IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. FAO (WCA) No. 471 of 2003. Decided on: July_11, 2008. __________________________________________________ The Oriental Insurance Company Ltd. … Appellant. Versus Miss Sushma and others. … Respondents ___________________________________________________________ Coram: Hon’bl Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. For the appellant : Mr. Lalit K. Sharma, Advocate. For Respondents No. 1 to 3 : Mr. Rajnish K. Lal, Advocate vice counsel. For Respondents No.5 & 6. : Mr. Ravinder Thakur, Advocate. ___________________________________________________________ Rajiv Sharma, Judge. The present F.A.O. has been preferred against the award dated 6.8.2003 passed by the learned Commissioner under the Workmen’s Compensation Act, 1923. The brief facts necessary for the adjudication of this appeal are that respondents No. 1 to 4 (hereinafter referred to as the claimants for convenience sake) had filed petition under Section 22 of the Workmen’s Compensation Act, 1923 for grant of compensation on account of death of Smt. Kamla Bhadur in an accident during the course of her employment when the Malgi Bridge under construction in Tehsil Suni suddenly collapsed on 1 Whether reporters of the local papers may be allowed to see the judgment? Yes. 2 11.12.1997. The respondents No. 5 & 6 filed joint replies. Respondent No.7 has also filed reply to the claim petition. He has admitted that the deceased workman, who died on 11.12.1997 in the accident, was his employee. The appellant-Insurance Company has also filed reply to the claim petition. The learned Commissioner awarded a sum of Rs. 3,27,707/- as compensation amount in favour of the claimants including the interest at the rate of 12% per annum on 6.8.2003. The respondents No. 5 to 7 were also ordered to pay a sum of Rs. 10,000/- each to the claimants by way of penalty vide award dated 6.8.2003. Mr. Lalit Sharma learned counsel for the appellant has strenuously argued that the award dated 6.8.2003 is not sustainable in the eyes of law. Mr. Sharma then contended that the compensation “falls due” when it has been adjudicated upon by the Commissioner and not at the time when the accident takes place. Mr. Sharma also contended that the learned Commissioner could not award penal interest at the rate of 18% per annum for every day of delay if the parties did not deposit within one month of the announcement of the award the entire amount. He has strongly relied upon National Insurance Co. Ltd. Vs. Mubasir Ahmed and another, 2007 ACJ 845 to buttress his submissions. The Learned counsel appearing on behalf of the respondents had relied upon Pratap Narain Singh Deo Vs. Shrinivas Sabata and another, AIR 1976 SC 222. According to them, the compensation “falls due” as soon as the personal injury is caused to the workmen. 3 I have heard the learned counsel for the parties and have perused the record carefully. Ext. RW-1/L-3 is the copy of policy. The appellant has undertaken to indemnify respondent No.7 against any damage. The policy was valid when the accident had taken place on 11.12.1997. The question formulated by Mr. Lalit Sharma has been considered by their Lordships of the Hon’ble Supreme Court in Pratap Narain Singh Deo Vs. Shrinivas Sabata and another, AIR 1976 SC 222. Their Lordships have held as under: “It has next been argued that the Commissioner committed serious error of law in imposing a penalty on the appellant under section 4A(3) of the Act as the compensation had not fallen due until it was 'settled' by the Commissioner under section 19 by his impugned order dated May 6, 1969. There is however no force in this argument. Section 3 of the Act deals with the employer’s liability for compensation. Sub-section (1) of that section provides that the employer shall be liable to pay compensation if "personal injury is caused to a workman by accident arising out of and in the course of his employment." It was not the case of the employer that the right to compensation was taken away under sub-section (5) of section 3 because of the institution of a suit in a civil court for damages, in respect of the injury, against the employer or any other person. The employer therefore became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is therefore futile to contend that the compensation did not fall due with after the Commissioner's order dated May 6, 1969 under 4 section 19. What the section provides is that if any question arises in any proceeding under the Act as to the liability of any person to pay compensation or as to the amount or duration of the compensation it shall, in default of a agreement, be settled by the Commissioner. There is therefore nothing to justify the argument that the employer's liability to pay compensation under section 3, in respect of the injury, was suspended until after the settlement contemplated by section 19. The appellant was thus liable to pay compensation as soon as the foresaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary. It was the duty of the appellant, under section 4A (1) of the Act, to pay the compensation at the rate provided by section 4 as soon as the personal injury was caused to the respondent. He failed to do so. What is worse, he did not even make a provisional payment under sub-section (2) of section 4 for, as has been stated, he went to the extent of taking the false pleas that the respondent was a casual contractor and that the accident occurred solely because of his negligence. Then there is the further fact that he paid no heed to the respondent's personal approach for obtaining the compensation. It will be recalled that the respondent was driven to the necessity of making and application to the Commissioner for settling the claim, and even there the appellant raised a frivolous objection as to the jurisdiction of the Commissioner and prevailed on the respondent to file a memorandum of agreement setting the claim for a sum which was so grossly inadequate that it was rejected by the Commissioner. In these facts and circumstances, we have no doubt that the Commissioner was fully justified in making an order for the payment of interest and the penalty.” 5 The same question fell for consideration before the Hon’ble Supreme Court in National Insurance Co. Ltd. Vs. Mubasir Ahmed and another (2007 ACJ 845). Their Lordships have held as under: “Interest is payable under section 4-A (3) if there is default in paying the compensation due under this Act within one month from the date it fell due. The question of liability under section 4-A was dealt with by this Court in Maghar Singh Vs. Jaswant Singh, 1997 ACJ 517 (SC). By Amending Act 30 of 1995, Section 4-A of the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest at the rate of 12 per cent. In the instant case, the accident took after the amendment and, therefore, the rate of 12 per cent as fixed by the High Court cannot be faulted. But the period as fixed by it is wrong. The started point is on completion of one month from the date on which it fell due. Obviously, it cannot be the date of accident. Since no indication is there as when it becomes due, it has to be taken to be the date of adjudication of the claim. This appears to be so because section 4-A (1) subscribes that compensation under section 4 shall be paid as soon as it falls due. The compensation becomes due on the basis of adjudication of the claim made. The adjudication under section 4 in some cases involves the assessment of loss of earning capacity by a qualified medical practitioner. Unless adjudication is done, question of compensation becoming due does not a rise. The position becomes clearer on a reading of sub section (2) of section 4-A. It provides that provisional payment to the extent of admitted liability has to be made when the employer does not accept the liability for compensation to the extent claimed. The crucial impression is ‘falls due’. Significantly, Legislature has not used the expression ‘from the date of accident’. Unless there is adjudication, the question of an amount falling due does not arise.” 6 Mr. Lalit Sharma submitted that this Court is bound to follow the law laid down by their Lordships of the Supreme Court in the latter judgment reported in 2007 ACJ 845. It is settled law by now that the High Court is bound by the law laid down by their Lordships of the Supreme Court under Article 141 of the Constitution of India. It is also settled law that if there are two conflicting judgments on the same point, the judgment rendered by larger Bench is to be followed. Their Lordships of the Hon’ble Supreme Court have held in Mattulal Vs. Radhe Lal (AIR 1974 SC 1596) that if there are contradictory decisions of the Supreme Court, the decision rendered by a larger Bench is to be followed. Their Lordships have held as under: “Now, it is obvious that the issues whether the respondent required the Lohia Bazar shop for the purpose of starting a new business as a dealer in iron and steel materials and if so, whether his requirement was bona fide were both questions of fact. Their determination did not involve the application of legal principles to the facts established in the evidence. The findings of the Additional District Judge on these issues were no doubt inferences from other basic facts, but that did not alter the character of these findings and they remained findings of fact. There is, therefore, no doubt that the conclusion of the Additional District Judge that the respondent did not bona fide require the Lohia Bazar shop for the purpose of starting business as a dealer in iron and steel materials represented a finding of fact and it could not be interfered with by the High Court in second appeal unless it was shown that in reaching it a mistake of law was committed by the Additional District Judge or it was based on no evidence or was such as no reasonable man could reach. This was precisely the ground on which a 7 Bench of four Judges of this Court in 134 Sarvate T. B. v. Nemichand(1) set aside the judgment of the Madhy Pradesh High Court which had interfered with the decree passed by the District Court dismissing a suit for eviction filed by he landlord against the tenant. The District Court, sitting as a court of first appeal, had taken the view, on an appreciation of the evidence, that the requirement of the premises by the landlord for his residence was not genuine, but in second appeal the Madhya Pradesh High Court reversed this finding and passed a decree for eviction against the tenant. This Court set aside the judgment of the Madhya Pradesh High-Court on the ground that the finding reached by the District Court on an appreciation of the evidence that the landlord did not genuinely require the premises for his residence was a finding of fact and the Madhya Pradesh High Court had no jurisdiction in second appeal to disturb this finding. Shah, J., speaking on behalf of the Court, summed up the legal position in the following words: "The District Court considered the evidence for the purpose of ascertaining whether the respondent honestly or in good faith required the premises and held that the respondent failed to establish the case pleaded by him. This finding of the District Court was based on appreciation of evidence and was binding upon the High Court and the High Court had no power to reverse that finding. The Legislature has imposed a restriction upon the jurisdiction of the Court to pass a decree against the tenant in a suit in ejectment by the landlord; and the onus of proving the conditions, on proof of which alone the protection may not be claimed, lies upon the landlord. The burden of proving that he genuinely requires non- residential accommodation within the meaning of section 4(h) therefore lies upon the landlord. Whether in a given case, that burden is discharged by the evidence on the record is a question of fact. It must however be observed that mere assertion by the 8 landlord that he requires for his use the premises in the occupation of his tenant raises no presumption that be genuinely requires the premises for his use. The District Court held that the respondent failed to establish that he genuinely required the premises in suit primarily on two grounds-(i) that he had in the first instance claimed that he required the promises for his residence and after the suit was remanded to the trial Court, he setup the plea that the premises were required for business purposes and abandoned his earlier case, and (ii) that the nature and extent of that business carried on by the respondent were such that no additional accommodation could have been honestly claimed by him. The inference of fact raised by the District Court was preeminently reasonable. In any event the High Court has no jurisdiction in second appeal to set aside the conclusion reached by the District Court based on that inference of fact." (1) 1966 M. P. Law Journal 26. 135 This decision, apart from principle, should conclude the question, but we find that there is one later judgment of this Court where a different view seems to have been expressed. That is the judgment in Smt. Kamla Soni v. Rup Lal Mehra(i). This case was decided by a Bench of three judges and the judgment was delivered by Shah,J., who was one of the, Members of the Bench. The learned Judge, speaking on behalf of the Court, observed in reference to section 39(2) of the Delhi Rent Control Act which confers an identical power on the High Court to interfere only where there is an error of law "The argument that the learned Judges of the High Court exceeded their jurisdiction under s. 39 (2) of the Delhi Rent Control Act, when they reversed the finding of bona fide requirement of the appellant, has no substance. Whether on 9 the facts proved the requirement of the landlord is bona fide within the meaning of s. 14 (1) (e) is a finding on a mixed question of law and fact. An inference that the requirement of the appellant in the present case was bona fide could not be regarded as conclusive." Now there can be no doubt that these observations made in Smt. Kamla Soni's case (1) is plainly in contradiction of what was said by this Court earlier in Sarvate T.B.'s case.(2) It is obvious that the decision in Sarvate T.B.'s case(2) was not brought to the notice of this Court while deciding Smt. Kamla Soni's case(1), or else this Court would not have landed itself in such patent contradiction. But whatever be the reason, it cannot be gain said that it is not possible to reconcile the observations in these two decisions. That being so, we must prefer to follow the decision in Sarvate T.B.'s case(2) as against the decision in Smt. Kamla Soni's case(1) as the former is a decision of a larger Bench than the latter. Moreover, on principle, the view taken in Sarvate T.B.'S case (1) commends itself to us and we think that is the right view. We must, therefore, hold that the finding of the Additional District Judge that the respondent did not bona fide require the Lohia Bazar shop for the purpose of starting business as a dealer in iron and steel materials was a finding of fact and not a finding of mixed law and fact.” Their Lordships of the Hon’ble Supreme Court in Commissioner of Income Tax, Bihar Vs. Trilok Nath Mehrotra and others (1998) 2 Supreme Court Cases 289 have held that where there is a conflict between the decisions of two Benches of different strength, the decision of larger Bench would prevail. Their Lordships have held as under: “We do not find any conflict in the law laid down in the case of R.M. Chidambaram Pillat with the law laid down in 10 the earlier two cases. The decision in the case of Raj Kumar Singh Hukam Chandji was rendered by a Bench of three Judges. Therefore, even assuming that there was a conflict between that decision and the decision rendered in Chidambaram Pillai case which was rendered by a Bench of two Judges, the decision of the larger Bench will prevail.” Hon’ble Mr. Justice Deepak Gupta in FAO (WCA) No. 270 of 2002, Sita Ram Vs. Satvinder Singh & another, decided on 30.5.2008 has also followed judgment rendered by the Constitutional Bench on the issue in question. His Lordship has held as under: “The Constitution Bench had already decided the question as to when compensation falls due in terms of the Workmen’s Compensation Act, 1923. Unfortunately, this decision of the Constitution Bench was not brought to the notice of the Apex Court while deciding National Insurance Co. Ltd. Versus Mubasir Ahmed and another, 2007 ACJ 845. Therefore, I feel that this Court is bound by the judgment rendered by the Constitution Bench of the Apex Court and I accordingly hold that the compensation falls due on the date when the accident takes place and in case the same is not deposited within thirty days, the workman is entitled to claim interest at the rate of 12% per annum without having to show that delay in depositing the compensation was attributable to the employer. While taking this view, I am supported by a Division Bench judgment of the Kerala High Court reported in National Insurance Co. Ltd. Versus Rekha, 2008ACJ 886.” In view of definite law laid down by their Lordships in 1976 SC 222 (Supra), there is no substance in the submissions of Mr. Lalit Sharma. Accordingly, it is held that the compensation “falls due” at the time when the accident takes place and not at the time when the learned Commissioner adjudicates upon the matter. 11 However, the contention of Mr. Lalit Sharma that the Commissioner could not direct payment of penal interest at the rate of 18% per annum is accepted. The order passed by the Commissioner to pay penal interest at the rate of 18% per annum for every day of delay in the eventuality of the awarded amount, if not deposited, within one month of the announcement of the award is without jurisdiction. The commissioner has to adjudicate upon the matter strictly under the provisions of the Workmen’s Compensation Act, 1923. Consequently, the appeal is partly allowed. The award dated 6.8.2003 is up-held except to the extent that the appellant shall not be liable to pay any interest at the rate of 18% per annum by way of penal interest. No costs. (Rajiv Sharma), J. July 11, 2008. (cr)