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2012 DIGILAW 1147 (GAU)

New India Assurance Company Ltd. v. Birsha Samura

2012-09-28

S.TALAPATRA

body2012
JUDGMENT S. Talapatra, J. 1. Heard Mr. S.S. Sharma, learned Senior Counsel assisted by Mr. K.K. Bhatta, learned Counsel appearing for the appellant. Identical substantial questions of law have been projected in both the appeals. Apart that these appeals have emerged from the same accident which occurred on 22.8.2004. As such, the appeals are taken up together for disposal by a common judgment. These appeals filed under section 30 of the Workmen's Compensation Act, 1923 against the judgment and award dated 30.8.2004 passed by the Commissioner, Workmen's Compensation, Tinsukia in W.C. Case No. 96 of 2004 and W.C. Case No. 95 of 2004. 2. At the time of admission no substantial question of law was formulated as required under section 30(1) of the Workmen's Compensation Act, 1923. However, from the memorandum of appeal, it appears that the following substantial questions of law are involved in these appeals: 1. Whether the wages of the workmen would include the daily allowance, and 2. Whether the interest shall accrue from the date of the judgment and award @ 12% per annum or from the date when it fell due as per section 3 of the Workmen's Compensation Act, 1923 or whether there can be higher rate of interest beyond 12% per annum on the award. 3. Mr. Sharma, learned Senior Counsel submitted that by the impugned judgment and award, the Commissioner, Workmen's Compensation has included the daily allowance in the monthly wages and thereafter assessed the compensation. Mr. Sharma, learned Senior Counsel to buttress his argument further submitted that section 2(m) of the W.C. Act, 1923 had fallen for interpretation before this Court in Oriental Insurance Co. Ltd. v. Lakhimai Das and another, 2006 (3) GLT 870 where this Court has held as under: 12. It is clear from hereinabove that a sum of amount paid to a workmen to cover any special expenses entailed on him by the nature of his employment is not included in his "wages" for the purpose of the Act. From the nature of the employment of the deceased, we have no hesitation to hold that the daily allowances by the claimant in her deposition would not form a part of the wages as defined under the Act. On a moderate estimate, we may take that a daily allowance of Rs.20/- was paid to the deceased. From the nature of the employment of the deceased, we have no hesitation to hold that the daily allowances by the claimant in her deposition would not form a part of the wages as defined under the Act. On a moderate estimate, we may take that a daily allowance of Rs.20/- was paid to the deceased. Resultants an amount of Rs.600/- can be safely deducted from the amount quoted by the claimant to be the income of the deceased per month. According to us, therefore, the wages for the purpose of computing the compensation for the death of the deceased has to be taken as Rs.3,000/- per month. We are, therefore, of the view that the learned Commissioners had erred in law and on facts in proceeding on the basis that the monthly wages of the deceased at the relevant time was Rs.3,500/-. 4. Mr. Sharma, learned Senior Counsel also submitted that as per section 4(A)(3)(a) of the Workmen's Compensation Act, 1923 the Commissioner can only 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. Therefore, unless such notification is published, no higher rate of interest can be given by the Commissioner, Workmen's Compensation. Apart that, the interest @ 12% can only be given on the amount due meaning thereby from when the compensation is determined by the Commissioner, Workmen's Compensation, not from a date anterior thereto. 5. This Court has given an anxious consideration to the submission of Mr. Sharma/learned Senior Counsel and has also critically examined the decision of Lakhimai Das (supra). In Lakhimai Das (supra), this High Court did not lay down any principle but has interpreted the provisions of law in the attendant circumstances of that particular case and held that a sum of amount paid to a workman to cover any special expenses entailed on him by the nature of his employment is not included in his "wages" for the purpose of the Act. The said interpretation does not contravene in any manner the definition of the "wages" as provided in section 2 of the Workmen's Compensation Act, 1923 which stipulates as under: "wages" includes any privilege or benefit which is capable of being estimated in money, other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of a workman towards any pension or provident fund or a sum paid to a workman to cover any special expenses entailed on him by the nature of his employment. 6. In that case, the Tribunal found that 'the said daily allowance was a sum paid to the workman to cover the special expenses but it did not project that the daily allowance of all nature would be excluded from the wages. The wages includes any privilege or benefit which is capable of being estimated in money. In this regard a decision of the Apex Court in Mohd. Ameeruddin and another v. United India Insurance Co. ltd. and another, (2011) 1 SCC 303 is required to be referred to. The Apex Court in Mohd. Ameeruddin (supra), held that: 7. We are unable to appreciate the view taken by the High Court on both counts. First, there was no evidence that the daily allowance of Rs.50/- was not paid to the deceased every day or even that he was not on work on every day of the month. On the contrary, there is evidence on record that apart from the monthly salary of Rs.2,500/- he was getting Rs.50/- as daily allowance. We, therefore, hold that the Tribunal was right in assessing the monthly income of the deceased at Rs.4,000/-. 7. In the case in hand also though there is no evidence that the daily allowance as was being given to the workman was not being given on everyday of the month or he had not worked on everyday of the month. Therefore, a conjoint reading of section 2(m) with Mohd. Ameeruddin (supra), it would be crystal clear that wages would include the daily allowance unless it is demonstrated that the said allowance is a part of the sum paid to a workman to cover any special expenses entailed on him by the nature of his employment. 8. Therefore, a conjoint reading of section 2(m) with Mohd. Ameeruddin (supra), it would be crystal clear that wages would include the daily allowance unless it is demonstrated that the said allowance is a part of the sum paid to a workman to cover any special expenses entailed on him by the nature of his employment. 8. The appellants in these appeals did not make any endeavour to prove that the daily allowances as paid to the workmen was a sum paid to the workmen to cover any special expenses entailed on him by the nature of his employment. Moreover, the allowances which are capable of being estimated in money would include within the benefit as defined in section 2(m) of the Workmen's Compensation Act, 1923. It is held that the daily wages of the nature as the workmen were being paid would include in the wages for purpose of calculating the compensation for death and bodily injury of the workmen. 9. The rate of interest on the award made under section 4 of the Workmen's Compensation Act, 1923 is still on the hotbed of debate. However, the Apex Court in National Insurance Co. Ltd. v. Mubasir Ahmed and another, 2007 (112) FLR 1033 (SC) 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, (1998) 9 SCC 134 By Amending Act 30 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 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. 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. 10. The Apex Court further enunciated the law drifting moderately away from Mubasir Ahmed (supra), in Oriental Insurance Co. Ltd. v. Mohd. Nasir and another, 2009 (121) FLR 1103 (SC) where it has been held that: 47. The second question which arises for consideration is with regard to the payment of interest. There cannot be any doubt whatsoever that interest would be from the date of default and not from the date of award of compensation. 48. Ltd. v. Mohd. Nasir and another, 2009 (121) FLR 1103 (SC) where it has been held that: 47. The second question which arises for consideration is with regard to the payment of interest. There cannot be any doubt whatsoever that interest would be from the date of default and not from the date of award of compensation. 48. Section 4-A(3) of the 1923 Act reads as under: 4-A. Compensation to be paid when due and penalty for default--(1)-(2) (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 percent 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. 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 (2 of 1934). 49. Section 4-A(3), as it appears from a plain reading, is penal in nature. It, however, does not take into consideration the chargeability of interest on various other grounds including the amount which the claimant would have earned if the amount of compensation would have been determined as on the date of filing of the claim petition. The Workmen's Compensation Act does not prohibit grant of interest at a reasonable rate from the date of filing of the claim petition till an order is passed. Only when sub-section (3) of section 4-A would be attracted, a higher rate of interest would be payable where for a finding of fact as envisaged therein has to be arrived at. The Workmen's Compensation Act does not prohibit grant of interest at a reasonable rate from the date of filing of the claim petition till an order is passed. Only when sub-section (3) of section 4-A would be attracted, a higher rate of interest would be payable where for a finding of fact as envisaged therein has to be arrived at. Only because in a given case, penalty may not be held to be leviable, by itself may not be a ground not to award reasonable interest. 50. Reliance has been placed on Mubasir Ahmed, wherein it was held: (SCC pp. 354-55, para 9) 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, (1998) 9 SCC 134 . 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 @ 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 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". 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. As therein this aspect of the matter has not been considered, we are of the opinion that interest will also be payable at the rate of 7½% 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. 11. Therefore, law as of now, is that the interest shall be paid @ 7½% per annum from the date of filing the application till the date of award. The rate of interest thereafter shall be payable in terms of the order passed by the Commissioner i.e., at the minimum rate of 12% per annum or at the higher rate after appropriate modification is available saying mat the higher rate of interest 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. 12. In view of the law as laid down by the Apex Court, the appellants are directed to pay the interest @ 7½% per annum from the date of filing of the application till the date of adjudication and thereafter to pay the interest @ 12% per annum till the payment is made. For the reasons as aforesaid, both the appeals are allowed partially to the extent as indicated above. However, there shall not be any order as to costs. The appellants are directed to pay the awarded sum, if not already paid, before the Commissioner, Workmen's Compensation, Tinsukia within a period of one month from the date of the judgment and order with interest as aforesaid. The Commissioner thereafter would make payment to the claimant-respondents. Send down the LCRs forthwith.