EMPLOYMENT LAW UPDATE
7th FEBRUARY 2022
Issue No. 23/21-22
EMPLOYEE COMPENSATION AND INTEREST SHALL BE PAYABLE FROM THE DATE OF ACCIDENT AND NOT FROM THE DATE OF ADJUDICATION OF CLAIM
A Division Bench of the Hon’ble Supreme Court of India (“SC”) in Ajaya Kumar Das & Anr. v. Divisional Manager & Anr.[1] has reiterated that compensation payable under the Employees Compensation Act, 1923 and the interest on the said compensation would fall due from the date of the accident and not from the date of the adjudication of the claim.
Brief Facts
In this matter, the appellant, a labourer, suffered severe injuries in a truck accident during the course of his employment. Subsequently, a claim was filed before the Workmen Compensation – cum – Assistant Labour Commissioner, Odisha (“Labour Commissioner”) which was allowed on the grounds that in spite of all the possible treatment, the appellant was permanently disabled up to 85%, which would reduce his earning capacity up to 100%. The Labour Commissioner awarded compensation and directed interest at the rate of 12% be paid on the same from the date of the accident to the date of deposit.
The first respondent, i.e. the insurer, subsequently filed an appeal before the Hon’ble Odisha High Court (“Odisha HC”), which was dismissed on the grounds of delay; however, the Odisha HC took a view that the appellants were not entitled to any interest on the compensation awarded, except the accrued interest. A review of this finding was sought, however the same was dismissed on the ground that the appellant had withdrawn the entire awarded amount along with the accrued interest.
Findings of the SC
The SC took the view that the Odisha HC was not entitled to interfere with the order passed by the Labour Commissioner on merits as it had already dismissed the appeal filed by the insurer on the grounds of limitation. The SC further observed that the Odisha HC had erred on merits as well.
On a reading of Section 4A of the Employee’s Compensation Act, 1923, the Commissioner must direct the employer to pay interest at 12% or a higher rate, not exceeding the lending rates of any scheduled banks specified, if the employer does not pay the compensation within one month from the date it fell due.
The SC relied on its earlier decisions passed in Saberabibi Yakubhai Shaikh v. National Insurance Co. Ltd.[2] wherein it was held that interest shall be paid on the compensation from the date of the accident and not from the date of the adjudication of the claim. The SC further relied on its decision in Oriental Insurance Co. Ltd. v. Siby George[3], which held that compensation would be payable from the date of the accident. The SC also reiterated its judgment in P. Meenaraj v. P. Adiguruswamy & Anr.[4] which rejected the argument that the award of interest should be after the expiry of 30 days from the date of the accident and held that the applicant is entitled to interest from the date of the application.
A copy of the judgment may be accessed here.
| Disclaimer: This newsletter is for general information only and not intended for any solicitation. Views expressed in this newsletter are as on date and not necessarily of V Law Partners (“VLaw”). While reasonable efforts have been taken to provide correct information, VLaw cannot and does not warrant or guarantee the accuracy of the information provided in the newsletter. Readers are advised not to rely solely on this information when making any decision.
Suggestions: If you do not wish to receive our newsletters or have any comments or suggestions for us, please write to us at – admin@vlawpartners.com |
[1] Civil Appeal No. 447 of 2022
[2] (2014) 2 SCC 298
[3] (2012) 12 SCC 540
[4] Civil Appeal No. 209 of 2022