SHOBHA & ORS. versus THE CHAIRMAN, VITHALRAO SHINDE SAHAKARI SAKHAR KARKHANA LTD. & ORS.
[2022] 1 S.C.R. 761, Supreme Court of India, 2022
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
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[2022] 1 S.C.R. 761
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SHOBHA & ORS.
v.
THE CHAIRMAN, VITHALRAO SHINDE SAHAKARI
SAKHAR KARKHANA LTD. & ORS.
(Civil Appeal No. 1860 of 2022)
MARCH 11, 2022
[M. R. SHAH AND B.V. NAGARATHNA, JJ.]
Employee’s Compensation Act, 1923: ss. 4, 4A – Award of
compensation under – Entitlement to interest, from the date of the
order passed by the Commissioner or from the date of accident –
Held: Liability to pay the compensation would arise from the date
on which the deceased died for which he is entitled to the
compensation, thus, the liability to pay the interest on the amount of
arrears/compensation would be from the date of accident and not
from the date of the order passed by the Commissioner – On facts,
order passed by the High Court directing the employer to pay the
interest @ 12% p.a. on the amount of compensation as leviable
u/s. 4A(3)(a) from the date of the order passed by the Commissioner
is unsustainable and is set aside.
Allowing the appeal, the Court
HELD: 1.1 As per Section 4A(1) of the Employee’s
Compensation Act, 1923 compensation under section 4 shall be
paid as soon as it falls due. Therefore, on the death of the
employee/deceased immediately, the amount of compensation can
be said to be falling due. Therefore, the liability to pay the
compensation would arise from the date on which the deceased
died for which he is entitled to the compensation and therefore,
the liability to pay the interest on the amount of arrears/
compensation shall be from
the date of accident and not from the
date of the order passed by the Commissioner. As per Section
4A(3)(b), if the Commissioner is satisfied that there is no
justification for the delay, it can direct the employer, in addition
to the amount of the arrears and interest thereon, to pay a further
sum not exceeding 50% of such amount by way of penalty. Thus,
provision for interest and provision for penalty are different. The
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provision for levy of interest would be under Section 4A(3)(a)
and the provision for levy of penalty would be under Section
4A(3)(b). While directing the employer to pay the interest from
the date of the order passed by the Commissioner, the High Court
has not at all considered Section 4A(3)(a) and has considered
Section 4A(3)(b) only, which is the penalty provision. The
impugned judgment and order passed by the High Court directing
the employer to pay the interest @ 12% p.a. on the amount of
compensation as leviable under Section 4A(3)(a) from the date
of the order passed by the Commissioner, is unsustainable, andis
quashed and set aside. The appellants-original claimants would
be entitled to the interest @ 12% p.a. on the amount of
compensation as awarded by the Commissioner from the date of
the incident. [Paras 4.1, 5, 6][765-B-H; 766-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1860
of 2022.
From the Judgment and Order dated 12.12.2019 of the High Court
of Judicature at Bombay, Bench at Aurangabad in F.A. No.3008 of 2017.
Ms. Qurratulain, Shivaji M. Jadhav, Brij Kishor Sah, Aditya Jadhav,
Advs. for the Appellants.
Samrat Krishnarao Shinde, Sarang Aaradhya, Advs. for the
Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned
judgmentand order passed by the High Court of Judicature at Bombay,
Bench at Aurangabad in First Appeal No. 3008 of
2017 by which the
High Court has partly allowed the said appeal preferred by the respondents
herein and has ordered that the respondents shall be liable to pay interest
@ 12 per cent p.a. as leviable under Section4A(3) of the Employee’s
Compensation Act, 1923 (hereinafter referred to as the “Act, 1923”)
from the date after expiry of period of one month from 25.01.2017 (the
date of the order passed by the Commissioner), the heirs of the deceased
–labourer working on sugarcane field have preferred the present appeal.
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2. That the deceased was a sugarcane cutting labourer. He was
engaged as a labourer by the Labour Contractor for cutting the sugarcane,
which was to be supplied to the sugar factory. While cutting the
sugarcane, he died of a snake bite. Neither the sugar factory nor the
contractor paid the compensation due and payable under the Act, 1923
and therefore the appellants herein – heirs of the deceased filed a claim
petition before the Commissioner Workmen’s Compensation, Beed being
W.M.C. No. 39 of 2011 and claimed Rs. 5 lakhs. By the order dated
25.01.2017, the Commissioner allowed the said application and directed
the respondent Nos. 1 to 3 herein jointly and severally to pay the
compensation amount of Rs.3,06,180/- alongwith simple interest @ 12%
p.a. from the date of accident, i.e., 29.11.2009 till its full realization. The
Commissioner also imposed the penalty of 50% on the compensation
amount, i.e., Rs. 1,53,090/-.
2.1 Feeling aggrieved and dissatisfied with the order passed bythe
Commissioner, Workmen’s Compensation, Beed dated 25.01.2017,
respondent Nos. 1 to 3 herein filed the First Appeal No. 3008 of 2017
before the High Court. By the impugned judgment and order the High
Court has though dismissed the appeal insofar as the amount of
compensation awarded by the Commissioner is concerned, however,
has set aside the penalty and modified the interest awarded @ 12% p.a.
from the date of incident and has directed that the interest @ 12% p.a.
shall become
payable from the period after expiry of one month from
25.01.2017.
2.2 Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the high Court restricting the interest @ 12% p.a.
from the date after expiry of period of one month from 25.01.2017, the
original claimants have preferred the present appeal.
3. We have heard the learned counsel for the respective parties
at length.
4. While holding that the claimants shall be entitled to interest @
12% p.a. from the date after expiry of a period of one month from
25.01.2017, the High Court has considered Section 4A(3)(b) only which
deals with imposition of penalty. However, the High Court has not noted
and/or considered Section 4A(3)(a) of the Act, 1923, which deals with
award of interest when the employer is in default. Section 4A reads as
under:-
SHOBHA v. THE CHAIRMAN, VITHALRAO SHINDE SAHAKARI
SAKHAR KARKHANA LTD. [M. R. SHAH, J.]
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“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 employee, as the case may be,
without prejudice to the right of the employee 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 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 the penalty payable under sub-section
(3) shall be paid to the employee or his dependant, as the case
may be.”
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4.1 Thus, from Section 4A of the Act, 1923 compensation under
Section 4 shall be paid as soon as it falls due. It can be seen that the
liability to pay the interest on the amount of compensation due and payable
would be under Section 4A(3)(a) and the penalty would be leviable under
Section 4A(3)(b). As per Section 4A(3)(a), the employer shall pay, in
addition to the amount of the arrears, simple interest thereon @12% p.a.
or at such higher rate not exceeding the maximum of the lending rates of
any scheduled bank as may be specified on the amount due. As per
Section 4A(1) compensation under section 4 shall be paid as soon as it
falls due. Therefore, on the death of the employee/deceased immediately,
the amount of compensation can be said to be falling due. Therefore, the
liability to pay the compensation would arise immediately on the death of
the deceased. Even as per Section 4A(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 employee, as the case may be, without
prejudice to the right of the employee to make any further claim.
Therefore, the liability to pay the compensation would arise from the
date on which the deceased died for which he is entitled to the
compensation and therefore, the liability to pay the interest on the amount
of arrears/compensation shall be from the date of accident and not from
the date of the order passed by the Commissioner. As per Section
4A(3)(b), if the Commissioner is satisfied that there is no justification for
the delay, it can direct the employer, in addition to the amount of the
arrears and interest thereon, to pay a further sum not exceeding 50% of
such amount by way of penalty. Thus, provision for interest and provision
for penalty are different. As observed hereinabove, the provision for
levy of interest would be under Section 4A(3)(a) and the provision for
levy of penalty would be under Section 4A(3)(b). While directing the
employer to pay the interest from the date of the order passed by the
Commissioner, the High Court has not at all considered Section 4A(3)(a)
and has considered Section 4A(3)(b) only, which is the penalty provision.
5. Under the circumstances, the impugned judgment and order
passed by the High Court directing the employer to pay the interest on
the amount of compensation as leviable under Section 4A(3)(a) from
the date of the order passed by the Commissioner, i.e., 25.01.2017 is
unsustainable.
SHOBHA v. THE CHAIRMAN, VITHALRAO SHINDE SAHAKARI
SAKHAR KARKHANA LTD. [M. R. SHAH, J.]
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6. In view of the above and for the reasons stated above, the
present appeal succeeds. The impugned judgment and order passed by
the High Court insofar as awarding the interest @ 12% p.a. after the
period of expiry of one month from 25.01.2017, is hereby quashed and
set aside and it is observed and held that the appellants herein – original
claimants shall be entitled to the interest @ 12% p.a. on the amount of
compensation as awarded by the Commissioner from the date of the
incidenti.e., 29.11.2009.
Present appeal is allowed accordingly. However, in the facts and
circumstances of the case, there shall be no order as to costs.
Nidhi Jain
Appeal allowed.