Bombay High Court
Manisha Ramdhan Jadhav And Anr vs The Managing Director, Natural Sugar ... on 3 March, 2025
2025:BHC-AUG:7969
(1) fa-642-2024.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO.642 OF 2024
The Managing Director,
Natural Sugar & Allied Industries Ltd.
Sai Nagar, Ranjani Ta. Kallamb,
District Osmanabad ..Appellant
(Orig. Respondent No.1.)
Versus
1. Manisha w/o Ramdhan Jadhav,
Age 50 yrs Occ. H.H.
R/o. Bhosa Ta. Latur Dist. Latur.
2. The Branch Manager,
The United India Insurance Co. Ltd.
Ambajogai Road, Latur Ta. Latur,
Dist. Latur. ..Respondents
(Res. No.1 is Orig. Applicant)
...
Mr. N. D. Kendre, Advocate for the Appellant.
Mr. P. S. Chavan, Advocate for Respondent No.1.
Mr. V. R. Mundada, Advocate for the Respondent No.2.
...
WITH
CROSS OBJECTIONS NO.59 OF 2024
IN
FIRST APPEAL ST. NO.23325 OF 2023
Manisha w/o Ramdhan Jadhav,
Age 50 yrs Occ. Household
R/o. Bhosa Tq. & Dist. Latur. ..Objection Petitioner
(Orig. Claimant)
Versus
1. The Managing Director,
Natural Sugar & Allied Industries Ltd.
Sai Nagar, Ranjani Ta. Kallamb,
District Osmanabad ..Respondent
(Orig. Appellant)
2. Branch Manager,
United India Insurance Company Ltd.
Ambajogai Road, Latur ..Respondent
(Orig. Respondent No.2)
(2) fa-642-2024.odt
...
Mr. P. S. Chavan, Advocate for Objection Petitioner.
Mr. N. D. Kendre, Advocate for Respondent No.1.
Mr. V. R. Mundada, Advocate for Respondent No.2.
...
CORAM : S. G. CHAPALGAONKAR, J.
DATE : 03rd MARCH, 2025.
JUDGMENT:
-
1. The appellant impugns judgment and order dated 08.05.2023
passed by Commissioner for Employees Compensation and Judge
Labour Court at Latur in Application (W.C.A.) No.111/2017. The
respondent no.1 has also filed Cross Objection assailing findings of
Commissioner recorded in impugned judgment. (Hereinafter,
parties are referred to by their original status for the sake of
convenience and brevity).
2. Brief facts of case are as under:
The respondent no.1/original claimant instituted proceeding
before Commissioner for Employees Compensation and Judge
Labour Court at Latur contending that her husband Ramdhan
Jadhav was retired soldier. He was appointed as watchman at
Natural Sugar and Allied Industries Ltd, Sai Nagar, Ranjani, Tq.
Kalamb, Dist. Osmanabad. He was getting monthly salary of
Rs.11,351/-. On 10.05.2016, he was assigned night duty. On
10.05.2016, when he was proceeding towards Sugar Factor on
motorcycle bearing Registration No.MH-24-L-0805, another
motorcycle bearing Registration No.MH-29-AP-9511 gave forceful
(3) fa-642-2024.odt
dash to motorcycle of deceased. Due to such accident, he suffered
fatal injuries and took his last breath on 17.05.2016. The accident
was reported to police station. Eventually, offences was registered.
According to the applicant, the deceased died during the course of
or arising out of employment. The respondent is under obligation
to pay compensation.
3. The respondent no.1-Natural Sugar and Allied Industries
Ltd. filed written statement contending that on 10.05.2016,
Ramdhan was absent from duty. There is no causal connection
between his accidental death and employment. In alternate, they
contend that they had obtained Employees Compensation Cover
from respondent no.2-Insurance Company, who accepted liability to
pay compensation.
4. The respondent no.2-Insurance Company denied all
averments in claim application and submitted that they have no
liability.
5. The learned Commissioner framed issues, recorded evidence
of the parties and finally concluded that respondent no.1 is liable to
pay compensation amount of Rs.6,25,880/- to claimant alongwith
with interest @ 12% per annum.
6. Aggrieved employer filed present Appeal assailing judgment
and award passed by the Commissioner. The applicant has filed
(4) fa-642-2024.odt
Cross Objection on the ground that Commissioner failed to award
penalty. Secondly, compensation is not assessed as per actual
salary. The cap of earning is wrongly imposed.
7. By order dated 19.01.2024 notices were issued to respondents
indicating that First Appeal would be heard finally at the stage of
admission and record and proceeding was also called for.
Accordingly, heard finally at admission stage by consent of parties
on following substantial questions of law:
(A) Whether Late Ramdhan died during course of and arising
out of employment with respondent-Sugar Factory,
particularly when accident took place before
commencement of his duty hours, outside place of
employment between his motorcycle and third party
vehicle?
(B) Whether insurer could have been made liable to pay
compensation based on Employees Compensation Policy
obtained by appellant?
(C) Whether compensation could have been assessed relying
upon actual monthly wages of deceased ignoring
Notification issued under Section 4(1)(1-B) by Central
Government?
(5) fa-642-2024.odt
(D) Whether employer could have been made liable for penalty
under Section 4-A(2) for making default in deposit of
compensation amount?
8. Mr. Kendre, learned Advocate appearing for the appellant
submits that accident took place before time of duty hours of
deceased. It was a motor vehicular accident outside premises of
employer. There is no causal connection between employment and
death of the deceased. In support of his contentions he relies upon
judgment of this Court in case of Meenakshi Gas Agencies,
Warora Vs. Ramaji Kusum Yerme and Ors. 1. He would further
submit that insurer has accepted risk of employees under workmen
compensation policy, but Commissioner wrongly exonerated him.
9. Per contra, Mr. Chavan, learned Advocate appearing for
respondent no.1 submits that accident took place opposite to
factory gate while deceased was on his way towards factory for
attending duty. Therefore, by applying theory of notional
extension, his accidental death must be treated as arising out of
and during course of employment. In support of his contentions he
relies upon judgments of the Supreme Court of India in cases of
General Manager, B.E.S.T. Undertaking, Bombay Vs. Mrs.
Agnes2 and Poonam Devi and Ors. Vs. Oriental Insurance Co.
Ltd.3.
1 AIROnline 2019 Bom 2910.
2 AIR 1964 SC 193.
3 AIR 2020 SC 1305.
(6) fa-642-2024.odt
10. Having considered submissions advanced by learned
advocates appearing for respective parties, first question that
arises for consideration is as to whether subject accident occurred
during course of and arising out of the employment. It is not in
dispute that deceased was employed as watchman at the Natural
Sugar and Allied Industries Limited, Sainagar. He was posted at
Unit No.2 situated at Gunj, Tq. Pusad, District-Yavatmal. On
10.05.2016, while he was proceeding on his motorcycle to attend
duty, another motorcycle gave forceful dash to his motorcycle.
Eventually, he suffered fatal injuries. The place of accident is in
front of factory gate.
11. FIR clearly shows that deceased was moving towards Factory
on his motorcycle at the time of accident. The spot panchnama
shows spot of accident on road in front of factory. In this
background, although accident does not occur while deceased was
actually on duty or during his duty hours, question as to when
employment begin would depend upon the facts of each case. In
case of General Manager, B.E.S.T. Undertaking Bombay Vs.
Mrs. Agnes4 in reference to law laid down in case of Saurashtra
Salt Manufacturing Co. Vs. Bai Valu Raja 5, wherein doctrine
of "Notional Extension" of employer's premises in the context of an
accident to an employee has been elaborated thus : -
4 AIR 1964 SC 193.
5 AIR 1985 SC 881.
(7) fa-642-2024.odt
"As a rule, the employment of a workman does not
commence until he has reached the place of
employment and does not continue when he has left the
place of employment, the journey to and from the place
of employment being excluded. It is now well-settled,
however, that this is subject to the theory of notional
extension of the employer's premises so as to include an
area which the workman passes and repasses in going
to and in leaving the actual place of work. There may
be some reasonable extension in both time and place
and a workman may be regarded as in the course of
his employment even though he had not reached or had
left his employer's premises. The facts and
circumstances of each case will have to be examined
very carefully in order to determine whether the
accident arose out of and in the course of the
employment of a workman, keeping in view at all times
this theory of notional extension."
12. In light of the aforesaid observations, Section 3(1) of the
Employees' Compensation Act has been interpreted to hold that
employment does not necessarily end when "down tool" signal is
given or when workman leaves actual workshop where he is
working. There is notional extension at both entry and exit by time
and space. The scope of such extension must necessarily depend on
circumstances of a given case.
13. Recently, in case of Poonam Devi and ors. Vs. Oriental
Insurance Company Ltd.6, again rule of Notional Extension has
been reiterated and it is observed that employees compensation is a
piece of socially beneficial legislation. The provisions will,
therefore, have to be interpreted in a manner to advance a purpose
of legislation, rather than to stultify it.
6 2020 Supreme Court 1305.
(8) fa-642-2024.odt
14. Similarly, in case of Manu Sarkar and ors. Vs. Mabish
Miah and ors.7, Supreme Court has further observed that there is
a notional extension at both the entry and exit by time and space.
The scope of such extension must necessarily depending on the
circumstances of a given case. As employment may end or may
begin not only when employee begins to work or leaves his tools,
but also when he used the means of access and, egress to and from
the place of employment.
15. Yet in another judgment in case of Daya Kishan Joshi and
Anr. Vs. Dyemech Systems Pvt. Ltd.8, employee working for sales
and installation of products while returning from field work met
with an accident, it is held that the injury caused to him was
during currency of the employment and arising out of employment.
16. The aforesaid exposition of law squarely covers present case.
Hence, there is no room to interfere in findings recorded by
Commissioner that accident and consequential death of deceased
was during the course of and arising out of the employment, so also
there was causal connection between death and his employment.
17. Now, turning to the second submission advanced on behalf of
the appellant that risk of employees was covered under valid
insurance policy issued by Respondent no.2-Insurance Company
7 (2014) 14 SCC 21.
8 (2018) 11 SCC 642
(9) fa-642-2024.odt
and, therefore, it could have been shouldered on them. Perusal of
the insurance policy shows that it was issued to M/s. Natural
Sugar and Allied Industries Limited, Sainagar, Ranjani, Kallamb,
District Osmanabad. The clause regarding location of risk
stipulates as Natural Sugar and Allied Industries Limited
Sainagar, Ranjani, Tq. Kallamb. The clause regarding details of
employees cover depicts that skilled, unskilled and administrative
employees working under Natural Sugar and Allied Industries,
various Divisions at Ranjani are covered. The place of employment
is shown as Natural Sugar and Allied Industries at Ranjani.
18. The cross-examination of witness Ashok Dama examined on
behalf of the appellant/employer shows that deceased was
employed at Unit No.2 at village Gunj, Savna, Tq. Mahagaon,
District Yavatmal. The insurance policy on record covers the risk
of employees at Unit No.1 in Village Ranjani, District Osmanabad.
Therefore, even if it is accepted that Unit No.1 and Unit No.2 are
sister concerns of the same group of industries, the insurance
policy obtained for one unit would not extend its coverage to
employees appointed at another unit, particularly when the policy
explicitly restricts its coverage to a specific unit. Therefore, second
contention as raised by the appellant is not acceptable.
19. Now, turning to cross-objection filed by original claimants
seeking enhancement of compensation. Mr. Chavan, learned
(10) fa-642-2024.odt
advocate submits that salary certificate of deceased shows that his
gross salary was Rs.11,351/- for April 2016. However, learned
Commissioner erroneously worked out compensation taking his
salary @ Rs.8,000/- p.m. applying ceiling under the Act of 1923.
Mr. Chavan submits that ceiling of monthly wages has been
removed by amendment of 2009. The Explanation (II) to Section 4
has been replaced by clause (1-B), which states that Central
Government may, by notification in Official Gazette specify for
purpose of sub-section (1) such monthly wages in relation to an
employees as it may consider necessary. According to him,
Commissioner ought to have considered actual monthly salary of
deceased for the purpose of determining compensation. Mr.
Chavan further submits that the learned Commissioner could have
imposed a penalty at the rate of 50% of the compensation amount.
Mr. Chavan relies upon judgment of Supreme Court in case of K.
Sivaraman and Ors. Vs. P Sathishkuar and another9.
20. The provisions of Employees' Compensation Act prior to
amendment of 2009 shows that Explanation (II) to Section 4 was in
the nature of cap of Rs.4,000/-, even for workman having wages
above Rs.4,000/-. However, by Act of 45 of 2009, which came into
force on 18.1.2010 Explanation (II) has been deleted and clause
(1-B) has been added, which reads thus :-
"(1-B) Central Government may, by notification in the
9 AIR ONLINE 2020 SC 221.
(11) fa-642-2024.odt
official Gazette, specify, for the purpose of sub-section (I),
such monthly wages in relation to an employee as it may
consider necessary.
21. In light of the aforesaid amendment, Supreme Court of India
in case of K. Sivraman (supra) observed in paragraph no.26,
which reads thus ;-
"26. Prior to Act 45 of 2009, by virtue of the deeming
provision in Explanation II to Section 4, the monthly wages
of an employee were capped at Rs.4000 even where an
employee was able to prove the payment of a monthly wage
in excess of Rs.4,000. The legislature, in its wisdom and
keeping in mind the purpose of the 1923 Act as a social
welfare legislation did not enhance the quantum in the
deeming provision, but deleted it altogether. The
amendment is in furtherance of the salient purpose which
underlies the 1923 Act of providing to all employees
compensation for accidents which occur in the course of
and arising out of employment. The objective of the
amendment is to remove a deeming cap on the monthly
income of an employee and extend to them compensation on
the basis of the actual monthly wages drawn by them.
However, there is nothing to indicate that the Legislature
intended for the benefit to extend to accidents that took
place prior to the coming into force of the amendment."
22. It is, therefore, evident that when monthly wages of employee
are proved on the basis of acceptable evidence, his salary @
Rs.11,351/- as per actual will have to be considered for the purpose
of determining compensation. However, in case where employee is
not in a position to prove his salary, notification issued by the
Central Government as to monthly wages, under clause (1-B) of
Section 4 would be relevant. Therefore, cap of Rs.8,000/- applied by
the Commissioner while determining compensation cannot be
countenanced. The compensation amount will have to be re-
(12) fa-642-2024.odt
determined by taking actual monthly wages of deceased at the time
of his death.
23. Mr. Chavan further submits that employer committed
default in making deposit within statutory period as contemplated
under Section 4-A of the Act. Per contra, Mr. Kendre, learned
Advocate submits that entire medical expenses have been borne by
employer. There was no intention to deny the liability. There was
bonafide dispute as regards to liability. Therefore, there is no case
for imposing penalty in addition to interest. Section 4-A of the
Employees' Compensation Act provides for penalty for default in
depositing compensation under Section 4 as soon as it falls due.
Sub-section (2) of Section 4-A mandates that where employer does
not accept liability for compensation to the extent of claim, he shall
be bound to make provisional payment based on extent of liability,
which he accepts. In case of default in paying the compensation
due within one month from the date it fell due in addition to the
amount of compensation, penalty and interest can be directed to be
paid by the employer.
24. In the present case, it is admitted position that employer has
borne medical expenses for hospitalization of deceased, but
compensation amount was not deposited. Only justification for
non-payment is given that medical expenses were already incurred
by employer.
(13) fa-642-2024.odt
25. It is true that, employer has incurred medical expenses,
possibility that they were not sure about their liability and under
belief that they had valid insurance policy covering risk of
employees, they protracted to deposit amount. However, law
mandates that in case of dispute as to liability, they could have
deposited admitted amount of compensation or atleast could have
raised claim to the insurer. Evidence on record do not state any
such steps taken by employer. Apparently, they are defaulters in
terms of Section 4(A) of the Employees' Compensation Act.
26. Looking to the totality of circumstances, this Court finds that
employer is liable to pay penalty @ 20% of compensation amount in
addition to the interest, as directed by Commissioner. In the
result, following order is passed.
ORDER
i. First Appeal No.642 of 2024 is dismissed.
ii. Cross Objection No.59 of 2024 filed by the
respondent-claimant is partly allowed.
iii. The respondent no.1 shall pay compensation
amount of Rs.8,88,045/- (Rs. Eight Lakh Eighty
Eight Thousand and Forty Five only) to applicant
alongwith simple interest @ 12% p.a. from the date
of accident till actual realization of compensation
amount.
(14) fa-642-2024.odt
iv. In addition to the compensation amount,
respondent no.1 shall pay 20% penalty i.e.
Rs.1,77,609/- (Rs. One Lakh Seventy Seven
Thousand Six Hundred and Nine) over
compensation amount to applicant.
v. The respondent no.1 shall pay Rs.5,000/- (Rs. Five
Thousand) towards funeral expenses to applicant.
vi. First Appeal and Cross Objection stand disposed
off. Pending civil application, if any, also stands
disposed off.
(S. G. CHAPALGAONKAR)
JUDGE
Devendra/March-2025
