SHOBHA & ORS. versus THE CHAIRMAN, VITHALRAO SHINDE SAHAKARI SAKHAR KARKHANA LTD. & ORS. on 11 March 2022

1. Feeling aggrieved and dissatisfied with the impugnedFjudgmentand order passed by the High Court of Judicature at Bombay,Bench at Aurangabad in First Appeal No. 3008 of 2017 by which theHigh Court has partly allowed the said appeal preferred by the respondentsherein 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’sGCompensation Act, 1923 (hereinafter referred to as the “Act, 1923”)from the date after expiry of period of one month from 25.01.2017 (thedate of the order passed by the Commissioner), the heirs of the deceased–labourer working on sugarcane field have preferred the present appeal.

2. That the deceased was a sugarcane cutting labourer. He wasengaged as a labourer by the Labour Contractor for cutting the sugarcane,which was to be supplied to the sugar factory. While cutting thesugarcane, he died of a snake bite. Neither the sugar factory nor thecontractor paid the compensation due and payable under the Act, 1923and therefore the appellants herein – heirs of the deceased filed a claimpetition before the Commissioner Workmen’s Compensation, Beed beingW.M.C. No. 39 of 2011 and claimed Rs. 5 lakhs. By the order dated25.01.2017, the Commissioner allowed the said application and directedthe respondent Nos. 1 to 3 herein jointly and severally to pay thecompensation 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. TheCommissioner also imposed the penalty of 50% on the compensationamount, i.e., Rs. 1,53,090/-.

2.1 Feeling aggrieved and dissatisfied with the order passed bytheCommissioner, Workmen’s Compensation, Beed dated 25.01.2017,respondent Nos. 1 to 3 herein filed the First Appeal No. 3008 of 2017before the High Court. By the impugned judgment and order the HighCourt has though dismissed the appeal insofar as the amount ofcompensation 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 from25.01.2017.

2.2 Feeling aggrieved and dissatisfied with the impugned judgmentand 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, theoriginal claimants have preferred the present appeal.

3. We have heard the learned counsel for the respective partiesat 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 from25.01.2017, the High Court has considered Section 4A(3)(b) only whichdeals with imposition of penalty. However, the High Court has not notedand/or considered Section 4A(3)(a) of the Act, 1923, which deals withaward of interest when the employer is in default. Section 4A reads asunder:- AB

C

D

E

F

G

H

A

B

C

D

E

F

G

H

“4A. Compensation to be paid when due and penaltyfor default.- (1) Compensation under section 4 shall be paid assoon as it falls due.

(2) In cases where the employer does not accept the liabilityfor compensation to the extent claimed, he shall be bound to makeprovisional payment based on the extent of liability which heaccepts, and, such payment shall be deposited with theCommissioner or made to the employee, as the case may be,without prejudice to the right of the employee to make any furtherclaim.

(3) Where any employer is in default in paying thecompensation due under this Act within one month from the dateit fell due, the Commissioner shall- (a) direct that the employer shall, in addition to the amountof the arrears, pay simple interest thereon at the rate of twelveper cent. per annum or at such higher rate not exceeding themaximum of the lending rates of any scheduled bank as maybe specified by the Central Government by notification in theOfficial 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 thearrears and interest thereon, pay a further sum not exceedingfifty per cent. of such amount by way of penalty:

Provided that an order for the payment of penalty shallnot be passed under clause (b) without giving a reasonableopportunity to the employer to show cause why it should notbe passed.”

Explanation.-For the purposes of this sub-section,“scheduled bank” means a bank for the time being included inthe 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 casemay be.”

4.1 Thus, from Section 4A of the Act, 1923 compensation underSection 4 shall be paid as soon as it falls due. It can be seen that theliability to pay the interest on the amount of compensation due and payablewould be under Section 4A(3)(a) and the penalty would be leviable underSection 4A(3)(b). As per Section 4A(3)(a), the employer shall pay, inaddition 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 ofany scheduled bank as may be specified on the amount due. As perSection 4A(1) compensation under section 4 shall be paid as soon as itfalls due. Therefore, on the death of the employee/deceased immediately,the amount of compensation can be said to be falling due. Therefore, theliability to pay the compensation would arise immediately on the death ofthe deceased. Even as per Section 4A(2), in cases, where the employerdoes not accept the liability for compensation to the extent claimed, heshall be bound to make provisional payment based on the extent of liabilitywhich he accepts, and, such payment shall be deposited with theCommissioner or made to the employee, as the case may be, withoutprejudice to the right of the employee to make any further claim.Therefore, the liability to pay the compensation would arise from thedate on which the deceased died for which he is entitled to thecompensation and therefore, the liability to pay the interest on the amountof arrears/compensation shall be from the date of accident and not fromthe date of the order passed by the Commissioner. As per Section4A(3)(b), if the Commissioner is satisfied that there is no justification forthe delay, it can direct the employer, in addition to the amount of thearrears and interest thereon, to pay a further sum not exceeding 50% ofsuch amount by way of penalty. Thus, provision for interest and provisionfor penalty are different. As observed hereinabove, the provision forlevy of interest would be under Section 4A(3)(a) and the provision forlevy of penalty would be under Section 4A(3)(b). While directing theemployer to pay the interest from the date of the order passed by theCommissioner, 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 orderpassed by the High Court directing the employer to pay the interest onthe amount of compensation as leviable under Section 4A(3)(a) fromthe date of the order passed by the Commissioner, i.e., 25.01.2017 isunsustainable.

AB

C

DEF

G

H

A6. In view of the above and for the reasons stated above, thepresent appeal succeeds. The impugned judgment and order passed bythe High Court insofar as awarding the interest @ 12% p.a. after theperiod of expiry of one month from 25.01.2017, is hereby quashed andset aside and it is observed and held that the appellants herein – originalclaimants shall be entitled to the interest @ 12% p.a. on the amount ofBcompensation as awarded by the Commissioner from the date of theincidenti.e., 29.11.2009.

Present appeal is allowed accordingly. However, in the facts andcircumstances of the case, there shall be no order as to costs.

C

Nidhi Jain

Appeal allowed.

D

E

F

G

H