Orissa High Court
(An Appeal Under Section 30 Of The ... vs M/S. S.R.C. Projects Pvt. Ltd on 10 September, 2025
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 16-Sep-2025 16:57:44
IN THE HIGH COURT OF ORISSA AT CUTTACK
FAO No. 694 of 2020
(An appeal under Section 30 of the Employee's Compensation Act,
1923.)
Purusottam Sahu & Ors. .... Appellant (s)
-versus-
M/s. S.R.C. Projects Pvt. Ltd., .... Respondent (s)
Tamil Nadu & Anr.
Advocates appeared in the case through Hybrid Mode:
For Appellant (s) : Mr. P.C. Pattanaik, Adv.
For Respondent (s) : Mr. Satyaranjan Mohapatra, Adv.
(for Res. No.1)
Mr. Santosh Ku. Mohanty, Adv.
(for Res. No.2)
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-19.08.2025
DATE OF JUDGMENT:-10.09.2025
Dr. Sanjeeb K Panigrahi, J.
1. The Appellants have preferred the present appeal assailing the
judgment and award dated 27.01.2020 passed by the learned
Commissioner for Employees' Compensation-cum-Divisional Labour
Commissioner, Berhampur, Ganjam in E.C. Case No. 02 of 2017.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
Location: ORISSA HIGH COURT, CUTTACK
(i) The deceased was employed by Opposite Party No. 1 at the worksite
situated at Mahindra World City, Paranur, Chengalpattu.
(ii) On the date of the incident, while discharging his duties as instructed
by Opposite Party No. 1, he was engaged in unloading cement bags
from a lorry at the worksite. In the course of such duty, his foot
slipped and he fell from the lorry along with a cement bag.
(iii) As a result of the fall, he sustained multiple injuries, including
grievous head injuries. He was immediately shifted to S.R.M.
Hospital, Potheri for treatment and was later referred to the
Government General Hospital, Chennai.
(iv) The deceased remained under treatment as an indoor patient from
30.05.2008 until he succumbed to the injuries on 03.06.2008 at about
6:00 P.M.
(v) At the time of his death, the deceased was 19 years of age. He was
drawing a monthly wage of Rs. 6,000/- and, in addition, was receiving
Rs. 200/- per day towards bhatta. The Appellants, therefore, preferred
a claim in Form-G before the learned Commissioner for Employees'
Compensation-cum-Deputy Labour Commissioner, Salem, Tamil
Nadu, seeking compensation of Rs. 5,00,000/-.
(vi) During the pendency of the proceedings, the Appellants filed an
application for transfer of the case to this Court on the ground of their
permanent residence in Odisha. The said application was allowed
and the matter was accordingly transferred.
(vii) Upon transfer, the case was registered before the learned
Commissioner for Employees' Compensation-cum-Divisional
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Labour Commissioner, Berhampur, Ganjam as E.C. Case No. 02 of
2017.
(viii) Upon consideration of the pleadings of the parties, the learned
Commissioner framed four issues and, after hearing both sides,
awarded a sum of Rs. 2,04,950/- as compensation payable by
Respondent No. 2, with a further direction that Respondent No. 1
shall pay interest at the rate of 12% per annum.
(ix) Aggrieved by the judgment and award dated 27.01.2020, the
Appellants have preferred the present appeal.
II. SUBMISSIONS ON BEHALF OF THE APPELLANTS:
3. Learned counsel for the Appellants earnestly made the following
submissions in support of his contentions:
(i) The Appellants contended that the learned Commissioner for
Employees' Compensation failed to properly appreciate the oral and
documentary evidence on record. P.W.1, Shri Purosottam Sahu,
categorically deposed that the deceased was earning ₹6,000/- per month
as wages and ₹200/- per day towards bhatta. Even Respondent No. 1, in
his written statement, admitted that the deceased was being paid
₹4,000/- per month. This clearly established the wage structure, which
was erroneously ignored by the Commissioner.
(ii) The Appellants further submitted that the insurance policy issued by
Respondent No. 2 covered both categories of employees drawing less
than ₹4,000/- per month and those drawing more than ₹4,000/- per
month. Respondent No. 1 had duly paid a premium of ₹18,898/-,
covering 15 skilled and 20 unskilled/mason/watchman/canteen
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workers. The policy was valid from 20.02.2008 to 19.06.2008 and
squarely covered the date of accident. Although this fact was noticed by
the learned Commissioner, he failed to apply ₹4,000/- as the monthly
wage for assessing compensation.
(iii) The Appellants submitted that if the monthly wage of ₹4,000/- had been
taken into account, the correct computation would have been ₹4,000 ×
50% × 225.22 = ₹4,50,440/-, considering the age of the deceased was 19
years. The award of ₹2,04,950/- is grossly inadequate and liable to be
enhanced to ₹4,50,440/- in the interest of justice.
(iv) The Appellants further argued that the learned Commissioner
committed illegality in fastening liability for payment of interest on
Respondent No. 1. In view of the decision of the Supreme Court in
North East Karnataka Road Transport Corporation v. Smt. Sujatha1,
the insurer is bound to indemnify the insured, and the principal
compensation along with interest at 12% per annum from the date of
accident is required to be paid by Respondent No. 2.
(v) The Appellants asserted that the impugned award is illegal, erroneous,
and unsustainable in law, and is liable to be modified by enhancing the
compensation to ₹4,50,440/- with statutory interest, fastening liability
upon the insurer.
III. SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
4. The Learned Counsel for the Respondents earnestly made the following
submissions in support of his contentions:
(2019) 11 SCC 514.
Location: ORISSA HIGH COURT, CUTTACK
(i) The insurance policy bearing No. 170803/41/07/01/00000864 issued by
Opposite Party No. 5 covered employees drawing both below and
above ₹4,000 per month. The employer had paid premium covering 20
unskilled/mason/watchman/canteen workers. The policy was valid
from 20.02.2008 to 19.06.2008, which included the date of the accident
that caused the death of the deceased.
(ii) The Commissioner, after examining the policy, held that the Insurance
Company was liable to pay compensation. However, despite this
finding, the Commissioner directed that the employer should pay the
statutory interest with liberty to seek reimbursement from the insurer.
This direction, in the face of a subsisting and valid insurance policy, is
unsustainable in law.
(iii) Interest is included within the definition of "compensation" under
Section 2(e) of the Workmen's Compensation Act, 1923. Once there is a
valid policy covering the risk, both compensation and statutory interest
are payable by the insurer.
(iv) The finding fastening liability on the employer to pay interest
amounting to ₹2,84,880 is therefore erroneous. The liability to pay both
compensation and interest rests squarely on the insurer, and the order
saddling the employer with interest requires to be set aside.
IV. FINDINGS OF THE COMMISSIONER FOR EMPLOYEES' COMPENSATION-
CUM-DIVISIONAL LABOUR COMMISSIONER, BERHAMPUR, GANJAM:
5. The Commissioner heard the parties, perused the pleadings and
evidence, and framed four issues for determination.
6. On appreciation of evidence, including the deposition of P.W.1, father
of the deceased, it was found that the deceased, aged 19 years, was
Location: ORISSA HIGH COURT, CUTTACK
employed at the worksite of Opposite Party No. 1, SRC Projects Ltd.,
and that on 30.05.2008, while unloading cement bags from a lorry, he
slipped and sustained grievous head injuries, leading to his death on
03.06.2008. The relationship of employer and employee was held
established, and the death was held to have arisen out of and in the
course of employment.
7. As to age, reliance was placed on the certificate of the Board of
Secondary Education, Odisha, recording him as 19 years old. On wages,
while the claimants asserted that he was earning Rs. 6,000 per month
with Rs. 200 per day as bhatta, and Opposite Party No. 1 admitted to
Rs. 4,000 per month, the Commissioner, in the absence of supporting
documentary proof, applied the notified minimum wage of Rs. 70 per
day for unskilled workers in Odisha at the relevant time, assessing
monthly wages at Rs. 1,820.
8. On that basis, compensation was computed as Rs. 1,820 × 50% × 225.22
= Rs. 2,04,950. Opposite Party No. 2, the insurer, was directed to pay the
compensation, the policy in force being valid and covering employees
drawing less than Rs. 4,000 per month. However, liability to pay interest
at 12% per annum, quantified at Rs. 2,84,880, was fastened upon
Opposite Party No. 1, the employer, with liberty to seek reimbursement
from the insurer if permissible under the policy.
V. COURT'S REASONING AND ANALYSIS:
9. Heard learned counsel for the parties and perused the material on
record.
10. On the rival pleadings and submissions, the questions that arise for
determination are: (i) whether the monthly wage of the deceased has
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been correctly adopted for computation of compensation under the
Employees' Compensation Act, 1923; (ii) whether the award of
₹2,04,950/- requires modification in accordance with the statutory
formula; and (iii) whether the finding fastening liability upon the
employer to pay interest is sustainable in law in view of the scheme of
the Act.
11. Section 3 of the Employees' Compensation Act, 1923 casts a statutory
obligation on the employer to pay compensation in respect of injury or
death caused by an accident arising out of and in the course of
employment.
12. Section 4(1)(a) provides that in the case of death, compensation shall be
fifty per cent of the monthly wages multiplied by the "relevant factor"
prescribed in Schedule IV. For the age of 19 years, the factor is 225.22.
13. Section 4A provides that compensation under Section 4 shall be paid as
soon as it falls due.
14. It is well settled that where an accident arises out of and in the course
of employment, the employer becomes liable to pay compensation as
soon as personal injury is caused to the workman, and such liability is
not deferred until adjudication or quantification. This principle was
affirmed in Pratap Narain Singh Deo v. Srinivas Sabata2.
15. In Kerala State Electricity Board v. Valsala K.3 the Supreme Court held
that the relevant date for determination of the rate of compensation is
the date of the accident and not the date of adjudication of the claim by
the Commissioner.
(1976) 1 SCC 289.
(1999) 8 SCC 254.
Location: ORISSA HIGH COURT, CUTTACK
16. The principle has been reiterated in North East Karnataka Road
Transport Corporation v. Sujatha4, where it was held that interest is
payable from the date of accident.
17. Further, it is also important to note that in Ved Prakash Garg v. Premi
Devi5 , the Supreme Court clarified that once a valid policy of insurance
is in force, the insurer is liable not only to indemnify the employer in
respect of the principal amount of compensation awarded under
Sections 3 and 4A(3)(a) of the Employees' Compensation Act, 1923, but
also to bear the liability of interest thereon as imposed by the
Commissioner. However, the Court further held that the insurer cannot
be made liable to reimburse any additional amount of compensation
levied by way of penalty under Section 4A(3)(b), which remains the
personal liability of the employer.
18. Applying the above principles, the Commissioner correctly found that
the deceased, aged 19 years, slipped while unloading cement bags at the
worksite of Opposite Party No. 1 on 30.05.2008, sustained grievous head
injuries, and died on 03.06.2008. The relationship of employer and
employee, and the fact that the death arose out of and in the course of
employment, were rightly held proved. These findings are affirmed.
19. The controversy is confined to wages and interest. The claimants
asserted that the deceased was drawing ₹6,000/- per month along with
₹200/- daily bhatta. Opposite Party No. 1, in its written statement,
admitted that the deceased was paid ₹4,000/- per month. Despite this
admission, the Commissioner discarded it and adopted the minimum
(2019) 11 SCC 514.
(1997) 8 SCC 1.
Location: ORISSA HIGH COURT, CUTTACK
wage of ₹70/- per day notified in Odisha for unskilled workers, thereby
fixing monthly wages at ₹1,820/-. This approach is legally untenable.
The employment was in Tamil Nadu, the deceased was admittedly
working at the site, and the employer himself admitted payment of
₹4,000/- per month. Such an admission constitutes substantive evidence
and could not have been ignored. Even without reckoning the daily bhatta, the
admitted wage of ₹4,000/- was the correct figure for computation.
20. On that footing, compensation recalculates to ₹4,000 × 50% × 225.22 =
₹4,50,440/-. The award of ₹2,04,950/- is therefore set aside to that extent
and modified accordingly.
21. As regards liability, the Commissioner himself recorded that a valid
policy of insurance issued by the insurer was in force covering
employees both below and above ₹4,000/- per month and accordingly
directed the insurer to pay compensation. However, while doing so, he
further directed that the employer would be liable to pay interest with
liberty to seek reimbursement. Such bifurcation is contrary to law. Once
a valid policy covers the risk, the liability to satisfy the award, inclusive
of both compensation and statutory interest, rests entirely with the
insurer. Only penalty, if any is imposed under Section 4A(3)(b), can be
enforced personally against the employer.
VI. CONCLUSION:
22. For the reasons aforesaid, this Court holds that the monthly wage of the
deceased is to be taken at ₹4,000/-. On that basis, the compensation
recalculates to ₹4,50,440/-. The award of ₹2,04,950/- passed by the
Commissioner is, therefore, modified to the above extent.
Location: ORISSA HIGH COURT, CUTTACK
23. This Court further directs that interest at the rate of twelve per cent per
annum shall run from the date of the accident, namely 03.06.2008, until
the date of deposit. In terms of the statutory scheme, both the principal
compensation and the statutory interest shall be borne by the insurer.
The employer cannot be saddled with liability to pay interest, though
penalty, if imposed, would rest with the employer alone.
24. Accordingly, the appeal is allowed. The award dated 27.01.2020 is
modified by enhancing the compensation to ₹4,50,440/-, together with
interest at twelve per cent per annum from 03.06.2008. The insurer is
directed to deposit the entire amount within eight weeks before the
Commissioner, who shall ensure disbursement to the claimants in
accordance with law.
25. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 10th Sept., 2025/
