IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN WEDNESDAY, THE 24TH SEPTEMBER 2008 / 2ND ASWINA 1930 MFA.No. 139 of 2007 --------------------------------- WCC.72/2004 of W.C.C. & CONTRACT L.BOARD,TVM. .................... APPELLANT/2ND OPPOSITE PARTY: THE NEW INDIA ASURANCE COMPANY LIMITED, THIRUVANANTHAPURAM NOW REP. BY ITS ADMINISTRATIVE OFFICER, REGIONAL OFFICE, M.G.ROAD, KOCHI-11. BY ADV. SRI.MATHEWS JACOB (SR.) SRI.P.JACOB MATHEW RESPONDENTS/APPLICANTS: 1. M.NASSIMUDEEN, S/O.MOHAMMED KASIM, THANNIMOODU VEEDU,CHEKKAKONAM P.O., KARAKULAM,THIRUVANANTHAPURAM. 2. S.LAILA BEEVI, W/O. NASSIMUDEEN, DO,..DO. 3. MS. ANSEENA, D/O. NASSIMUDEEN DO...DO.. 4. MS.ANEESHA (MINOR), DO..DO.. (Minor 4th respondent is rep. by her father 1st respondent) (No reliefs are claimed against the 1st opposite party in the application and hence she is not made a party in this appeal). ADV. SRI.NAGARAJ NARAYANAN FOR R1-4 SRI.NAIR AJAY KRISHNAN FOR R1-4 SRI.RAJAN VELLOTH FOR R1-4 SRI.SAIJO HASSAN FOR R1-4 SRI.A.S.SABU FOR R1-4 THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 24/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B.Koshy & K.P.Balachandran, JJ. --------------------------------- M.F.A.No.139 of 2007 --------------------------------- JUDGMENT Koshy, J. A 19 year old youngster, while driving a car, sustained fatal injuries in a motor accident. His dependents filed an application for compensation before the Workmen's Compensation Commissioner. Being a workmen's compensation claim, contributory negligence need not be taken into account in fatal injury cases. The Tribunal awarded compensation taking Rs.4,000/- as the monthly income. Apart from the self serving statement of the first claimant, there is no evidence to show that he was getting a monthly income of Rs.4,000/-. He was only a 19 year old youngster. Even though he was employed by the owner of the car as a driver, instead of Rs.4,000/- we fix Rs.3,000/- as the monthly income. Compensation was calculated as provided under the schedule. If that be so, MFA 139/07 2 compensation payable will be 3000 x 50/100 x 225.22 = 3,37,830. The Tribunal has awarded penalty also. It is settled law that penalty cannot be imposed on the Insurance Company. Further, for issuing penalty, separate notice has to be issued. 2. In Ved Prakash Garg v. Premi Devi ((1997) 8 SCC 1), the Honourable Supreme Court has very clearly stated that penalty cannot be imposed on the Insurance Company. At paragraph 9 of the above decision, it was held as follows: “.... Thus even in the scheme of amended Section 4-A(3) or as per the amended Section 4-A(3) read with clauses (a) and (b) thereof, it becomes clear that additional amount of compensation can be levied against the defaulting employer by way of penalty if it is shown that there is no justification for the delay on his part in making good the compensation amount to the MFA 139/07 3 claimant. Interest payable on the principal amount, if not paid when it fell due, is not considered by the legislature to be a penalty. This is further highlighted by the proviso to Section 4-A (3) as substituted by Act 30 of 1995, which clearly indicates that a penalty amount under clause (b) cannot be imposed against the employer without giving him reasonable opportunity to show cause. No such show cause notice is contemplated while imposing interest on default of payment of principal amount on the part of the employer as per Section 4-A(3) (a). Absence of this provision is obviously based on the legislative intent that interest on principal amount is not by way of penalty. Therefore, the employer need not be heard in this connection. A simpliciter default in payment of compensation within the time of one month from the date it fell due would automatically attract MFA 139/07 4 the provision for simple interest under Section 4-A(3) as per the rate prescribed therein and for such imposition of interest no question of justification for the delay is countenanced by the legislature.” (emphasis supplied). 3. With regard to payment of interest at 12% per annum, interest is payable under Section 4-A from the date of accident, i.e. from the date compensation fell due as held in Ved Prakash Garg's case (cited supra). In Kerala State Electricity Board v. Valsala ((1999) 8 SCC 254), a three member Bench of the Honourable Supreme Court held that compensation falls due on the date of the accident. In that case, the accident occurred before the amendment of the Workmen's Compensation Act by Act 30 of 1995. It was contended by the claimants that compensation is payable at the rate prescribed on the date of adjudication and the employer contended MFA 139/07 5 that compensation is payable on the basis of the provisions of the Act as on the date of accident, as compensation falls due on the date of accident. The Honourable Supreme Court held that compensation falls due on the date of accident itself. Similar view was taken by a Constitutional Bench of the Honourable Supreme Court in Pratap Narain Singh Deo v. Shrinivas Sabata (AIR 1976 SC 222) and in Maghar Singh v. Jashwant Singh ((1998) 9 SCC 134). In Maghar Singh's case (cited supra) the accident occurred on 26.7.1984 and compensation was awarded from 26.7.1984. Considering the long delay, the Honourable Supreme Court, in the interest of justice, using the constitutional power, rate of interest was reduced from 12% to 9%. In the instant case, the accident took place on 10.3.2004 and the victim died on 12.3.2004. Therefore, interest is payable at least from 12.3.2004 as held by the Commissioner. Therefore, award is modified and the total compensation payable will be Rs.3,37,830/- MFA 139/07 6 with 9% interest from 12.3.2004 till its deposit. The amount due to the claimants will be disbursed according to law. The excess amount deposited by the Insurance Company should be refunded to them. The appeal is allowed in part. (J.B.Koshy, Judge) 24th September, 2008 (K.P.Balachandran, Judge) tkv