Shri AleemuddIn and ors. Vs. the Divisional Manager, New India Assurance Company Limited - Court Judgment

A.N. Venugopala Gowda, J.

1. Though these appeals are listed for hearing on admission, keeping in view the nature of controversy, learned Counsel on both sides consented for final hearing and disposal of the appeals on merits of the lis. Since common question of facts and law are involved in these two appeals, they are clubbed, heard together and are being disposed of by this common Judgment. For the sake of convenience, the parties would be referred to with reference to their rank in the Court below.

2. A few background facts leading to these appeals are:

(i) M.F.A. No. 4387/2008:

One Khayamuddin, son of Appellants-1 & 2, husband of appellant-3 and father of appellant 4, was employed as a driver by Mr. Mohammed Naseeruddin, to drive his lorry bearing No. KA-39-4256. The said lorry which had been insured with the respondent, while being driven by said Khayamuddin on 09.03.2007, met with an accident and as a result of fatal injuries sustained, he succumbed. The appellants being the heirs and legal representatives of the deceased workman filed claim petition before the Commissioner for Workmen Compensation (hereinafter referred to as 'Commissioner' for short). The owner of the lorry, despite service of notice of the claim petition remained absent and he was placed exparte. The respondent-insurance company contested the claim petition. Considering the pleadings of the parties, the Commissioner framed issues. The first claimant deposed and produced the documents, which were marked as Ex. A.1 to 4. No rebuttal evidence was placed by the respondent-insurance company. After evaluating the oral and documentary evidence with reference to the rival contentions, the Commissioner allowed the claim petition in part and awarded compensation of Rs. 4,30,560/-, payable by the insurance company. Learned Commissioner, keeping in view the decision of the Apex Court in the case of National Insurance Company Ltd. v. Mubasheer Ahamed and Ors. : (2007)ILLJ1035SC has held that, the claimants are not entitled to any interest on the award amount. Dissatisfied with the quantum of compensation awarded as well as the denial of interest on the amount awarded, the claimants have preferred this appeal.(ii) M.F.A. No. 7031/2008:The appellant was employed as a driver by one Mohammed Akbar, the owner of lorry bearing registration No. KA-39-1327 which had been insured with the respondent. When the appellant was driving the said lorry on 27.04.2006, met with an accident, in which he sustained injuries and consequential permanent disability and therefore, he filed claim petition before the Commissioner. The owner of the vehicle, despite service of notice of the claim petition, did not appear and he was placed exparte. The insurance company appeared and contested the claim petition. Considering the pleadings, issues were framed. The claimant deposed and produced the documents as at Ex.P. 1 to 8. No rebuttal evidence was placed on record by the respondent. The commissioner, after considering the rival contentions and on evaluation of the oral and documentary evidence has held that the claimant, while in the course of employment, suffered permanent disability and he is entitled to be compensated and has determined the compensation amount payable at Rs. 1,28,142/-. However, taking into consideration the decision of the Apex Court in the case of National Insurance Company Ltd. v. Mubasheer Ahamed and Ors. (Supra), has held that no interest is payable, if the amount is deposited within 30 days. Being aggrieved by the quantum of compensation awarded and non-awarding of interest, the claimant has filed this appeal.

3. Contentions:

(i) Learned Counsel for the appellants in both the appeals contended that, the learned Commissioner has erred in assessing the earning capacity of the deceased/claimant in the respective cases; that the amount of compensation determined and awarded is not in accordance with law; that non awarding of interest on the amount determined is contrary to Section 4A(3) of the Workmen Compensation Act 1923 ('the Act' for short); that the interest is payable from the date of accident and at any event, after the expiry of 30 days from the date of accident.

(ii) Per contra, both learned Counsel for the respondent-insurance companies contended that, under the scheme of the Workmen Compensation Act and the Motor Vehicle Act, the insurance company would be liable to meet the liability of the insured-owner of the respective vehicles to the extent of the principal amounts of compensation which were made payable to the claimant by the insured employer, as awarded by the Commissioner; that the compensation becomes payable only on its determination by the Commissioner and falls due for payment and the starting point for payment of interest is on completion of one month from the date it falls due i.e., passing of the award as held by the Apex Court in the case of National Insurance Co. Ltd. v. Mubasir Ahmed (Supra) and also in the case of Kamala Chaturvedi v. National Insurance Company and Ors. (2009) 1 SCC (cri) 550. They further contended that, the award passed by the Commissioner being in conformity with the said two decisions of the Apex Court, the claim for interest from the date of accident or after expiry of 30 days from the date of accident is untenable and that the determination of compensation amount by the Commissioner being based on the age and wages paid to the deceased/injured respectively at the relevant point of time, by applying the relevant factor, no enhancement is permissible.

4. Relevant Statutory Provisions:

(i) Section-4 of the Act, deals with the amount of compensation and lays down the scheme for computing the compensation payable in the cases, types of accidental injuries suffered by the workmen concerned. Section 3(1) and 4(1) of the Act makes the employer liable to pay the compensation to the injured workmen under the circumstances enumerated therein. Section 4-A of the Act is the one which speaks as regards payment of compensation to be paid when due and penalty for default. It is just and necessary to extract the said provision, which reads thus:

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 percent 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 percent of such amount by way of penalty.

(ii) Section 4A deals with the time for payment of compensation computed Under Section 4. Sub-Section (1) thereof mandates that, compensation shall be paid as soon as it 'falls due'. Sub-section (2) contemplates the situations wherein the employer do not accept his liability to pay the compensation to the extent claimed and payment of compensation in the cases where the employer accepts the extent of his liability and Sub-section (2) enables him to make provisional payment on the accepted liability by depositing it either with the Commissioner or pay the amount directly to the workmen. It also provides that, if the employer totally disputes his liability to pay the compensation on the grounds that the injured person being not his employee or that the accident was not caused to him at a time when he was in the course of the employment or that the accident caused to him did not arise out of his employment, in such cases, the employer would not be liable to make provisional payment and his liability to make provisional payment and his liability would depend upon the final adjudication by the Commissioner. Sub-section (3), when read in conjunction with Sub-section (2) becomes clear that, once the compensation under the Act will become due, ascertained either provisionally in terms of Sub-section (2) or finally on adjudication by the Commissioner and if the employer does not pay the amount within one month from the date on which it falls due, the Commissioner can direct to pay the interest as per Sub-clause (a) of Section-4A(3), at the rate provided therein and also the penalty in the manner provided therein.

5. Substantial Question of Law:

In the light of the aforenoticed mandatory provisions of the Act, the substantial question of law that arises for consideration is:Where an employee receives personal injuries in a motor accident arising out of and in the course of his employment while working in the motor vehicle of the employer, whether the insurance company, which has insured the employer/owner of the vehicle against the third party accident claims under the Motor Vehicle Act 1988 and against the claim for compensation arising out of the proceedings under the Workmen Compensation Act 1923 in connection with such motor accident, is liable to pay the interest in respect of the award passed against the insured employer Under Section 4-A of the Act and if so, from what date?.

6. Precedents:

(i) In Pratap Narain Singh Deo v. Srinivas Sabata and Anr. : (1976)ILLJ235SC , a Judgment rendered by the Bench of four Hon'ble Judges, the contention canvassed was that, the compensation had not fallen due, until it was settled by the Commissioner. Negating the said contention, it was held as follows:

Section 3 of the Act deals with the employer's liability for compensation. Sub-section (1) of that section provides that the employer shall be liable to pay compensation if 'personal injury is caused to a workman by accident arising out of and in the course of his employment'. It was not the case of the employer that the right to compensation was taken away under Sub-section (5) of Section-3 because of the institution of a suit in a civil court for damages, in respect of the injury, against the employer or any other person. The employer therefore became liable to pay the compensation as soon as the aforesaid personal injury was caused to the workman by the accident which admittedly arose out of and in the course of the employment. It is therefore futile to contend that the compensation did not fall due until after the Commissioner's order dated May 6, 1969 under Section-19. What the Section provides is that if any question arises in any proceeding under the Act as to the liability of any person to pay compensation or as to the amount or duration of the compensation it shall, in default of agreement, be settled by the Commissioner. There is therefore nothing to justify the argument that the employer's liability to pay compensation under Section-3, in respect of the injury, was suspended until after the settlement contemplated by Section 19. The appellant was thus liable to pay compensation as soon as the aforesaid personal injury was caused to the appellant, and there is no justification for the argument to the contrary.

(Emphasis supplied by me)

(ii) In the case of Kerala Electricity Board and Anr. v. Valsala K. and Anr. : (1999)IILLJ1112SC a Judgment rendered by a Bench of three Hon'ble Judges, overruled the ratio of law laid down by the Bench of two Hon'ble Judges in the case of New India Assurance Co. Ltd. v. V.K. Neelakandan C.A No. 16904-09 of 1996 and it was held as follows:

Various High Courts in the country, while dealing with the claim for compensation under Workmen's Compensation Act have uniformly taken the view that the relevant date for determining the rights and liabilities of the parties is the date of the accident.

A four-Judges Bench of this Court in Pratap Narain Singh Dev v. Srinivas Subata speaking through Shinghal, J. has held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman by the accident which arose out of and in the course of employment. Thus, 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.

A two-Judges Bench of this Court in New India Assurance Co. Ltd. v. V.K. Neelakandan (Supra) however, took the view that the Workmen's Compensation Act being a special legislation for the benefit of the Workmen, the benefit is available on the date of adjudication should be extended to the workmen and not the compensation which was payable on the date of the accident. The two-Judge Bench in Neelakandan case however, did not take notice of the Judgment of the larger Bench in Pratap Narin Singh Deo case as it presumably was not brought to the notice of their Lordships. Be that as it may, in view of the categorical law laid down by the larger Bench in Pratap Singh Deo case the view expressed by the two-Judge Bench in Neelakandan Case is not correct.

Our attention has also been drawn to a Judgment of the Full Bench of the Kerala High Court in United India Insurance Co. Ltd. v. Alavi wherein the Full Bench precisely considered the same question and examined both the above-noted Judgments. It took the view that the injured workman becomes entitled to get compensation the moment he suffers personal injuries of the types contemplated by the provisions of the Workmen's Compensation Act and it is the amount of compensation payable on the date of the accident and not the amount of compensation payable on account of the amendment made in 1995, which is relevant. The decision of the Full Bench of the Kerala High Court, to the extent it is in accord with the Judgment of the larger Bench of this Court in Pratap Narain Singh Deo v. Srinivas Sabata lays down the correct law and we approve it.

(Emphasis supplied by me)

(iii) In the case of L.R. Ferro Alloys Ltd. v. Mahavir Mathto and Anr. : (2001)ILLJ181SC , the contention considered was with regard to the liability to pay the penalty and interest. It was held therein that, payment of interest and penalty are two distinct liabilities arising under the Act, while liability to pay interest is part and parcel of legal liability to pay the compensation upon default of payment of that amount within one month. Therefore, claim of compensation along with interest will have to be made good by the insurance company with the insured-employer.

(iv) In the case of Oriental Insurance Company Ltd. v. Ningachari and Anr. : (2000)IILLJ538Kant , the point considered was, 'whether fastening of liability to pay the interest on the insurance company is illegal?'. In that case, the question for consideration was not only quantification of compensation by the Commissioner, but also payment of interest. Considering effect of the expression 'fell due' occurring in Section 4A(3) of the Act it was held as follows:

Thus, a specific meaning has been attained by the 'fell due' expression by means of amendment of the statue by introducing Sub-section (3) (a). In view of the matter, the interest would accrue 30 days after the date of accident and not from the date of quantification. The award of Workmen's Compensation Commissioner which hold that the interest is payable from the date accident should be modified and held that falls due only after 30 days from the date of accident i.e., in the instant case from 22.06.1996.

(Emphasis supplied by me)

(v) In the case of National Insurance Company v. Mubasir Ahmed and Anr. (Supra), it has been held that, starting point for payment of interest would arise on completion of one month from the date it 'fell due' and unless there is an adjudication, the question of the amount falling due does not arise.

(vi) In the case of Kamala Chaturvedi v. National Insurance Company (Supra), following the decision rendered in the case of National Insurance Company v. Mubasir Ahmed (Supra), it has been held that, the liability for payment of interest would be in terms of what has been stated in paragraph-9 of the earlier Judgment.

(vii) In the case of New India Assurance Company v. Manphool Singh and Ors. , it has been held that, interest becomes payable, is not from the date of order/award of the Commissioner, but on expiry of one month from the date injury was sustained by the Workmen.

7. In a situation where there is a conflict between two decisions of the Supreme Court, the question as to, whether, it is the latter of the two decisions or the decisions of the larger Benches which rendered those decisions be followed by the High Courts and other courts in the country, came up for consideration before the larger Full Bench of this Court in the case of Govindnaik G. Kalaghatigi v. West Patent Press Co. Ltd. and Anr. AIR 1980 Kar 92 wherein the said question has been answered as follows:

If two decisions of the Supreme Court on a question of law cannot be reconciled and one of them is by a larger Bench while the other is by a smaller Bench, the decision of the larger Bench whether it is earlier or later in point of time, should be followed by High Courts and other Courts, However, if both such Benches of the Supreme Court consist of equal number of Judges, the later of the two decisions should be followed by High Courts and other Courts.

(Emphasis supplied by me)

8. Keeping in mind the ratio of law laid down in the case referred to supra, it is just and necessary to state that the larger Bench decision in the case of Pratap Narain Singh Deo (Supra) appears to have not been brought to the notice of the Hon'ble Supreme Court, when the decision in the case of National Insurance Company Ltd. v. Mubasir Ahmed and Kamala Chaturvedi's Case (Supra) were delivered. The said two decisions are by Benches of two Hon'ble Judges of the Apex Court, whereas, the ratio of law laid down in the case of Pratap Narain Singh Deo's case, which has been followed in the subsequent cases, was rendered by a quorum of more than two Hon'ble Judges. Under Article-141 of the Constitution of India, the Judgment of the Hon'ble Supreme Court is binding on all the Courts in the country. However, in the event if there is a conflict on the question of law in two decisions, while considering the question of law on the point and interpretation of statute, this Court is required to follow the course of action as has been laid down by the larger Full Bench of this Court in the case of Govindanaik G Kalaghatigi (supra).

9. In view of the ratio of law laid down by the Apex Court in the case of Pratap Narain Singh Deo's (Supra), which is the binding precedent in regard to the expression 'fell due' appearing in Section-4-A(1) and (3) of the Act, following and applying the said ratio to the facts of the present case, it has to be held that the amount of compensation becomes due on expiry of one month from the date of accident and if the same is not paid or deposited, interest becomes payable after the expiry of one month period from the date of the workmen sustaining injuries due to an accident in the course of his employment and not after 30 days from the date of order/award passed by the Commissioner. The learned Commissioner has erred in not applying the law, as enunciated in the case of Pratap Narain Singh Deo (supra) and in not awarding the interest after expiry of 30 days from the date of the accident. Hence, the contentions of the learned Counsel for respondent are unacceptable. Substantial question of law stands answered accordingly.

10. The other contention raised by the learned Counsel for the appellant with regard to the determination of the compensation by the Commissioner, is devoid of merit, since the Commissioner has on proper appreciation of the evidence on record, assessed the compensation payable to the deceased/injured Workmen, by correctly reckoning the wages, age and after applying the relevant factor.

In view of the foregoing discussion, I pass the following:

ORDER

i) Both the appeals are allowed in part.

ii) In modification of the Judgment award dated 24.07.2007 & 30.06.2007 passed by the Labour Officer and Commissioner for Workmen Compensation, Gulbarga in case Nos. KAGU/KANAPA/NAFA/44/2007 & KAGU/KANAPA/NAFA/113/2006 respectively, it is held that the amount as determined and awarded by Commissioner shall carry interest at the rate of 12% per annum, after expiry of 30 days from the date the accident occurred in the course of employment.

iii) The respondent-Insurance companies in both the appeals, shall be liable to pay the interest at 12% per annum on the amount awarded by the Commissioner.

iv) Parties shall incur their respective costs.