IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MRS. JUSTICE K.HEMA FRIDAY, THE 1ST FEBRUARY 2008 / 12TH MAGHA 1929 MFA.No. 762 of 2001() ------------------------------- WCC.243/1996 of COMMISSIONER FOR WORKMEN'S COMPENSATION AND DEPUTY LABOUR COMMISSIONER, KANNUR .................... APPELLANT: 2ND OPPOSITE PARTY IN W.C.C. NO.243/1996. ----------------- THE MANAGER, THE NEW INDIA ASSURANCE COMPANY LTD., BRANCH OFFICE, KALPETTA, REP.BY ITS ASSISTANT ADMINISTRATIVE OFFICER, REGIONAL OFFICE, M.G.ROAD, ERNAKULAM. BY ADV. SRI.LAL GEORGE RESPONDENTS: APPLICANT & OPPOSITE PARTIES 1,3,4 & 5 ----------------------- 1. K.G.LAKSHMIKUTTY, W/O. SIVADASAN NAMBIAR, KEECHERI HOUSE, PUTHIYEDOM, TALAPOYA, MANANTHAVADY, WAYANADU. 2. P.J.FRANCIS, S/O. P.V.JOSEPH, POONOOLIL HOUSE, B.STREET, MANANTHAVADY, WAYANADU. 3. VRINDA KUMARI, D/O. DAMODARAN NAMBIAR, MURINGHAD PUTHEN VEEDU, PADINJARATHARA, VYTHIRI, WAYANADU. 4. ARUN, (MINOR), AGED 5 YEARS, S/O. VRINDAKUMARI, REP.BY HIS MOTHER AND NATURAL GUARDIAN, SMT.VRINDAKUMARI, MURINHAD PUTHEN VEEDU, PADINJARATHARA, VYTHIRI. M.F.A.NO.762/2001 5. ABHILASH (MINOR), AGED 3 YEARS, S/O. VRINDAKUMARI, REP.BY HIS MOTHER AND NATURAL GUARDIAN SMT.VRINDAKUMARI, MURINHAD PUTHEN VEEDU, PADINJARATHARA, VYTHIRI R2 BY ADV. SRI.N.J.ANTONY R3 TO R5 BY ADV. SRI.P.K.SURESH KUMAR SRI.K.P.SUDHEER R1 BY ADV. SRI.RONY J.PALLATH THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 01/ 02/2008 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.F.A. NO.762/2001 ORDER ON CMP. NO.6338/2001 IN MFA. NO.762/2001 DISMISSED 01.02.2008 SD/- J.B.KOSHY, JUDGE SD/- K.HEMA, JUDGE /TRUE COPY/ P.S. TO JUDGE tss J.B.KOSHY & K. HEMA, JJ. -------------------------------------- M.F.A.No.762 OF 2001 ------------------------------------- Dated 1st February, 2008 JUDGMENT Koshy,J . Legal representatives of a deceased workman who died in the course of employment applied for compensation before the Commissioner for Workmen's Compensation claiming Rs.Three lakhs as compensation. Though the deceased workman was getting Rs.2,250/- as the monthly income, since the accident occurred on 14.11.1994, that is, prior to the amendment of the Workmen's Compensation Act by Act No.30 of 1995 only Rs.1,000/- was taken as the monthly wages and compensation awarded was Rs.83,968/- with interest at 12% per annum. The contention of the appellant insurance company is that on the date of the accident, the statutory interest payable under section 4A of the Act was only 6% and in K.S.E.B. v. Valsala (1999 (3) KLT 348 SC), the Supreme Court held that compensation should be calculated on the basis of the provisions of the Act on the date of the accident. This matter was considered by a Division Bench of this Court in Oriental Insurance Co. v. Mohammed (2002 (1) KLT 131) and following the decision in K.S.E.B. v. M.F.A.No.762/2001 2 Valsala (supra) it was held that compensation can be calculated only on the basis of the provisions of the Act on the date of accident as compensation falls due on that date. But, as far as payment of interest is concerned, that always depends upon the date of deposit of compensation by the party. Interest is payable due to hike in money value and due to delay in paying compensation in time. Therefore, it is related to the payment. In the decision in Oriental Insurance Co. v. Mohammed (supra), it was held as follows: “Amount of compensation was deposited only after the order of the Commissioner on 13.2.1997. No compensation was paid to the workman in time despite the matter was informed by the employer to the insurance company in time and claim was given in time. S.4A(3) of the Act was amended and sub-s. (3) and (3A) were substituted by Act 30 of 1995 with effect from 15.9.1995 which reads as follows: “S.4A .... (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 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 M.F.A.No.762/2001 3 (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. Explanation:- For the purpose of this sub- section, “scheduled bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934. (3A) The interest payable under sub-s. (3) shall be paid to the workman or his dependant, as the case may be, and the penalty shall be credited to the State Government.” As per S. 4-A (1) compensation under S.4 shall be paid as soon as it falls due. Permissible upper limit of time in depositing compensation is one month from the date of accident. In Ved Prakash Garg. v. Prema Devi ((1997) 8 SCC 1) the Apex Court held that once default on the part of employer in paying the compensation due takes place beyond permissible limit of one month, liability to pay interest runs automatically. Payment of interest depends upon the time of payment of compensation. Therefore, we are of the opinion that unlike the amount of compensation which is to be calculated as per the statutory provisions existing on the date of accident, interest has to be calculated on the rates prescribed as per the statute existing on the date of payment. Right to get compensation is crystallised on the date of accident itself but interest payable thereon depends upon the date of M.F.A.No.762/2001 4 payment of compensation. Hence rate of interest and amount of interest payable are directly related to the date of payment of interest.” Here, the amount was deposited only in 2001. Therefore, at that time statutory rate of interest was 12% per annum and on that ground alone, the order of the Commissioner cannot be challenged. Hence, this appeal is dismissed. J.B.KOSHY JUDGE K.HEMA JUDGE vaa