The Division Bench of the Supreme Court consisting of Justice M.R. Shah and B.V. Nagarathna opined that u/s 4A (1) of the Employee’s Compensation Act, 1923 (“the Act”) compensation u/s 4 shall be paid as soon as it falls due. So, the liability to pay the compensation would arise immediately on the death of the employee/worker.
Facts
The deceased was a sugarcane cutting labourer who died of a snake bite while cutting the sugarcane. Neither the sugar factory nor the contractor paid the compensation due and payable under the Act, 1923 and therefore the appellants (heirs of the deceased) filed a claim petition before the Commissioner Workmen’s Compensation and claimed Rs. 5 lakhs. By the order dated 25.01.2017, the Commissioner directed the respondent Nos. 1 to 3 herein jointly and severally to pay the compensation amount of Rs.3,06,180/- along with simple interest @ 12% p.a. from the date of accident till its full realization. The Commissioner also imposed the penalty of 50% on the compensation amount, i.e., Rs. 1,53,090/-.
Procedural History
Feeling dissatisfied, respondent Nos. 1 to 3 herein filed First Appeal before the High Court. The High Court, though dismissed the appeal insofar as the amount of compensation awarded by the Commissioner is concerned, however, set aside the penalty and modified the interest awarded @ 12% p.a. from the date of incident and directed that the interest @ 12% p.a. shall become payable from the period after expiry of one month from 25.01.2017. Feeling aggrieved, the original claimants have preferred the present appeal.
Observations of the Court
The Bench observed that:
“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 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.”
Judgment
The impugned judgment was quashed and was held that the appellants shall be entitled to the interest @ 12% p.a. on the amount of compensation as awarded by the Commissioner from the date of the incident.
Case Name: Shobha & Ors. vs The Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors.
Citation: CIVIL APPEAL NO. 1860 OF 2022
Bench: Justice M.R. Shah, Justice B.V. Nagarathna
Decided on: 11th March 2022
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