IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MRS. JUSTICE K.HEMA FRIDAY, THE 22ND FEBRUARY 2008 / 3RD PHALGUNA 1929 MFA.No. 452 of 2001(B) --------------------------------- W.C.C.NO.51/1997 OF THE COMMISSIONER FOR WORKMEN'S COMPENSATION, ERNAKULAM. .................... APPELLANT/ APPLICANT: ------------------------------------- M.P. PETER, S/O. PATHROSE, MOOTTAMOLAYIL HOUSE, KADAYIRUPPU KARA, ERNAKULAM DISTRICT. BY ADV. SRI.P.RAMAKRISHNAN, ADV. SMT.T.C.KRISHNA. RESPONDENT/ OPP. PARTY: ------------------------------------------ JOSHY, S/O. VARGHESE, MADAPPILLIL HOUSE, KIZHAKKAMBALAM KARA, KIZHAKKAMBALAM.P.O. BY THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 22/02/2008,ALONG WITH M.F.A NOS.454/2001 & 456/ 2001 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B.KOSHY & K.HEMA, JJ. -------------------------------------- M.F.A.Nos.452, 454 & 456 OF 2001 ------------------------------------- Dated 22nd February, 2008 JUDGMENT Koshy,J . In all these cases, appellants claimed compensation contending that they sustained injuries in an accident during the course of employment. Tribunal found that they sustained injuries in an accident that arose in the course of employment and they are entitled to compensation. Tribunal assessed compensation, but, interest was awarded only if the amount is not paid within 30 days of the award, i.e., from the date of adjudication. A three member Bench of the Supreme Court in K.S.E.B. v. Valsala ((1999) 8 SCC 254) held that relevant date for determination of the rights and liabilities of the parties concerned is the date of accident and not the date of adjudication of the claim. Therefore, compensation need be calculated as per the provisions of the Act existing on the date of accident. In Pratap Narain Singh Deo v. Shrinivas Sabata and another (AIR 1976 SC 222) Apex Court held that liability to pay interest starts from the date of accident as compensation falls due as soon as the personal injuries received to a workman during the course of employment. The above view was followed by various High Courts including this court in Gopinath v. United India Insurance Co. Ltd. (2000 II LLJ 80 Ker. DB); Vagher MFA.452,454 & 456/2001 2 Mamad Husein Gadh v. Secretary, Gujarat Electricity Board (1996 Lab. IC 368) and Divisional Manager, New India Assurance Co. Ltd. v. S.B. Singh (2003 Lab. I.C. 596 Orissa). Learned counsel for the insurance company pointed out that in National Insurance Co. Ltd. v. Mubasir Ahmed & Anr. (2007 AIR SCW 1265) it was held that interest is payable only from the date of award and not from the date of accident. In the above decision, Supreme Court relied on a three member Bench decision of the Supreme Court in Maghar Singh v. Jashwant Singh ((1998) 9 SCC 134) wherein also interest was awarded from the date of accident. In that case, accident occurred in 1984, but, Supreme Court awarded compensation for the first time after the amendment of the Act in 1995. Rate of interest payable in 1984 was 6%, whereas 12% was the interest prevailing at the time of final adjudication. Considering the long pendency, Supreme Court only granted 9% from the date of accident in view of the powers of the Supreme Court under Article 134 of the Constitution of India. Even then, it is relevant to note that Supreme Court awarded interest from the date of the accident. This matter was considered by this court in National Insurance Co. Ltd. v. Rekha (2007 (4) KLT 386). Compensation is to be calculated considering the provisions of the Act on the date of the accident, but, interest is payable considering the date of deposit of the amount. MFA.452,454 & 456/2001 3 Interest is payable to offset the erosion of money value. Hence, interest is payable at the statutory rate prevailing on the date of deposit. Except in M.F.A.No.456/2001, in the other two cases accident occurred after the amendment of the Act. But, in M.F.A.No.456/2001 amount was deposited after the amendment of the Act at the prevailing interest rate of 12% per annum. 2. Section 4A of the Workmen's Compensation Act reads as follows: “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 workman, as the case may be, without prejudice to the right of the workman 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- (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 MFA.452,454 & 456/2001 4 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.” The Commissioner found that the employer and in turn insurance company has got liability to pay compensation. The accident arose out of employment. Payment of compensation is a statutory liability and employer ought to have deposited/paid the amount within 30 days of the award failing which there is libility to pay interest from the date of accident, but, interest should be paid at the current statutory rate applicable on the date of deposit/payment. Considering the provisions of Section 4A, claimants are entitled to interest at the rate of 12% per annum from the date of accident till its deposit. However, we note that appeals were filed with a delay of 268 days. Before filing the appeals, amount ordered was paid. Hence, appellants will not be MFA.452,454 & 456/2001 5 entitled to claim interest on interest after the date of earlier payment by the insurance company and they need pay interest at the rate of 12% per annum from the date of accident till the date of deposit on the basis of impugned orders of the Commissioner. All appeals are disposed of accordingly. J.B.KOSHY JUDGE K.HEMA JUDGE tks