REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    3486          OF 2009 (Arising out of SLP (C) No.11215 of 2006)

Oriental Insurance Co. Ltd. … Appellants

Versus

Mohd. Nasir & Anr. … Respondents

WITH CIVIL APPEAL NOS.   3495,3496,3497 and  3484  

OF 2009 (Arising out of SLP (C) No.16171, 21012 of 2006, 74 of 2007  

and  2854 of 2008)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Applicability  of  the  respective  provisions  of  the  Workmen  

Compensation Act, 1923 (1923 Act) and Motor Vehicles Act, 1988 (1988  

Act) in respect of the claimants who had suffered disability is the question  

involved in this appeal.

3. The factual  matrix involved in these cases would be noticed by us  

separately.

SLP (C) NO.11215 OF 2006

First  respondent  in  this  appeal  was  the  driver  of  a  truck  bearing  

registration No.UP-21-9636.  Respondent No.2 was its owner.  An accident  

took place on 2.10.2004 wherein first respondent suffered an injury in his  

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right leg besides others.  He filed an application for award of compensation  

in  terms of  the  provisions  of  the  1923  Act  before  the  Commissioner  of  

Workmen Compensation, Moradabad claiming a sum of Rs.1,50,000/- with  

interest.  The Commissioner opined that although the workmen had suffered  

15% disability but loss of his earning capacity was 100%.  Noticing that he  

was aged about 35 years and his salary was Rs. 3,200/- per month, a sum of  

Rs. 3,78,355.20 was awarded with interest  at  the rate of 12% per annum  

from the date of accident till payment.

The High Court dismissed the appeal in limine.

SLP (C) NO.16171 OF 2006

Respondent No.1 was a cleaner in a truck.  It collided with a tanker  

on  17.7.2002  resulting  in  fracture  of  his  femur right  thigh.   Respondent  

No.1 was hospitalized from 19.7.2002 to 7.8.2002.  He filed claim petition  

under the 1923 Act for a sum of Rs.3,00,000/-.

By an  order  dated  8.9.2003,  the  Commissioner  awarded  a  sum of  

Rs.93,302/- on the premise that he was aged 22 years and his income was  

Rs.2003/-  per  month.   Although the disability was determined at  20% to  

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25%, the loss of earning capacity was determined at 35%.  The doctor who  

had  treated  him,  in  his  deposition,  stated  that  disability  of  the  first  

respondent was between 20% to 25%.   

The High Court, by reason of its impugned judgment dated 14.6.2006  

determined  his  loss  of  earning  capacity  at  60%  and  the  amount  of  

compensation, on the said premise, was enhanced to Rs.2,65,865.37.

SLP (C) NO.21012 OF 2006

First  respondent  was  hired  as  a  casual  labour  for  loading  and  

unloading.  The truck in which he was working collided with a stationary  

lorry as a result whereof he sustained injuries.  He filed claim petition under  

the 1923 Act claiming a sum of Rs.1,50,000/-  before  the  Commissioner.  

The Commissioner, by an order dated 29.4.2004 assessed his disability at  

40%.  However,  the  loss  of  earning  capacity  was taken to  be 80%.  An  

amount of Rs.2,17,169.83 was awarded as compensation.

An appeal preferred by the insurance company thereagianst has been  

dismissed by the High Court in terms of the impugned judgment.

SLP (C) NO.74 OF 2007

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Respondent  Nos. 1 and 2 were engaged for loading and unloading  

broken rice on casual basis in a lorry which collided with a stationary lorry  

resulting in sustaining injuries to respondent No.1.  He filed an application  

before the Workmen’s Compensation Commissioner claiming an amount of  

Rs.3,00,000/- as compensation.  His disability was assessed at 40% but loss  

of earning capacity was assessed at 80% by the doctor.  The Commissioner,  

by an order dated 29.4.2004 assessed the disability of the respondents  at  

80% and loss of earning capacity at 100%.  A sum of Rs.2,09,123/-  was  

awarded.   

By reason of  the  impugned judgment  the  High Court  affirmed the  

award.

SLP (C) NO.2854 of 2008

Respondent No.1 on 31.5.1995 was traveling in an Ambassador car  

which collided with a bus as a result whereof he sustained injuries.  He filed  

an  application  under  Section  166  of  the  1988  Act  claiming  a  sum  of  

Rs.18,00,000/- before the Motor Accident Claims Tribunal.  He was aged  

about 65 years.  He is a practicing advocate.  By an award dated 21.2.2002,  

the Tribunal assessed the permanent disability suffered by him at 50%.  A  

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sum of Rs.1,95,000/-  was  awarded  keeping in  view the  fact  that  he was  

unable  to work for 39 months.   A sum of Rs.50,000/-  was also awarded  

towards future loss of income.  In total, MACT awarded Rs.7,42,191/- with  

9% interest per annum.

On an appeal preferred thereagainst, the High Court, by reason of the  

impugned  judgment,  enhanced  the  amount  of  compensation  to  

Rs.12,37,191/- with 9% interest per annum.

4. The insurance company contends that its liability is only to the extent  

of percentage of disability of the person as provided by Section 4 of the  

1923 Act and the interest becomes payable with effect from one month after  

the date of adjudication by the Commissioner.

It was also stated that the insurance company had not filed any appeal  

before the High Court in the case of K. Srinivas Murthy satisfying the award  

given by the Tribunal.  The appellant has also deposited 50% of the amount  

of compensation enhanced by the High Court.  It was prayed that the said  

amount may be directed to be recovered.

It is also contended that the amount of compensation could not have  

exceeded the amount claimed.

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5. A question has been raised as to whether the percentage of loss of  

earning capacity and the physical disability shall be the same.

A question has furthermore been raised as regards applicability of the  

multiplier specified in the Second Schedule appended to the 1988 Act on  

the premise that the same would not be applicable in respect of the claim  

petition which is filed under Section 166 of the Act.

6. Before adverting to the questions raised before us, we may notice the  

statutory provisions contained in the 1923 Act and 1988 Act.

The  1923  Act  was  enacted  to  provide  for  the  payment  by  certain  

classes  of  employers  to  their  workmen  of  compensation  for  injury  by  

accident.   

‘Compensation’ has been defined in Section 2(c) of the 1923 Act to  

mean ‘compensation as provided therein.   

‘Partial disability’ has been defined in Section 2(g) as under :

“  ‘Partial  disablement’  means,  where  the  disablement  is  of  a  temporary  nature,  such  disablement as reduces the earning capacity of a  workman  in  any  employment  in  which  he  was  engaged at the time of the accident resulting in the  disablement,  and,  where  the  disablement  is  of  a  

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permanent nature, such disablement as reduces his  earning  capacity  in  every  employment  which  he  was capable of undertaking at that time : provided  that every injury specified (in Part II of Schedule  I] shall  be deemed to result  in permanent partial  disablement;”

‘Qualified medical practitioner’ has been defined in Section 2(i)  to  

mean :

“  ‘qualified  medical  practitioner’  means  any  person  registered  under  any  Central  Act,  Provincial  Act, or an Act of the Legislature of a  State providing for the maintenance of a register  of medical practitioners, or, in any area where no  such  last-mentioned  Act  is  in  force,  any  person  declared by the State Government, by notification  in the Official Gazette, to be a qualified medical  practitioner for the purposes of this Act;”

Section  3  provides  for  the  employer’s  liability  for  compensation.  

Section 4 deals with the amount of compensation, clauses (a), (b) and (c) of  

sub-section (1) whereof read as under :

“a)  Where  death  results  from the injury  

an amount equal to fifty per cent of  the monthly wages  of  the deceased  workman multiplied by the relevant  factor;  

or  

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an  amount  of  eighty  thousand  rupees, whichever is more;  

(b)  Where  permanent  total  disablement  results  from the injury  

an amount equal to sixty per cent of  the  monthly  wages  of  the  injured  workman multiplied by the relevant  factor;  

or  

an  amount  of  ninety  thousand  rupees, whichever is more;  

Explanation I.--For the purposes of clause (a) and  clause  (b)  "relevant  factor"  in  relation  to  a  workman means the factor specified in the second  column of Schedule IV against the entry in the first  column of that 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.--Where  the  monthly  wages  of  a  workman  exceed  four  thousand  rupees,  his  monthly wages for the purposes of clause (a) and  clause  (b)  shall  be  deemed  to  be  four  thousand  rupees only;  

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(c)  Where  permanent  partial  disablement  result from the injury  

(i) in the case of an injury specified  in  Part  II  of  Schedule  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 that  injury; and  

(ii)  in  the  case  of  an  injury  not  specified  in  Schedule  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.--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.--In  assessing  the  loss  of  earning  capacity  for  the  purpose  of  sub-clause  (ii),  the  qualified  medical  practitioner  shall  have  due  regard  to  the  percentages  of  loss  of  earning  capacity in relation to different injuries specified in  Schedule I.”

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We may notice that the First Schedule specified under Section 1(g)  

and Section 4 is in two parts.  Part I specifies the list of injuries deemed to  

result  in permanent total  disablement and Part  II  specifies  list  of injuries  

deemed  to  result  in  permanent  partial  disablement.   The  note  appended  

thereto reads as under :

“Note.—Complete and permanent loss of the use  of any limb or member referred to in the Schedule  shall be deemed to be equivalent of the loss of that  limb or member.”

The  Fourth  Schedule  appended  to  the  1923  Act  provides  for  the  

factors  for working out  lump sum equivalent  of compensation amount in  

case of permanent disablement and death.

7. The 1988 Act was enacted to consolidate and amend the law relating  

to  motor  vehicles.   Chapter  X provides  for  the  liability  without  fault  in  

certain cases.  Subsection (1) of Section 140, Section 142 and Section 143  

read as under :

“140—Liability to pay compensation in certain  cases  on  the  principle  of  no  fault—(1)  Where  death or permanent disablement of any person has  resulted from an accident arising out of the use of  a motor vehicle  or  motor  vehicles,  the  owner  of  the  vehicle  shall,  or,  as  the  case  may  be,  the  

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owners of the vehicles shall, jointly and severally,  be liable to pay compensation in respect  of such  death  or  disablement  in  accordance  with  the  provisions of this section.

XXX XXX XXX

142 - Permanent disablement—For the purposes  of this Chapter, permanent disablement of a person  shall be deemed to have resulted from an accident  of  the  nature  referred  to  in  sub-section  (1)  of  section 140 if such person has suffered by reason  of the accident, any injury or injuries involving:-

(a) permanent privation of the sight of either eye  or  the  hearing  of  either  ear,  or  privation  of  any  member or joint; or

(b)  destruction  or  permanent  impairing  of  the  powers of any member or joint; or

(c) permanent disfiguration of the head or face.

143 - Applicability of Chapter to certain claims  under  Act  8  of  1923—The  provisions  of  this  Chapter  shall  also apply in relation to any claim  for compensation in respect of death or permanent  disablement  of  any person  under  the  Workmen's  Compensation  Act,  1923  resulting  from  an  accident of the nature referred to in subsection (1)  of  section  140  and  for  this  purpose,  the  said  provisions shall, with necessary modifications, be  deemed to form part of that Act.”

Section 144 of the Act provides for a non obstante clause.

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Chapter XI deals with insurance of motor vehicles against third party  

risks.  Chapter XII of the Act provides for constitution of claims tribunal.  

Explanation appended to sub-section (1) of Section 165 provides that the  

expression ‘claims for compensation in respect of accidents involving death  

of  or  bodily  injury  to  persons  arising  out  of  the  use  of  motor  vehicles’  

includes claims for compensation under section 140 and Section 163-A of  

the 1988 Act.  The Second Schedule appended thereto framed in terms of  

Section  163-A  thereof  provides  for  compensation  for  third  party  fatal  

accidents/injury cases claims.  It specifies the amount of compensation in  

case of death on the basis of income of the deceased as also the age group.  

It also provides for applicability of multiplier.  The note appended thereto  

reads as under :

“5. Disability in non-fatal accidents :   

The  following  compensation  shall  be  payable  in  case of disability to the victim arising out of non- fatal accidents:   

Loss  of  income,  if  any,  for  actual  period  of  disablement not exceeding fifty two weeks.   

PLUS either of the following:--   

(a) In case of permanent total  disablement the  amount  payable  shall  be  arrived  at  by  multiplying the annual loss of income by the  

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Multiplier applicable to the age on the date  of determining the compensation, or   

(b)   In  case  of  permanent  partial  disablement  such  percentage  of  compensation  which  would  have  been  payable  in  the  case  of  permanent  total  disablement  as  specified  under item (a) above.   

Injuries  deemed  to  result  in  Permanent  Total  Disablement  /Permanent  Partial  Disablement  and  percentage of loss of earning capacity shall be as  per  Schedule  I  under  Workmen's  Compensation  Act, 1923.   

6. Notional income for compensation to those who  had no income prior to accident.—

Fatal and disability in non-fatal accidents: --  

(a) Non-earning persons – Rs.15,000 p.a.

(b)  Spouse    --  Rs. l/3rd of  income  of  the  earning/survivi ng spouse.

In case of other injuries only "general damage" as  applicable.”

8. Both, the 1923 Act and 1988 Act are beneficent legislation insofar as  

they provide for payment of compensation to the workmen employed by the  

employers and/or by use of motor vehicle by the owner thereof and/or the  

insurer to the claimants suffering permanent disability.

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9. The  amount  of  compensation  is  to  be  determined  in  terms  of  the  

provisions of the respective Acts.  Whereas in terms of the 1923 Act, the  

Commissioner  who  is  a  quasi  judicial  authority,  is  bound  to  apply  the  

principles  and  the  factors  laid  down  in  the  Act  for  the  purpose  of  

determining  the  compensation,  Section  168  of  the  1988  Act  enjoins  the  

Tribunal to make an award determining the amount of compensation which  

appears to be just.

10. Both the Acts aim at providing for expeditious relief to the victims of  

accident.  In these cases, the accidents took place by reason of use of motor  

vehicles.

Both the statutes are beneficial ones for the workmen as also the third  

parties.   The benefits  thereof  are  available  only to  the  persons  specified  

under the Act besides under the Contract of Insurance.

The statutes, therefore, deserve liberal construction.  The legislative  

intent  contained therein is required to be interpreted with a view to give  

effect thereto.

11. With the aforementioned backdrop, we may analyse the contentions  

raised before us by the learned counsel for the parties.

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Both  the  statutes  provide  for  the  mode  and  manner  in  which  the  

percentage of laws of earning capacity is required to be calculated.  They  

provide that the amount of compensation in cases of this nature would be  

directly  relatable  to  the  percentage  of  physical  disability  suffered  by the  

injured vis-à-vis the injuries specified in the First Schedule of the 1923 Act.  

Indisputably where injuries are specified in the First Schedule, the mode and  

manner provided for the purpose of calculating the amount of compensation  

would be applicable.

12. The  statutes  provide  for  determination  of  the  extent  of  physical  

disability suffered by a qualified medical practitioner so as to enable him to  

assess the loss of earning capacity.  Explanation 1 appended to clause (c) of  

sub-section (1) of Section 4 provides that where there are more injuries than  

one, the aggregate amount of compensation has to be taken but the same  

should not exceed the amount which would have been payable in case of  

permanent total disablement.   

It  is  also  beyond  any doubt  or  dispute  that  while  determining  the  

amount of loss of earning capacity, the Tribunal  or the High Court  must  

record reasons for arriving at their conclusion.

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The 1923 Act which would also be the claims applications arising out  

of use of motor vehicles in terms of the provisions of 1988 Act would for  

the  purpose  of  determination  of  the  amount  of  compensation  where  the  

victim of the accident suffers from disability in the cases coming within the  

purview thereof.  The Note appended to the Second Schedule of the 1988  

Act raises a legal fiction, stating that ‘injuries deemed to result in Permanent  

Total Disablement/Permanent Partial Disablement and percentage of loss of  

earning  capacity  shall  be  as  per  Schedule  I  under  the  Workmen’s  

Compensation  Act,  1923’.   Permanent  disability,  therefore,  for  certain  

purposes have been co-related with functional disability.   

13. As to what, therefore, in our opinion, would be relevant is to find out  

the nature of injuries and as to whether the same falls within the purview of  

Part I or Part II thereof.  We have noticed hereinbefore that whereas Part I  

specifies  the  injuries  which  would  deem  to  result  in  permanent  total  

disablement, Part II specifies injuries which would be deemed to result in  

permanent  partial  disablement.   The  distinction  between  the  ‘permanent  

total disablement’ and ‘permanent partial disablement’ is that whereas in the  

former it is 100% disablement, in the latter it is only the disablement to the  

extent specified in the Schedule.

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14. Similar terms have been used in clauses (a) and (b) of paragraph 5 of  

the  Second  Schedule  of  the  Motor  Vehicles  Act.   It,  by  reference,  

incorporates  the  provisions  of  the  First  Schedule  of  the  1923  Act.  

Indisputably,  therefore,  the  Note  appended  thereto  would  not  only  be  

applicable to the cases falling under the 1923 Act but apply to the cases  

which fall under the 1988 Act as well.

15. Our attention, however, has been drawn to a decision of this Court in  

National Insurance Co. Ltd. v. Mubasir Ahmed & Anr. [(2007) 2 SCC 349],  

wherein it was held :

“8.  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.”

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16. In  determining  the  amount  of  compensation,  several  factors  are  

required  to  be  taken  into  consideration  having  regard  to  the  Note.  

Functional disability, thus, has a direct relationship with the loss of limb.   

Mohd. Nasir was a driver.  A driver of a vehicle must be able to make  

use of both his feet.  It was the case of the claimant that he would not be in a  

position to drive the vehicle and furthermore would not be able to do any  

other  work.  He was incapable of taking load on his body.  It,  however,  

appears that in his cross-examination, he categorically stated that only Chief  

Medical Officer had checked him in his office.  No disability certificate had  

been  granted.   He  admitted  that  he  had  not  suffered  any  permanent  

disability.  He, even according to the Chief Medical Officer who had not  

been examined, suffered only 15% disability.  The Tribunal has arrived at  

the following findings :

“On page 16 original  of  disability  certificate  the  prescription  of  medicine  X-Ray  report  of  Sarvodaya  and  of  Mohan  X-Rays  have  been  produced which reveals  the fracture of right  leg.  CMO certificate O/M 9/2003 dated 21.3.2005 has  also been produced which is alleged to be false by  insurance  Co.   I  have  perused  them  carefully  which bears signature of Deputy CMO officer of  disability Board, Moradabad had it shown that the  applicant  had  appeared  before  them for  medical  check  up  and  whose  examination  was  done  by  

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senior orthopedics surgeon Dr. R.K. Singh on the  basis of recommendation of Dr. Bansal operation  was done on 2.10.2004 the applicant walk with the  help of the support and is not competent to drive  the  heavy motor  vehicle  the  said  certificate  was  issued with recommendation that after six months  his condition is to be reviewed.

That document was filed on 29.3.2005.  Insurance  company  has  stated  the  doctor  who  has  issued  disability certificate has not been produced in the  court.  But looking into the aftermath situation the  plea of insurance company that the said certificate  is forged and the same has not been issued by any  MBBS doctor, carries no force.”

17. The learned Tribunal had held that there has been a 15% disability  

but then there was nothing to show that he suffered 100% loss of earning  

capacity.  The Commissioner has applied the 197-06 as the relevant factor,  

his age being 35.  He, therefore, proceeded on the basis that it was a case of  

permanent  total  disablement.   However,  his  income  was  taken  to  be  at  

Rs.1,920/- per month.  There is nothing on record to show that the qualified  

medical practitioner opined that there was a permanent and complete loss of  

use of his right leg or that he became totally unfit to work as a driver.  In  

that situation, the High Court, in our opinion, was not correct in determining  

the loss of income at 100%.

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In  Ramprasad Balmiki v.  Anil  Kumar Jain  & Ors. [(2008)  9  SCC  

492], wherein upon referring to the evidence of the Doctor who did not say  

that any permanent disability had been caused, this Court held :

“Be that as it may, the High Court, in our opinion,  correctly  proceeded  on  the  assumption  that  the  extent  of  permanent  disability  suffered  by  the  appellant is only 40% and not 100%.”

We, therefore, are of the opinion that the extent of disability should  

have been determined at 15% and not 100%.  The appeal is allowed to the  

aforementioned extent.

CA @ SLP (C) NO.16171 OF 2006

18. Shaik Baji was a cleaner of a truck.  He suffered an injury on the leg.  

The disability was determined at 20% to 25%.  The disablement was partial  

and not total.  There was no basis for the High Court to assess the loss of  

earning capacity at 60%.  Respondent No.1 being a cleaner, a frature in the  

leg suffered by him would not amount to loss of permanent use of the limb,  

i.e., the entire foot.  The note appended to the Second Schedule, therefore,  

has no application.

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Therefore, the judgment of the High Court is set aside and that of the  

Commissioner,  Workmen  Compensation  is  restored.   Appeal  is  allowed  

accordingly.

CA @ SLP (C) NO.21012 OF 2006

19. Accident occurred in this case by reason of the use of a vehicle.  Both  

the  claimants  were  casual  workmen.   Whereas  in  the  former  case  the  

disability was assessed at 40%, the loss of earning capacity was taken to be  

80%.  We do not know on what basis, the same was arrived at.  According  

to the doctor, he suffered injury.  The doctor having found the disability to  

the extent of 40% could not have determined the loss of earning capacity to  

80%.    

Therefore, the judgment and order of the High Court as well as the  

Commissioner to that extent cannot be sustained.  It is set aside accordingly.  

Appeal is allowed and the amount of compensation may be calculated on  

the said basis.

CA @ SLP (C) NO.74 OF 2007

20. In  this  case,  respondent  No.1  was  engaged  as  a  casual  labour  for  

loading and unloading the broken rice from a lorry.  The said lorry collided  

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with a stationed lorry as a result whereof respondent No.1 received injuries.  

The doctor assessed his physical disability at 40% and the loss of earning  

capacity as 80%.   

The  learned  Commissioner,  in  his  award,  assessed  the  physical  

disability at 80% and loss of earning capacity at 100%.  The High Court  

confirmed the award.  No reason has been assigned therefor.

The  impugned  judgment  and  order  of  the  High  Court  and  award  

passed by the learned Commissioner, thus, cannot be sustained and set aside  

accordingly.  Appeal is allowed to the said extent

CA @ SLP (C) NO.2854 of 2008 OF 2008

21. Respondent No.1 in this case met with an accident while traveling in  

an Ambassador Car which collided with a bus.  He sustained injuries.  He  

was  a  practicing  advocate.   Whereas  his  income  was  determined  at  

Rs.5,000/- per month.  For the purpose of awarding compensation as he had  

been  out  of  practice  for  39  months,  the  High  Court  determined  it  at  

Rs.10,000/-  per month.  It is on that basis multiplier of 5 had been applied.  

On what basis,  the High Court  came to the said conclusion has not been  

disclosed.  No reason has been assigned in support thereof.  

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Furthermore, if the principle laid down in the Second Schedule was to  

be applied, the loss of income could not have exceeded 52 weeks.   

He  had  suffered  50%  disability.   The  amount  of  compensation,  

therefore, should have been calculated by applying the multiplier of 5.   

We, therefore, are of the opinion that the matter should go back to the  

Tribunal for determination of the matter afresh.   The judgment of the High  

Court is set aside.

The matter, therefore, is remitted back to the Tribunal for deciding  

the matter afresh.

22. The second question which arises for consideration is with regard to  

the payment of interest.  There cannot be any doubt whatsoever that interest  

would  be  from the  date  of  default  and  not  from  the  date  of  award  of  

compensation.

Section 4A(3) of the 1923 Act reads as under :

“4A.  Compensation  to  be  paid  when due  and  penalty for default.—(1) and (2) …  

(3) Where any employer is in default in paying the  compensation  due  under  this  Act  within  one  

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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 per cent  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 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.--For the purposes of this sub-section,  “scheduled bank” means a bank for the time being  included  in  the  Second  Schedule  to  the  Reserve  Bank of India Act, 1934 (2 of 1934).”

23. The said provision,  as  it  appears  from a plain reading,  is  penal  in  

nature.  It,  however, does not take into consideration the chargeability of  

interest on various other grounds including the amount which the claimant  

would  have  earned  if  the  amount  of  compensation  would  have  been  

determined  as  on  the  date  of  filing  of  the  claim  petition.   Workmen  

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Compensation Act does not prohibit  grant of interest at a reasonable rate  

from the date of filing of the claim petition till  an order is passed.  Only  

when sub-section  (3)  of  Section  4A would  be attracted,  a higher  rate  of  

interest would be payable wherefor a finding of fact as envisaged therein  

has to be arrived at.  Only because in a given case, penalty may not be held  

to  be  leviable,  by  itself  may  not  be  a  ground  not  to  award  reasonable  

interest.

Reliance has been placed on Mubasir Ahmed (surpa), wherein it was  

held :

“8.  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 4A  was dealt with by this Court in  Maghar Singh v.  Jashwant Singh [(998) 9 SCC 134]. By Amending  Act,  14  of  1995,  Section  4A  of  the  Act  was  amended,  inter  alia,  fixing  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  4A(1)  prescribes  that  

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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 4A. 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.”

As threin this aspect of the matter has not been considered, we are of  

the opinion that interest will also payable at the rate of 7½ % per annum  

from the date of filing of the application till the date of award.  The rate of  

interest  thereafter  shall  be  payable  in  terms  of  the  order  passed  by  the  

Commissioner.   

24. However,  in  the  cases  determined  under  the  Motor  Vehicles  Act,  

interest stipulated therein shall become payable.

25. The third question which had been raised is as to whether any amount  

could be directed to be paid in excess of the amount claimed.  We have  

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noticed hereinbefore that the Act is a beneficent legislation.  It imposes a  

statutory duty upon the Commissioner and/or the Tribunal.

Reliance has been placed in this behalf on a decision of this Court in  

Shyama Devi v. Union of India & Anr. [(2005) 12 SCC 217], wherein it was  

held :

“6. So  far  as  quantum  of  compensation  is  concerned,  the  Presiding  Officer  has  recorded  a  finding that the deceased was earning Rs 1600  and was aged 56 years at the time of his death. On  the basis of his last wages and age, according to  Schedule IV of the Workmen’s Compensation Act,  1923, a total sum of Rs 1,05,560 was payable  as  compensation  on  the  death  of  the  deceased  but  since the claim was made for Rs 84,448,  we  will restrict the award for the aforesaid sum as has  been claimed in the claim petition. Apart from the  above  quantum  of  compensation,  the  appellant  would be entitled to statutory interest payable on  this sum. The appeal is accordingly allowed. The  appellant is awarded compensation in the sum of  Rs 84,448 with statutory interest under Section  4-A(3) of the Workmen’s Compensation Act. The  amount  shall  be  paid  by  the  Railways  within  a  period of eight weeks.”

26. No principle of law has been laid down therein.  No reason has been  

assigned in support  of the said conclusion.   The said decision,  therefore,  

must be held to have been rendered in the facts and circumstance of the case  

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and not as a law laid down in terms of Article 141 of the Constitution of  

India.

27. The  function  of  Commissioner  is  to  determine  the  amount  of  

compensation as laid down under the Act.  Even if no amount is claimed,  

the Commissioner must determine the amount which is found payable to the  

workman.  Even in the cases arising out of the 1988 Act, it is the duty of the  

Tribunal  to arrive at a just  compensation having regard to the provisions  

contained in Section 168 thereof.

In Nagappa v. Gurudayal Singh & Ors. [(2003) 2 SCC 274], it is held:

“20.  Similarly,  the  High  Court  of  Punjab  and  Haryana  in  Devki  Nandan  Bangur  and  Ors.  v.   State  of  Haryana  and  Ors. [1995  ACJ  1288]  observed  that  the  grant  of  just  and  fair  compensation  is  statutory  responsibility  of  the  Court and if, on the facts, the Court finds that the  claimant  is  entitled  to  higher  compensation,  the  Court  should  allow  the  claimant  to  amend  his  prayer and allow proper compensation.

21. For the reasons discussed above, in our view,  under  the  M.V.  Act,  there  is  no  restriction  that  Tribunal/Court  cannot  award  compensation  amount  exceeding  the  claimed  amount.  The  function  of  the  Tribunal/Court  is  to  award  'Just'  compensation which is reasonable on the basis of  evidence  produced  on  record.  Further,  in  such  cases there is no question of claim becoming time  

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barred or it cannot be contended that by enhancing  the  claim  there  would  be  change  of  cause  of  action. It is also to be stated that as provided under  Sub-section  (4)  to  Section  166,  even  report  submitted  to  the  Claims  Tribunal  under  Sub- section  (6)  of  Section  158  can  be  treated  as  an  application for compensation under the M.V. Act.  If required, in appropriate cases, Court may permit  amendment to the Claim Petition.”

In  Syed Basheer Ahmed & Ors. v.  Mohd. Jameel & Anr. [(2009) 2  

SCC 225], this Court held :

“9. Section 168 of the Act enjoins the Tribunal to  make  an  award  determining  "the  amount  of  compensation which appears to be just." However,  the  objective  factors,  which  may  constitute  the  basis of compensation appearing as just, have not  been  indicated  in  the  Act.  Thus,  the  expression  "which appears to the just" vests a wide discretion  in the Tribunal  in the matter of determination of  compensation.  Nevertheless,  the  wide  amplitude  of such power does not empower the Tribunal to  determine  the  compensation  arbitrarily,  or  to  ignore settled principles relating to determination  of compensation.”

In National Insurance Co. Ltd. v. Laxmi Narain Dhut [(2007) 3 SCC  

700], this Court held :

“24. In the background of the statutory provisions,  one  thing  is  crystal  clear  i.e.  the  statute  is  beneficial one qua the third party.  But that benefit  

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cannot be extended to the owner of the offending  vehicle.   The  logic  of  fake  licence  has  to  be  considered differently in respect of the third party  and in respect of own damage claims.”

In  Punjab  State  Electricity  Board  Ltd. v.  Zora  Singh  and  Others  

[(2005) 6 SCC 776], this Court held:

“22. The administrative circulars as thence existed  as also the regulations indisputably require supply  of  electrical  energy to the agriculturists  within  a  period of two months from the date of receipt of  the  amount  asked  for  in  terms  of  the  demand  notice.  It  may  be  true  that  the  note  appended  thereto provides  that  the period specified therein  shall be subject to availability of requisite material  but the same does not absolve the appellant from  performing its statutory duties.

23.  In A.P. SRTC v.  STAT a Full  Bench of the  Andhra Pradesh High Court has noticed thus: (An  LT p.544, para 31)

“31[24].  The  meaning  of  ‘note’  as  per  P.  Ramanatha Aiyar’s Law Lexicon, 1997 Edn. is ‘a  brief  statement  of  particulars  of  some  fact’,  a  passage or explanation.”

24. The note, therefore, was merely explanatory in  nature  and  thereby  the  rigour  of  the  main  provision was not diluted.”

{[See also State of Haryana & Ors.  v.  Shakuntla Devi [2008 (13) SCALE  621]}.

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28. For the  reasons  aforementioned,  the Commissioner/Tribunal  should  

determine the amount of compensation in the respective cases in the light of  

the observations made herein.

29. The  appeals  are  accordingly  disposed  of.   In  the  facts  and  

circumstances of the case, there shall be no order as to costs.

……………………………….J. [S.B. Sinha]

..…………………………..…J.  [Dr. Mukundakam Sharma]

New Delhi; May 12, 2009

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