IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH THURSDAY, THE 11TH DECEMBER 2008 / 20TH AGRAHAYANA 1930 MFA.No. 197 of 2008(F) -------------------------------- WCC.NO.66/2005 OF THE COMMISSIONER FOR WORKMEN'S COMPENSATION, ERNAKULAM .................... APPELLANT/ 2ND OPPOSITE PARTY: ----------------------------------------------------- THE ORIENTAL INSURANCE CO.LTD., T.H.TOWERS, MARKET ROAD, MUVATTUPUZHA, REPRESENTED BY THE AUTHORISED SIGNATORY, REGIONAL OFFICE, NORTH RAILWAY STATION ROAD, ERNAKULAM, KOCHI-682018. BY ADV. SRI.M.JACOB MURICKAN. RESPONDENTS/ APPLICANTS AND 1ST AND 3RD OPPOSITE PARTIES: ----------------------------------------------------------------------------------------------------- 1. KRISHNAN, S/O. NARAYANAN, KOKKAPILLIL HOUSE,KALADY, MEKKADAMPU P.O.,VALAKOM. 2. SOBHANA,W/O.KRISHNAN, KOKKAPPILLIL HOUSE, KALADY, MEKKADAMPU P.O., VALAKOM. 3. ANJU, D/O. KRISHNAN, KOKKAPPILLIL HOUSE, KALADY, MEKKADAMPU P.O., VALAKOM. 4. RANJITH, S/O. K.V.BALAKRISHNAN, KALLIPANAKUDIYIL HOUSE, KADAKKANADU, KOLENCHERRY. 5. PHILOMINA GEORGE, ARACKAL HOUSE, MANJALLOOR, VAZHAKKULAM. BY THIS MISC. FIRST APPEAL HAVING COME UP FOR ADMISSION ON 11/12/2008,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. J.B. Koshy & Thomas P.Joseph, JJ. -------------------------------------- M.F.A.(WCC) No. 197 of 2008 --------------------------------------- Dated this the 11th day of December, 2008 Judgment Koshy,J. Driver of car bearing registration No. KL 7E 8224 owned by the first opposite party (fourth respondent) sustained fatal injuries during the course of employment. His dependents filed an application for compensation before the Commissioner for Workmen's Compensation. Commissioner awarded compensation as provided under the Workmen's Compensation Act and since the vehicle was insured and the accident arose out of employment and during the course of employment while driving the motor vehicle, insurance company was directed to deposit the amount. It is not disputed that the policy covered workmen's compensation liability of the employed driver. Commissioner awarded interest from the date of accident. The vehicle was also insured by the first opposite party. Originally, the vehicle was owned by the third opposite party (fifth respondent in the appeal). Insurance was not transferred. Therefore, it is contended by the insurance company that since she was not employed by the insured, insurance company M.F.A. (WCC) No.197/2008 2 is not liable to pay compensation. The Apex Court in Rikhiram and another v. Smt.Sukhrania and others (AIR 2003 SC 1446) and G.Govindan v. New India Assurance Co. Ltd. and others (AIR 1999 SC 1398) held that transfer of ownership will not affect the liability of the insurance company. Since the vehicle was covered at the time of accident and employed driver is also covered under the policy for the liability under the Workmen's Compensation Act, insurance company is liable to deposit the amount. 2. Second contention raised is that the Commissioner went wrong in granting interest from the date of accident. Award of interest is statutory . Section 4A (3) reads as follows: "4A.Compensation to be paid when due and penalty for default:- xx xx xx (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. (WCC) No.197/2008 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 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)." A reading of the above section shows that compensation has to be paid within one month from the date it fell due and if it is not paid, interest at the rate of 12% or on a higher rate not exceeding the maximum of the rate of interest of the schedule bank should be paid from the date when compensation 'fell due'. So, the only question to be decided is when the compensation fell due. A Constitution Bench of the Hon'ble Apex Court in Pratap Narain Singh Deo v. Shrinivas Sabata and another (AIR 1976 SC 222 = ((1976) 1 SCC 289) held that even a reference under section 19 of the Act does not have the effect of suspending the liability of an employer to pay compensation under section 3 till after adjudication or settlement. M.F.A. (WCC) No.197/2008 4 It is the duty of the employer to pay/deposit compensation as soon as personal injury is caused to the workman in an accident during the course of employment. If the employer fails to do so within one month of the accident and also makes no provisional payment, he is liable to pay interest from the date of accident. Apex Court held as follows: "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 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 6, 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 M.F.A. (WCC) No.197/2008 5 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." Apex Court at paragraph 8 observed as follows: “8. It was the duty of the appellant, under section 4-A (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 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......" 3. The Workmen's Compensation Act was amended in 1995 by Act No.30 of 1995 and the rate of compensation amount was enhanced. Until that time, maximum monthly income that can be taken for calculation of compensation was only Rs.1,000/-. By the above amendment Act, that amount was increased to M.F.A. (WCC) No.197/2008 6 Rs.2,000/-. It was the contention of the workmen that compensation falls due on the date of adjudication. Therefore, even if the accident was before the amendment of the Act, when adjudication was over and order was passed only after the amendment, they are entitled to the benefit of the amendment and to a higher rate of compensation. On the other hand, the employers and insurance companies contended that compensation 'fell due' on the date of accident itself and not on the date of adjudication or the date of application. Therefore, compensation has to be calculated as per the statutory provisions existing as on the date of accident. The matter was referred to a three-member Bench. In K.S.E.B. v. Valsala ((1999) 8 SCC 254), a three member Bench of the Supreme Court held that relevant date for determination of the rights and liabilities of the parties concerned is the date of accident and not the date of adjudication of the claim. Workmen's Compensation Act is a welfare legislation and it cannot be stated that whenever an interpretation beneficial to the workman is possible, that should be avoided and only interpretation that is injurious to the workman should be adopted. Employers and insurance companies cannot contend that when the question of quantum of compensation is calculated, it should be calculated on the basis of the statutory provisions on the M.F.A. (WCC) No.197/2008 7 date of accident as compensation falls due on the date of accident and not on the date of adjudication, but, for the purpose of calculation of interest, compensation falls due on date of award. The compensation payable on the date of accident is calculated. Considering the reduction of money value, interest is to be calculated from that date itself. 4. In Ved Prakash Garg v. Premi Devi and others ((1997) 8 SCC 1), the Apex Court calculated interest from the date of accident. In Maghar Sing v. Jashwant Singh ((1998) 9 SCC 134) the accident occurred on 26.7.1984. Application filed by the workman was rejected by the commissioner and High Court. Apex Court held that workman was entitled to compensation at the rate applicable on the date of accident. But, when Supreme Court allowed the claim, the Act was amended and rate of interest payable was enhanced from 6% to 12% in 1995 by Act No.30 of 1995. Hon'ble Apex Court by exercising constitutional power, in the interest of justice, considering the long delay, reduced the interest from 12% to 9%, but, directed the employer to pay interest from 26.7.1984 (date of accident) till payment. Apex Court observed as follows: M.F.A. (WCC) No.197/2008 8 "6. The accident occurred way back in 1984 and, therefore,we must decide the rate of interest keeping that factor in mind. We think that it would be appropriate to grant interest at the rate of 9% per annum. 7. In the result, we allow this appeal, set aside the orders of the courts below and hold that the appellant is entitled to compensation of Rs.24,000 with interest at the rate of 9% per annum from the date of accident, i.e., 26.7.1984 till the date of recovery or actual payment." Following the larger bench decisions in M.F.A.No.84 of 2007, a Division Bench of this court, in which one of us (J.B.Koshy, J) was a party held that as per the provisions of the Workmen's Compensation Act, interest on the compensation amount is payable from the date of accident. The SLP filed from the above judgment was dismissed as can be seen from the order of the Supreme Court in S.L.P.(C) No.10696/2008 in National Insurance Co. Ltd. v. N. Khadeeja & Others. In these circumstances, there is no merit in the appeal. Appeal dismissed. J.B.Koshy Judge Thomas P. Joseph Judge vaa M.F.A. (WCC) No.197/2008 9 J.B. KOSHY AND THOMAS P.JOSEPH,JJ. ------------------------------------- M.F.A.(WCC) No.197/2008 ------------------------------------- Judgment Date:11th December,2008