National Insurance Co. Ltd. Vs. Mubasir Ahmed &Amp; Anr.  Insc 80 (1 February 2007)
Dr. ARIJIT PASAYAT & S.H. KAPADIA
[With Civil Appeal Nos. 5625 of 2006 and Civil Appeal No.5624 of 2006] Dr.
ARIJIT PASAYAT, J.
Challenge in these appeals is to the judgment rendered in each case by
learned Single Judge of the Andhra Pradesh High Court. Respondent no.1 in each
case was working as employee of respondent no.2. Each of them filed a claim
petition under Section 22 of the Workmen's Compensation Act, 1923 (in short the
'Act') claiming compensation for alleged personal injuries sustained in course
of employment. In each case the claimant claimed to be either a labour or
cleaner or driver of the vehicle which was involved in the accident. While
respondent no.1 in Civil Appeal No.5625 of 2006 claimed to be driver of the
vehicle No.APJ-1907, the respondent no.1 in Civil Appeal No.5623 of 2006
claimed to be the cleaner of the vehicle.
Respondent no.1 in Civil Appeal No. 5624 claimed to be employed in a
different vehicle. The claim petitions were adjudicated by the Commissioner for
Workmens' Compensation and Assistant Commissioner of Labour, Nizamabad
(hereinafter referred to as the 'Commissioner').
In order to prove the nature of injuries sustained and the alleged loss of
earning capacity, a doctor was examined as witness. The doctor who was
examined, indicated the percentage of permanent and temporary disablement,
functional disability and loss of earning capacity as follows:
Civil Appeal No. 5623 of 2006 Permanent/partial disability : 65% Functional
disability : 65% Loss of earning capacity : 80% Civil Appeal No. 5624 of 2006
Permanent/partial disability : 65% Functional disability : 65% Loss of earning
capacity : 65% Civil Appeal No. 5625 of 2006 Permanent/partial disability : 65%
Functional disability : 70% Loss of earning capacity : 80% The
appellant-insurer of offending vehicle did not question correctness of the
award made by the Commissioner.
The claimant in each case preferred an appeal under Section 30 of the Act.
By the impugned judgment in each case the High Court held that there was 100%
loss of earning capacity and, therefore, awarded compensation. It also directed
grant of interest @ 12% p.a. from date of accident till actual realization.
In support of the appeals, learned counsel for the appellant submitted that
the judgment of the High Court without any discussion on the loss of earning
capacity is clearly unsustainable, and in addition question of payment of 12%
p.a. interest does not arise. The rate of interest is high.
Learned counsel for the respondents supported the impugned order of the High
Court in each case.
In order to decide the basic issues Sections 4 and 4-A of the Act need to be
noted. They read as follows:
"Amount of compensation.
Subject to the provisions of this
Act, the amount of compensation shall be as follows, namely :
where death results from the injury
an amount equal to forty per cent of the monthly wages of the deceased workman
multiplied by the relevant factor;
or an amount of twenty thousand rupees, whichever is more;
where permanent total disablement
results from injury an amount equal to fifty per cent of the monthly wages of
the injured workman multiplied by the relevant factor;
or an amount of twenty- four thousand rupees, whichever is more;
Explanation I For the purposes of Cl. (a) and Cl. (b), "relevant
factor", in relation to a workman means the factor specified in the second
column of Sch. IV against the entry in the first column of the schedule
specifying the number of years which are the same as the completed years of the
age of the workman on his last birthday immediately preceding the date on which
the compensation fell due;
Explanation II Where the monthly wages of a workman exceed one thousand
rupees, his monthly wages for the purposes of Cl. (a) and Cl. (b) shall be
deemed to be one thousand rupees only.
where permanent partial disablement results from the injury (i) in the
case of an injury specified in Pt. II of Sch. I, such percentage of the
compensation which would have been payable in the case of permanent total
disablement as is specified therein as being the percentage of the loss of
earning capacity caused by the injury; and (ii) in the case of an injury not
specified in Sch. I, such percentage of the compensation payable in the case of
permanent total disablement as is proportionate to the loss of earning capacity
(as assessed by the qualified medical practitioner) permanently caused by the
Explanation I Where more injuries than one are caused by the same accident,
the amount of compensation payable under this head shall be aggregated but not
so in any case as to exceed the amount which would have been payable if
permanent total disablement had resulted from the injuries.
Explanation II In assessing the loss of earning capacity for the purposes
sub-clause (ii), of the qualified medical practitioner shall have due regard to
the percentage of loss of earning capacity in relation to different injuries
specified in Sch.I;
Where temporary disablement, whether
total or partial results from the injury A half-monthly payment or the sum-
equivalent to twenty-five per cent of monthly wages of the workman, to be paid
in accordance with the provisions of sub-section (2).
Xx xx xx 4-A. Compensation to be paid when due and penalty for default (1)
Compensation under Sec. 4 shall be paid as soon as it falls due.
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 event 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.
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 may direct that, in addition to the amount of the
arrears, simple interest at the rate of six per cent per annum on the amount due
together with, if in the opinion of the Commissioner there is no justification
for the delay, a further sum not exceeding fifty per cent of such amount, shall
be recovered from the employer by way of penalty."
These cases related to injuries which were not specified in Schedule I and
as such cases are covered by Section 4(1)(c) (ii) Explanation. In terms of
Explanation II the qualified medical practitioner has to assess loss of earning
capacity having due regard to percentage of loss of earning capacity in
relation to the different injuries in Schedule I. Explanation I also provides
that where there are more than one injury, the aggregate has to be taken, so
that the amount which would be payable for permanent total disablement is not
Loss of earning capacity is, therefore, not a substitute for percentage of
the physical disablement. It is one of the factors taken into account. In the
instant case the doctor who examined the claimant also noted about the
functional disablement. In other words, the doctor had taken note of the
relevant factors relating to loss of earning capacity. Without indicating any
reason or basis the High Court held that there was 100% loss of earning
capacity. Since no basis was indicated in support of the conclusion, same
cannot be maintained. Therefore, we set aside that part of the High Court's
order and restore that of the Commissioner, in view of the facts situation.
Coming to the question of liability to pay interest, Section 4-A(3) deals with
that question. The provision has been quoted above.
Interest is payable under Section 4-A(3) if there is default in paying the
compensation due under this Act within one month from the date it fell due. The
question of liability under Section 4-A was dealt with by this Court in Maghar
Jashwant Singh (1998 (9) SCC 134). By Amending Act, 14 of 1995, Section 4-A
of the Act was amended, inter alia, fixing the minimum rate of interest to be
simple interest @ 12%. In the instant case, the accident took place after the
amendment and, therefore, the rate of 12% as fixed by the High Court cannot be
faulted. But the period as fixed by it is wrong. The starting point is on
completion of one month from the date on which it fell due. Obviously it cannot
be the date of accident.
Since no indication is there as when it becomes due, it has to be taken to
be the date of adjudication of the claim. This appears to be so because Section
4-A(1) prescribes that compensation under Section 4 shall be paid as soon as it
falls due. The compensation becomes due on the basis of adjudication of the
claim made. The adjudication under Section 4 in some cases involves the
assessment of loss of earning capacity by a qualified medical practitioner.
Unless adjudication is done, question of compensation becoming due does not
arise. The position becomes clearer on a reading of sub-section (2) of Section
4-A. It provides that provisional payment to the extent of admitted liability
has to be made when employer does not accept the liability for compensation to
the extent claimed. The crucial expression is "falls due".
Significantly, legislature has not used the expression "from the date
of accident". Unless there is an adjudication, the question of an amount
falling due does not arise.
The appeals are allowed to the extent indicated, without any order as to