United India Insurance Company Limited v. Bindhu Venugopal and Others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **THE HONOURABLE MR.JUSTICE K.HARILAL &** **THE HONOURABLE MR. JUSTICE A.M.BABU** **THURSDAY, THE 2ND DAY OF NOVEMBER 2017 / 11TH KARTHIKA, 1939 MFA (WCC)No. 97 of 2013** **AGAINST THE ORDER/JUDGMENT IN WCC 6/2012 BEFORE THE COMMISSIONER FOR EMPLOYEE'S COMPENSATION, KOTTAYAM DATED 27-05-2013** **APPELLANT(S)/APPELLANT/2ND OPPOSITE PARTY** **UNITED INDIA INSURANCE LIMITED KOTTAYAM, NOW REPRESENTED BY ITS DEPUTY MANAGER, REGIONAL OFFICE, 'SHARANYA', HOSPITAL ROAD, KOCHI-11.** **BY ADVS.SRI.MATHEWS JACOB (SR.) SRI.P.JACOB MATHEW** ## **RESPONDENT(S)/RESPONDENTS/APPLICANTS :** ## **1. BINDHU VENUGOPAL** - **W/O. LATE VENUGOPALAN NAIR, KIZHAKKEPALLATH HOUSE, THEKKETHKAVALA, PONKUNNAM, NOW RESIDING AT KARIMUTTATHU HOUSE, KAVUMBHAGOM, CHERUVALLY, PONKUNNAM, PIN-686 320.** ## **2. RAHUL VENUGOPAL (MINOR)** - **S/O. LATE VENUGOPALAN NAIR, KIZHAKKEPALLATH HOUSE, THEKKETHKAVALA, PONKUNNAM, NOW RESIDING AT KARIMUTTATHU HOUSE, KAVUMBHAGOM, CHERUVALLY, PONKUNNAM, PIN-686 320.** **3. ROHIT VENUGOPAL (MINOR)** **S/O. LATE VENUGOPALAN NAIR, KIZHAKKEPALLATH HOUSE, THEKKETHKAVALA, PONKUNNAM, NOW RESIDING AT KARIMUTTATHU HOUSE, KAVUMBHAGOM, CHERUVALLY, PONKUNNAM, PIN-686 320. (MINOR RESPONDENTS 2 AND 3 ARE REPRESENTED BY THEIR LEGAL GUARDIAN FIRST RESPONDENT)** **R1-R3 BY ADV. SRI.T.K.RADHAKRISHNAN R1-R3 BY ADV. SRI.ANTONY PANATHOTTAM** **THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 02-11-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **K.HARILAL & A.M.BABU, JJ. “CR”** --------------------------- **M.F.A.(WCC) No.97 of 2013** --------------------------- _Dated this the 2[nd] day of November, 2017_ ## **JUDGMENT** ## _**Harilal, J.**_ United India Insurance Company Limited, the 2[nd] respondent in WCC.No.6/2012 on the files of the Commissioner for Employees' Compensation has filed this appeal challenging the legality and correctness of the findings of the Commissioner for Employees' Compensation. According to the applicants, the accident which culminated in the death of the deceased was arising out of and in the course of employment and thereby the first opposite party is liable to pay compensation to them. The applicants, who are the legal heirs of the deceased employee, filed the aforesaid application under section 22 of the Employees' Compensation Act, 1923 claiming compensation of Rs.5,84,800/- for the loss suffered by them owing to the death of the deceased employee. The parties are referred to as in the Workmen's Compensation Case. 2. According to them, the deceased employee by name Venugopalan Nair was employed under the first opposite party as a driver in his Jeep bearing Regn. No.KL-5/B-3182. On 7/3/2010 at 9.30 PM while he was driving the Jeep from Thekkethkavala after a trip to his residence through the 2 MFA (WCC) No. 97 of 2013 Chamampathal road and when it reached at Chirakkal Valavu, he lost control upon the vehicle and met with an accident. He sustained serious injuries and eventually he succumbed to the injuries. He was aged 52 years and was drawing a monthly wages of Rs.8,000/- at the relevant time. 3. First opposite party who employed the deceased has filed a written statement admitting the accident and the employer-employee relationship. It was also admitted that the accident was arising out of and in the course of employment. The second opposite party filed a written statement denying the employer-employee relationship between the first opposite party and the deceased. All the parties adduced evidence to prove their respective pleadings and after considering the evidence on record the Commissioner found that the accident was arising out of and in the course of employment and thereby the first opposite party is liable to pay compensation to the applicants. Since the first opposite party was insured with the second opposite party, he is liable to indemnify the first opposite party. With the above view the second opposite party was directed to deposit an amount of Rs.4,38,660/- with simple interest @ 12% with effect from 7/3/2010 within 30 days from the date of order, failing which the amount would be realised 3 MFA (WCC) No. 97 of 2013 with 30% of such amount towards penalty. 4. Heard the learned counsel for the appellant and the learned counsel for the respondents. 5. The learned counsel for the appellant focused his arguments firstly on the finding whereby the Commissioner fixed Rs.6,000/- as monthly wages of the deceased. It is contended that the accident occurred on 7/3/2010 and on that date the notification under section 1(b) of the Employees' Compensation Act, 1923 was not in force; it was published on 31/5/2010 only. Therefore, the Commissioner for Employees' Compensation ought to have taken Rs.4,000/- as monthly wages as the explanation (2) to sec.4(1) was in force on 7/3/2010, the date of accident. Thus, the Commissioner has fixed the monthly wages in contravention to the aforesaid explanation to section 4(1)(b). Further it is contended that since the notification as per Sec.4 (1) (b) was published with effect from 31.5.2010 only, the Commissioner for Workmen's Compensation ought to have fixed monthly wage at the rate of Rs.4000/- till 31.5.2010. In short, it is contended that even though the Explanation to Sec.4 (1) (b) was deleted with effect from 18.1.2010, the same continued to remain in force till 31.5.2010, the date of publication of notification under Sec.4 4 MFA (WCC) No. 97 of 2013 (1) (b). Therefore the Commissioner ought to have fixed the monthly wage at the rate of Rs.4,000/- per month only. Secondly, it is contended that the Commissioner for Workmen's Compensation invoked penalty clause envisaged under Sec.4 (a) (b) in the impugned order itself contrary to the proviso to Sec.4 (a) (b) of the Act. According to the learned counsel, the Commissioner for Workmen's Compensation went wrong by directing the second opposite party to pay penalty, on the failure to pay compensation amount with 12% interest within thirty days from the receipt of the order. The penalty could have been imposed on satisfaction that delay occurred in depositing the compensation amount without any justification. Therefore no penalty could be imposed along with the direction to deposit the amount of compensation within one month. _6. Per contra_ the learned counsel for the respondent/applicant advanced arguments to justify the findings whereby the Commissioner for Workmen's Compensation fixed monthly wage at the rate of Rs.6,000/- and imposed penalty in case the second opposite party fails to deposit the compensation amount within one month. 7. In view of the arguments at the bar, the first question to be considered is whether the Commissioner is 5 MFA (WCC) No. 97 of 2013 justified in taking Rs.6,000/- as monthly wages of the deceased in an accident occurred on 7.3.2010, when the Central Government by notification fixed monthly wages at the rate of Rs.8,000/- under Sec.4 (1) (b) on 31.5.2010 only. Going by Sec.4 (1) of the Employees Compensation Act, 1923, it is seen that Explanation 2 fixing a cap to the monthly wages of an employee at Rs.4,000/- was deleted with effect from 18.1.2010. But, the notification under Sec.4(1) (b) enhancing the maximum monthly wage to Rs.8,000/- was published with effect from 31.5.2010 only. Thus, no law was in force, fixing the maximum monthly wages, during the period from 18.1.2010 to 31.5.2010. Then the question is can the rule, which was deleted with effect from 18.1.2010, be enforced during the said period. We are of the opinion that when a law was deleted from the statute book with effect from a particular date, that law cannot be enforced from that date onwards. It is true that the law, whereby the maximum monthly wage was enhanced to Rs.8,000/- has come into force with effect from 31.5.2010 only. In the above context, the court ought to consider the aim and object of the deletion of the earlier provision and the introduction of the new provision. We are of the view that the deletion of Explanation 2 was made 6 MFA (WCC) No. 97 of 2013 consciously with a view that the fixation of Rs.4,000/- as maximum monthly wage was inadequate. The above view is supported by subsequent enhancement of the maximum monthly wage to Rs.8,000/-. Therefore, the maximum monthly wage of the period from 18.1.2010 to 31.5.2010 could be taken in consonance with the aim and object of the amendment and it cannot be otherwise. In the above analysis, we find that the Commissioner for Workmen's Compensation is justified in taking the maixmum monthly wage at Rs.8000/- from 18.1.2010, in consonance with the notification which was published with effect from 31.5.2010. 8. The above interpretation is justified by the principles of beneficial interpretation, which stands approved in **1988 (2) SCC 372 (Appukkuttan vs. Thundiyil Janaki Amma) and AIR 2015 (SC) 2434 (Sashikala Devi vs. Central Bank of India)** . In view of the above decisions, we are of the opinion that while interpreting the scope and application of an amendment enhancing benefits to the workman, the Court ought to keep in mind the legislative intent and eschew an interpretation which would tend to restrict, narrow down or defeat the enhanced benefit. 9. In the above analysis, the Commissioner for 7 MFA (WCC) No. 97 of 2013 Workmen's Compensation is justified in fixing the monthly wage at the rate of Rs.6,000/- per month, in the case of an accident occurred on 7.3.2010 and we do not find any reason to interfere with the said finding. 10. The next question to be considered is, can the penalty clause under Sec.4A (3) (b) of the Employees Compensation Act also be invoked along with the order under Sec.4A (3) (a) of the said Act, without giving an opportunity to the employer to show cause why penalty should not be imposed. The penalty clause provided under Sec.4A of the Employees Compensation Act, 1923 reads as follows: ## **4A. Compensation to be paid when due and penalty for default.-** (1) x x x x x x x x (2) x x x x x x x x (3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall- (a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve percent, per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the Central Government, by notification in the Official Gazette, on the amount due; and (b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per 8 MFA (WCC) No. 97 of 2013 cent, of such amount by way of penalty: Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. _Explanation._ - x x x x x x x 11. We have analyzed the scheme under sub-sec (3) of Sec.4A of the Act. Clause (a) of sub-sec (3) of Sec.4A of the Act grants power to the Commissioner to direct the employer to pay the amount of arrears with simple interest thereon at the rate of 12% per annum or at such rate not exceeding maximum of the lending rates of scheduled bank. Clause (b) to sub-sec (3) of Sec.4A directs that if there is no justification for any delay in depositing the arrears as provided under clause (a), the employer shall in addition to the amount of arrears and interest thereon pay a further sum not exceeding 50% of such amount by way of penalty. The proviso is very important and it obviously indicates the circumstance for which the penalty clause can be invoked. The proviso mandates that an order for payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed. Obviously, it is clear that no order imposing penalty could be passed along with the 9 MFA (WCC) No. 97 of 2013 order directing the employer to deposit the amount of the arrears with interest, without giving a reasonable opportunity to the employer to show cause why such an order should not be passed. That apart, the penalty clause provided under clause (b) to Sec.4A (3) of the Act could be invoked, if the Commissioner is satisfied that there is no justification for the delay. To sum up, a single composite order, directing the employer to pay the amount of compensation with interest and imposing penalty for the delay is impermissible, under Sec.4A(3) of the Employees Compensation Act, unless a reasonable opportunity is given to the employer to show cause why such an order imposing penalty also should not be passed and the Commissioner is satisfied that there is no justification for the delay. 12. When applying the above propositions to the instant case, we find that the Commissioner for Workmen's Compensation has invoked penalty clause directing the insurance company to pay penalty at 30% of the Compensation amount without granting an opportunity to show cause why such an order should not be passed. Consequently, we set aside the direction of the Commissioner for Workmen's Compensation imposing penalty at 30% of compensation 10 MFA (WCC) No. 97 of 2013 amount on the insurance company on the failure to deposit the compensation amount within thirty days from 27.5.2013. It is made clear that the direction to pay compensation with interest would stand undisturbed and if there is any delay in depositing the compensation amount, the Commissioner is at liberty to pass orders imposing penalty, after satisfying the requirements under Sec.4A (3) of the Act only, if desires so. Accordingly, this Miscellaneous First Appeal is partly allowed. Sd/- **K.HARILAL Judge** **sd/A.M.BABU Judge** _okb/sks/3.11.2017_