IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA FAO No. 408 of 2008. Date of Decision: 29.8.2011. Oriental Insurance Co. Ltd. ….Appellant. Versus. Kartar Singh & Anr. …Respondents. Coram: The Hon’ble Mr. Justice Deepak Gupta, Judge. Whether approved for Reporting? No. For the Appellant: Mr. Deepak Bhasin, Advocate. For the Respondent: Mr. Naresh Kaul, Advocate for respondent No.1. None for respondent No.2. Deepak Gupta, J. (Oral) 1. By means of this appeal, the appellant- insurance company has challenged the award dated 5.5.2008, passed by the Commissioner, Workmen’s Compensation, Chamba, District Chamba whereby compensation of Rs. 3,50,352/- alongwith interest @ 12% per annum from the date of accident i.e. total sum of Rs. 6,86,690/- has been passed/awarded in favour of the claimant and it has further been directed that in case the insurance company fails to deposit 2 this amount within the aforesaid period, it shall be liable to pay 25% penalty on the principal amount of compensation. 2. The appeal was admitted on the following question of law on 7.11.2008. “Whether the Ld. Commissioner was justified in imposing the interest and penalty on award amount upon the insurance company in the absence of any contract or statutory provision empowering him to do so, that too from the date of accident? 3. In my view the following questions of law of equal importance also arise in the same:- 1. Whether the computation of damages has to be done as per the law existing on the date of the accident or as per the law which exists on the date of making of the award? 2. Whether the learned Commissioner was justified in awarding compensation of hundred percent disabilities and even in case of hundred percent disabilities, then as per the evidence of the claimants the disabilities were to be 40 %? 4. As far as the first question is concerned, the law by now is well settled that liability to pay interest can be fixed upon the insurance company, unless the insurance company shows that it has in its policy specifically put a clause that the insurance company is not liable to pay interest. The Supreme Court in Ved Prakash Garg Vs. Premi Devi and others, (1997) 8 Supreme Court Cases 1, held that there was no statutory liability to pay penalty and interest, but this Court in a number of cases has held that in case the insurance 3 company wants to escape the liability to pay interest, it must show that under the terms of the policy, the insurance company was not liable to pay the interest. 5. Reference may be made to the decision of the learned Single Judge of this Court in The New India Assurance Co. Ltd. Vs. Smt. Jamna Devi & ors, Latest HLJ 2006 (HP) 1158 wherein the Court has held as follows:- “4. Undoubtedly a reading of the aforesaid Supreme Court judgment does clearly suggest that it is open, under the Scheme of the Workmen’s Compensation Act, 1923, for an insurer to exclude its liability to pay interest on compensation amount, yet on a question of fact the insurer has to specifically aver and plead this fact. In the instant case, this fact was neither averred nor pleaded either before the Commissioner or in this Court in the present appeal.” In the present case, the same has not been shown and therefore, the insurance company is liable to pay interest. 6. However, the burden of payment of penalty could never be fixed upon the insurance company. Even otherwise, the Commissioner, Workmen’s Compensation cannot direct that if the amount is not paid within a particular period then it will be liable to pay penalty. Penalty is to be paid for not making the payment at the time of the accident and for non compliance of the award there are other remedies available and penalty cannot be imposed by giving a 4 limited time to comply with the terms of the award. First question is answered accordingly. 7. As far as the second question is concerned, Mr. Deepak Bhasin, Advocate has vehemently argued that the damage has been caused due to the injuries suffered in the accident. In my view, this question is a finding of fact which cannot be raised in appeal and in this case from the evidence on record it stands established that the claimant-workman is blind in the left eye and is suffering some disability/loss of vision in the right eye. If the disabilities to both the eyes are calculated together, it comes to 40% which is also the assessment of the doctor. 8. The second contention of Mr. Deepak Bhasin, Advocate is that the compensation has to be assessed as per law existing on the date of accident. In fact this question is no longer res integra. There are numerous judgments of the Apex Court on this point. The compensation has to be calculated as per the provisions of law as they exist on the date of accident. In the present case the cause of action has arisen on the date when the accident had occurred. 5 9. The learned Commissioner, Workmen’s Compensation while calculating the compensation assessed the income of the deceased at Rs. 3,000/- per month and assessed the disability at hundred percent i.e. 60% of his emoluments multiplied by the relevant factor. The accident in question occurred in May, 2000 prior to the amendment of the Workmen’s Compensation Act vide Act No. 46 of 2000, whereby the maximum income limits was increased from Rs. 2,000/- to Rs. 4,000/- per month. 10. A Single Judge of this Court in Oriental Insurance Co. Ltd. Vs. Smt. Vidya Devi and others, Latest HLJ 2005(HP) 784 following the judgment of the apex Court clearly held that the law as existing on the date of the accident is applicable while assessing the compensation and the amended provisions of the Act are not procedural in nature and cannot be given retrospective effect. 11. A four-Judge Bench of the Apex Court in Pratap Narain Singh Deo v. Srinivas Sabata (1976 1 SCC 289) has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman by the accident which arose out of and in the course of employment. Thus, the relevant date 6 for determination of the rate of compensation is the date of the accident and not the date of adjudication of the claim. This judgment was followed in Kerala State Electricity Board and another v. Valsala K. and another (1999) 8 SCC 254). The same view has been taken in Oriental Insurance Co. Ltd.v. Khajuni Devi and others (2002) 10 SCC 567). 12. This Court has also consistently taken the view that the rights of the parties are governed by the law as it exists on the date of the accident. This view has been taken in United India Insurance Company Ltd. v. Smt. Nako alias Naiku Devi, 1996 (1) Sim. L.C.370, where it was held as follows: “8. We may refer to Maxwell on Interpretation of Statutes, Twelfth Edn. P.215, regarding retrospective operation of statutes in the following terms: “Upon the presumption that the legislature does not intend that is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary distinct implication.” 9. Applying the above settled law of interpretation, we hold that as the accident took place prior to the amendment of the Schedule IV of the Act, the compensation has to be assessed according to unamended Schedule. We say so as if retrospective operation is given to the amended Schedule, it will take away the rights of the parties, namely, the owner as well as the Insurance Company, in this regard. Therefore, the Commissioner erred in law in assessing the compensation under the amended Schedule IV.” 13. To similar effect are also the decisions of this Court in H.P. State Forest Corporation Ltd. v. Ganu Devi and others, Latest HLJ 2004 (HP) 945 and in 7 Executive Engineer, B & R, HPPWD, Solan and Anr. v. Kewal Ram, FAO No. 261 of 2003 decided on 17.7.2004. 14. This view has also been followed by this Court in FAO No. 252 of 1998 and FAO No. 308 of 1995 decided on 12.5.2005. 15. Therefore, it is obvious that it is the law existing on the date of the accident which is applicable and amendments whereby changes are made with regard to the maximum salary or multiplier etc. are not procedural but substantive and hence cannot be given retrospective effect. 16. The method of the assessment followed by the Commissioner Workmen’s Compensation is totally illegal. 17. Assuming that the injury was held to be 40% disability then also after calculating the amount payable on account of hundred percent disabilities, the Commissioner was required to work out 40% of the amount which would be the amount payable. In every case of injury it is not the maximum liability which is payable and Section 4(1) (c) makes it clear that the compensation has to be assessed as per the percentage of the loss of earning capacity caused by the injury. In the case of loss of earning capacity 8 injury is 40% and the calculation has been made accordingly. 18. In view of the above discussion, it is obvious that the maximum wages which could have been taken into consideration are Rs. 2,000/- per month. The claimant was aged 36 years and therefore, the relevant factor was 194.64 and since the disability was 40%, the compensation has to be worked out as follows: 60/100 x 1200 x 194.64 x 40/100 which works out to Rs. 93,427.20 paise. The accident occurred on 27.5.2000, therefore, the claimant is entitled to interest on this amount w.e.f. 27.6.2000 @ 12% per annum i.e. one month after the date of accident as provided under Section 4(A) for payment of compensation. The insurance company is not liable to pay any penalty whatsoever. 19. In view of the above discussion, the award of the Commissioner Workmen’s Compensation is modified and the compensation is reduced from Rs. 3,50,352/- to Rs. 93,427.20 paise alongwith interest @ 12% per annum as detailed hereinabove. No costs. (Deepak Gupta), Judge 29th August, 2011. (Krn Guleria)