Report No. 134
3.3.1. Need to remove the injustice resulting from treating unequals as equals by deleting Explanation II to section 4.- The compensation payable to the injured workman or the dependants of the deceased workman is linked to the monthly wages drawn by him at the time of the occurrence. However, Explanation II to section 4 provides that where the wages of a workman exceed one thousand Rupees, his monthly wages for the purposes of clauses (a) and (b) shall be 'deemed' to be one thousand only. In other words, while a workman earning monthly wages exceeding Rs. 1,000 is entitled to compensation, the compensation has been delinked from his wages.
For the workman earning more than Rs. 1,000, whatever be the monthly wages, by a fiction introduced by the deeming provision contained in the Explanation, the compensation would be computed as if his monthly wages is only Rs. 1,000. Even if his monthly wages is Rs. 3,000, lie would be paid compensation as if he was earning only Rs. 1,000. Evidently, it is extremely unjust and unfair. A few facts relating to the historical background of this provision deserve to be stated. Before 1984, the Workmen's Compensation Act did not provide for compensation to workmen earning more than Rs. 1,000. In other words, they were not covered by the Act at all.
The National Commission on Labour, in order to extend coverage to such workmen also, in paragraph 13.22 of its report, recommended as under:-
"13.22. The monthly wage limit for coverage under the Act was raised from Rs. 400 to Rs. 500 by the Amendment Act of 1962. The supervisory staff and others drawing monthly wages exceeding Rs. 500 and employed in mines, manufacture of explosives and other similar operations are exposed to the same employment hazards as those within the monthly wage limit of Rs. 500. We consider that all workmen including supervisors employed in the occupations covered under the Act should be eligible without any wage limit for compensation for work-injury."
The Law Commission of India on its part, in its Sixty-second Report, recommended coverage to such workmen for the reasons reflected in para. 2.33:-
"2.33. The above comments for verbal improvements (with reference to the category, of railway servants) have been made on the assumption that the present separate category of railway servants is to be retained. It seems to us, however, that this matter itself requires serious consideration. The present scheme seems to constitute a discrimination between railway servants and other workmen similarly placed. A railway servant (if he satisfies certain conditions mentioned above) is net subject to a maximum regarding the wages. Others are so subject.
This discrimination is difficult to support in the face of Article 14 of the Constitution and on the merits, appears to be unjustified. We are therefore of the view that this discrimination should be removed and like railway servants, other employees (if they satisfy the other conditions of the definition) also should be brought within the Act if they fall within the Second Schedule irrespective of their wages."
3.3.2. It will thus be seen that the Law Commission had made the point that while railway employees, regardless of whether their monthly income was in excess of Rs. 1000 or not, would be entitled to compensation, the workmen in other employments of a hazardous nature who are covered by the Act would not be so covered. This would introduce hostile discrimination which would be obnoxious to Article 14 of the Constitution of India. Thus, the Law Commission as also the National Commission on Labour recommended coverage for all workmen who were employed in hazardous occupations listed in Schedule II of the Act.
The recommendation was for extending coverage so as to enable the injured workmen or dependants of a deceased workman to claim compensation irrespective of his monthly income (regardless of whether he was earning more than Rs. 1,000 under the Act). However, when in 1984, the Act was amended, whilst accepting the recommendation, a rider, not indicated or mooted either by the National Commission on Labour or by the Law Commission, was added as is evident from a reading of paragraphs 2 and 3 of the Statement of Objects and Reasons, which are reproduced below:-
"2. The Act at present applies to railway servants arid persons employed in certain hazardous employments specified in Schedule II of the Act and drawing wages not exceeding Rs. 1000 per month. The National Commission on Labour had recommended inter alia that the wage limit for coverage under the Act may be removed altogether. The Law Commission of India, which had also made a similar recommendation. It is, therefore, now proposed to do away with the wage limit for coverage altogether. It is likely to benefit a large number of workmen who are at present drawing wages exceeding Rs. 1000 per month."
"3. Section 4 of the Act provides for payment of compensation at the rates specified in Schedule IV of the Act. These rates of compensation were last revised in 1976 and there is a demand for its upward revision. Further, the amount of compensation is at present determined without reference to the age of the workman. This is not considered fair. It is, therefore, now proposed to provide for payment of compensation in terms of percentage of monthly wages linked to the age of the workman at the time of his disablement or death.
The proposed revised rates of compensation are based on the rates specified in the ILO Convention concerning Minimum Standards of Social Security, except that the compensation payable in respect of those drawing wages exceeding Rs. 1000 per month is proposed to be restricted to the amount payable on the wages of Rs. 1000 per month."
3.3.3. It needs to be stressed that the rider to restrict the amount payable on the fictional basis of Rs. 1,000 notwithstanding that the monthly wages of the workman were in excess of Rs. 1,000, was not referable to the recommendation of the Labour Commission. Nor was it warranted by the ILO Convention. The artificial pegging of the compensation by linking it to the deemed wages of Rs. 1,000 regardless of the actual wages being in excess of Rs. 1000 is prima facie unjust and unwarranted.
Since the scheme of compensation in Schedule IV evidences the formula of applying the specified multiple to the monthly wages of a workman (taking into account his age) it is difficult to justify the discriminatory treatment meted out to workmen earning monthly wages in excess of Rs. 1000. In para. 3 of Statement of Objects and Reasons extracted hereinabove, it is declared in no unclear terms that "it is now proposed to provide for payment of compensation in terms of percentage of monthly wages.".
Evidently the rationale of the formula is to compensate the injured workman or the dependants of the deceased workman for the loss of monthly wages of the injured or deceased workman. Obviously the loss of monthly wages in respect of a workman earning Rs. 2000 would be twice that in respect of a workman earning Rs. 1000. The family of the deceased workman who was earning Rs. 2000 would have to be compensated for a loss of that magnitude.
The greater the loss the greater is the need for the compensation. To make good the monthly loss of Rs. 2000 the compensation cannot be the same as needed to make good the monthly loss of Rs. 1000. To do so would be to treat two unequals as equals. An injured workman earning Rs. 2,000 would get the same compensation as an injured workman earning Rs. 1,000 though, such workman earning Rs. 1,000 would get twice the amount of compensation as compared to the workman earning Rs. 500.
Similar will be the fate of dependants of deceased workmen. Apart from the fact that the provision in question would be exposed to the charge of being violative of Article 14, it is difficult to justify it from the platform of logic philosophy, or ethics. This injustice prejudicially affects thousands of workmen as the wages have been revised upwards and very many more workmen are in the Rs. 1000 plus range in view of inflation.
There is, therefore, no escape from the conclusion that Explanation II to section 4 incorporated by Act 22 of 1984 with effect from July 1, 1984, which has introduced the fiction that the compensation should be computed on the basis that a workman was earning Rs. 1,000 even if his earning was in excess of that amount, must be deleted or repealed.