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While allowing an appeal filed by the heirs of a deceased sugarcane field labourer, the Supreme Court has held, "...the liability to pay the compensation would arise from the date on which the deceased died for which he is entitled to the compensation and therefore, the liability to pay the interest on the amount of arrears/compensation shall be from the date of accident and not from the date of the order passed by the Commissioner."

The Court set aside a Bombay High Court order wherein it was held that interest on the compensation awarded shall be calculated from the date after expiry of period of one month from January 25, 2017 i.e., the date of the order passed by the Commissioner.

Facts

The deceased was a sugarcane cutting labourer who while cutting the sugarcane, died of a snake bite. Since neither the sugar factory nor the contractor paid the compensation due and payable under the Employee’s Compensation Act, 1923, the legal heirs of the deceased filed a claim petition before the Commissioner Workmen’s Compensation, Beed and claimed Rs. 5 lakhs.

The Commissioner allowed the said application and directed payment of compensation amount of Rs.3,06,180/- alongwith simple interest @ 12% p.a. from the date of accident, i.e., November 29, 2009 till its full realization.  A penalty of 50% on the compensation amount, i.e., Rs. 1,53,090/- was also imposed.

The Bombay High Court had set aside the penalty and directed that the interest @ 12% p.a. shall become payable from the period after expiry of one month from the date of the order.

Supreme Court's Findings

A bench of Justices MR Shah and BV Nagarathna found that the High Court had not considered Section 4A(3)(a) of the Act, 1923, which deals with award of interest when the employer is in default.

It was further found that the liability to pay the interest on the amount of compensation due and payable was given under Section 4A(3)(a) and the penalty would be leviable under Section 4A(3)(b).

As per Section 4A(1), the top court held that compensation under Section 4 shall be paid as soon as it falls due.

"Therefore, on the death of the employee/deceased immediately, the amount of compensation can be said to be falling due. Therefore, the liability to pay the compensation would arise immediately on the death of the deceased," held the top court.

Thus while finding the order of the High Court to be unsustainable, the bench said,

"While directing the employer to pay the interest from the date of the order passed by the Commissioner, the High Court has not at all considered Section 4A(3)(a) and has considered Section 4A(3)(b) only, which is the penalty provision."

Cause Title: Shobha & Ors. vs The Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors