IMPORTANT POINT
Death in course of employment – Interest statutorily provided on amount of compensation is 12% – Discretion is only in so far as awarding higher rate of interest.

JUDGMENT

K. VINOD CHANDRAN, J.

Leave granted.

2. The only question raised in the appeal is as to the interest payable under the Employee’s Compensation Act 1923. The Insurance Company’s argument is that when there is a default in complying with Section 4A (2); mandating the employer, disputing a liability, to make provisional payment based on the extent of liability, which payment has to be either deposited with the Commissioner or disbursed to the employee or legal representatives, the additional liability incurred on such failure cannot be mulcted on the insurer. Sub­ section 3A provides that on default to pay the compensation within one month from the date it fell due, the employer shall pay, in addition to the amount of arrears, simple interest at the rate of 12 % per annum or at such higher rate not exceeding the maximum lending rate prescribed for scheduled banks by sub­clause (a) and sub­clause(b) further provides a penalty not exceeding 50 % of such award amounts.

3. It is the submission of the learned counsel for the appellants that there is a statutory mandate to award interest under Sub­ section 3(a) @ 12 % per annum and the discretion conferred on the Commissioner is only to the extent of granting a higher rate, which again should not exceed the lending rate specified for scheduled banks.

4. The learned Standing Counsel for the respondent­Insurance Company refutes the claim, on the contention that the insurer is not liable to indemnify the insured for the default committed by the insured. It is pointed out that in the present case the owner of the vehicle, was the father of the deceased and the contention was that the deceased was employed as a cleaner in the truck owned by the father. The mother and the other siblings were the claimants. There is a specific contention taken by the Insurance Company that there was no intimation about the accident, given to the Insurance Company. It is submitted that even if the liability is mulcted on the Insurance Company, they are entitled to recover the interest awarded, from the insured; since there is no question of indemnification of a default committed by the employer.

5. At the outset, we have to find that there is a mandate in so far as payment of 12 % interest if there is a default committed in making the provisional payment. We cannot but notice that under Section 4A(3), the interest liability arises on default of the employer, in paying the admitted compensation due under the Act within one month from the date it fell due and if there is such default, necessarily interest shall run at the rate provided. That the interest runs from the date of the accident is declared by this Court in Pradeep Narain Singh Deo vs. Srinivas Sabate, (1976) 1 SCC 289 and North East Karnataka Road Transport Corporation vs. Sujatha, (2019) 11 SCC 514.

6. That the interest statutorily provided is 12 % comes out from the provision itself. The discretion is only in so far as awarding a higher rate of interest; exceeding the prescribed lending rates applicable to scheduled banks. The discretion is only in so far as applying a higher rate, ensuring that it does not exceed the lending rate prescribed for scheduled banks. Hence 12 % simple interest per annum necessarily has to be applied. The legislative intent is very clear insofar as Sub­clause (b) of Section 4A(3) conferring a discretion on the Commissioner/Authority to impose a penalty not exceeding 50 % of the amounts awarded while no such discretion is available under clause (a). In the instant case, the Commissioner has awarded only 40 % penalty.

7. The question of whether the son’s employment in the father’s vehicle can inure to the benefit of the legal representatives, to raise a claim for compensation under the Act, cannot now be agita