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CASE NO.: Appeal (civil)  5623 of 2006

PETITIONER: National Insurance Co. Ltd.                             \005..Appellant

RESPONDENT: Mubasir Ahmed & Anr.                                    \005.Respondents

DATE OF JUDGMENT: 01/02/2007

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T [With Civil Appeal Nos. 5625 of 2006 and Civil Appeal No.5624 of 2006]

Dr. ARIJIT PASAYAT, J.

       Challenge in these appeals is to the judgment rendered in  each case by learned Single Judge of the Andhra Pradesh High  Court. Respondent no.1 in each case was working as employee  of respondent no.2.  Each of them filed a claim petition under  Section 22 of the Workmen’s Compensation Act, 1923 (in short  the ’Act’) claiming compensation for alleged personal injuries  sustained in course of employment.  In each case the claimant  claimed to be either a labour or cleaner or driver of the vehicle  which was involved in the accident.  While respondent no.1 in  Civil Appeal No.5625 of 2006 claimed to be driver of the  vehicle No.APJ-1907, the respondent no.1 in Civil Appeal  No.5623 of 2006 claimed to be the cleaner of the vehicle.   Respondent no.1 in Civil Appeal No. 5624 claimed to be  employed in a different vehicle.  The claim petitions were  adjudicated by the Commissioner for Workmens’  Compensation and Assistant Commissioner of Labour,  Nizamabad (hereinafter referred to as the ’Commissioner’).    

In order to prove the nature of injuries sustained and the  alleged loss of earning capacity, a doctor was examined as  witness. The doctor who was examined, indicated the  percentage of permanent and temporary disablement,  functional disability and loss of earning capacity as follows:

Civil Appeal No. 5623 of 2006         Permanent/partial disability    :       65%               Functional disability                   :       65%         Loss of earning capacity                :       80% Civil Appeal No. 5624 of 2006         Permanent/partial disability    :       65%               Functional disability                   :       65%         Loss of earning capacity                :       65% Civil Appeal No. 5625 of 2006         Permanent/partial disability    :       65%               Functional disability                   :       70%         Loss of earning capacity                :       80%

       The appellant-insurer of offending vehicle did not  question correctness of the award made by the Commissioner.  The claimant in each case preferred an appeal under Section

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30 of the Act.  By the impugned judgment in each case the  High Court held that there was 100% loss of earning capacity  and, therefore, awarded compensation.  It also directed grant  of interest @ 12% p.a. from date of accident till actual  realization.   

       In support of the appeals,  learned counsel for the  appellant submitted that the judgment of the High Court  without any discussion on the loss of earning capacity is  clearly unsustainable, and in addition question of payment of  12% p.a. interest does not arise.  The rate of interest is high.   

Learned counsel for the respondents supported the  impugned order of the High Court in each case.

In order to decide the basic issues Sections 4 and 4-A of  the Act need to be noted.  They read as follows:

"4. Amount of compensation. \026 (1) Subject to  the provisions of this Act, the amount of  compensation shall be as follows, namely :

(a) where  death results  from the  injury an amount equal to  forty per cent of the  monthly wages of the  deceased workman  multiplied by the  relevant factor;  or  an amount of twenty  thousand rupees,  whichever is more;   

(b)  where  permanent total  disablement  results from injury   an amount equal to fifty  per cent of the monthly  wages of the injured  workman multiplied by  the relevant factor;  or  an amount of twenty- four thousand rupees,  whichever is more;   

Explanation I \026 For the purposes of Cl. (a) and  Cl. (b), "relevant factor", in relation to a workman  means the factor specified in the second column of  Sch. IV against the entry in the first column of the  schedule specifying the number of years which are  the same as the completed years of the age of the  workman on his last birthday immediately  preceding the date on which the compensation fell  due;

Explanation II \026 Where the monthly wages of a

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workman exceed one thousand rupees, his monthly  wages for the purposes of Cl. (a) and Cl. (b) shall be  deemed to be one thousand rupees only.

(c) where  permanent  partial  disablement  results from  the injury (i) in the case of an  injury specified in Pt. II  of Sch. I, such  percentage of the  compensation which  would have been  payable in the case of  permanent total  disablement as is  specified therein as  being the percentage of  the loss of earning  capacity caused by the  injury; and

(ii)  in the case of an  injury not specified in  Sch. I, such percentage  of the compensation  payable in the case of  permanent total  disablement as is  proportionate to the   loss of earning capacity  (as assessed by the  qualified medical  practitioner)  permanently caused by  the injury;   

   Explanation I \026 Where more injuries than one  are caused by the same accident, the amount of  compensation payable under this head shall be  aggregated but not so in any case as to exceed the  amount which would have been payable if  permanent total disablement had resulted from the  injuries.    Explanation II \026 In assessing the loss of  earning capacity for the purposes sub-clause (ii), of  the qualified medical practitioner shall have due  regard to the percentage of loss of earning capacity  in relation to different injuries specified in Sch.I;   

(d) Where  temporary  disablement,  whether total  or partial  results from  the injury  A half-monthly  payment or the sum- equivalent to twenty-five

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per cent of monthly  wages of the workman,  to be paid in accordance  with the provisions of  sub-section (2).  

              Xx                               xx                                 xx 4-A. Compensation to be paid when due and  penalty for default \026 (1) Compensation under  Sec. 4 shall be paid as soon as it falls due.   

(2) In cases where the employer does not  accept the liability for compensation to the  extent claimed, he shall be bound to make  provisional payment based on the event of  liability which he accepts, and, such payment  shall be deposited with the Commissioner or  made to the workman, as the case may be  without prejudice to the right of the workman  to make any further claim.

(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 may direct that, in addition to  the amount of the arrears, simple interest at  the rate of six per cent per annum on the  amount due together with, if in the opinion of  the Commissioner there is no justification for  the delay, a further sum not exceeding fifty per  cent of such amount, shall be recovered from  the employer by way of penalty."             These cases related to injuries which were not specified  in Schedule I and as such cases are covered by Section 4(1)(c)  (ii) Explanation.  In terms of Explanation II the qualified  medical practitioner has to assess loss of earning capacity  having due regard to percentage of loss of earning capacity in  relation to the different injuries in Schedule I. Explanation I  also provides that where there are more than one injury, the  aggregate has to be taken, so that the amount which would be  payable for permanent total disablement is not exceeded.

Loss of earning capacity is, therefore, not a substitute for  percentage of the physical disablement.  It is one of the factors  taken into account. In the instant case the doctor who  examined the claimant also noted about the functional  disablement.  In other words, the doctor had taken note of the  relevant factors relating to loss of earning capacity. Without  indicating any reason or basis the High Court held that there  was 100% loss of earning capacity. Since no basis was  indicated in support of the conclusion, same cannot be  maintained.  Therefore, we set aside that part of the High  Court’s order and restore that of the Commissioner, in view of  the facts situation.  Coming to the question of liability to pay  interest, Section 4-A(3) deals with that question. The provision  has been quoted above.           Interest is payable under Section 4-A(3) if there is default  in paying the compensation due under this Act within one  month from the date it fell due.  The question of liability under  Section 4-A was dealt with by this Court in Maghar Singh v.  Jashwant Singh (1998 (9) SCC 134).  By Amending Act, 14 of  1995, Section 4-A of the Act was amended, inter alia, fixing

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the minimum rate of interest to be simple interest @ 12%.  In  the instant case, the accident took place after the amendment  and, therefore, the rate of 12% as fixed by the High Court  cannot be faulted.  But the period as fixed by it is wrong.  The  starting point is on completion of one month from the date on  which it fell due.  Obviously it cannot be the date of accident.   Since no indication is there as when it becomes due, it has to  be taken to be the date of adjudication of the claim.  This  appears to be so because Section 4-A(1) prescribes that  compensation under Section 4 shall be paid as soon as it falls  due.  The compensation becomes due on the basis of  adjudication of the claim made.  The adjudication under  Section 4 in some cases involves the assessment of loss of  earning capacity by a qualified medical practitioner.  Unless  adjudication is done, question of compensation becoming due  does not arise.  The position becomes clearer on a reading of  sub-section (2) of Section 4-A.  It provides that provisional  payment to the extent of admitted liability has to be made  when employer does not accept the liability for compensation  to the extent claimed.  The crucial expression is "falls due".   Significantly, legislature has not used the expression "from the  date of accident".  Unless there is an adjudication, the  question of an amount falling due does not arise.             

The appeals are allowed to the extent indicated, without  any order as to costs.