Judgment:
The Court
1. This appeal is filed by the legal representatives of the owner of the lorry, to challenge the order dated 30-4-1997 in case No. LOD:WCR:CR 68/96, insofar as the same related to fastening the liability with regardto payment of penalty and interest to the extent of Rs. 1,03,990/-, 50% of the total award of Rs. 2,07,980/- awarded under Section 4 of the Workmen's Compensation Act, 1923, henceforth for convenience 'the Act', by the Commissioner for Workmen's Compensation, Davanagere, henceforth in brief referred as the 'WCC.
2. The learned Counsel for the appellants had taken me in brief to the facts of the case. They are as hereunder:
That one Malleshappa, the husband of the respondent 1 and father of the respondent 2, was the driver under one Sri B.L. Shivappa, the husband of the appellant 1 and father of the appellants 2 to 4. The said Malleshappa died on 28-4-1996 in an accident. The L.Rs of the deceased Malleshappa, the respondents 1 and 2 herein have claimed an award of Rs. 3,50,000/- together with interest at 12% p.a. and in consideration of the said claim the WCC had awarded a sum of Rs. 2,07,980/- as against the said B.N. Shivappa and the respondent 3-The New India Assurance Company Limited. The WCC had also directed that the said B.N. Shivappa, the lorry owner and the respondent 3-Insurance Company were jointly liable to pay the award amount to respondents 1 and 2 herein. In the penultimate para of the impugned order the WCC had also awarded 50% of the above sum, i.e., Rs. 1,03,990/- as penalty and further imposed interest at 12% p.a. on that amount payable by the lorry owner, the above said Sri B.L. Shivappa.
3. While urging the grounds made out in the instant appeal Sri Vasanth, learned Counsel appearing for the appellants argued that there was no justification on the part of the WCC to impose 50% of the award amount to be paid by the lorry owner i.e., Sri B.N. Shivappa. According to him the said lorry owner was not issued with any show-cause notice as contemplated under proviso below Section 4-A(3)(b) of the Act. He had also pointed out that in filing the instant appeal before this Court the L.Rs of the lorry owner have specifically taken the contention at para 14 thereof that the WCC had fastened the liability with regard to the payment of penalty on the lorry owner without complying to the provisions under Section 4-A(3)(b) of the Act. In substance what was submitted by the learned Counsel for the appellant was that his party was not put on notice before fastening the said liability of payment of penalty and interest thereon. Therefore he prayed that the impugned order passed by the WCC insofar as the same related to fastening the liability of payment of penalty and interest thereon, be set aside.
4. The respondents 1 and 2 being the claimants before the WCC are represented herein by their Counsel, Sri M.V. Hiremath, whereas the respondent 3-Insurance Company is represented by the learned Counsel, Sri O. Mahesh.
5. In view of the circumstance that the penalty imposed by the WCC has to go to the State, in view of the provisions in Sub-section 3(a) of Section 4-A, I find it is appropriate to direct the learned Additional Government Advocate to take notice for the respondent 4, day before yesterday. Accordingly, Mr. Ashok Menasinakai, the learned Additional Government Advocate is present before the Court this day.
6. With the assistance of the learned Additional Government Advocate, I have also gone through the records. The learned Additional Government Advocate had fairly submitted before the Court that, of course, based on the record, the WCC did not cause issuance of the show-cause notice to the appellant herein. The L.Rs of the original lorry owner Sri B.N. Shivappa, before fastening the liability of payment of penalty and interest thereon. However, he supported the impugned order passed by the WCC in its entirety.
7. In the light of the above arguments advanced, I have gone through the records of the WCC myself. As argued by the learned Counsel for the appellant, the WCC at no point of time had caused notice either to the original lorry owner Sri B.N. Shivappa or for that matter his L.Rs during the course of the entire proceedings before him. Therefore, it was correct on the part of the learned Counsel for the appellant to argue that his parties were not put on notice by causing show-cause notice to them as contemplated under proviso below Section 4-A(3)(b) of the Act. In this contest, I feel it proper to quote provisions of Section 4-A of the Act; to do that the same reads as under:
'4-A. 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 workman, as the case may be, without prejudice to the right of the workman 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'.
8. On careful reading of the proviso below Section 4-A(3)(b) as above, it is clear that the WCC shall not to pass an order in the matter of payment of penalty as contemplated under Sub-section 3(b) of Section4-A of the Act, without giving a reasonable opportunity to the employer to show cause as to why he should not be penalised. If it is true that the WCC did not cause for issuance of notice to show cause to the lorry owner or his successors in title, the appellants herein, it is obvious that the WCC has no jurisdiction to pass an order in the matter of payment of penalty and interest, as he did in passing the impugned order.
9. In that view of the matter, I feel that the impugned order insofar as the same related to imposition of penalty of Rs. 1,03,990/- together with interest thereon is liable to be set aside, as the same is not in consonance with the provisions of law as above. It is therefore obvious that the instant appeal has to succeed and accordingly liable to be allowed.
10. In the result, the impugned order dated 30-4-1997 in case No. LOD:WCR:CR 68/96, insofar as the same relates to fastening the liability with regard to payment of penalty to the extent of Rs. 1,03,990/-together with the interest at 12% p.a. on the said amount stands set aside. In the result, a sum of Rs. 10,000/- deposited by the appellants herein during the pendency of this appeal before this Court is liable to he refunded to them. Let the registry, now repay the amount to the appellants on they being properly identified.
11. Appeal, therefore, succeeds and accordingly stands allowed in the above terms.
12. The learned Additional Government Advocate is permitted to file his memo of appearance within four weeks.