section 4-A of the Act it is clear that where the employer failed to pay the amount of compensation within a period of one month from the date of accident, the claimant is entitled to interest of 6 per cent per annum from the date of accident till the amount is paid. From a plain reading of section 4-A(3) of the Act, it is clear that interest should be awarded from the date when the amount became payable or fell due. That means, it became due and fell due, on the very day on which the deceased succumbed to the injuries. The period of one month given in section 4-A(3) is by way of grace so that the employer can arrange for making necessary deposits before the learned Commissioner. If the amount is not paid within a period of one month from the date on which it became payable or fell due, the Commissioner can grant interest from the date of the accident. Under the Act the employer becomes liable to pay the compensation as soon as the injury to or death of the workman, as the case may be, is caused. It is the duty of the employer to pay compensation under section 4-A (1) as soon as the death is caused. Where the employer fails to do so, the employer is liable to pay interest. 7. The Act provides for expeditious settlement of the claim arising out of employment and sufferance of injuries or death. It is, of course, necessary that the employer is enabled to know the case he has to meet and should have the right and be afforded a reasonable opportunity to present his case and be heard. The procedural sophistications attending the levy of penalty in other context should not be imported to a proceeding under the present Act which is a law providing for speedy and expeditious settlement of the claims arising out of employment injury or death. 8. Under clause (a) of sub-section (3) of section 4-A of the said Workmen's Compensation Act, 1923, it is mandatory on the part of the said Commissioner to award interest that too at the statutory minimum rate of 12 per cent per annum as can directly be seen therefrom. 8. Under clause (a) of sub-section (3) of section 4-A of the said Workmen's Compensation Act, 1923, it is mandatory on the part of the said Commissioner to award interest that too at the statutory minimum rate of 12 per cent per annum as can directly be seen therefrom. By Amendment Act 30 of 1995, section 4-A(3)(a) of the said enactment of 1923 was amended in the year 1995, inter alia, fixing statutorily the minimum rate of interest, which is irreducible at 12 per cent per annum. After the amendment in 1995, the minimum rate of interest is 12 per cent per annum which can be enhanced or increased to more than 12 per cent per annum provided the facts and circumstances prescribed therein prevail. 9. If the statute itself provides a particular interpretation and the interpretation is so clear that in no case High Court can deviate from the simple word of the statement, i.e. pay simple interest thereon, the court will not deviate from it. The statute clearly provides for the payment of 'interest' and, therefore, there cannot be any violation of the statutory provision so as to read the same as a penalty as directed by the counsel for the appellant. 10. In view of the law laid down by the Apex Court in the case of Ved Prakash Garg v. Premi Devi, 1998 ACJ 1 (SC), it must be held that the learned Commissioner has committed grave error in not holding the insurance company liable to pay the interest at the rate of 12 per cent on the amount awarded from the date of accident because the insurance company in spite of coming to know about the accident failed to pay the amount of compensation within a statutory period as provided under the Act. 11. As per section 4-A of the Act, interest as a matter of compensation falls due 30 days after the date of accident and not from the date of quantification. Interest itself is the damages for unreasonable retention of money due to employee by the employer. If the compensation is not paid within one month from the date it fell due, the employer shall, in addition to the amount of compensation, pay simple interest there on at the rate of 12 per cent per annum in the minimum. 12. Interest itself is the damages for unreasonable retention of money due to employee by the employer. If the compensation is not paid within one month from the date it fell due, the employer shall, in addition to the amount of compensation, pay simple interest there on at the rate of 12 per cent per annum in the minimum. 12. It is no more res Integra that the payment of compensation under the Workmen's Compensation Act falls due from the date of death of the workman and that the insurer, who is liable to pay the principal amount of compensation, is also liable to pay interest thereon as prescribed under the provision quoted above. Divisional Manager, New India Assurance Co. Ltd. v. Manorama Devi, 2006 ACJ 1048 (Ori). 13. The Apex Court in the case of Ved Prakash Garg v. Premi Devi, 1998 ACJ 1 (SC), has held that the insurance company, so far as the question of penalty is concerned, would not be liable under the provisions of the Act. However, the liability in respect of interest would be fastened on the insurance company as also on the employer. The same view has been reiterated in the subsequent decision of the Supreme Court in the case of Kashibhai Rambhai Patel v. Shahabhai Somabhai Parmar, 2000 ACJ 1435 (SC). 14. In the case of National Insurance Co. Ltd. v. Mubasir Ahmed, 2007 ACJ 845 (SC) it was held: (9) Interest is payable under section 4-A(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 4-A was dealt with by this court in Maghar Singh v. Jashwant Singh, 1997 ACJ 517 (SC). By Amending Act 30 of 1995, section 4-A of the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest at the rate of 12 per cent. In the instant case, the accident took place after the amendment and, therefore, the rate of 12 per cent 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. 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 to 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 4-A (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 becoming due does not arise. The position becomes clearer on a reading of sub-section (2) of section 4-A. 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 claimed. 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. 15. Learned counsel for the appellant insurance company drew my attention to the decision of the Apex Court in the case of Oriental Insurance Co. Ltd. v. Mohd. Nasir, 2009 ACJ 2742 (SC), wherein it was held that interest would be from the date of default and not from the date of award of compensation. The Apex Court further observed that the Act does not provide grant of interest at a reasonable rate from the date of filing of the claim petition till an order is passed. Only v/hen sub-section (3) of section 4-A would be attracted, a higher rate of interest would be payable where for a finding of fact envisaged therein has to be arrived at. The Hon'ble Apex Court allowed interest at the rate of 7.5 per cent per annum from the date of filing of the application till the date of award and thereafter at the rate of 12 per cent per annum till payment. It was held: We are of the opinion that interest will also be payable at the rate of 7.5 per cent per annum from the date of filing of the application till the date of award. It was held: We are of the opinion that interest will also be payable at the rate of 7.5 per cent per annum from the date of filing of the application till the date of award. The rate of interest thereafter shall be payable in terms of the order passed by the Commissioner. 16. In the case of Maghar Singh v. Jashwant Singh, 1997 ACJ 517 (SC), the three-Judge Bench of the Supreme Court taking into consideration the fact that the accident had occurred way back in 1984, awarded interest at the rate of 9 per cent per annum from the date of accident till the date of recovery or actual payment. 17. A four-Judge Bench of Apex Court in Pratap Narain Singh Deo v. Shrinivas Sabata, 1976 ACJ 141 (SC), speaking through Shinghal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman by the accident which arose out of and in the course of employment. Thus, the relevant date for determination of interest is the date of the accident and not the date of adjudication of the claim. 18. A two-Judge Bench of Apex Court in New India Assurance Co. Ltd. v. V.K. Neelakandan, C.A. Nos. 16904-16906 of 1996; decided on 6.11.1996, however, took the view that the Workmen's Compensation Act, 1923 being a special legislation for the benefit of the workmen, the benefit as available on the date of adjudication should be extended to the workmen and not the compensation which was payable on the date of accident. Similar view was taken by the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd. v. Mohd. Nasir, 2009 ACJ 2742 (SC). In the case of Kerala State Electricity Board v. Valsala K., 2000 ACJ 5 (SC), it was observed that the two-Judge Bench in Neela-kandan's case (supra), however, did not take notice of the judgment of the larger Bench in Pratap Narain Singh Deo's case, 1976 ACJ 141 (SC), as it presumably was not brought to the notice of their Lordships. Be that as it may, in view of the categorical law laid down by the larger Bench in Pratap Narain Singh Deo's case (supra), the Apex Court held that the view expressed by the two-Judge Bench in Neelakandan's case (supra) is not correct. 19. Be that as it may, in view of the categorical law laid down by the larger Bench in Pratap Narain Singh Deo's case (supra), the Apex Court held that the view expressed by the two-Judge Bench in Neelakandan's case (supra) is not correct. 19. The Division Bench of M.P. High Court in the case of Tara Chand Tarrani v. Sunder Das, 2000 ACJ 7 (MP), allowed the interest at the rate of 12 per cent per annum from the date of claim till the date of payment. The Division Bench of M.P. High Court in the case of National Insurance Co. Ltd. v. Moliya Devi, 2007 ACJ 1116 (MP), held that the claimants are entitled to get interest at the rate of 12 per cent per annum from the date of accident as ordered by the Commissioner for Workmen's Compensation. Recently, a single Judge of this court in the case of Oriental Insurance Co. Ltd. v. Heerabai, 2009 ACJ 147 (MP), after relying upon the judgment of the Hon'ble Apex Court in the matter of Pratap Narain Singh Deo v. Shrinivas Sabata, 1976 ACJ 141 (SC), has held that the employer and the insurance company are liable for payment of compensation along with interest from the date of accident. The learned single Judge after appreciating the decision of the Apex Court in the case of National Insurance Co. Ltd. v. Mubasir Ahmed, 2007 ACJ 845 (SC), has held that the decision given by the four Judges of the Hon'ble Apex Court in the year 1976 has not been taken into consideration in the subsequent decision and awarded interest to the claimant at the rate of 12 per cent per annum instead of 9 per cent per annum. 20. For the above-mentioned reasons, this court is of the view that as per section 4-A (3) (a) of the Act the interest is to be paid from due date of the accident. Hence, I hold that the payment of interest at the rate of 12 per cent per annum will arise from the date of accident. Therefore, as per the provisions of the statute the claimants are entitled to 12 per cent interest from the date of accident till deposit of compensation. 21. In the result, all appeals are dismissed, but without any order as to costs.