FA/4717/2006 1/50 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 4717 of 2006 With FIRST APPEAL No. 1044 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= NATIONAL INSURANCE COMPANY - Appellant(s) Versus JAYASHREEBEN NANDULAL NERKAR (PATIL) & 3 - Defendant(s) ========================================================= Appearance : MR DAKSHESH MEHTA for Appellant in F.A. No.4717 of 2006, MR HM THAKKAR for Appellant in F.A. No.1044 of 2007, MR MTM HAKIM for Defendant(s) : 1 - 4. ========================================================= FA/4717/2006 2/50 JUDGMENT CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 06/05/2008 C.A.V. JUDGMENT 1. As common question of law arises in both these appeals, they are being disposed of by this common judgement and order. 2. First Appeal No.4717 of 2006 is by the appellant herein - original respondent No.2 - National Insurance Company, challenging the judgement and order dtd.20/1/2006 passed by the Commissioner for Workmen Compensation, Vadodara in Workmen Compensation Case No.67 of 2001 in so far as directing the appellant - Insurance Company to pay an amount of Rs.4,27,140 towards the Workmen Compensation with interest at the rate of 12% per annum from the date of accident till realisation. 3. First Appeal No.1044 of 2007 is by the appellant herein - original respondent (employer) challenging the judgement and order dtd.25/9/2006 passed by the learned Commissioner for Workmen Compensation, FA/4717/2006 3/50 JUDGMENT Bharuch in Workmen Compensation Application No.63 of 1994 in so far as directing the appellant to pay an amount of Rs.67,139 towards workmen compensation with 50% penalty with interest at the rate of 6% per annum from the date of accident till realisation. 4. In both these appeals, following short but interesting question of law arises for determination of this Court:- “Whether the claimant/workman, under the Workmen Compensation Act, 1923, is entitled to the interest on the Workmen Compensation from the date of accident or from the date of judgement and order passed by the learned Commissioner for Workmen Compensation? 5. In First Appeal No.4717 of 2006, accident took place on 29/5/2001 in which workman named Nandulal Tulsiram Nelkar (Patil) – husband of the original applicant No.1, father of the original applicant No.2 and son of the original applicant No.3, who was serving as Tanker Driver, died. A notice under sec.10 of the Workmen Compensation Act (hereinafter shall be referred as “the Act” for short) was served upon the original respondents FA/4717/2006 4/50 JUDGMENT on 16/8/2001 for compensation. However, as the workmen compensation was not paid either by the Insurance Company or by the original owner/employer, the respondent Nos.1 to 3 herein – original claimant Nos.1 to 3 filed Workmen Compensation Case No.67 of 2001 before the Commissioner for Workmen Compensation, Vadodara on 1/11/2001 claiming compensation of Rs.4,27,140=00 with interest at the rate of 12% per annum from the date of accident and penalty under the Act. The learned Commissioner for Workmen Compensation, Vadodara by the impugned judgement and order dtd.20/1/2006 directed both the original respondents to pay an amount of Rs.4,27,140 by way of compensation with interest at the rate of 12% per annum from the date of accident and further directed the respondent No.4 herein - original employer to pay an amount of Rs.2,13,570=00 towards penalty required to be paid under the Act. Being aggrieved by and dissatisfied with the impugned judgement and order dtd.20/1/2006 in so far as directing the appellant herein – Insurance Company to pay compensation with interest at the rate of Rs.12% per annum from the date of accident, the appellant - Insurance Company has FA/4717/2006 5/50 JUDGMENT preferred the present First Appeal No.4717 of 2006. 6. So far as First Appeal No.1044 of 2007 is concerned, the same is filed by the appellant herein – original employer challenging the judgement and order passed by the Commissioner for Workmen Compensation, Bharuch in Workmen Compensation Application No.63 of 1994. The said application was filed by the heirs of workmen – Somabhai Panchiyabhai Vasava, contending inter-alia that while on duty on 29/9/1994 in an accident Somabhai died and the said claim application was filed claiming compensation of Rs.67,139.70 ps. with penalty and interest at the rate of 6% per annum from the date of accident. The Commissioner for Workmen Compensation by the impugned judgement and order dtd.25/9/2006 allowed the said claim application directing the appellant – original respondent to pay an amount of Rs.67,139 towards compensation along with penalty of Rs.33,569=00 with interest at the rate of 6% per annum from the date of accident till realisation. Being aggrieved by and dissatisfied with the impugned judgement and order dtd.25/9/2006 in so far as directing the appellant to pay the aforesaid amount of compensation with penalty and interest on compensation from the date of FA/4717/2006 6/50 JUDGMENT accident, the appellant herein has preferred the present appeal under sec.30 of the Workmen's Compensation Act, 1923 (hereinafter shall be referred to as “the Act” for short). 7. Mr.D.B. Mehta, learned advocate has appeared on behalf of the appellant – Insurance Company in First Appeal No.4717 of 2006 and Mr.H.M. Thakkar, learned advocate has appeared on behalf of the appellant of First Appeal No.1044 of 2007. Mr.MTM Hakim, learned advocate has appeared on behalf of the original claimants. 8. The learned advocates appearing on behalf of the respective appellants i.e. Insurance Company as well as owner/employer have vehemently submitted that the respective Commissioners have materially erred in awarding the interest from the date of accident. It is submitted that unless and until the amount of compensation is determined by the Commissioner for Workmen Compensation, there was no determined liability of the owner/employer and/or the Insurance Company to pay the compensation and therefore, the Commissioner for Workmen Compensation ought to have awarded the interest from the date of determination of compensation i.e. judgement and order passed by the FA/4717/2006 7/50 JUDGMENT Commissioner for Workmen Compensation, and not from the date of accident. It is further submitted that as such to pay compensation with interest from the date of accident is contrary to sec.4 of the Act. The learned advocates appearing on behalf of the respective appellants have heavily relied upon the decision of the Hon'ble Supreme Court in the case of National Insurance Company Vs. Mubasir Ahmed, reported in (2007) 2 SCC 349. Mr.Thakkar, learned advocate appearing on behalf of the appellant of First Appeal No.1044 of 2007 and Mr.Mehta, learned advocate appearing on behalf of the appellant of First Appeal No.4717 of 2006 have submitted that sec.3 of the Act provides for employer's liability to pay compensation and sec.4 of the Act provides for the amount of compensation payable in case of loss of earning capacity or death on account of accident occurred during the course of the employment. It is submitted that sec.4-A of the Act provides for payment of interest and penalty in case of default. It is also further submitted that sec.10 of the Act provides for notice and claim to be sent to the employer or workmen or the claimant, as the case may be. It is also further submitted that prior to 15/9/1995 i.e. the FA/4717/2006 8/50 JUDGMENT Amendment of 1995 came into force, the commissioner was given a discretionary power whether to award interest or not to award interest on the amount of compensation payable. It is submitted that as per the Scheme of the Workmen Compensation Act, the employer is liable to pay compensation in case of an accident arising out of and in the course of employment as per sec.3 of the Act and the sec.3 does not provide the time limit within which the payment of compensation has to be made. Sec.4 of the Act provides for payment of compensation depending upon the nature of accident namely death, permanent total disablement or permanent partial disablement etc. and the sec.4 also does not provide time limit within which the compensation has to be paid to the workmen or to the claimant, as the case may be. 9. It is submitted that sec.4-A of the Act provides that compensation u/sec.4 shall be paid as soon as it falls due and in sec.4-A also there is no reference made of sec.3. Sec.4-A provides for amount of compensation which is mentioned in sec.4, to be paid as soon as it falls due. Thus, sec.4-A also does not provide time limit within which the amount of compensation is to be made. It is FA/4717/2006 9/50 JUDGMENT also submitted that the language employed in sec.4-A(1) says that “as soon as it falls due”. 10.It is further submitted that sec.4-A(2) provides that where employer accepts liability, he will be required to deposit the amount to the extent he accepts the liability. Sec.4-A(3) provides that where the employer is in default in paying the compensation due under the Act within one month from the date it falls due, the Commissioner may (upto 14/9/1995) and after 15/9/1995 shall direct the employer to pay interest as provided under sec.4-A(3) (a) and penalty as provided under sec.4-A(3)(b). It is submitted that reading sec.4-A(1) and 4-A(3) of the Act together, it becomes clear that the compensation has to be paid as soon as it falls due and if the compensation is not paid within one month from the date it falls due, the Commissioner will be at his discretion to award interest and/or penalty. Thus, Sec.4-A(1) or Sec.4-A(3) does not provide the time limit within which compensation has to be paid i.e. within one month from the date of accident or within one month from the date of adjudication. It is submitted that the Legislature has not employed the language that the compensation has to be paid within one month from the date of accident and therefore, the FA/4717/2006 10/50 JUDGMENT liability of the employer does not arise for payment of compensation as provided in sec.4 in case of accident arising out of and in course of employment within one month from the date of accident. 11.It is submitted that there are different types of accidents which results into injury or death like accidental death, permanent total disablement, permanent partial disablement, scheduled injury, non-scheduled injury etc. and in each cases the adjudication is required. It is submitted that for the purpose of adjudication in case of a death, the learned Commissioner is required to ascertain as to whether the accident has occurred out of and in course of employment; whether there was relationship of employer and employee; whether there was an accidental death or a death on account of heart-attack or a natural death; the amount of wages paid by the employer to the employee; the age of the employee; whether the notice as required u/s.10 of the Act was issued by the employee concerned. 12.It is further submitted that in cases of disablement whether it is permanent disablement or permanent partial disablement or scheduled injury or non-scheduled injury or in case of non-scheduled injury whether the FA/4717/2006 11/50 JUDGMENT Doctor was examined and the age of the claimant; wages of the claimant and whether notice under sec.10 was issued. It is submitted that these are the disputes which are required to be adjudicated by the Commissioner in order to decide the amount of compensation. It is submitted that looking to the scheme of the Act, without adjudication in either case i.e. either death or disablement, the Commissioner cannot come to the conclusion in respect of the amount payable to the workman or the claimant as the case may be in case of an accident arising out of and in course of employment. 13.The learned advocates appearing on behalf of the respective appellants have submitted that the Hon'ble Supreme Court has held in para 14 in the case of Ved Prakash Garg Vs. Prerna Devi, reported in (1997) 8 SCC 1 that if the employer accepts the liability as provided under sec.4-A(2) then the interest is payable from the date of accident. However, if the liability is disputed by the employer, then sec.4-A(3) comes into play. In that case the amount of compensation has to be paid from the date of adjudication i.e. from the date of order passed by the Commissioner for Workmen Compensation under the Act. FA/4717/2006 12/50 JUDGMENT 14.Relying upon the decision of the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra), it is submitted that now it is held by the Hon'ble Supreme Court that interest has to be paid after one month from the date of adjudication and not after one month from the date of accident. It is submitted that in para 9 the Hon'ble Supreme Court has categorically observed that the legislature has not used the expression “from the date of accident” and unless there is an adjudication, the question of amount falling due does not arise. It is submitted that the Hon'ble Supreme Court in the said decision has interpreted sub sections (1), (2) and (3) of sec.4-A of the Act and has specifically held that unless there is an adjudication, the question of amount falling due does not arise. It is submitted that as held by the Hon'ble Supreme Court in the said decision, adjudication under sec.4 in some cases involve assessment of loss of earning capacity by qualified medical practitioner and unless adjudication is done, the question of compensation becoming due does not arise. It is submitted that position becomes clear on reading sub-section (2) of sec.4-A which provides that provisional payment to the extent of admitted liability has to be made when the employer FA/4717/2006 13/50 JUDGMENT does not accept the liability for compensation to the extent claimed. It is submitted that the crucial expression is “falls due” and the legislature has not used the expression “from the date of accident”. 15.Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Pratap Narayan Singh Dev. Vs. Srinivas Sabata, reported in AIR 1976 SC 222 by the learned advocate appearing on behalf of the claimant, it is submitted by the learned advocates appearing on behalf of the Insurance Company as well as the employer that in the said decision the Hon'ble Supreme Court has interpreted sec.3 read with sec.19. However, sec.3 does not provide time limit within which compensation has to be paid. It is submitted that in the said decision, the Hon'ble Supreme Court has not interpreted the words “falls due” as employed in sec.4- A(1) read with sec.4-A(3). It is further submitted that even in the said decision, there was no dispute that the injury in question was caused to the respondent by an accident which arises out of and in the course of employment with the appellant. It is submitted that in the said decision it was also not in dispute that the injury resulted in an amputation of his left arm in the elbow and therefore, FA/4717/2006 14/50 JUDGMENT the position was very much clear that the case falls in sec.4A(2) and does not fall in sec.4-A(3). It is submitted that, therefore, in the facts and circumstances of that case, the Hon'ble Supreme Court has held that the employer became liable to pay compensation as soon as the injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is submitted that having held so, the Hon'ble Supreme Court has observed that the employer did not make any provisional payment under sub- section(2) of section 4, therefore, in the said decision the Hon'ble Supreme Court had not interpreted sub-sections (1), (2) and (3) of sec.4-A and therefore, the ratio laid down in that case is not applicable, more particularly the issue decided in the case of Mubasir Ahmed (supra) and Pratap Narayan Singh Dev (supra) are altogether different. 16.It is also further submitted that even the decisions of the Hon'ble Supreme Court in the case of Kerala State Electricity Board Vs. Valsala K., reported in 2000 ACJ 5 decided the issue whether the amount of compensation falls due from the date of accident or from the date of adjudication. FA/4717/2006 15/50 JUDGMENT 17.Mr.Thakkar, learned advocate appearing on behalf of the employer – the appellant of First Appeal No.1044 of 2007 has, in addition, submitted that in the present case, no notice under sec.10 was issued by the workman to the employer and the employer has disputed the liability to pay the compensation on the ground that there was no relationship of employer and employee and therefore, in this case, adjudication was required to be made by the learned Commissioner and therefore, even if the compensation falls due, it will fall due from the date of adjudication and not from the date of accident. It is further submitted that in fact the accident occurred in the year 1994 and the claimant deposed in the year 2003 i.e. after a period of nine years from the date of alleged accident and therefore, the delay has been caused on the part of the claimant and there was no fault on the part of the employer and therefore also the employer is not required to be saddled with the liability to pay interest and/or penalty for the said period. Making above submissions, learned advocates appearing on behalf of the respective appellants have prayed to quash and set aside and/or modify the impugned judgement and order passed by the learned Commissioner for Workmen FA/4717/2006 16/50 JUDGMENT Compensation, by directing to pay interest on the compensation from the date of adjudication i.e. from the date of judgement and order and not from the date of accident. 18.Mr.MTM Hakim, learned advocate appearing on behalf of the original claimants has submitted that the learned advocate appearing on behalf of the original appellants have heavily relied upon the decision of the Hon'ble Supreme Court in the case of Mubasir Ahmed (supra) by which the Hon'ble Supreme Court has held that starting point for payment of compensation in the Workmen's Compensation Act, 1923 is the date of adjudication of the claim and not the date of accident and hence the liability to pay interest and liability would arise after the date of adjudication and not from the date of accident. It is submitted by Mr.Hakim that prima facie in consideration of the judgement in the case of Mubasir Ahmed (supra), it appears that the said submissions seems to be true but the proposition of law laid down in the case of Mubasir Ahmed (supra) is in direct conflict with the earlier decisions of the Hon'ble Supreme Court and that too of a Larger Benches i.e. in the cases of Pratap Narayan Singh Dev (supra) and Kerala State Electricity Board (supra). It FA/4717/2006 17/50 JUDGMENT is submitted that it is not true that in the case of Pratap Narayan Singh (supra), the Hon'ble Supreme Court has not considered sections 4-A(1) and 4-A(3) of the Act. It is submitted that in the case of Pratap Narayan Singh (supra), considering the provisions of secs.3, 4-A(1), 4- A(3) and 19 of the Act, in para 7 the Hon'ble Supreme Court has held that “the employer, therefore, became liable to pay 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 employment. Therefore, it is futile to contend that the compensation did not fall due until after the Commissioner's order dated May 6, 1969 under sec.19.” It is further observed by the Hon'ble Supreme Court in the said decision that “there is therefore nothing to justify the argument that the employer's liability to pay compensation under section 3, in respect of injury, was suspended until after the settlement contemplated by section 19.” 19.It is further submitted that even in the subsequent decision the Hon'ble Supreme Court in the case of Valsala K. (supra), considering the question whether the amendment of secs.4 and 4-A of the Act w.e.f.15/9/1995 FA/4717/2006 18/50 JUDGMENT enhancing the amount of compensation and rate of interest would be applicable to the cases where the claims are made from accident which took place prior to 15/9/1995 and the Hon'ble Supreme Court, after considering the proposition of law laid down in the case of Pratap Narayan Singh (supra), in para 3 has held that “thus the relevant date for determination of the rate of compensation is the date of accident and not the date of adjudication of the claim.” It is also submitted that in the case of Valsala K. (supra) the Hon'ble Supreme Court has also approved the decision of the Full Bench of the Kerala High Court to the extent it is in accord with the judgement in the case of Pratap Narayan Singh (supra). It is submitted that from the aforementioned decisions of the Larger Bench of the Hon'ble Supreme Court i.e. Four Hon'ble Judges Bench in the case of Pratap Narayan Singh (supra) and Three Hon'ble Judges Bench in the case of Valsala K. (supra), it is apparent that there is clear conflict between the said decisions and decision in the case of Mubasir Ahmed (supra) pronounced by the Two Hon'ble Judges of the Supreme Court and therefore, it is requested that in view of the aforementioned conflict, this Court should follow the principle of law laid down by the FA/4717/2006 19/50 JUDGMENT Larger Benches of the Hon'ble Supreme Court as the same would be binding. It is also further submitted that the aforesaid dispute is also covered by the Hon'ble Supreme Court in the case of Oriental Insurance Co. Ltd. Vs. Khajuni Devi and others, reported in (2002) 10 SCC 567. 20.It is submitted that thus from the aforesaid decisions of the Hon'ble Supreme Court it can be seen that the proposition of law that the compensation falls due on the date of accident is consistently adopted by the Hon'ble Supreme Court from 1976 onwards and hence, considering the principles of “stare decisis”, the settled proposition of law as laid down in the case of Pratap Narayan Singh (supra) is required to be adopted, applied and implemented. It is submitted that since the said proposition of law has remained unchanged onwards and has been also adopted, applied and implanted by all the courts of law through out the country and therefore, there is no reason to deviate from the same. It is submitted that it is, therefore, best to adhere the decision and not to disturb questions put at rest. 21.Mr.Hakim, learned advocate appearing on behalf of the claimants has relied upon upon the following decisions of FA/4717/2006 20/50 JUDGMENT this Court (i.e. decisions of the Division Bench as well as Single Judge) in support of his submission that the liability to pay interest on compensation is from the date of accident:- (i) New India Assurance Company Limited Vs. Badrudin Karmalibhai Ramani, reported in 2000-JX(Guj), 2000- GLHEL-0-208638. (ii)Vagher Mamad Husein Gandh Vs. Secretary, Gujarat Electricity Board, Baroda, reported in 1995-GLH-2-752, 1995-GCD-2-435. (iii)Ahmed Harun Gori Vs. Abbas Ibrahim Kara, reported in 1993-GCD-2-365, 1993-GLR-2-1433. (iv)Radhabehn Wd/o. Narasibhai S.Patel & Anr. Vs. Mulji Kanji Dhord, reported in 1992-GLH-2-528 = 1994-ACJ-0- 404. (v)Baria Gaman Hamji vs. Rajnikant J.Shah, reported in 1991-GLH-1-317 = 1992-GLR-1-7. (vi)Jayantilal & Corporation, Rajkot Vs. Garasia Rajvirba Udesinh, reported in 1991-GLR-2-726, 1992-ACJ-0-286. (vii)Natwarsinh A.Chauhan Vs. Niranjanbhai K.Shah, reported in 1991-(1)-GLH-P-12 = 1991-GLR-(1)-361. (viii)Chavan Ramji Mavji Vs. Khavas Shantilal Kanji, reported FA/4717/2006 21/50 JUDGMENT in 1991-GLH-1-12 = 1992-GLR-1-387. (ix)Bharatkumar Premji Chauhan Vs. Gurukrupa Alluminium Corporation, reported in 1985-GLH-0-128 = 1986-ACJ-0- 416. (x)Union of India Vs. Shantaben wd/o.Vithaldas Gobardas Patel, reported in 1985-GLH-0-754 = 1985-ACJ-0-818. (xi)Jiviben Chana & Ors. Vs. Shah Karsan Lakha, reported in 1983-GLH-0-14 = 1983-GLH-1-134. (xii)Municipal Corporation, Baroda Vs.