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Madhya Pradesh High Court · body

2013 DIGILAW 349 (MP)

Rajendra Prasad Mishra v. Mamta

2013-03-14

M.C.GARG

body2013
JUDGMENT : M.C. Garg, J. A short point is involved in this appeal as to whether the appellant made himself liable to pay penalty in accordance with section 4-A of the Workmen's Compensation Act, 1923 which reads as under : 4-A. Compensation to be paid when due and penalty for default.- (1) Compensation u/s 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 percent 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). (3A) The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependant, as the case may be. 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). (3A) The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependant, as the case may be. To appreciate the submission of the learned counsel for the appellant, who submits that there was no occasion for the appellant to pay any compensation to the legal representatives of the deceased Devraj Patel who died in the accident and whose relatives have claimed that he was an employee of the appellant/company. It is submitted that the appellant would have been liable to deposit compensation, had the appellant admitted the factum of employment of deceased Devraj Patel with the appellant. In fact the appellant never accepted him to be their employee and, therefore, the question of payment of any compensation on account of his death to his legal heirs did not arise. Thus, if there was no liability on the appellant to pay compensation, the question of payment of any penalty does not arise. 2. It is submitted that the appellant has contested the claim of the legal heirs of the deceased Devraj Patel who filed compensation petition under the Workmen's Compensation Act because of death of deceased Devraj Patel in the accident. 3. The case of the claimants was based upon their submissions that deceased Devraj Patel was the employee of the appellant being posted as cleaner in the bus in question at the relevant point of time. 4. In their reply to the claim petition, appellant denied that Devraj Patel was employed as cleaner in the bus in question. This fact is borne out from the pleadings in the written statement filed by the appellant inasmuch as in para 1 of the written statement the appellant has stated as under : (Omitted as in vernacular) 5. It is submitted that in view of aforesaid denial of the claim of the respondent for compensation on account of death of deceased Devraj Patel, issue No. 1 was framed. 6. It is submitted that even in the evidence which came on record, the appellant denied that deceased Devraj Patel was his employee. It is submitted that in view of aforesaid denial of the claim of the respondent for compensation on account of death of deceased Devraj Patel, issue No. 1 was framed. 6. It is submitted that even in the evidence which came on record, the appellant denied that deceased Devraj Patel was his employee. In this regard they have examined Rajendra Mishra, D.W. 1, who appeared as sole witness of the appellant and has categorically stated that deceased was not an employee of the appellant and was not posted as cleaner at the relevant point of time. 7. It is submitted that Workmen's Commissioner has reached a conclusion that deceased was an employee merely because appellant has not produced the record, such as, employment register, wages register. It is also submitted that this decision of the Tribunal does not hold that the appellant was guilty of not depositing the compensation amount or that on account of non-depositing the compensation amount, the appellant became liable to pay the penalty u/s 4-A of the Act. 8. The appellant has relied upon the judgment of Hon'ble Apex Court in the case of Ved Prakash Garg Vs. Premi Devi and others (1997) 8 SCC 1 , wherein while discussing the liability to pay penalty u/s 4-A, the Apex Court has been pleased to make the following observations : (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 ends 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 4-A of the Compensation Act with which we are directly concerned. 9. A mere look at the aforesaid provision quoted above shows that section 4-A deals with the time for payment of compensation as required to be computed u/s 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 sub-section (2) of section 4-A 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 4-A 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 4-A 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 4-A(3) interest at the rate provided therein and also penalty as contemplated by sub-clause (b) thereof as per the amended section 4-A(3) of the Compensation Act but even under the unamended section 4-A(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 percent of compensation found payable when it is not paid within the requisite time as and when it fell due. 10. Thus even in the scheme of the unamended section 4-A(3) or as per the amended section 4-A(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 4-A(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 4-A(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. 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 4-A(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 simplicity default in payment of compensation within the time of one month from the date it fell due would automatically attract the provision of simple interest u/s 4-A(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 4-A(3)(a) of the Workmen's Compensation Act as existing on the Statute Book at present which shows that the interest payable under sub-section (3A) 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 4-A that the question posed for our consideration has to be resolved. 11. A bare perusal of the aforesaid para of the judgment shows that if there is a dispute about the relationship or stand has been taken by the employer that deceased was not his employee, then the liability to pay compensation arises only after the claim is ascertained by the Workmen's Commissioner and compensation is not paid within 30 days thereafter. In the present case, admittedly the claim after being ascertained has been paid by the insurance company within 30 days, as such it is not a case where penalty should have been imposed upon the appellant. With the aforesaid, this appeal is allowed.