Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1860 OF 2022
Shobha & Ors. …Appellant(s)
Versus
The Chairman, Vithalrao Shinde
Sahakari Sakhar Karkhana Ltd. & Ors. …Respondent(s)
J U D G M E N T
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
Signature Not Verified
Digitally signed by R
Natarajan
Date: 2022.03.11
16:39:38 IST
Reason:
engaged as a labourer by the Labour Contractor for cutting the
sugarcane, which was to be supplied to the sugar factory. While cutting
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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.
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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-
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(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.”
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 employee or his
dependant, as the case may be.”
4.1 Thus, from Section 4A of the Act, 1923 compensation under
Section 4 shall be paid as soon as it falls due. It can be seen that the
liability to pay the interest on the amount of compensation due and
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payable would be under Section 4A(3)(a) and the penalty would be
leviable under Section 4A(3)(b). As per Section 4A(3)(a), the employer
shall pay, in addition to the amount of the arrears, simple interest
thereon @ 12% p.a. or at such higher rate not exceeding the maximum
of the lending rates of any scheduled bank as may be specified on the
amount due. As per Section 4A(1) compensation under section 4 shall
be paid as soon as it falls due. Therefore, on the death of the
employee/deceased immediately, the amount of compensation can be
said to be falling due. Therefore, the liability to pay the compensation
would arise immediately on the death of the deceased. Even as per
Section 4A(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. Therefore, the liability to pay the
compensation would arise from the date on which the deceased died for
which he is entitled to the compensation and therefore, the liability to pay
the interest on the amount of arrears/compensation shall be from the
date of accident and not from the date of the order passed by the
Commissioner. As per Section 4A(3)(b), if the Commissioner is satisfied
that there is no justification for the delay, it can direct the employer, in
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addition to the amount of the arrears and interest thereon, to pay a
further sum not exceeding 50% of such amount by way of penalty. Thus,
provision for interest and provision for penalty are different. As observed
hereinabove, the provision for levy of interest would be under Section
4A(3)(a) and the provision for levy of penalty would be under Section
4A(3)(b). While directing the employer to pay the interest from the date
of the order passed by the Commissioner, the High Court has not at all
considered Section 4A(3)(a) and has considered Section 4A(3)(b) only,
which is the penalty provision.
5. Under the circumstances, the 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.
6. In view of the above and for the reasons stated above, the present
appeal succeeds. The impugned judgment and order passed by the
High Court insofar as awarding the interest @ 12% p.a. after the period
of expiry of one month from 25.01.2017, is hereby quashed and set
aside and it is observed and held that the appellants herein – original
claimants shall be entitled to the interest @ 12% p.a. on the amount of
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compensation as awarded by the Commissioner from the date of the
incident i.e., 29.11.2009.
Present appeal is allowed accordingly. However, in the facts and
circumstances of the case, there shall be no order as to costs.
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
MARCH 11, 2022. [B.V. NAGARATHNA]
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