Shobha, Nitin, Shailesh vs The Chairman, Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd, The Managing Director, Mahadeo

CIVIL APPEAL NO. 1860 OF 2022

Shobha & Ors. …Appellant(s)

Versus

The Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors. …Respondent(s)

JUDGMENT

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment

and 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 Section 4A(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.

2. That the deceased was a sugarcane cutting labourer. He was Signature Not Verified Digitally signed by R

engaged as a labourer by the Labour Contractor for cutting the Natarajan Date: 2022.03.11 16:39:38 IST Reason:

sugarcane, which was to be supplied to the sugar factory. While cutting

1 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 by the

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 2.2 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:-

“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-

3 (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.”

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

4 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

5 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 employee 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.

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

6 compensation as awarded by the Commissioner from the date of the

incident i.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.

………………………………….J. [M.R. SHAH]

NEW DELHI; ………………………………….J. MARCH 11, 2022. [B.V. NAGARATHNA]

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