The High Court of Jharkhand in an appeal filed under section 30 of the Employee's Compensation Act, 1923 against an award by the labour court that did not include interest as mandated under section 4(A) of the act and held that compensation should be calculated from the date of the accident, and interest calculations should commence from that very date.

Brief Facts:

A case was filed after the death of an employee who worked as a tractor driver, following which a chargesheet was submitted after the investigation took place. However, the employer failed to provide compensation to the deceased's legal heirs and dependents within the legally required timeframe and consequently, legal action was initiated under the Workmen's Compensation Act, 1923 wherein the trial court determined compensation based on the minimum wage rate without interest, which led to the current appeal under Section 30 of the  Employee's Compensation Act, 1923.

Contentions of the Applicant:

The learned counsel appearing on behalf of the appellant contended the appellant was entitled to simple interest @ 12 % per annum from the date of the accident apart from the awarded amount and confined himself to the question of non-award of interest @ 12 % per annum along with substantial award amount which is in violation of mandatory provision of Section 4(A) of Workmen’s Compensation Act.

Contentions of the Respondent:

The learned counsel appearing on behalf of the respondent refuted the arguments raised by the appellant but conceded that the insurer is bound to indemnify the insured only to the extent of payment of principal award and can’t be saddled with liability to pay interest and penalty imposed due to fault of the insured.

Observations of the Court:

The court referred to Section 4A(3) of the Employee’s Compensation Act 1923 highlighting the provision for interest and penalties. Further, the court referred to the judgment in Shobha Vs. The Chairman, Vitthal Rao Shinde held that the liability to pay the compensation and interest on the amount of arrears/compensation shall be from the date of the accident and not from the date of the order passed by the Commissioner and the judgment in f Kamla Chaturvedi Vs. National Insurance Co. Ltd. held that the insurance company is liable to pay not only the principal amount of compensation payable by the insured/employer but also interest thereon if ordered by the Commissioner to be paid by the insured/employee.

The court observed that the award of compensation fells due on the date of occurrence/ accident and computation of compensation and interest begins from the date, it fell due i.e. the date of accident and not the date of award till its realization and in case of an accident out of use motor vehicle causing death or injuries to employee, the insurer of the vehicle can’t escape liability to pay the interest on the principal award.

The court stated that in the present case, no amount of interest component has been awarded in spite of the statutory mandate of Section 4A(3)(a) and no reason has been attributed for not granting the interest component in the award which is quite illegal and suffers from perversity.

The decision of the Court:

The court allowed the appeal and modified the impugned order to the extent of payment of simple interest @ 12 % per annum from the deceased's death date till the date of actual payment on the original award amount.

Case Title: Jugal Kishor Ray vs. Ashok Prasad Yadav

Coram: Hon’ble Mr. Justice Pradeep Kumar Srivastava

Case No.: M.A. No.227 of 2020

Advocate for the Applicant: Mr. Arvind Kr. Lall

Advocate for the Respondent: Mr. Manish Kumar

 

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Kritika