{1} fa159211.odt IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD FIRST APPEAL NO.1592 OF 2011 Kinetic Engineering Ltd., Nagar-Daund Road, Ahmednagar. Appellant Versus K.P.Ramdas Nair, age: 54 years, Occ: service, R/o Room No.56, Priyanka Colony, Near Railway Station Road, Ahmednagar. Respondent Mr.V.S.Bedre, advocate for the appellant. Mr.P.V.Barde, advocate for the respondent. CORAM : R.M.BORDE, J. DATE : 06th September, 2011 ORAL JUDGMENT: 1 Heard learned Counsel for respective parties. Appeal is admitted and taken up forthwith for final disposal by consent of learned Counsel for respective parties. 2 The only point, which arises for consideration in the instant appeal is, as to whether the Commissioner for Workmen’s Compensation was justified in issuing a direction to the employer – appellant herein to pay an amount of Rs.9588/- towards penalty to the extent of 50% of the amount of compensation. 3 The appellant is the original opponent employer and is challenging the judgment and award dated 25.03.2011, passed by the {2} fa159211.odt Commissioner for Workmen’s Compensation & Judge, 2nd Labour Court, Ahmednagar in Application (WC) No.24/2007. 4 Respondent herein – original claimant sustained employment injury on 16.05.2006. The injury sustained by the employee is minor one thereby causing permanent disability to the extent of 5%. The employee claimed compensation amounting to Rs.19,176/- along with interest and penalty by tendering an application to the Commissioner for Workmen’s Compensation. The application was allowed and the employer has been directed to pay amount of compensation together with penalty and interest. 5 Shri Bedre, learned Counsel appearing for the appellant, has contended that the Commissioner for Workmen’s Compensation has erred in issuing direction to the employer to pay amount of penalty to the extent of 50% of the amount of compensation without issuing prior notice calling upon the employer to show cause as to why amount of penalty shall not be recovered from him. According to the learned Counsel for the appellant, in the absence of such notice, the Commissioner was not justified in imposing the liability on the employer in respect of payment of penalty. Reliance is placed on the judgment of the Apex Court in the case of Ved Prakash Garg Vs. Premi Devi and others, reported in (1997) 8 SCC 1. In paragraph no.14 of the judgment, it is observed by the Apex Court, thus: “...... But similar consequence will not follow in case where additional amount is added to the principal amount of compensation by way of penalty to be levied on the employer under circumstances {3} fa159211.odt contemplated by Section 4-A(43)(b) of the Compensation Act after issuing show-cause notice to the employer concerned who will have reasonable opportunity to show cause why on account of some justification on his part for the delay in payment of the compensation amount he is not liable for this penalty. However, if ultimately, the Commissioner after giving reasonable opportunity to the employer to show cause takes the view that there is no justification for such delay on the part of the insured employer and because of his unjustified delay and due to his own personal fault he is held responsible for the delay, then the penalty would get imposed on him. That would add a further sum up to 50% on the principal amount by way of penalty to be made good by the defaulting employer. So far as this penalty amount is concerned it cannot be said that it automatically flows from the main liability incurred by the insured employer under the Workmen’s Compensation Act.” 6. The judgment of the Apex Court in Ved Prakash’s case was followed by the learned Single Judge of this Court in the matter of Uddhav Rangnathrao Pawar Vs. Sheshrao Raji Jogdand and another, reported in 2009 (6) ALL MR 117. In para 32 of the judgment, it is observed by the learned Single Judge, thus: “32 This judgment in Ved Prakash’s case has been followed in un-reported judgment of this Court in F.A. No.1562/2009, Nandi Sahakari Sakhar Karkhana’s case (supra). It has been held that a show cause notice was required to be issued to the employer calling upon him to furnish the explanation for the delay caused in making the payment of arrears. Upon receipt of the explanation from the employer, if the Commissioner is not satisfied then the penalty to the extent of maximum 50 per cent of the amount of compensation {4} fa159211.odt determined is required to be paid by the employer. The order impugned in the present case is a composite order determining the compensation payable by the employer imposing the interest on the arrears of the amount of compensation and imposing penalty for failure to furnish the satisfactory explanation. The show cause notice contemplated by clause (b) of section 3 of section 4- A of the said Act is with reference to the arrears of the amount of compensation determined to be payable by the employer along with the interest payable thereon. This finding would arise only upon determination of the compensation by the Commissioner under section 19 of the said Act. Hence, the show cause notice contemplated is after passing of the order by the Commissioner determining the compensation. In view of this order imposing penalty of Rs.45,000/- to the extent of 50% of the amount of compensation of Rs.90,000/- determined by the Commissioner, needs to be quashed and set aside with a direction to the Commissioner to issue a show cause notice providing the appellant / employer a reasonable opportunity of being heard in the matter and to furnish the explanation for the delay caused in making the payment of arrears of compensation and interest, and thereafter to pass an appropriate order.” 7 Both these judgments were considered and followed by this Court in an unreported case in the matter of Satyanarayan s/o Ramlal Maniyar Vs. Md. Zahurdin Faruqi s/o Mohd. Salawodin Faruki & another, (First Appeal No.135 of 2011, decided on July 26, 2011) and the direction issued by the Commissioner for Workmen’s Compensation, without observing the mandate of the Apex Court in respect of issuance of notice to the employer, is set aside. {5} fa159211.odt 8 It is not disputed in the instant matter, that the Commissioner for Workmen’s Compensation did not call upon the employer to show cause as to why the amount of penalty shall not be recovered from him thereby depriving the employer to putforth his submissions as regards circumstances compelling the employer in respect of his failure to pay the compensation within stipulated period. Therefore, the order passed by the Commissioner for Workmen’s Compensation, to the extent specified above, needs to be quashed and set aside. 9 The appeal thus deserves to be allowed and the matter requires to be remitted back to the Commissioner for Workmen’s Compensation with a direction to extend an opportunity to the employer to show cause as to why the amount of penalty shall not be recovered from him and after extending an opportunity of hearing to the appellant- employer, the Commissioner shall proceed to decide the issue as regards imposition of penalty as contemplated by Section 4-A of the Workmen’s Compensation Act. 10 The appeal is, thus, allowed. The direction issued by the Commissioner for Workmen’s Compensation and Judge, 2nd Labour Court, Ahmednagar, on 25.03.2011 in Application (WC) No.24 of 2007, is set aside and the learned Commissioner is directed to extend an opportunity of hearing to the employer to show cause in respect of proposed order of recovery of penalty as contemplated by Section 4-A (3) (b) of the Workmen’s Compensation Act. The parties are directed to cause appearance before the Commissioner for Workmen’s Compensation on 27th September, 2011 and as such, no separate notice requiring their {6} fa159211.odt appearance before the Commissioner shall be necessary. The Commissioner shall proceed to decide the issue in respect of imposition of penalty after extending an opportunity of hearing to both the sides and in accordance with the provisions of law. Rest of the directions contained in the award in respect of payment of compensation together with interest recoverable from the employer – appellant herein stands confirmed. In the facts and circumstances of this case, there shall be no order as to costs. Pending Civil Application does not survive and stand disposed of accordingly. R.M.BORDE JUDGE adb/fa159211