IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F . A . O . N o . 3 2 1 8 o f 2 0 0 7 Date of Decision : November 17, 2008 New India Assurance Company Limited ....Appellant Versus Smt. Luxmi Devi and others .....Respondents CORAM : HON’BLE MR. JUSTICE T.P.S. MANN Present : Mr. Vinod Gupta,Advocate for the appellant. Mr. S.K. Verma, Advocate for respndents No. 1 to 4. None for respondent No. 6. T.P.S. MANN, J. Challenge in the appeal is to the order passed by Commissioner under Workmen's Compensation Act, 1923, Bhiwani, whereby the appellant Insurance Company was directed to pay an amount of Rs. 3,89,280/- as compensation and Rs. 1,55,712/- as interest on account of death of Krishanpal Singh, in an accident. The claim petition was filed by Smt. Luxmi Devi-respondent No.1 and her three minor children with the allegations that her husband F.A.O. No. 3218 of 2007 - 2 - Krishanpal Singh was employed as a Driver on truck No. HR-38E-4170 on a monthly salary of Rs. 5,000/- with present respondents No. 5 and 6. On 24/25.10.2003, said Krishanpal Singh was driving the truck and reached in the area of Perumandur on the Bangalore Highway, when one lorry bearing registration No. KA-07-3718 was coming from the opposite direction and both the vehicles dashed against each other. Apart from others, Krishanpal Singh received injuries. He was shifted to Ram Chandra Hospital, Chennai, where he died on 25.10.2003. Accordingly, Smt. Luxmi Devi and her three children prayed for the grant of compensation to them. The claim petition was opposed by the Insurance Company, whereas present respondents No. 5 and 6 did not appear and were proceeded again ex parte. From the pleadings of the parties, learned Commissioner framed the following issues :- 1. Whether there existed the relationship of master and servant between respondent Nos. 1, 2 and the deceased Sh. Krishanpal Singh ? If so, to what its effect ? 2. Whether the injuries which resulted in death of Sh. Krishanpal Singh caused by accident arising out during the course of employment ? If so, with what its effect ? F.A.O. No. 3218 of 2007 - 3 - 3. Whether the applicants are entitled to the claimed amount or not ? If so, with what detailed and from whom ? 4. Relief. The claimants-respondents No. 1 to 4 examined AW1 Smt.Luxmi Devi and AW2 Rameshwar Dass, whereas the Insurance Company relied upon the Insurance Policy Ex.R1 and closed its evidence. After hearing learned counsel for the parties and perusing the evidence, learned Commissioner held that their existed the relationship of master and servant between respondents No. 5 and 6 on the one hand and deceased Krishanpal Singh on the other and that the injuries received by Krishanpal Singh,which led to his death were caused by accident arising out of and during the course of employment. Resultantly, a penalty of Rs.1,94,640/- was imposed upon respondents No. 5 and 6 severally whereas the Insurance Company was directed to pay the amount of compensation and interest as mentioned above. Hence, the present appeal under Section 30 of the Workmen's Compensation Act (hereinafter referred to as the 'the Act'). Though, it had been pleaded on behalf of the appellant in the grounds of appeal that neither there was any relationship of employer and employee between respondents No. 5 and 6 on the one hand and the deceased on the other and the learned Commissioner wrongly calculated the F.A.O. No. 3218 of 2007 - 4 - income of the deceased as Rs. 5,000/- per month without any documentary evidence on the record and further that there was no evidence regarding employment of the deceased with respondents No. 5 and 6 yet, at the time of preliminary hearing, the only ground taken on behalf of the Insurance Company was that the learned Commissioner erred in granting interest at the rate of 12% per annum to the claimants from the date of filing of the claim petition. Instead, it should have been from the date of passing of the order and reliance in this regard was placed upon National Insurance Company Limited v. Mubasir Ahmed and another, 2007(2) PLR 188(SC). Notice of motion was, accordingly, issued and the payment of interest awarded by the learned Commissioner was stayed. The amount of compensation which already stood deposited by the appellant was directed to be released to the claimants on their furnishing adequate surety to the satisfaction of the learned Commissioner. Upon appearance of respondents No. 1 to 4, when the appeal was taken up for hearing, once again, the appellant limited its prayer against the grant of interest on the amount of compensation as awarded by the learned Commissioner. Thus, the limited point to be considered in the present appeal is as to whether the claimants/respondents were entitled to the grant of interest on the amount of compensation from the date of filing of the claim petition or from the date of adjudication by the learned Commissioner. The accident in which Krishanpal Singh died, occurred on 24/25.10.2003. As is clear from the impugned order, claim petition under Section 22 of the Act was filed by the claimants/respondents on 1.1.2004. F.A.O. No. 3218 of 2007 - 5 - Inspite of the same, neither the Insurance Company nor respondents No. 5 and 6 responded by paying any compensation to the claimants although under Section 4A of the Act, they were required to pay the compensation as it had fallen due on expiry of a period of one month from the date of filing of claim petition. The provisions of Section 4A of the Act are reproduced here-in-below :- “4A. Compensation to be paid when due and penalty for default.--(1) Compensation under Section 4 shall be paid as soon as it falls due. (2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim. (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 F.A.O. No. 3218 of 2007 - 6 - 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 (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 purposes 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(2 of 1934). (3A) The interest and penalty payable under F.A.O. No. 3218 of 2007 - 7 - sub-Section (3) shall be paid to the workman or his dependent, as the case may be. It is, thus, clear that the compensation has to be paid as soon as it falls due. In case where the employer does not accept the liability for compensation, such an employer would be bound to make provisional payment, based on the extent of liability which he accepts. In the event of the employer not paying the compensation due under the Act within one month from the date it falls due, the Commissioner can also direct the employer to pay a further sum by way of penalty. Sub-section (3A) also requires the payment of interest and penalty to the workman or his dependent. However, no penalty can be imposed, without giving any reasonable opportunity to the employer to show cause against such an imposition. In National Insurance Company Limited's case (supra), the Hon'ble Supreme Court while interpreting Section 4-A (1) of the Act explained the expression “falls due” by observing as under :- “9. Interest is payable under Section 4A(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 4A was dealt with by this Court in Maghar Singh v. Jaswant Singh, J.T. 1998(7) S.C. 544: 1998(9) S.C.C. 134. By amending F.A.O. No. 3218 of 2007 - 8 - Act 14 of 1995, Section 4A of the Act was amended, inter alia, fixing the minimum rate of interest to be simple interest @ 12%. In the instant case, the accident took place after the amendment and, therefore, the rate of 12% as fixed by the High Court cannot be faulted. But the period as fixed by it is wrong. The starting 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 4A(1) prescribes 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 arise. The position becomes clearer on a reading of sub-Section (2) of Section 4A. It provides that provisional payment to the extent of admitted liability has to be made when employer does not accept the liability for compensation to the extent claimed. The crucial expression is “falls due”. Significantly, legislature has not used the expression F.A.O. No. 3218 of 2007 - 9 - “from the date of accident”. Unless there is an adjudication, the question of an amount falling due does not arise.” However, way-back on December 04, 1975, a four-Judge Bench of the Hon'ble Supreme Court in the case of Pratap Narain Singh Deo v. Srinivas Sabata and another, (1976) 1 SCC 289, considered the expression “falls due” by observing as under :- “6. It has next been argued that the Commissioner committed a 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 06, 1969. There is, however, no force in this argument. 7. 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 F.A.O. No. 3218 of 2007 - 1 0 - 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 until after the Commissioner's order dated May 06, 1969 under 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 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 aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary. 8. It was the duty of the appellant, under Section 4A(1) of the Act, to pay the compensation at the rate F.A.O. No. 3218 of 2007 - 1 1 - 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 an 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 settling 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.” It appears that the judgment in the case of Pratap Narain Singh Deo (supra) was not brought to the notice of the Hon'ble Supreme Court when it was dealing with the case of National Insurance Company Limited (supra). While the judgment in the latter case was rendered by two Hon'ble F.A.O. No. 3218 of 2007 - 1 2 - Judges, it was a Bench of four Hon'ble Judges of the Supreme Court which dealt with the former matter and, that too, earlier in point of time. It is settled principle of law under Article 141 of the Constitution of India that the judgment of the Hon'ble Supreme Court is binding on all the Courts in the country. However, in the event of conflict between two judgments on any question of law or interpretation of statue, the later judgment needs to be followed provided both the judgments are rendered by Benches of equal strength. In the event of conflict between a judgment of a Constitution Bench rendered earlier and of a Division Bench delivered later in point of time, the former is to be followed, while applying the doctrine of stare decisis. Similarly, where the conflict is between a larger Bench judgment and a judgment by a Bench of lesser strength, opinion of the larger Bench is to be followed. In State of U.P. v. Ram Chandra Trivedi, AIR 1976 Supreme Court 2547, while considering the aforementioned issues, it was observed as follows :- “22.....It is also to be borne in mind that even in cases where a High Court finds any conflict between the views expressed by larger and smaller benches of this Court, it cannot disregard or skirt the views expressed by the larger benches. The proper course for a High Court in such a case, as observed by this Court in Union of India v. K.S.Subramanian (Civil Appeal No. 212 of F.A.O. No. 3218 of 2007 - 1 3 - 1975, decided on July 30, 1976) to which one of us was a party, is to try to find out and follow the opinion expressed by larger benches of this Court in preference to those expressed by smaller benches of the Court which practice, hardened as it has into a rule of law is followed by this Court itself.” In another judgment in the case of Commissioner of Income Tax, Bihar v. Trilok Nath Mehrotra, (1998) 2 Supreme Court Cases 289, the Hon'ble Supreme Court has observed as under :- “4. We do not find any conflict in the law laid down in the case of R.M. Chidambaran Pillai with the law laid down in 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.” In New India Assurance Company Limited v. Manphool Singh and others, 2008(1) Punjab Law Reporter 706, while dealing with the issue of interest on compensation, it was held that the judgment in the case of Pratap Narain Singh Deo (supra) created a binding precedent F.A.O. No. 3218 of 2007 - 1 4 - regarding the interpretation of expression “falls due” under Section 4A(1) of the Act and the amount of compensation became due on expiry of one month from the date of injuries sustained by the workman. The relevant observation is as under :- “9. In view of the law laid down by the Hon'ble Apex Court regarding the binding precedent under Article 141 of the Constitution of India, I am of the considered view that the judgment in the case of Pratap Narain Singh Deo v. Srinivas Sabata (supra) will create a binding precedent regarding the interpretation of expression “falls due” under Section 4A(1) of the Act and amount of compensation becomes due on expiry of one month from the date of accident. Thus, interest becomes payable not from the date of order/award of the Commissioner, but on expiry of one month from the date of injuries sustained by the workmen.” In view of the decision in the case of Pratap Narain Singh Deo (supra), the compensation fell due on expiry of a period of one month from the day when the claim petition was filed and as the same was not paid, the claimants-respondents were rightly held entitled to the grant of interest on the same for a period starting after one month from the date it fell due till the final adjudication. F.A.O. No. 3218 of 2007 - 1 5 - Accordingly, there is no merit in the appeal. The same is, therefore, dismissed. In case the claimants-respondents had furnished any surety to the satisfaction of the Commissioner for getting the amount of compensation released, they shall stand discharged of the same. The amount of interest as awarded by the learned Commissioner be deposited by the appellant within 60 days from this order, or else, it shall pay interest at the rate of 12% per annum on the same from the date of the passing of the order by the learned Commissioner upto the date of actual payment. No order as to costs. ( T.P.S. MANN ) November 17, 2008 JUDGE satish Whether to be referred to the Reporters : YES / NO