Interest Under Employee's Compensation Act Payable From Date Of Accident; Widow Entitled To Penalty For Delay: Jharkhand High Court

The Jharkhand High Court has held that interest on compensation under the Employees' Compensation Act is payable from the date of the accident and that where the employer fails to pay compensation within the statutory period without justification, penalty under Section 4A of the Act must also be awarded. Modifying an award passed by the Labour Court, the Court directed payment of interest from the date of the accident, imposed a 50% penalty and granted funeral expenses to the deceased employee's widow.

A Single Judge Bench of Justice Sanjay Kumar Dwivedi partly allowed an appeal filed by the widow of a deceased truck helper seeking enhancement of the compensation awarded by the Labour Court.

According to the appellant, her husband, Laxman Mandal, was travelling in a truck to unload stone chips at Bengabad on the instructions of his employer when the vehicle overturned due to the rash and negligent driving of its driver on May 26, 2012. He sustained serious injuries and died during treatment. An FIR was registered, the offending vehicle was seized and, after investigation, a chargesheet was filed against the driver.

The appellant thereafter filed proceedings under the Employees' Compensation Act claiming compensation on the ground that the deceased was employed as a truck helper, earning ₹6,000 per month along with a daily allowance of ₹50. The Labour Court awarded compensation of ₹5,83,270 and directed payment within 30 days.

Before the High Court, the appellant contended that the Labour Court had failed to award penalty under Section 4A of the Employees' Compensation Act, had not specified the date from which interest was payable, and had omitted to grant funeral expenses.

The Insurance Company argued that it was not liable to pay penalty and interest, relying on the Supreme Court's decision in L.R. Ferro Alloys Ltd. v. Mahavir Mahto.

The High Court noted that the occurrence of the accident, the death of the employee and the award of compensation were undisputed. It observed that although the Labour Court had directed payment of interest, it had failed to specify the date from which interest would run. The Court held:

“It is well known that interest in such type of cases are required to be paid from the date of accident i.e. 26.05.2012 and in view of that appellant shall be entitled for payment of interest in terms of Award from 26.05.2012 till the payment.”

Referring to Section 4A of the Employees' Compensation Act, the Court observed that the legislation is a beneficial statute and casts a duty upon the employer to pay compensation within one month from the date it falls due. The Bench noted that there was no justification for the employer's failure to pay compensation within the statutory period and held that the Labour Court ought to have considered the issue of penalty.

Observing that the appellant was the widow of the deceased employee, the Court said:

“The Act is a beneficial piece of legislation... particularly considering the fact that the death had occurred in the family and the widow who is the appellant may not be fully aware of the Act and the provisions therein.”

The Court also noted that the Supreme Court's decision in Jugal Kishor Ray v. Ashok Prasad Yadav had upheld grant of interest and penalty in similar circumstances. Since the Insurance Company had not challenged the original award, the appellant was held entitled to penalty. Accordingly, the High Court modified the Labour Court's award and directed: (i) payment of interest from May 26, 2012, the date of the accident, until actual payment; (ii) payment of a 50% penalty on the compensation amount, amounting to ₹2,91,635, within four weeks; and (iii) payment of ₹5,000 towards funeral expenses.

Case Title: Smt. Sudama Devi v. Amjad Nabib Khan and Ors.

Case Number: M.A. No. 81 of 2015.

Appearance: Mr. Arvind Kumar Lall appeared for the Appellant. Mr. Ashutosh Anand appeared for the Insurance Company.

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