Sukhbir Kour vs Sr. Vice President (P&A) Gammon
2023 Latest Caselaw 2182 j&K

     HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                     AT JAMMU
                                                     Reserved on 03.10.2023
                                                  Pronounced on 06.10.2023
MA No. 297/2013


Sukhbir Kour W/o. Late Khushwant                  .....Appellant(s)/Petitioner(s)
Singh Koundal, Q. No. 340 DA
Block, Sheesh Mehal Apartments,
Near Hyderpur, New Delhi th. her
father and attorney Swinder Singh
Kalsi R/o. H. No. 844 Masters
Colony Gurdaspur Punjab

Q
                        Through: Mr. H. C. Jalmeria, Adv.
                 vs
1.     Sr. Vice President (P&A) Gammon                       ..... Respondent(s)
       India Ltd. Gammon House,
       Virsavarkar Marg, Post Box 91229,
       Prabhadevi-Mumbai, Maharashtra-
       400025
2.     General Manager/Project Manager,
       Sewa H. E. Project, Gammon India
       Ltd, Pathankot, Distt. Gurdaspur(Pb).
3.     Assistant Labour Commissioner,
       Kathua
                        Through: None.


    Coram: HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE

                                  JUDGMENT

1. The appellant has challenged award dated 29.04.2013 passed by the

Commissioner, Employees Compensation Act(Assistant Labour

Commissioner), Kathua (hereinafter to be referred as the Commissioner),

whereby compensation in the amount of Rs. 4,11,900/- has been awarded in

favour of the appellant to be payable by respondent No. 2. In fact the appellant

has filed the instant appeal for enhancement of compensation awarded by the

Commissioner and for payment of interest and penalty.

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2. It has been contended that vide the impugned award, no interest has been

allowed on the awarded sum and even the penalty has not been awarded in

favour of the appellant. It has been further contended that the compensation has

been awarded by taking the income of the appellant as Rs. 4,000/- per month

though as per the evidence on record, it was established that the monthly

income of the appellant was Rs. 8,000/- per month.

3. Notice of the appeal was issued to the respondents but despite service,

none of the respondents came forwarded to contest the appeal. Accordingly,

they were set ex parte. In terms of order dated 20.04.2023, the following

questions of law were framed:

(a) Whether the Assistant Labour Commissioner concerned has committed an error in not awarding the interest to the appellant/claimant upon the compensation awarded to the appellant from the date of accident?

(b) Whether the penalty at the rate of 50 per cent of the award amount was required to be imposed upon the respondent Nos. 1 and 2?

4. I have heard learned counsel for the appellant and perused the record of

the case.

5. The first question of law that has been framed is as regards the claim of

the appellant to interest on the amount of compensation awarded in her favour.

In this regard, it is to be noted that the Commissioner has not awarded any

interest in favour of the appellant and only compensation in the amount of Rs.

4,11,900/- has been awarded in her favour. Penalty in terms of Section 4A of

the Employee's Compensation Act has also not been awarded by the

Commissioner.

6. If we have a look at the provisions contained in Section 4A of the

Employee's Compensation Act, 1923, it deals with the payment of interest on

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amount of compensation to be paid when due and it also deals with penalty for

default. The said provision 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--

(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. (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."

7. From a perusal of the aforesaid provision, it is clear that if an employer

fails to pay compensation due under the Act within one month from the date it

falls due, the Commissioner has to direct the employer to pay simple interest at

the rate of 12% per annum on the amount of compensation. The rate of interest

can go up to the rate not exceeding the maximum of the lending rates of any

MA No. 297/2013

scheduled bank. So far as payment of penalty is concerned, the Commissioner

has to direct the employer to pay to the claimant in addition to the amount of

arrears and interest, a further sum not exceeding 50% by way of penalty in a

case where there is no justification for delay.

8. The question that arises for consideration is as to when payment of

compensation becomes due. The answer to this question would determine as to

whether respondent No. 2, the employer is obliged to pay interest and the

penalty on the awarded sum.

9. The Supreme Court in the case of Shobha and others v Chairman,

Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. and others, 2022,

LiveLaw (SC) 271 had an occasion to interpret the provisions contained in

Section 4A of the Employee's Compensation Act, 1923. While doing so, the

Supreme Court observed as under:

"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 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

MA No. 297/2013

satisfied that there is no justification for the delay, it can direct the employer, in 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 compensation as awarded by the Commissioner from the date of the incident i.e., 29.11.2009."

10. From the analysis of the aforesaid ratio laid down by the Supreme Court,

it is manifest that the amount of compensation falls due on the death of the

employee. Therefore, the liability to pay the compensation would arise

immediately on the death of the deceased. Even if the employer does not accept

the liability for compensation to the extent of the claim, still then he has to

make provisional payment of compensation and deposit the same with the

Commissioner or pay the same to the employee. It is also clear that if the

Commissioner is satisfied that there is no justification for delay in payment of

compensation, the employer can be directed to pay a further sum not exceeding

50% by way of penalty in addition to the amount of arrears and interest

thereon. So the crucial date of payment of compensation becoming due is the

date of the incident.

11. In the instant case, the deceased-husband of the appellant had died on

06.07.2007. Therefore, the amount of compensation became due to her on the

MA No. 297/2013

said day. The record of the Commissioner shows that the amount of

compensation in the instant case has been deposited by the employer on

26.06.2013. However, the Commissioner has not awarded any interest in favour

of the appellant from the date of incident i.e. from 06.07.2007 to 26.06.2013.

By omitting to do so, the Commissioner has fallen into a grave error.

12. Apart from the above, no reason much less a plausible reason has been

assigned by the respondents as to why they did not deposit the amount of

compensation with the Commissioner until 26.06.2013 even though the same

had fallen due on the date of incident itself. The only plea that was urged by the

employer before the Commissioner was that the husband of the appellant had

died a natural death. However, the said plea has been found to be without any

substance as the deceased had died while on the work site and as per the post-

mortem report, he has suffered cardiac arrest. Thus, there was no justification

for the employer to delay the payment of compensation at least in making

payment of provisional compensation to the appellant. The appellant is,

therefore, also entitled to amount on account of penalty besides the amount of

interest and the arrears of compensation.

13. Accordingly, the appellant is held entitled to interest at the rate of 12%

per annum from the date of incident i.e. from 06.07.2007 to the deposition of

the compensation with the Commissioner i.e. up to 26.06.2013. Besides this,

the appellant is also held entitled to payment of amount on account of penalty

which in the facts and circumstances of the case is assessed as 10% of the

awarded sum i.e. 10% of Rs. 4,11,900/-. The same shall be payable by the

respondent Nos. 1 and 2.

MA No. 297/2013

14. The appeal is accordingly allowed and the impugned awarded is

modified to the aforesaid extent.

(SANJAY DHAR) JUDGE

Jammu 06.10.2023 Rakesh Whether the order is speaking: Yes Whether the order is reportable: Yes