SUPREME COURT RULES THAT THE INTEREST TO BE LEVIED ON COMPENSATION FROM THE DATE OF ACCIDENT, AND NOT FROM THE DATE OF THE ADJUDICATION OF THE AWARD

The Supreme Court has held in the case of North East Karnataka Road Transport Corporation vs. Smt. Sujatha, that the interest on compensation amount is to be levied from the date of accident, and not from the date of the adjudication of the Award.

Brief facts of the case are that one Mallikarjuna, a driver with the State Road Transport Corporation (SRTC) for the State of Karnataka, died on duty due to heart attack 06.04.1999. His wife filed a claim petition before the Commissioner under the Workmen’s Compensation Act, 1923 (“the Act”). The Commissioner allowed the claim petition and awarded a sum of Rs.3,79,120 (said amount) as compensation to the wife of the deceased, Mallikarjuna. ­ Along with the Award, a direction was laid down by Commissioner that SRTC has to deposit the awarded sum within 45 days, and if SRTC failed to deposit the said amount within 45 days, then it would be liable to incur an interest of 12% per annum on the Awarded sum.

Thereafter, against the Award allowed by the Commissioner, the SRTC moved the High Court of Karnataka (“The High Court”) for an appeal and the same was dismissed. Consequently, the SRTC filed a Special Leave Petition (SLP) in the Supreme Court.

It was observed by the Supreme Court that, an appeal under Workmen’s Compensation Act, 1923 (the Act) to the High Court against the order of the Commissioner is not similar to a Regular First Appeal akin to the Code of Civil Procedure, 1908 which can be heard both on facts and law. The appellate jurisdiction of the High Court can only examine the question of law in the case.

Therefore, when an appeal is filed by the aggrieved party (the employer) in the High Court, according to Workmen’s Compensation Act, 1923, the aggrieved party (the employer) is under a legal obligation to deposit the entire awarded sum in order to file an appeal.

It is only when the employer deposits the entire awarded money along with the memo of appeal duly certified by the Commissioner, his appeal is regarded as being properly filed in conformity with the requirement of the Act.

Then such appeal is heard on the fact whether it involves any substantial question of law or not; and whether it needs examination by the High Court. Thereafterthe High Court would admit the appeal for final hearing on merit, else it would dismiss the case in liminiwith the reason that it does not involve any substantial questions of law.

The Supreme Court with reference to the case of PratapNarain Singh Deo vs. Srinivas Sabata, 1976 AIR 222, held that, “when the personal injury is caused to a workman through an accident in the course of employment, then the employer becomes liable to pay the compensation as soon as the injury is caused to him, and that is date of the accident, not the date of the adjudication of claim”.

The Apex Court also observed that, contrary principle was appointed by the court in the case of, National Insurance Company Ltd vs. Mubasir Ahmed, 2007 AIR SC 1208 and Oriental InsuranceCompany Ltd. vs. Mohmad Nasir &Anr., 2009 AIR SC 3717, wherein the court held that “the payment of compensation would fall only after commissioner’s order with reference to the date on which the claim application was made.”

This principle was overruled by the Apex Court having said that, “the principle adopted in above cases has not adopted the correct principles of law”. That is why, it will not be considered as the binding precedent”.

Therefore, Supreme Court ruled in the favour of the claimant to the extent that the awarded sum of money will carry 12% interest per annum from the date of the accident, regardless of the fact whether it has been challenged by the claimant or not.

 Thus, the Apex Court held that “even though the respondent did not challenge this direction by filing any appeal in the High Court nor challenged it by filing any appeal in this Court too, yet the question being a pure question of law, this Court with a view to do substantialjustice to the respondent consider it just and proper to modify the order of the Commissioner in respondent’s favour so as to make the same in conformity with the law laid down by this Court in the above referred two decisions”.

Satyam Singh Pal

Associate

The Indian Lawyer