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Gauhati High Court · body

2012 DIGILAW 836 (GAU)

Oriental Insurance Co. Ltd. v. Paren Narzary

2012-07-18

A.K.GOSWAMI

body2012
JUDGMENT A.K. Goswami, J. 1. This appeal under Section 30 of the Workmen's Compensation Act, 1923, for short, the Act, is preferred against the judgment and order dated 11.03.2002 passed in W.C. Case No. 24 of 2001 by the learned Commissioner, Workmen's Compensation, Dhubri awarding compensation of Rs.1,48,284/- to the opposite party No. 1 for the injuries sustained by him while being employed as a driver of the opposite party No. 2. By the impugned judgment and order dated 11.03.2002, the learned Commissioner also directed the Oriental Insurance Company Ltd. to pay simple interest @ 9% p.a. on the entire amount of the due compensation from the date of occurrence from 08.10.1999 to 11.03.2002 amounting to Rs.33,364/-. It is further directed that the total amount of Rs.1,81,648/- (Rs.1,48,284/- + Rs.33,364/-) should be paid on or before 12.04.2002, failing which it is also indicated that additional simple interest @ 9 % p.a. will accrue from the date of the order till the date of deposit in Court. It is submitted by Mr. Dutta that the amount of Rs.1,48,284/- was deposited by the Insurance Company on 05.10.2002 and on 16.11.2002, the awarded amount was disbursed to the claimant. From the record of W.C. Case No. 24 of 2001, it is also seen that an amount of Rs.1,47,489/- was disbursed to the claimant on 16.11.2002 after deducting a sum of Rs.95/- from the awarded amount on account of "BC/PC". 2. When the appeal was admitted on 06.05.2003, no substantial question of law was formulated. The matter was partly- heard on 04.05.2012 and 12.06.2012. On 12.06.2012, this Court noticed the aforesaid aspect of the matter and accordingly, after hearing Mr. S. Dutta, the following substantial question of law was formulated: Whether interest can be awarded in case of injury from the date of accident ? 3. In Ved Prakash Garg Vs. The matter was partly- heard on 04.05.2012 and 12.06.2012. On 12.06.2012, this Court noticed the aforesaid aspect of the matter and accordingly, after hearing Mr. S. Dutta, the following substantial question of law was formulated: Whether interest can be awarded in case of injury from the date of accident ? 3. In Ved Prakash Garg Vs. Premi Devi & Ors., reported in (1997) 8 SCC 7, the question that had fallen for consideration of the Apex Court was as under: Where an employee receives a personal injury in a motor accident arising out of and in the course of his employment while working on the motor vehicle of the employer, whether the insurance company, which has insured the employer-owner of the vehicle against third-party accident claims under Motor Vehicles Act, 1988 (hereinafter referred to as ' Motor Vehicles Act') and against claims for compensation arising out of proceedings under the Workmen's Compensation Act, 1923 (herein referred to as' the Compensation Act') in connection with such motor accidents, is liable to meet the awards of Workmen's Commissioner imposing penalty and interest against the insured employer under Section 4A (3) of the Compensation Act ? 4. There were conflicting decisions rendered by several High Courts. The Apex Court at paragraph 9 of Ved Praksah (supra) stated as follows: 9. Before we deal with the rival contentions and have a look at the divergent viewpoints expressed by the different High Courts on this question, it will be necessary to keep in view the relevant statutory schemes in the light of which this controversy has to be resolved. The Compensation Act deals with the provisions for payment by certain classes of employers to their workmen of compensation for employment injuries caused by accident. There is no dispute between the parties that the deceased drivers and cleaner in these cases were workmen employed by the appellant-employers. Section 3 of the Compensation Act deals with "Employer's liability for compensation". Sub section (1) thereof lays down that "if personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II. Section 3 of the Compensation Act deals with "Employer's liability for compensation". Sub section (1) thereof lays down that "if personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II. It is also not in dispute that fatal personal injuries were caused to the workmen by accidents which arose out of and in the course of their employment because of which they were working on the motor vehicles of the appellant-employers when they met their end on account of motor accidents. Section 4 of the Compensation Act deals with "Amount of compensation". It lays down the statutory scheme for computing the compensation payable in cases of the types of accidental injuries suffered by the workmen concerned. The employer, on a conjoint reading of Sections 3(1) and 4(1) of the Compensation Act, would be liable to make good the liability for paying compensation to the insured workmen under circumstances contemplated by these provisions. Then follows Section 4A of the Compensation Act with which we are directly concerned. It is, therefore, necessary to extract it in extenso. The said section during the relevant time, in 1992, when the accidents were caused read 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 may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty. The said section was further amended by Act 30 of 1995 with effect from 15.9.1995 and in the amended form it now 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; 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: 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. A mere look at the aforesaid provision shows that Section 4A deals with the time for payment of compensation as required to be computed under Section 4. Sub-section (1) thereof mandates that compensation shall be paid as soon as it falls due. Sub-section (2) thereof contemplates a situation wherein the employer though accepting his liability to pay compensation to his injured workman disputes the extent of the claim of compensation and in such a case sub-section (2) enjoins him to make provisional payment based on the extent of accepted liability by depositing it with the Commissioner or to pay it directly to the workman. It is obvious that such an obligation of the employer would not arise under Section 4A sub-section (2) if he totally disputes his liability to pay on grounds like the injured person being not his employee or that the accident was caused to him at a time when he was not in the course of employment or that the accident caused to him did not arise out of his employment. If such disputes are raised by the employer then his obligation to make provisional payment under sub-section (2) of Section 4A would not arise and his liability would depend upon the final adjudication by the Workmen's Commissioner at the end of the trial. In that light when sub-section (3) of Section 4A is seen it becomes obvious that once the compensation due under the Act becomes ascertained either provisionally under sub-section (2) or finally on adjudication by the Commissioner and if the employer does not pay the same within one month from the date it thus falls due, the Commissioner can direct under sub-clause (a) of Section 4A(3) interest at the rate provided therein and also penalty as contemplated by sub-clause (b) thereof as per the amended Section 4A(3) of the Compensation Act but even under the unamended Section 4A(3) which applied at the relevant time a clear distinction is made by the legislature between the imposition of penalty by way of a further sum not exceeding fifty per cent of compensation amount and the imposition of interest on the amount of compensation found payable when it is not paid within the requisite time as and when it fell due. Thus even in the scheme of unamended Section 4A(3) or as per the amended Section 4A(3) read with clauses (a) and (b) thereof, it becomes clear that additional amount of compensation can be levied against the defaulting employer by way of penalty if it is shown that there is no justification for the delay on his part in making good the compensation amount to the claimant. Interest payable on the principal amount, if not paid when it fell due, is not considered by the legislature to be a penalty. This is further highlighted by the proviso to Section 4A(3) as substituted by Act 30 of 1995 which clearly indicates that a penalty amount under clause (b) cannot be imposed against the employer without giving him reasonable opportunity to show cause. This is further highlighted by the proviso to Section 4A(3) as substituted by Act 30 of 1995 which clearly indicates that a penalty amount under clause (b) cannot be imposed against the employer without giving him reasonable opportunity to show cause. No such show-cause notice is contemplated while imposing interest on default of payment of the principal amount on the part of the employer as per Section 4A(3)(a). Absence of this provision is obviously based on the legislative intent that interest on principal amount is not by way of penalty. Therefore, the employer need not be heard in this connection. A simpliciter default in payment of compensation within the time of one month from the date it fell due would automatically attract the provision for simple interest under Section 4A(3) as per the rate prescribed therein and for such imposition of interest no question of justification for the delay is countenanced by the legislature. But while imposing penalty justification for delay would be a good defence for the employer for meeting such claim for penalty. The same aspect is further highlighted by Section 4A(3)(a) of the Compensation Act as existing on the statute-book at present which shows that the interest payable under sub-section (3-A) is to be paid to the workman or his dependant while the penalty imposed is to be credited to the State Government. It is in the light of the aforesaid statutory scheme of Section 4A that the question posed for our consideration has to be resolved". 5. In National Insurance Co. Ltd. Vs. Kanshi Ram & Ors., reported in 2008 ACJ 2808 at paragraphs 8, 30, 31, and 32, the Delhi High Court stated as follows: 8. After examining the scheme of the Compensation's Act, the Hon'ble Supreme Court held that: (1) Payment of interest and penalty are two distinct liabilities arising under the Workmen Compensation's Act. (2) Penalty is not a part and parcel of the legal liability of the employer to compensate his employee and since the insurer is under contractual obligation to indemnify the employer for his legal liability the insurer is not liable to pay the penalty. (2) Penalty is not a part and parcel of the legal liability of the employer to compensate his employee and since the insurer is under contractual obligation to indemnify the employer for his legal liability the insurer is not liable to pay the penalty. (3) Liability to pay interest is part and parcel of legal liability of the employer to pay compensation upon the default of payment of that amount within 1 month, therefore, claim for compensation payable under the Workmen Compensation's Act along with interest thereon will have to be made good by the insurance company jointly with the insured employer. 30. But, in cases where the employer totally disputes his liability to pay on the grounds like the injured person being not his employee or that the accident was caused to him at a time when he was not in the course of employment or that the accident caused to him did not arise out of his employment then Section 4A(2) would not get attracted and one month's period would start running from the date on which due compensation payable by the employer is adjudicated upon by the Commissioner, Workmen's Compensation. 31. In Ved Prakash's case (supra) after noting the afore-noted 2 situations the Hon'ble Supreme Court has held that in either case the Commissioner, Workmen's Compensation would be justified in directing payment of interest not only from the date of the award but also from the date of the accident concerned. 32. Therefore, a discretion has been vested in Commissioner, Workmen Compensation with regard to the date of the payment of the interest which he has to exercise judiciously keeping in mind the nature of the dispute raised by the employer. If a bona fide dispute is raised by the employer then Commissioner, Workmen's Compensation should award interest from the date of the adjudication of the claim. But where a wholly frivolous dispute was raised by the employer then Commissioner, Workmen's Compensation should award interest from the date of the accident. 6. On the facts of the case, the Delhi High Court held that the Commissioner, Workmen's Compensation was justified in awarding interest from the date of accident. 7. In National Insurance Co. Ltd. Vs. But where a wholly frivolous dispute was raised by the employer then Commissioner, Workmen's Compensation should award interest from the date of the accident. 6. On the facts of the case, the Delhi High Court held that the Commissioner, Workmen's Compensation was justified in awarding interest from the date of accident. 7. In National Insurance Co. Ltd. Vs. Mubasir Ahmed & Anr., reported in (2007) 2 SCC 349 , at paragraph 9, the Supreme Court stated as follows: ..........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 4A(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 case 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 4A. 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. 8. In Palraj Vs. Divisional Controller, North East Karnataka Road Transport Corporation, reported in (2010) 10 SCC 34 7, at paragraph 19, the Apex Court stated as follows: 19. It will be evident that compensation assessed under Section 4 is to be paid as soon as it falls due and in case of default in payment of the compensation due under the Act within one month from the date when it falls due, Commissioner would be entitled to direct payment of simple interest on the amount of the arrears @ 12 % per annum or at such higher rates which do not exceed the maximum lending rates of any scheduled bank as may be specified by the Central Government. Both the Commissioner, Workmen's Compensation, as also the High Court, therefore, rightly held that interest under the 1923 Act cannot be claimed from the date of the filing of the application, but only after a default is committed in respect of the payment of compensation within 30 days from the date on which the payment becomes due. 9. In New India Insurance Company Ltd. Vs. Abdul Kalam, reported in 2009 (1) GLT 138: (2009) 3 GLR 135, this Court had held that starting point of interest is on completion of 30 days from the date on which the payment of compensation falls due and it cannot be the date of accident. 10. In Oriental Insurance Company Ltd. & Anr. Vs. Binoy Roy & Ors., reported in 2011 (1) GLT 9, this Court held that amount of compensation would be payable by the employer under Section 4 of the Act within one month from the date of judgment and if the employer fails to pay the compensation within the time framed as indicated in Sub section 3 of Section 4A of the Act, the Commissioner would be within the jurisdiction to direct payment of simple interest @ 12 % p.a. 11. In view of the discussions aforesaid, the learned Commissioner was not correct in awarding interest in the instant case from the date of accident and as such, the interest from date of occurrence on 08.10.1999 to the date of judgment and order, which is 11.03.2002, quantified at Rs.33,364/- is not payable by the Insurance Company. The learned Commissioner had also imposed additional simple interest @ 9 % p.a. from 12.04.2002. Once a determination of compensation amount is made, Sub-Section 3 (a) of Section 4A of the Act envisages payment of simple interest @ 12 % p.a. Even though no appeal has been filed by the workman questioning the imposition of interest of only 9% p.a.. the Act being a beneficial piece of legislation, this Court is of the opinion that it will not be unjustified if the Court directs payment of simple interest @ 12 % p.a. from 12.4.2002, the date fixed by the learned Commissioner for payment, up to 5.10.2002, the date of deposit of the compensation amount by the Insurance Company. the Act being a beneficial piece of legislation, this Court is of the opinion that it will not be unjustified if the Court directs payment of simple interest @ 12 % p.a. from 12.4.2002, the date fixed by the learned Commissioner for payment, up to 5.10.2002, the date of deposit of the compensation amount by the Insurance Company. Accordingly, the Insurance Company will pay interest @ 12 % p.a. from 12.04.2002 to 05.10.2002 within a period of 45 days failing which interest @ 12 % p.a. will accrue on the aforesaid sum till payment is made. 12. The judgment and order dated 11.03.2002 passed by the learned Commissioner, Workmen's Compensation, Dhubri is modified to the extent indicated above. 13. The appeal, accordingly, stands disposed of. Send back the L.C.R.s.