Whether the Interest on Compensation under Employees' Compensation Act, 1923 is payable from Date of Accident or from the Date of Adjudication of Claim?
Employees' Compensation Act, 1923 (called Workmen Compensation Act, 1923 before
the amendment of 2009) for compensation for injury / death caused to "employees"
by accident arising out of and in the course of employment. The Non-Life
Insurance Industry offers to cover the statutory liability of the "employer"
under the Act, in addition to their liability under the Fatal Accidents Act,
1855 and the Common Law, under the Workmen Compensation Policy.
Sec 4-A (3) of the Employees' Compensation Act, 1923 makes a provision for payment of interest by the "employer" where he is in default of paying the compensation within the statutorily mandated one month from the date of accident. There is also a provision under the same section, that where, in the opinion of the Workmen Compensation Commissioner, there is no justification for delay, he may direct the "employer" to pay a penalty not exceeding 50% of the compensation amount and the interest and the interest thereon.
The term "interest" is distinct from the principal amount of "award", and is awarded in order to compensate a party for the denial of its rightful money under the a Employee's Compensation Act, 1923. It is a settled principle of law that "interest" is awarded against a party [under Section 4-A ("compensation to be paid when due and penalty for default") of the Employees' Compensation Act, 1923, the word used is "shall" and, therefore, the amount awarded shall carry 12% interest as per the statute...], more specifically monetary obligations, so as to put the injured party in the same economic position it would have been in, where the "employer" is in default of paying the compensation within the statutorily mandated one month from the date of accident.
Employee's Compensation Act, 1923 was enacted to provide compensation to the "workers" who suffer injury(ies)/fatal injury(ies) during the course of their employment. Employee's Compensation Act, 1923 is a social beneficial welfare legislation for the benefit of the "workmen". Section 25-A of the Employee's Compensation Act, 1923 provides for expeditious disposal of a compensation case within a period of three months.
On the point of interest, it is relevant to refer Section 4-A of the Employee's Compensation Act, 1923, as under:
Relevant Provision Dealing With Grant Of Interest Under Employees' Compensation Act, 1923
4A. Compensation to be paid when due and penalty for default
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.
[(3A) The interest and the penalty payable under sub-section (3) shall be paid to the 1[employee] or his dependant, as the case may be.]"
Section 4-A (3) of the WC Act 1923 provides that where any "employer" is in default in paying compensation due under Employees' Compensation Act, 1923 within one month from the date it fell due, the Commissioner shall 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 if in the opinion of the Commissioner there is no justification for delay he shall direct the employer to pay a further sum not exceeding 50% of the arrears of compensation and interest, as penalty.
Evidently, Section 4-A of Employees' Compensation Act, 1923 provides for payment of interest on the compensation amount, as determined under the award, as also the penalty if there is no justification for delay.
The question as to whether the "interest" @ 12% could be awarded only in default of the "employer" in making payment within one month from the date it fell due i.e., date of the "award" or it is only, thereafter, that the "interest" could be imposed?. The compensation determined under the "award" must be without any "interest". No "interest" could be imposed with effect from the date of the accident but if default is committed on payment of compensation, from the date of default, the "interest" would be payable @ 12% per annum up to the date of actual payment, and if the amount is paid within that period, no "interest" could not be levied on the compensation amount.
Law Laid Down By Supreme Court
In ["Pratap Narain Singh Deo Vs Srinivas Sabata & Anr." (1976) 1 SCC 289] the Hon'ble Supreme Court of India held that the employer became liable to pay the compensation as soon as the personal injury was caused to the workman by the accident which arose out of and in the course of the employment. In Paras 7 & 8 of the Judgment, the Hon'ble Apex Court held as under:
"7. Section 3 of the Act deals with the employer's liability for compensation. Sub-section (1) of that Section provides that the employer shall be liable to pay compensation if "personal injury is caused to a workman by accident arising out of and in the course of his employment". It was not the case of the employer that the right to compensation was taken away under sub-section (5) of Section 3 because of the institution of a suit in a Civil Court for damages, in respect of the injury, against the employer or any other person. The employer, therefore, became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is, therefore, futile to contend that the compensation did not fall due until after the Commissioner's Order dated May 6, 1969 under Section 19. What the Section provides is that if any question arises in any proceeding under the Act as to the ability of any person to pay compensation or as to the amount or duration of the compensation it shall, in default of agreement, be settled by the Commissioner. There is, therefore, nothing to justify the argument that the employer's liability to pay compensation under Section 3, in respect of the injury, was suspended until after the settlement contemplated by Section 19. The appellant was thus liable to pay compensation as soon as the aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary.
8. It was the duty of the appellant, under Section 4-A (1) of the Act, to pay the compensation at the rate provided by Section 4 as soon as the personal injury was caused to the respondent. He failed to do so. What is worse, he did not even make a provisional payment under sub-section (2) of Section 4 for, as has been stated, he went to the extent of taking the false pleas that the respondent was a casual contractor and that the accident occurred solely because of his negligence. Then there is the further fact that he paid no heed to the respondent's personal approach for obtaining the compensation. It will be recalled that the respondent was driven to the necessity of making an application to the Commissioner for settling the claim, and even there the appellant raised a frivolous objection as to the jurisdiction of the Commissioner and prevailed on the respondent to file a memorandum of agreement settling the claim for a sum which was so grossly inadequate that it was rejected by the Commissioner. In these facts and circumstances, we have no doubt that the Commissioner was fully justified in making an order for the payment of interest and the penalty."
Although the Hon'ble Supreme Court of India in ["National Insurance Co. Ltd. Vs Mubasir Ahmed & Anr.", (2007) 2 SCC 349] held that the starting point of payment of interest is on completion of one month from the date on which the compensation fell due. It cannot be the date of the accident and it has to be taken to be the date of the adjudication of the claim. Para 9 of Mubasir Ahmed (supra) reads as under:
"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 Vs. 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". Unless there is an adjudication, the question of an amount falling due does not arise."
["National Insurance Co. Ltd. Vs Mubasir Ahmed & Anr.", (2007) 2 SCC 349] and one more judgment in ["Oriental Insurance Company Limited Vs. Mohd. Nasir & Anr.", (2009) 6 SCC 280] were considered by the Hon‟ble Apex Court in ["Oriental Insurance Co.Ltd. Vs. Siby George & Ors" (2012) 12 SCC 540] in which it was held that the earlier decisions in Pratap Narain Singh Deo (supra) (by Four-Judge Bench) and ["Kerala State Electricity Board Vs. Valsala K & Anr" (1999) 8 SCC 254] (by Three-Judge Bench) were not brought to the notice of the Apex Court in the later decisions in Mubasir Ahmed (supra) and Mohd. Nasir (supra). The contrary view taken in the decisions of Mubasir Ahmed (supra) and Mohd. Nasir (supra) do not express the correct view and do not make binding precedents.
In Siby George (supra) the question that arose for consideration was "When does the payment of compensation under the Workmen‟s Compensation Act, 1923 becomes due and consequently what is the point in time from which interest would be payable on the amount of compensation as provided under Section 4-A (3) of the Act?" It was held that the payment of compensation fell due on the date of the accident as was laid down in Pratap Narain Singh Deo (supra).
It is apt to refer Paras 8, 12 & 13 of Siby George (supra) as under:
"8. It is, thus, to be seen that sub-section (3) of Section 4-A is in two parts, separately dealing with interest and penalty in clauses (a) and (b) respectively. Clause (a) makes the levy of interest, with no option, in case of default in payment of compensation, without going into the question regarding the reasons for the default. Clause (b) provides for imposition of penalty in case, in the opinion of the Commissioner, there was no justification for the delay. Before imposing penalty, however, the Commissioner is required to give the employer a reasonable opportunity to show cause. On a plain reading of the provisions of sub-section (3) it becomes clear that payment of interest is a consequence of default in payment without going into the reasons for the delay and it is only in case where the delay is without justification, the employer might also be held liable to penalty after giving him a show cause. Therefore, a finding to the effect that the delay in payment of the amount due was unjustified is required to be recorded only in case of imposition of penalty and no such finding is required in case of interest which is to be levied on default per se.
12. The decision in Pratap Narain Singh Deo [(1976) 1 SCC 289: 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] was by Four-Judge Bench and in Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] by Three-Judge Bench of this Court. Both the decisions were, thus, fully binding on the Court in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] , each of which was heard by Two Judges. But the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] were not brought to the notice of the Court in the two later decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] .
13. In the light of the decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] , it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] insofar as they took a contrary view to the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] do not express the correct view and do not make binding precedents."
In Siby George (supra), the Commissioner for Workmen‟s Compensation had directed payment of simple interest @ 12% per annum from the date of the accident, against which the High Court of Kerala dismissed the appeal as time barred. The appeal of the Oriental Insurance Company was dismissed by the Apex Court.
In ["Sabera Bibi Yakubbhai Shaikh & Ors Vs. National Insurance Co.Ltd. & Ors.", (2014) 2 SCC 298] the Hon‟ble Apex Court after referring to Siby George (supra) held that the appellants therein shall be entitled to interest @12% per annum from the date of the accident. Paragraph Nos. 9 & 10 are being reproduced as under:
"9. Following the aforesaid judgments, this Court in Oriental Insurance Co. Ltd. Vs. Siby George & Ors. [(2012) 12 SCC 540 : (2012) 4 SCC (Cri) 136 : (2013) 2 SCC (Civ) 392] reiterated the legal position and held as follows : (SCC PP. 545-46, Paras 11 -13)
"11. The Court then referred to a Full Bench decision of the Kerala High Court in United India Insurance Co. Ltd. Vs. Alavi [(1998) 1 KLT 951] , and approved it insofar as it followed the decision in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] .
12. The decision in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] was by Four-Judge Bench and in Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] by Three-Judge Bench of this Court. Both the decisions were, thus, fully binding on the Court in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987], each of which was heard by Two Judges. But the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB v. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] were not brought to the notice of the Court in the two later decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] .
13. In the light of the decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] , it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] insofar as they took a contrary view to the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] do not express the correct view and do not make binding precedents."
10. In view of the aforesaid settled proposition of law, the appeal is allowed and the Judgment and Order [National Insurance Co. Ltd. Vs. Yusuf Ibrahim Shaikh, First Appeal No. 197 of 2012, decided on 24-1-2012 (Guj)] of the High Court are set aside. The appellants shall be entitled to interest at the rate of 12% from the date of the accident. No costs."
In ["North East Karnataka Road Transport Corpn. Vs Sujatha (2019) 11 SCC 514] also the Hon‟ble Apex Court again laid down as under in Paras 19 to 25 as under:
"19. The question relates to grant of interest on the awarded amount and further, from which date, it is to be awarded to the respondent claimant.
20. The grant of interest on the awarded sum is governed by Section 4-A of the Act. The question as to when does the payment of compensation under the Act "becomes due" and consequently what is the point of time from which interest on such amount is payable as provided under Section 4-A (3) of the Act remains no more res integra and is settled by the two decisions of this Court.
21. As early as in 1975, Four-Judge Bench of this Court in [Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] speaking through Singhal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman in the accident which arose out of and in the course of employment. It was accordingly held that it is the date of the accident and not the date of adjudication of the claim, which is material.
22. Another question analogous to the main question arose before the Three-Judge Bench of this Court in Kerala SEB Vs. Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] as to whether increased amount of compensation and enhanced rate of interest brought on statute by amending Act 30 of 1995 with effect from 15-9-1995 would also apply to cases in which the accident took place before 15-9-1995. Their Lordships, placing reliance on the law laid down in Pratap Narain case [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] held that since the relevant date for determination of the rate of compensation is the date of accident and not the date of adjudication of the claim by the Commissioner and hence if the accident has taken place prior to 15-9-1995, the rate applicable on the date of accident would govern the subject.
23. After these two decisions, this Court in two cases (both by the Two-Judge Bench) viz. National Insurance Co. Ltd. Vs. Mubasir Ahmed [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Oriental Insurance Co. Ltd. Vs. Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] without noticing the law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases took a contrary view and held that payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made.
24. This conflict of view in the decisions on the question was noticed by this Court (Two-Judge Bench) in Oriental Insurance Co. Ltd. Vs. Siby George [Oriental Insurance Co. Ltd. Vs. Siby George, (2012) 12 SCC 540 : (2013) 2 SCC (Civ) 392 : (2012) 4 SCC (Cri) 136 : (2013) 3 SCC (L&S) 478] . Aftab Alam, J. speaking for the Bench referred to the aforementioned decisions and explaining the ratio of each decision held that since the two later decisions rendered in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] which took contrary view without noticing the earlier two decisions of this Court rendered in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases by the larger Benches (combination of four and Three Judges respectively) and hence later decisions rendered in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] cases cannot be held to have laid down the correct principles of law on the question and nor can, therefore, be treated as binding precedent on the question.
25. In other words, the law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases was held to hold the field throughout as laying down the correct principle of law on the subject. The Two-Judge Bench in Oriental Insurance Co. Ltd. Vs. Siby George [Oriental Insurance Co. Ltd. Vs. Siby George, (2012) 12 SCC 540 : (2013) 2 SCC (Civ) 392 : (2012) 4 SCC (Cri) 136 : (2013) 3 SCC (L&S) 478] accordingly followed the principle of law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases and decided the case instead of following the law laid down in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] cases which was held per incuriam."
Recently, in [Ajaya Kumar Das & Anr Vs. Divisional Manager & Anr., 2022 (1) SCJ 766] also the Hon‟ble Apex Court held that the applicant therein was entitled to interest from the date of the accident under the Workmen‟s Compensation Act, 1923. Para 5 thus reads as under;
"5. The Judgment of the High Court is inexplicable. Having dismissed the appeal of the insurer on the ground of limitation, there was no occasion for the High Court to interfere on merits with the award of interest on compensation under the Workmen's Compensation Act 1923. When the appeal was dismissed on the ground of limitation, the High Court could not have entertained it on merits.
The error on the part of the High Court has led a labourer and his spouse to travel all the way to this Court. Though the accident took place in 2000, the course of litigation would now end only with the present judgment. To set the record straight, the High Court has erred on merits as well. Section 4A of the Workmen's Compensation Act 1923 stipulates that the Commissioner shall direct the employer to pay interest of 12% or at a higher rate, not exceeding the lending rates of any scheduled banks specified, if the employer does not pay the compensation within one month from the date it fell due.
In {Sabera Bibi Yakubbhai Shaikh & Ors Vs. National Insurance Co.Ltd. & Ors.", (2014) 2 SCC 298}, this Court held that interest shall be paid on the compensation awarded from the date of the accident and not the date of adjudication of the claim in view of the decision of this Court in {Oriental Insurance Co.Ltd. Vs. Siby George & Ors" (2012) 12 SCC 540} where it was held that compensation would fall due from the date of the accident.
Further, in the recent decision in {P. Meenaraj Vs. P. Adigurusamy & Anr." Civil Appeal No 209 of 2022, decided on 6 January 2022}, this Court reiterated that the applicant is entitled to interest from the date of accident while rejecting the submission that the award of interest should be after the expiry of 30 days from the date of accident. Thus, there was no legal basis for the High Court to delete the order of payment of interest."
From the aforesaid Judgment, it is settled that the interest is awarded from the date of the accident under Section 4-A of the Employees' Compensation Act, 1923 as the compensation falls due on the date of accident.
Conclusion
In view of the aforesaid, the liability for payment of compensation arises on the date of the accident. The compensation so determined is an amount which the Claimant/Claimants is/are legally entitled to receive on the "date of the accident". The determination of compensation is made after the "date of the accident" on the date of the "award".
The Claimant/Claimants is/are entitled for "interest" on compensation from the "date of the accident", till its payment. If such amount i.e., compensation with "interest" from the "date of accident" as determined under the award of the Commissioner is not paid, within one month from the date of "award", the "employer" would also be further liable for imposition of penalty as provided under Section 4-A (1) (b) of the Employees' Compensation Act, 1923, in cases where the delay in payment of compensation, after one month from the "date of the award" is without justification. In such case, a finding to the effect that the delay in payment of the amount due was unjustified is required to be recorded by the Commissioner of the Workmen‟s Compensation.
Written By: Dinesh Singh Chauhan, Advocate
High Court of Judicature, J&K & Ladakh, Jammu.
Email: [email protected]; [email protected]
Sec 4-A (3) of the Employees' Compensation Act, 1923 makes a provision for payment of interest by the "employer" where he is in default of paying the compensation within the statutorily mandated one month from the date of accident. There is also a provision under the same section, that where, in the opinion of the Workmen Compensation Commissioner, there is no justification for delay, he may direct the "employer" to pay a penalty not exceeding 50% of the compensation amount and the interest and the interest thereon.
The term "interest" is distinct from the principal amount of "award", and is awarded in order to compensate a party for the denial of its rightful money under the a Employee's Compensation Act, 1923. It is a settled principle of law that "interest" is awarded against a party [under Section 4-A ("compensation to be paid when due and penalty for default") of the Employees' Compensation Act, 1923, the word used is "shall" and, therefore, the amount awarded shall carry 12% interest as per the statute...], more specifically monetary obligations, so as to put the injured party in the same economic position it would have been in, where the "employer" is in default of paying the compensation within the statutorily mandated one month from the date of accident.
Employee's Compensation Act, 1923 was enacted to provide compensation to the "workers" who suffer injury(ies)/fatal injury(ies) during the course of their employment. Employee's Compensation Act, 1923 is a social beneficial welfare legislation for the benefit of the "workmen". Section 25-A of the Employee's Compensation Act, 1923 provides for expeditious disposal of a compensation case within a period of three months.
On the point of interest, it is relevant to refer Section 4-A of the Employee's Compensation Act, 1923, as under:
Relevant Provision Dealing With Grant Of Interest Under Employees' Compensation Act, 1923
4A. Compensation to be paid when due and penalty for default
- Compensation under Section 4 shall be paid as soon as it falls due.
- 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.
- 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:
- 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
- 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:
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.
[(3A) The interest and the penalty payable under sub-section (3) shall be paid to the 1[employee] or his dependant, as the case may be.]"
Section 4-A (3) of the WC Act 1923 provides that where any "employer" is in default in paying compensation due under Employees' Compensation Act, 1923 within one month from the date it fell due, the Commissioner shall 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 if in the opinion of the Commissioner there is no justification for delay he shall direct the employer to pay a further sum not exceeding 50% of the arrears of compensation and interest, as penalty.
Evidently, Section 4-A of Employees' Compensation Act, 1923 provides for payment of interest on the compensation amount, as determined under the award, as also the penalty if there is no justification for delay.
The question as to whether the "interest" @ 12% could be awarded only in default of the "employer" in making payment within one month from the date it fell due i.e., date of the "award" or it is only, thereafter, that the "interest" could be imposed?. The compensation determined under the "award" must be without any "interest". No "interest" could be imposed with effect from the date of the accident but if default is committed on payment of compensation, from the date of default, the "interest" would be payable @ 12% per annum up to the date of actual payment, and if the amount is paid within that period, no "interest" could not be levied on the compensation amount.
Law Laid Down By Supreme Court
In ["Pratap Narain Singh Deo Vs Srinivas Sabata & Anr." (1976) 1 SCC 289] the Hon'ble Supreme Court of India held that the employer became liable to pay the compensation as soon as the personal injury was caused to the workman by the accident which arose out of and in the course of the employment. In Paras 7 & 8 of the Judgment, the Hon'ble Apex Court held as under:
"7. Section 3 of the Act deals with the employer's liability for compensation. Sub-section (1) of that Section provides that the employer shall be liable to pay compensation if "personal injury is caused to a workman by accident arising out of and in the course of his employment". It was not the case of the employer that the right to compensation was taken away under sub-section (5) of Section 3 because of the institution of a suit in a Civil Court for damages, in respect of the injury, against the employer or any other person. The employer, therefore, became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is, therefore, futile to contend that the compensation did not fall due until after the Commissioner's Order dated May 6, 1969 under Section 19. What the Section provides is that if any question arises in any proceeding under the Act as to the ability of any person to pay compensation or as to the amount or duration of the compensation it shall, in default of agreement, be settled by the Commissioner. There is, therefore, nothing to justify the argument that the employer's liability to pay compensation under Section 3, in respect of the injury, was suspended until after the settlement contemplated by Section 19. The appellant was thus liable to pay compensation as soon as the aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary.
8. It was the duty of the appellant, under Section 4-A (1) of the Act, to pay the compensation at the rate provided by Section 4 as soon as the personal injury was caused to the respondent. He failed to do so. What is worse, he did not even make a provisional payment under sub-section (2) of Section 4 for, as has been stated, he went to the extent of taking the false pleas that the respondent was a casual contractor and that the accident occurred solely because of his negligence. Then there is the further fact that he paid no heed to the respondent's personal approach for obtaining the compensation. It will be recalled that the respondent was driven to the necessity of making an application to the Commissioner for settling the claim, and even there the appellant raised a frivolous objection as to the jurisdiction of the Commissioner and prevailed on the respondent to file a memorandum of agreement settling the claim for a sum which was so grossly inadequate that it was rejected by the Commissioner. In these facts and circumstances, we have no doubt that the Commissioner was fully justified in making an order for the payment of interest and the penalty."
Although the Hon'ble Supreme Court of India in ["National Insurance Co. Ltd. Vs Mubasir Ahmed & Anr.", (2007) 2 SCC 349] held that the starting point of payment of interest is on completion of one month from the date on which the compensation fell due. It cannot be the date of the accident and it has to be taken to be the date of the adjudication of the claim. Para 9 of Mubasir Ahmed (supra) reads as under:
"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 Vs. 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". Unless there is an adjudication, the question of an amount falling due does not arise."
["National Insurance Co. Ltd. Vs Mubasir Ahmed & Anr.", (2007) 2 SCC 349] and one more judgment in ["Oriental Insurance Company Limited Vs. Mohd. Nasir & Anr.", (2009) 6 SCC 280] were considered by the Hon‟ble Apex Court in ["Oriental Insurance Co.Ltd. Vs. Siby George & Ors" (2012) 12 SCC 540] in which it was held that the earlier decisions in Pratap Narain Singh Deo (supra) (by Four-Judge Bench) and ["Kerala State Electricity Board Vs. Valsala K & Anr" (1999) 8 SCC 254] (by Three-Judge Bench) were not brought to the notice of the Apex Court in the later decisions in Mubasir Ahmed (supra) and Mohd. Nasir (supra). The contrary view taken in the decisions of Mubasir Ahmed (supra) and Mohd. Nasir (supra) do not express the correct view and do not make binding precedents.
In Siby George (supra) the question that arose for consideration was "When does the payment of compensation under the Workmen‟s Compensation Act, 1923 becomes due and consequently what is the point in time from which interest would be payable on the amount of compensation as provided under Section 4-A (3) of the Act?" It was held that the payment of compensation fell due on the date of the accident as was laid down in Pratap Narain Singh Deo (supra).
It is apt to refer Paras 8, 12 & 13 of Siby George (supra) as under:
"8. It is, thus, to be seen that sub-section (3) of Section 4-A is in two parts, separately dealing with interest and penalty in clauses (a) and (b) respectively. Clause (a) makes the levy of interest, with no option, in case of default in payment of compensation, without going into the question regarding the reasons for the default. Clause (b) provides for imposition of penalty in case, in the opinion of the Commissioner, there was no justification for the delay. Before imposing penalty, however, the Commissioner is required to give the employer a reasonable opportunity to show cause. On a plain reading of the provisions of sub-section (3) it becomes clear that payment of interest is a consequence of default in payment without going into the reasons for the delay and it is only in case where the delay is without justification, the employer might also be held liable to penalty after giving him a show cause. Therefore, a finding to the effect that the delay in payment of the amount due was unjustified is required to be recorded only in case of imposition of penalty and no such finding is required in case of interest which is to be levied on default per se.
12. The decision in Pratap Narain Singh Deo [(1976) 1 SCC 289: 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] was by Four-Judge Bench and in Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] by Three-Judge Bench of this Court. Both the decisions were, thus, fully binding on the Court in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] , each of which was heard by Two Judges. But the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] were not brought to the notice of the Court in the two later decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] .
13. In the light of the decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] , it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] insofar as they took a contrary view to the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222 : 1976 Lab IC 222] and Valsala K. [(1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] do not express the correct view and do not make binding precedents."
In Siby George (supra), the Commissioner for Workmen‟s Compensation had directed payment of simple interest @ 12% per annum from the date of the accident, against which the High Court of Kerala dismissed the appeal as time barred. The appeal of the Oriental Insurance Company was dismissed by the Apex Court.
In ["Sabera Bibi Yakubbhai Shaikh & Ors Vs. National Insurance Co.Ltd. & Ors.", (2014) 2 SCC 298] the Hon‟ble Apex Court after referring to Siby George (supra) held that the appellants therein shall be entitled to interest @12% per annum from the date of the accident. Paragraph Nos. 9 & 10 are being reproduced as under:
"9. Following the aforesaid judgments, this Court in Oriental Insurance Co. Ltd. Vs. Siby George & Ors. [(2012) 12 SCC 540 : (2012) 4 SCC (Cri) 136 : (2013) 2 SCC (Civ) 392] reiterated the legal position and held as follows : (SCC PP. 545-46, Paras 11 -13)
"11. The Court then referred to a Full Bench decision of the Kerala High Court in United India Insurance Co. Ltd. Vs. Alavi [(1998) 1 KLT 951] , and approved it insofar as it followed the decision in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] .
12. The decision in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] was by Four-Judge Bench and in Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] by Three-Judge Bench of this Court. Both the decisions were, thus, fully binding on the Court in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987], each of which was heard by Two Judges. But the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB v. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] were not brought to the notice of the Court in the two later decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] .
13. In the light of the decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] , it is not open to contend that the payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made. The decisions in Mubasir Ahmed [(2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [(2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] insofar as they took a contrary view to the earlier decisions in Pratap Narain Singh Deo [(1976) 1 SCC 289 : 1976 SCC (L&S) 52] and Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50] do not express the correct view and do not make binding precedents."
10. In view of the aforesaid settled proposition of law, the appeal is allowed and the Judgment and Order [National Insurance Co. Ltd. Vs. Yusuf Ibrahim Shaikh, First Appeal No. 197 of 2012, decided on 24-1-2012 (Guj)] of the High Court are set aside. The appellants shall be entitled to interest at the rate of 12% from the date of the accident. No costs."
In ["North East Karnataka Road Transport Corpn. Vs Sujatha (2019) 11 SCC 514] also the Hon‟ble Apex Court again laid down as under in Paras 19 to 25 as under:
"19. The question relates to grant of interest on the awarded amount and further, from which date, it is to be awarded to the respondent claimant.
20. The grant of interest on the awarded sum is governed by Section 4-A of the Act. The question as to when does the payment of compensation under the Act "becomes due" and consequently what is the point of time from which interest on such amount is payable as provided under Section 4-A (3) of the Act remains no more res integra and is settled by the two decisions of this Court.
21. As early as in 1975, Four-Judge Bench of this Court in [Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] speaking through Singhal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman in the accident which arose out of and in the course of employment. It was accordingly held that it is the date of the accident and not the date of adjudication of the claim, which is material.
22. Another question analogous to the main question arose before the Three-Judge Bench of this Court in Kerala SEB Vs. Valsala K. [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] as to whether increased amount of compensation and enhanced rate of interest brought on statute by amending Act 30 of 1995 with effect from 15-9-1995 would also apply to cases in which the accident took place before 15-9-1995. Their Lordships, placing reliance on the law laid down in Pratap Narain case [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] held that since the relevant date for determination of the rate of compensation is the date of accident and not the date of adjudication of the claim by the Commissioner and hence if the accident has taken place prior to 15-9-1995, the rate applicable on the date of accident would govern the subject.
23. After these two decisions, this Court in two cases (both by the Two-Judge Bench) viz. National Insurance Co. Ltd. Vs. Mubasir Ahmed [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Oriental Insurance Co. Ltd. Vs. Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] without noticing the law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases took a contrary view and held that payment of compensation would fall due only after the Commissioner's order or with reference to the date on which the claim application is made.
24. This conflict of view in the decisions on the question was noticed by this Court (Two-Judge Bench) in Oriental Insurance Co. Ltd. Vs. Siby George [Oriental Insurance Co. Ltd. Vs. Siby George, (2012) 12 SCC 540 : (2013) 2 SCC (Civ) 392 : (2012) 4 SCC (Cri) 136 : (2013) 3 SCC (L&S) 478] . Aftab Alam, J. speaking for the Bench referred to the aforementioned decisions and explaining the ratio of each decision held that since the two later decisions rendered in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] which took contrary view without noticing the earlier two decisions of this Court rendered in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases by the larger Benches (combination of four and Three Judges respectively) and hence later decisions rendered in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] cases cannot be held to have laid down the correct principles of law on the question and nor can, therefore, be treated as binding precedent on the question.
25. In other words, the law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases was held to hold the field throughout as laying down the correct principle of law on the subject. The Two-Judge Bench in Oriental Insurance Co. Ltd. Vs. Siby George [Oriental Insurance Co. Ltd. Vs. Siby George, (2012) 12 SCC 540 : (2013) 2 SCC (Civ) 392 : (2012) 4 SCC (Cri) 136 : (2013) 3 SCC (L&S) 478] accordingly followed the principle of law laid down in Pratap Narain [Pratap Narain Singh Deo Vs. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52 : AIR 1976 SC 222] and Valsala [Kerala SEB Vs. Valsala K., (1999) 8 SCC 254 : 2000 SCC (L&S) 50 : AIR 1999 SC 3502] cases and decided the case instead of following the law laid down in Mubasir [National Insurance Co. Ltd. Vs. Mubasir Ahmed, (2007) 2 SCC 349 : (2007) 1 SCC (L&S) 643] and Mohd. Nasir [Oriental Insurance Co. Ltd. Vs. Mohd. Nasir, (2009) 6 SCC 280 : (2009) 2 SCC (Civ) 877 : (2009) 2 SCC (Cri) 987] cases which was held per incuriam."
Recently, in [Ajaya Kumar Das & Anr Vs. Divisional Manager & Anr., 2022 (1) SCJ 766] also the Hon‟ble Apex Court held that the applicant therein was entitled to interest from the date of the accident under the Workmen‟s Compensation Act, 1923. Para 5 thus reads as under;
"5. The Judgment of the High Court is inexplicable. Having dismissed the appeal of the insurer on the ground of limitation, there was no occasion for the High Court to interfere on merits with the award of interest on compensation under the Workmen's Compensation Act 1923. When the appeal was dismissed on the ground of limitation, the High Court could not have entertained it on merits.
The error on the part of the High Court has led a labourer and his spouse to travel all the way to this Court. Though the accident took place in 2000, the course of litigation would now end only with the present judgment. To set the record straight, the High Court has erred on merits as well. Section 4A of the Workmen's Compensation Act 1923 stipulates that the Commissioner shall direct the employer to pay interest of 12% or at a higher rate, not exceeding the lending rates of any scheduled banks specified, if the employer does not pay the compensation within one month from the date it fell due.
In {Sabera Bibi Yakubbhai Shaikh & Ors Vs. National Insurance Co.Ltd. & Ors.", (2014) 2 SCC 298}, this Court held that interest shall be paid on the compensation awarded from the date of the accident and not the date of adjudication of the claim in view of the decision of this Court in {Oriental Insurance Co.Ltd. Vs. Siby George & Ors" (2012) 12 SCC 540} where it was held that compensation would fall due from the date of the accident.
Further, in the recent decision in {P. Meenaraj Vs. P. Adigurusamy & Anr." Civil Appeal No 209 of 2022, decided on 6 January 2022}, this Court reiterated that the applicant is entitled to interest from the date of accident while rejecting the submission that the award of interest should be after the expiry of 30 days from the date of accident. Thus, there was no legal basis for the High Court to delete the order of payment of interest."
From the aforesaid Judgment, it is settled that the interest is awarded from the date of the accident under Section 4-A of the Employees' Compensation Act, 1923 as the compensation falls due on the date of accident.
Conclusion
In view of the aforesaid, the liability for payment of compensation arises on the date of the accident. The compensation so determined is an amount which the Claimant/Claimants is/are legally entitled to receive on the "date of the accident". The determination of compensation is made after the "date of the accident" on the date of the "award".
The Claimant/Claimants is/are entitled for "interest" on compensation from the "date of the accident", till its payment. If such amount i.e., compensation with "interest" from the "date of accident" as determined under the award of the Commissioner is not paid, within one month from the date of "award", the "employer" would also be further liable for imposition of penalty as provided under Section 4-A (1) (b) of the Employees' Compensation Act, 1923, in cases where the delay in payment of compensation, after one month from the "date of the award" is without justification. In such case, a finding to the effect that the delay in payment of the amount due was unjustified is required to be recorded by the Commissioner of the Workmen‟s Compensation.
Written By: Dinesh Singh Chauhan, Advocate
High Court of Judicature, J&K & Ladakh, Jammu.
Email: [email protected]; [email protected]
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