Release of compensation in employment injury settlement cannot be restricted for elderly claimants in financial need

The petitioner, a 63-year-old truck driver, sustained a left leg fracture and underwent surgeries following an employment-related accident on July 26, 2021.

A settlement was reached via a compromise purshis on December 9, 2023, where the respondent Insurance Company agreed to pay ₹1,70,346/-.

Upon deposit, the learned Commissioner, Labour Court, Rajkot, vide order dated February 21, 2024, permitted the immediate release of only ₹25,552/- and directed the remaining balance to be placed in a fixed deposit (FD) for five years.

The petitioner challenged this restrictive disbursement order, citing advanced age and urgent financial need.

1. Whether the Labour Court was justified in restricting the disbursement of the settlement amount and ordering a long-term fixed deposit given the petitioner’s age and financial circumstances.

The court exercised its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India.

The primary statutory framework involved is the Workmen’s Compensation Act, 1923 (now Employee's Compensation Act), which provides for compensation for employment injuries.

The court applied the principle of judicial discretion regarding the mode of disbursement, balancing the protective interest of the court in preventing squandering of funds against the immediate necessity and age of the claimant.

The court observed that the compensation arose from a mutual compromise between the parties which the Insurance Company did not challenge.

The court found the Commissioner’s decision to lock the majority of the funds in a five-year FD to be inappropriate under the specific circumstances of the case.

The court highlighted two pivotal factors: the petitioner’s advanced age (63 years) and the nature of the physical injuries (leg fracture) which necessitate immediate access to funds.

It reasoned that at such an age, the petitioner is in "dire need of money," and the restriction on withdrawal served no beneficial purpose for the claimant.

The court held that the entire compensation amount of ₹1,70,346/-, along with any accrued interest, must be disbursed directly to the petitioner. The Commissioner, Labour Court, Rajkot, was directed to facilitate this disbursement after following due process.