IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY EIGHTH DAY OF APRIL TWO THOUSAND AND TEN PRESENT: THE HON'BLE SRI JUSTICE P.S. NARAYANA C.M.A.No.825 of 2008 Between: The United India Insurance Company Limited, DO-I, Ramalaya Building, 3rd Floor, Paradise, Secunderabad ..... APPELLANT AND Sri U.V. Datta Kumar and another ..... RESPONDENTS JUDGMENT: Heard Sri S.A.V. Ratnam, learned counsel representing the appellant – second opposite party and Sri Mohammad Yousufuddin, learned counsel representing the first respondent – applicant and Smt.Nieeraja Reddy, and Sri C. Prabhaka Reddy, learned counsel representing the second respondent. 2. The C.M.A. is filed by the appellants – second opposite party – the United India Insurance Company Limited being aggrieved of the order made in W.C.No.15 of 2006 on the file of the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour-III, Hyderabad under Section 30 of the Workmen’s Compensation Act, 1923 (hereinafter in short referred to as ‘the Act’ for the purpose of convenience). 3. The C.M.A. was admitted on 05-09-2008. The substantial questions of law formulated in the grounds of appeal are as hereunder: 1. Whether the Commissioner is justified in fastening liability on the appellant Insurance Company inspite of the fact that the Appellant Insurance Company had paid an amount of Rs.85,130/- towards full and final settlement of the claim. 2. Whether the Commissioner is justified in taking the disability at 80% as against the medical evidence. 3. Whether the Commissioner is justified in considering the evidence of A2, who had not treated the Claimant. 4. Whether the Commissioner is justified in taking the monthly income of the Claimant at Rs.4,000/- without any evidence. 5. Whether the Commissioner is justified in awarding the interest at the rate of 12% p.a. that to from the date of accident. 6. Whether the Commissioner is justified in making the appellant insurance company liable for the penalty as against the Judgment of the Apex Court. 4. Sri S.A.V. Ratnam, learned counsel representing the appellant would maintain that when the amount already had been paid the question of fastening the appellant – second opposite party with further liability would not arise. The learned counsel also would maintain that the amount of Rs.85,130/- was paid towards the final settlement of the claim and hence, the appellant insurance company cannot be fastened with any further liability. The learned counsel also would maintain that the Commissioner erred in taking disability at 80% without any basis and at the best it can be said that the disability is only up to 30%. 5. The learned counsel also would comment that Commissioner should have appreciated that AW-2 was not the Doctor who originally treated the Claimant and the Claimant approached AW-2 after two years of accident. The learned counsel also would maintain that the monthly income of the Claimant was taken as Rs.4,000/- without any evidence or without any basis whatsoever. The learned counsel also made elaborate submissions on the aspect of granting of interest and quantum of interest as well and would maintain that since already the amount had been paid the question of paying interest would not arise and even otherwise the interest granted be excessive and not in accordance with law, the same to be modified. The learned counsel also relied on certain decisions. 6. In contra, Sri Mohammad Yousufuddin, learned counsel representing the first respondent – applicant would maintain that the unfortunate first respondent became a scapegoat in between the United India Insurance Company Limited and the Chairman and Managing Director of M/s.Madhucon Projects Limited and this aspect of payment of amount had not been brought to the notice of the applicant and even otherwise the learned Commissioner for the Workmen’s Compensation appreciated the evidence available on record and came to the correct conclusion and hence, the said findings not to be disturbed. 7. The learned counsel also had taken this Court through the oral and documentary evidence available on record and would maintain that in the light of the convincing findings recorded by the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour-III, it is not a fit case to be interfered with. 8. Heard the learned counsel. 9. The substantial questions of law formulated in the grounds of CMA already had been specified supra. It is needless to say that the Civil Miscellaneous Appeal was filed under Section 30 of the Workmen’s Compensation Act, 1923 (hereinafter in short referred to as ‘the Act’ for the purpose of convenience). 10. Section 30 of the Act dealing with the Appeals. Section 30 (1) of the Act first proviso specifies as follows: “Provided that no appeal shall lie against any order unless a substantial question of law is involved in the appeal and, in the case of an order other than an order such as is referred in Clause (b), unless the amount in dispute in the appeal is not less than three hundred rupees.” 11. What is the meaning of the substantial questions of law had been explained in Om Parkash Batish v. Ranjit @ Ranbir Kaur[1]. In the light of the submissions made by the learned counsel on record the following points arises for consideration in this C.M.A.: 1. Whether the findings recorded by the Commissioner for Workmen’s Compensation/Assistant Commissioner Labour- III to be confirmed or to be set aside or to be modified in the facts and circumstances of the case ? 2. Whether the interest directed to be paid by the Commissioner of Workmen’s Compensation to be confirmed or to be disturbed in the facts and circumstances of the case ? 3. If so, to what relief the parties would be entitled ? 12. POINT Nos.1 and 2: For the purpose of convenience these points are being discussed together. The appellant herein is opposite party No.2 in W.C.No.15 of 2006 aforesaid. The first respondent as applicant filed the aforesaid W.C. claiming compensation under the provisions of the Act for the loss of earning capacity suffered by him due to employment injuries sustained by him in an accident while he was working as a fitter against his employer. The Chairman and Managing Director, M/s.Madhucon Projects Limited, Hyderabad – opposite party No.1 and also against the insurer of the first opposite party – the United India Insurance Company Limited, Secunderabad – the second opposite party. 13. The first respondent - applicant stated that he is a workman- employee of opposite party No.1 and he received personal injuries in an accident, which occurred on 14-05-2004 during the course and out of his employment with the said opposite party. It was also stated that the applicant at the relevant point of time working as fitter in the employment of opposite party No.1 since 05-05-2005. On 14-05-2005 he was discharging his duties as fitter at Kodambakkam Project site of the said opposite party and at about 3.00 P.M. as per the instructions of the Site Manager, he was dismantling the parts of a container and while doing so, he fell from the container from a height of 200 feet to the bottom of the container having 12 feet diameter in between the machines fixed on both sides and on surface of iron bars covered with iron mesh and sustained grievous injuries. The applicant stated that in the accident he sustained fracture of his spinal cord (D 12 vertebra) during the course and out of his employment with the opposite party. The applicant stated that immediately after the accident, he was shifted to Government General Hospital and Madras Medical College, Chennai by the Project Manager of the opposite party and was discharged from the said hospital on 17.05.2005. The applicant stated that no police case was registered at the request of the opposite party. 14. The applicant further stated that he was paid wages @ Rs.5,000/- per month and aged about 35 years at the time of accident. The applicant stated that due to the said fracture injury to his backbone, he became immovable and cannot stand for long time, cannot bend his back and cannot walk and cannot move from the bed, therefore, he is not in a position to discharge his earlier duties or any other duties in future, therefore, prayed to consider his disablement and loss of earning capacity at 100%, therefore, he applicant claimed compensation for Rs.6,00,000/- against the opposite parties and requested for an award to be issued in his favour after deciding the matters incidental to the application. 15. Opposite party No.1 – the Chairman and Managing Director, M/s.Madhucon Projects Limited denied the averments made in the application and had taken a stand that the plaintiff is put to strict proof of the said allegations. The occurrence of incident, narration of accident and the plea of sustaining injury during the course of employment, these aspects had been denied. It is stated that the applicant did not sustain any injury whatsoever and certain further facts also had been narrated. 16. Opposite party No.2 denied all averments made in the application. Opposite party No.2 stated that the applicant had not filed any document to how that he was working under opposite party No.1 and denied the occurrence of accident on 14.05.2005, denied the narration of the accident, denied the injuries sustained by the applicant, denied the treatment of the applicant at various hospitals, denied the disabilities suffered by the applicant. Opposite party No.2 stated that the applicant has not filed any document to show that he possesses valid qualification to work as fitter and he is fit for that job, therefore, denied the employment of the applicant with opposite party No.1, denied the wages and age claimed by the applicant, denied that the applicant sustained injuries during the course and out of his employment with opposite party No.1, opposite party No.2 stated that if at all the accident occurred, that occurred because of the negligence of the applicant and that he was doing the duty by consuming alcohol. Opposite party No.2 stated that no police case has been registered in respect of the said accident. Opposite party No.2 stated that the applicant failed to mention under which Section he filed the application, therefore, the application fails. Opposite party No.2 further denied that the risk of the applicant is covered under the policy, denied that opposite party No.1 has paid premium to cover the risk of the applicant under the Act, and denied that the applicant was a workman within the meaning of the Act. Opposite party No.2 further stated that either the applicant or opposite party No.1 did not serve notice to opposite party No.2 regarding the accident, injuries sustained by the applicant, therefore, stated that they are not liable. Opposite party No.2 stated that the applicant and opposite party No.1 colluded and filed a false case. Opposite party No.2 further stated that the amount of compensation claimed by the applicant is not only untenable and unsustainable. While reserving their right to file additional counter, requested to dismiss the applicant against opposite party No.2. 17. In additional counter opposite party No.2 stated that they have issued an insurance policy bearing No.150700/41/04/01/0000004 in favour of opposite party No.1 for road work from Tambaram to Dindivaram and the policy is given to employees with wages less than Rs.4,000/- per month. As per the policy premium and the conditions mentioned in the policy, the applicant is plant helper who met with the accident on 14.05.2005 at project site, who comes under unskilled worker. Opposite party No.2 stated that as per the unskilled employees mentioned by opposite party No.1 in the declaration form, opposite party No.2 has collected premium for 35 unskilled workers basing on the monthly wages @ Rs.2,500/- per month accordingly opposite party No.1 paid premium basing on the said wage. Opposite party No.2 stated that as per the policy conditions and the premium collected by opposite party No.2 for unskilled workers, opposite party No.2 has settled the claim of the applicant basing on the documents supplied by him to opposite party No.1 for Rs.85,130/- by taking the monthly wage @Rs.2,400/- per month and age 35 years and the loss of earning capacity at 30%. Opposite party No.2 stated that they have paid a sum of Rs.85,130/- on 31.03.2006 to opposite party No.1 towards full and final settlement of the claim, therefore, opposite party No.2 stated that they discharged their liability under the policy with regard to the compensation claimed by the applicant and they are not liable for any other compensation. Opposite party No.2 further stated that if opposite party No.1 has not paid the said amount to the applicant, the applicant has to file case against opposite party No.1 only. For all the reasons stated above, opposite party No.2 requested to dismiss the application against them. 18. In the rejoinder opposite party No.1 denied averments made in the additional counter filed by opposite party No.2. Opposite party No.1 stated that opposite party No.2 had taken a new plea of additional counter after cross-examination of the applicant. Therefore, he had taken a plea that such plea cannot be permitted to be taken. Opposite party No.1 admitted that they obtained an insurance policy from opposite party No.2 and as per the terms and conditions as of the insurance policy, it is the responsibility of opposite party No.2 to pay compensation to its employees in case of an accident took place during the course of employment, but it is utterly false to allege that the policy is given to the employer to cover the risk of employees who are getting the wages less than Rs.4,000/- per month and the opposite party No.1 declared that its employees are getting Rs.2,400/- per month as salary. Opposite party No.1 denied that opposite party No.2 has settled the claim of the applicant and paid a sum of Rs.85,130/- as per the Act and the same has been paid to opposite party No.1 on 31.03.2006 towards full and final settlement of claim. Opposite party No.1 stated that opposite party No.2 has no authority to decide the quantum of compensation unilaterally of an injured workman and stated that opposite party No.2 has not obtained the so-called receipt for full and final settlement from the authorized person of opposite party No.1. Opposite party No.1 stated that the matter is pending before this commissioner and therefore, opposite party No.1 and opposite party No.2 cannot decide the compensation at this stage and such decision is premature and sub judice. Further the matter has been referred to the Commissioner for compensation by the applicant, therefore, opposite party No.1 and opposite party No.2 are bound by the orders passed by the Commissioner. Opposite party No.1 stated that opposite party No.2 cannot be allowed to wash its hands as if it has sent the amount of Rs.85,130/- to opposite party No.1 and stated that since the opposite party No.1 has paid premium under the insurance policy to opposite party No.2 to cover the risk of its employees and that when the policy was in force, it is the responsibility of opposite party No.2 to pay compensation. The opposite party No.1 stated that the said amount is with opposite party No.1 without prejudice to its right and that the same will be deposited or sent back to opposite party No.2 depending on the orders passed by the Commissioner. Opposite party No.1 prayed the Commissioner to pass order directing the opposite party No.2 to pay amount as per the orders passed by the Commissioner for Workmen’s Compensation since the opposite party No.1 paid huge premiums to opposite party No.2 for all the reasons stated above, opposite party No.1 requested to dismiss the application against him. 19. The applicant examined himself as AW-1. He filed affidavit in lieu of chief-examination, wherein the contents of the applicants had been well narrated. In support of the claim AW-1 filed the under noted document: 1. Ex.A1: Inpatient certificate issued by Government General Hospital & Madras Medical College, Chennai. 2. Ex.A2: X-ray of the applicant. 3. Ex.A3: Disability certificate issued by Dr.N.Subrahmanyadutt. 4. Ex.A4: Age proof certificate (Subject to objection) 5. Ex.A5: Representation, dated 25.08.2005 6. Ex.A6: Reply, dated 05.09.2005 7. Ex.A7: Letter, dated 05.10.2005 8. Ex.A8: Xerox copy of ITI Certificate 9. Ex.A9: Disability certificate issued by Dr.S.Vasudev Rao 10. Ex.A10: X-Ray, dated 07.03.2007 11. Ex.A11: Medical Prescription 12. Ex.A12: Requisition 13. Ex.A13: Diagnostic requisition 14. Ex.A14: Xerox copy of insurance policy 20. The cross-examination of AW-1 had been discussed in elaboration by the Commissioner for Workmen’s Compensation at paragraph Nos.9 and 10. The documentary evidence available on record also had been considered. AW-2 Dr.S. Vasudeva Rao filed an affidavit in lieu of chief-examination who had depressed about the details. As against this evidence A.R.K. Reddy was examined as RW-1 on behalf of opposite party No.2 who had taken the stand as specified in the counter and the additional counter and this witness relied the under noted documents, Exs.B-1 to B-4: 1. Ex.B1: Original Insurance Policy 2. Ex.B2: Settlement intimation voucher between opposite party No.1 and opposite party No.2. 3. Ex.B3: Memo, dated 07.09.2007 filed by the applicant 4. Ex.B4: Conditions of insurance policy 21. The evidence of RW-1 in fact was appreciated at paragraph Nos.16 and 17 and certain findings had been recorded. The learned Commissioner for Workmen’s Compensation formulated the following points for consideration: 1. Whether the applicant met with an accident on during the course and out of his employment as fitter in the employment of opposite party No.1 and sustained injuries? 2. If yes, what is the consequent loss of earning capacity suffered by the applicant? 3. Who are liable to pay compensation to the applicant? And; 4. What is the amount of compensation entitled by the applicant? 22. The learned Commissioner for Workmen’s Compensation recorded reasons at paragraph Nos.20, 21 and 22 and came to the conclusion that the applicant was working as fitter in the employment of opposite party No.1 and met with an accident on 14-05-2005 and sustained injury during the course of work under opposite party No.1. Ex.A-1 is the inpatient certificate issued by Government General Hospital & Madras Medical College, Chennai, Ex.A2 is the X-ray of the applicant, Ex.A3 is the disability certificate issued by Dr.N.Subrahmanyadutt, Ex.A4 is the age proof certificate (Subject to objection), Ex.A5 is the representation, dated 25.08.2005, Ex.A6 is the reply, dated 05.09.2005, Ex.A7 is the letter, dated 05.10.2005, Ex.A8 is the Photostat copy of ITI Certificate, Ex.A9 is the disability certificate issued by Dr.S.Vasudev Rao, Ex.A10 is the X-Ray, dated 07.03.2007, Ex.A11 is the Medical Prescription, Ex.A12 is the Requisition, Ex.A13 is the Diagnostic requisition and Ex.A14 is the Xerox copy of insurance policy had been marked. As already aforesaid the oral evidence of RW-1 A.R.K. Reddy is available on record. Ex.B- 1 the original insurance policy, Ex.B1 is the original Insurance Policy, Ex.B2 is the settlement intimation voucher between opposite party No.1 and opposite party No.2, Ex.B3 is the memo, dated 07.09.2007 filed by the applicant, Ex.B4 is the conditions of insurance policy also had been marked. 23. The learned Commissioner for Workmen’s Compensation on appreciation of evidence came to the conclusion that the claim would fall within the category of Rs.4,000/- wages and made the following calculations at paragraph No.26 and findings at paragraph No.30: Rs.4,000/- x 60 X 80 x 197.06 = Rs.3,78,355.20 100 100 “In the result, it is held that opposite party No.1 and opposite party No.2 are jointly and severally liable to pay compensation of Rs.3,78,355/- together with the stamp fee of Rs.757/- and advocate fee of Rs.500/- + Rs.21,371/- (interest) totaling to Rs.4,00,983/- (Rupees four lakhs and nine hundred eighty three only) to the applicant Sri U.V. Datta Kumar for the loss of earning capacity suffered by him due to the employment injuries received by him in an accident that occurred on 14.05.2005, which arose out of in the course of his employment as fitter in the employment of opposite party No.1. Both opposite party No.1 and opposite party No.2 are directed to deposit he said total amount by means of a demand draft drawn on any Nationalized Bank and drawn in favour of the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour-III, Hyderbad, within (30) days from the date of receipt of this order, lest, the applicants will be entitled for interest @12% p.a., on the amount of compensation from the date of the accident and a show cause notice will be issued to opposite party No.1 and opposite party No.2 under Section 4A (3)(b) of the Act for passing the order under the provision imposing 50% penalty on the compensation amount.” 24. This court had carefully gone through the evidence of AWs-1 and 2 and also the evidence of RW-1, Exs.A-1 to A-14 and Exs.B- 1 to B-4 as well as far as the findings recorded by the Commissioner for Workmen’s Compensation are concerned. This court is satisfied that the findings do not deserve any disturbance. However, the learned counsel representing the appellant placed strong reliance on National Insurance Company Limited v. Mubasir Ahmed and another[2], wherein at paragraph Nos.8 and 9 it was held that: “Loss of earning capacity is, therefore, not a substitute for percentage of the physical disablement. It is one of the factors taken into account. In the instant case the doctor who examined the claimant also noted about the functional disablement. In other wards, the doctor had taken note of the relevant factors relating to loss of earning capacity. Without indicating any reason or basis the High Court held that there was 100% loss of earning capacity. Since no basis was indicated in support of the conclusion, same cannot b maintained. Therefore, we set aside that part of he High Court’s order and restore that of the Commissioner, in view of the facts situation. Coming to the question of liability to pay interest. Section 4-A(3) deals with that question. The provision has been quoted above. 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 v. Jashwant Singh (1998 (9) SCC 134). By Amending Act, 14 of 1995, Section 4-A 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 4-A (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 4-A. 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 “from the date of accident”. Unless there is an adjudication, the question of an amount falling due does not arise.” 25. Further strong reliance was placed on Oriental Insurance Company Limited v. Mohd. Nasir and another[3] wherein the Apex Court observed at paragraph Nos.22, 23 and 27 as hereunder: “22. The second question which arises for consideration is with regard to the payment of