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SUPREME COURT OF INDIA
(From the High Court of Judicature at Bombay, Bench at Aurangabad)
M.R. Shah, B.V. Nagarathna, JJ.
Shobha & Ors. – Appellants
Versus
The Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors. – Respondents
Civil Appeal No. 1860 of 2022
Decided On : 11-03-2022
Employee’s Compensation Act, 1923 – Section 4A(3) – Award of interest on amount of compensation – Compensation under Section 4 shall be paid as soon as it falls due – Liability to pay compensation would arise immediately on death of deceased – In cases, where employer does not accept 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 Commissioner or made to employee, as the case may be, without prejudice to right of employee to make any further claim – Liability to pay compensation would arise from the date on which deceased died for which he is entitled to compensation and therefore, liability to pay interest on amount of arrears/compensation shall be from date of accident and not from date of order passed by Commissioner – If Commissioner is satisfied that there is no justification for delay, it can direct employer, in addition to amount of arrears and interest thereon, to pay a further sum not exceeding 50% of such amount by way of penalty – Provision for interest and provision for penalty are different – Provision for levy of interest would be under Section 4A(3)(a) and provision for levy of penalty would be under Section 4A(3)(b) – While directing employer to pay interest from date of order passed by Commissioner, High Court has not at all considered Section 4A(3)(a) and has considered Section 4A(3)(b) only, which is penalty provision – Impugned judgment and order passed by High Court insofar as awarding interest @ 12% p.a. after period of expiry of one month of date of order passed by Commissioner, quashed and set aside – Appellants-original claimants shall be entitled to interest @ 12% p.a. on amount of compensation as awarded by Commissioner from date of incident. (Paras 4.1 and 5)
Facts of the case:
Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Bombay, Bench at Aurangabad in First Appeal No. 3008 of 2017 by which the High Court has partly allowed the said appeal preferred by the respondents herein and has ordered that the respondents shall be liable to pay interest @ 12 per cent p.a. as leviable under Section 4A(3) of the Employee’s Compensation Act, 1923 from the date after expiry of period of one month from 25.01.2017 (date of order passed by Commissioner), heirs of deceased-labourer working on sugarcane field have preferred present appeal.
Findings of Court:
Impugned judgment and order passed by the High Court directing the employee to pay the interest on the amount of compensation as leviable under Section 4A(3)(a) from the date of the order passed by the Commissioner, i.e., 25.01.2017 is unsustainable.
Result : Appeal allowed.
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Bombay, Bench at Aurangabad in First Appeal No. 3008 of 2017 by which the High Court has partly allowed the said appeal preferred by the respondents herein and has ordered that the respondents shall be liable to pay interest @ 12 per cent p.a. as leviable under Section 4A(3) of the Employee’s Compensation Act, 1923 (hereinafter referred to as the “Act, 1923”) from the date after expiry of period of one month from 25.01.2017 (the date of the order passed by the Commissioner), the heirs of the deceased – labourer working on sugarcane field have preferred the present appeal.
2. That the deceased was a sugarcane cutting labourer. He was engaged as a labourer by the Labour Contractor for cutting the sugarcane, which was to be supplied to the sugar factory. While cutting the sugarcane, he died of a snake bite. Neither the sugar factory nor the contractor paid the compensation due and payable under the Act, 1923 and therefore the appellants herein – heirs of the deceased filed a claim petition before the Commissioner Workmen’s Compensation, Beed being W.M.C. No. 39 of 2011 and claimed Rs. 5 lakhs. By the order dated 25.01.2017, the Commissioner allowed the said application and directed the respondent Nos. 1 to 3 herein jointly and severally to pay the compensation amount of Rs.3,06,180/-alongwith simple interest @ 12% p.a. from the date of accident, i.e., 29.11.2009 till its full realization. The Commissioner also imposed the penalty of 50% on the compensation amount, i.e., Rs. 1,53,090/-.
2.1 Feeling aggrieved and dissatisfied with the order passed by the Commissioner, Workmen’s Compensation, Beed dated 25.01.2017, respondent Nos. 1 to 3 herein filed the First Appeal No. 3008 of 2017 before the High Court. By the impugned judgment and order the High Court has though dismissed the appeal insofar as the amount of compensation awarded by the Commissioner is concerned, however, has set aside the penalty and modified the interest awarded @ 12% p.a. from the date of incident and has directed that the interest @ 12% p.a. shall become payable from the period after expiry of one month from 25.01.2017.
2.2 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the high Court restricting the interest @ 12% p.a. from the date after expiry of period of one month from 25.01.2017, the original claimants have preferred the present appeal.
3. We have heard the learned counsel for the respective parties at length.
4. While holding that the claimants shall be entitled to interest @ 12% p.a. from the date after expiry of a period of one month from 25.01.2017, the High Court has considered Section 4A(3)(b) only which deals with imposition of penalty. However, the High Court has not noted and/or considered Section 4A(3)(a) of the Act, 1923, which deals with award of interest when the employer is in default. Section 4A reads as under:-
“4A. 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 employee, as the case may be, without prejudice to the right of the employee 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 Officia
Award of interest on amount of compensation – Liability to pay interest on amount of arrears/compensation shall be from date of accident and not from date of order passed by Commissioner.
The court clarified that under the Employee's Compensation Act, entitlement to interest begins from the date of the accident, and appeals against refusals of interest and penalty are maintainable.
The main legal point established in the judgment is the liability of the Insurance Company to pay interest imposed upon the insured employer by the Workmen's Commissioner under Sec. 4A(3) of the Empl....
The court held that under the Employees' Compensation Act, 1923, employers cannot refuse to pay interest on compensation for delays, mandating payment of 12% interest from 30 days post-incident.
The Insurance Company is liable for interest on compensation under the Employee’s Compensation Act, while the employer is responsible for penalty payments.
Claimants entitled to interest at 12% from the date of the accident under the Workmen’s Compensation Act, ensuring fairness and adherence to beneficial legislation.
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