Supreme Court

Shobha & Ors. Vs. The Chairman, Vithalrao Shinde Sahakari Sakhar Karkhana Ltd. & Ors.

MANU/SC/0315/2022

11.03.2022

Labour and Industrial

Liability to pay the interest on compensation shall be from the date of accident

The heirs of the deceased – labourer working on sugarcane field have preferred the present appeal against the impugned judgment passed by the High Court by which the High Court has ordered that, the Respondents shall be liable to pay interest @ 12 per cent p.a. as leviable under Section 4A(3) of the Employee’s Compensation Act, 1923 (“Act, 1923”) from the date after expiry of period of one month from 25th January, 2017 (the date of the order passed by the Commissioner).

As per Section 4A of the Act, 1923 compensation under Section 4 of Act shall be paid as soon as it falls due. It can be seen that, the liability to pay the interest on the amount of compensation due and payable would be under Section 4A(3)(a) of the Act, 1923 and the penalty would be leviable under Section 4A(3)(b) of the Act, 1923. As per Section 4A(1) of the Act, 1923, compensation under Section 4 of Act 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.

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 impugned judgment and order passed by the High Court directing the employee to pay the interest on the amount of compensation as leviable under Section 4A(3)(a) of the Act, 1923 from the date of the order passed by the Commissioner, i.e., 25th January, 2017 is unsustainable. The impugned judgment passed by the High Court insofar as awarding the interest @ 12% p.a. after the period of expiry of one month from 25th January, 2017 is quashed. The Appellants herein – original claimants shall be entitled to the interest @ 12% p.a. on the amount of compensation as awarded by the Commissioner from the date of the incident. Appeal allowed.

Tags : Compensation Interest Entitlement

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