REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  7430       OF 2010 (@ SPECIAL LEAVE PETITION (C) No.10416 2008)

PALRAJ                      … APPELLANT

VS.

THE DIVISIONAL CONTROLLER, NEKRTC     … RESPONDENT

J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.  

2. The  sole  respondent  who  is  the  Divisional  

Controller,  North  East  Karnataka  Road  Transport

Corporation,  being  duly  represented  and  having  

regard to the facts involved in the appeal, the  

same was taken up for final disposal at the stage  

of admission itself.

3. The Appellant was employed as a Bus Driver in  

the Karnataka State Road Transport Corporation.  On  

10th October, 1998, the vehicle being driven by the  

Appellant,  met  with  an  accident  in  which  he  

sustained grievous injuries.  The Medical Officer  

who examined the Appellant came to the conclusion  

that the Appellant had suffered 65% of total body  

disability and 20% of functional disability.  The  

Commissioner, Workmen’s Compensation, however, took  

85% as functional disability for quantifying the  

compensation  payable  to  the  Appellant,  who  was  

admittedly  drawing  a  salary  of  Rs.15,000/-  per  

month on the date of the accident.

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4. It was also admitted that on account of the  

injuries  suffered  by  him,  the  Appellant  was  no  

longer able to drive a vehicle and the Corporation  

accordingly  appointed  him  as  a  Peon  in  the  

Corporation where he is drawing the same salary.  

Taking  the  above  percentage  of  disability,  both  

permanent and functional, the Commissioner made an  

Award  granting  compensation  amounting  to  

Rs.1,75,970/-,  together  with  interest  @12%  per  

annum from 10.11.1998 till the date of deposit, to  

the Appellant.     

5. Aggrieved by the compensation awarded by the  

Commissioner  to  the  Appellant  herein,  the  

Corporation through its Divisional Controller filed  

Misc. First Appeal No.3771 of 2003 in the Karnataka  

High Court.  The only question which was raised in  

the appeal was whether the percentage of disability  

taken by the Commissioner, Workmen’s Compensation,  

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Gulbarga, at 85% was against the weight of medical  

evidence adduced in the case.  The appeal was heard  

by the learned Single Judge of the Karnataka High  

Court who agreed with the case of the Respondent  

herein  that  the  Commissioner,  Workmen’s  

Compensation, had erroneously taken 85% to be the  

extent of disability suffered by the Appellant and  

that the same ought to have been 20% instead.  On  

such basis, the learned Single Judge modified the  

Award  passed  by  the  Commissioner,  Workmen’s  

Compensation,  and  reduced  the  amount  of  

compensation  from  Rs.1,75,970/-  together  with  

interest at the @12% per annum, to Rs.41,404.80p.  

It  was  also  held  that  the  Commissioner  had  

committed an error in awarding interest from the  

date  of  filing  of  the  claim  petition  and  the  

Appellant  was  entitled  to  interest  on  the  

compensation  amount  only  after  30  days  from  the  

date of passing of the Award.  The appeal was,  

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accordingly, allowed in part, and the Award passed  

by  the  Commissioner,  Workmen’s  Compensation,  was  

modified  and  reduced  from  Rs.1,75,970/-  to  

Rs.41,405/- together with interest @12% per annum  

on the said amount from 30 days after the date of  

the passing of the Award.  The amount which was in  

deposit  before  the  Court  was  directed  to  be  

transferred  to  the  Commissioner,  Workmen’s  

Compensation, Gulbarga, for disbursement.  It is  

the said order of the learned Single Judge, which  

has been challenged in this appeal.

6. On behalf of the Appellant it was contended  

that the doctors had certified that the Appellant  

was 100% disabled as far as his functioning as a  

Driver was concerned and that his total disability  

had  been  found  to  be  65%  while  his  functional  

disability was assessed at 20%.  Taking the two  

together  the  Commissioner,  Workmen’s  Compensation  

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had  found  the  Appellant  to  have  acquired  85%  

disability  that  entitled  him  to  a  sum  of  

Rs.1,75,970/- in accordance with Schedule IV of the  

Workmen’s  Compensation  Act,  1923,  by  taking  his  

monthly income as Rs.2,000/- in view of Explanation  

2 to Section 4 of the above Act and multiplying it  

with the multiplier of 172.52.

7. Mr.  Basava  Prabhu  S.  Patil,  learned  Senior  

counsel for the Appellant, also submitted that, in  

fact, the limit imposed by way of Explanation 2 to  

Section  4  had  been  increased  from  Rs.2,000/-  to  

Rs.4,000/- with effect from 8th December, 2000, and  

the amount of compensation awarded to the Appellant  

should  have  been  computed  on  the  basis  of  his  

monthly wages being Rs.4,000/-.  It was contended  

that the High Court had wrongly interfered with the  

compensation  of  the  Commissioner,  Workmen’s  

Compensation,  Gulbarga,  and  the  compensation  

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assessed by him.  It was submitted that the High  

Court  had  erred  in  granting  compensation  on  the  

basis of 20% functional disability thereby reducing  

the  figure  from  Rs.1,75,970/-  to  Rs.41,404.80p.  

Learned counsel for the Appellant submitted that  

the  order  of  the  Commissioner,  Workmen’s  

Compensation, Gulbarga, was liable to be restored.  

8. As opposed to the aforesaid submissions made on  

behalf of the Appellant, it was submitted by Ms.  

Hetu Arora, learned counsel appearing on behalf of  

the Respondent-Corporation, that in addition to the  

compensation awarded to the Appellant, he had also  

been given alternative employment as Peon in the  

establishment of the Corporation and was also being  

paid the same salary which he would have drawn if  

he had continued to be a Driver, so that despite  

his accident, the Appellant did not face any loss  

of earnings.  She also submitted that since the  

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Commissioner,  Workmen’s  Compensation,  had  

erroneously  confused  the  amount  of  functional  

disability  of  the  Appellant  as  against  his  

permanent  disability,  the  Commissioner  ought  to  

have taken the percentage of the disability of the  

accident  of  20%  and  not  85%,  after  taking  into  

consideration the fact that the Appellant had been  

provided  with  employment  as  a  Peon  in  the  

Respondent-Corporation,  where  he  was  drawing  the  

same salary as earlier.  Learned counsel for the  

Respondent submitted that the Appellant was also  

entitled  to  interest  as  awarded  on  the  reduced  

amount only after 30 days from the date of the  

passing of the Award.  On the aforesaid findings,  

the learned Single Judge allowed the appeal in part  

and modified the Award passed by the Commissioner,  

Workmen’s Compensation, Gulbarga from Rs.1,75,970/-  

awarded by the Commissioner to Rs.41,405/- awarded  

by the High Court.    

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9. While computing compensation for disabilities  

being suffered by a workman in the case of his  

employment,  it  is  the  functional  disability  

resulting in loss of earning capacity which is the  

criteria  which  is  followed  in  assessing  

compensation. The Workmen’s Compensation Act, 1923,  

hereinafter referred to as “the 1923 Act”, has its  

own formula in computing compensation on account of  

injuries  suffered  during  employment  which  is  

reproduced in Schedule I to the said Act.  In Part  

II  of  the  said  Schedule  the  loss  of  earning  

capacity in terms of percentage has been directly  

related to the loss of any of the limbs and parts  

thereof, both of the upper limbs as also the lower  

limbs. Loss of earning capacity is commensurate to  

the  injuries  suffered  and  the  loss  of  earning  

capacity as a result thereof.   

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10. In the instant case, it is no doubt true that  

the Appellant has lost his capacity to function as  

a driver, but with the help of external aids his  

mobility has, to some extent, been restored and he  

is able to perform work which is suitable to his  

physical condition after the accident.

11. In  the  Appellant’s  case,  by  virtue  of  the  

injuries suffered by him, his disablement as far as  

driving a vehicle is concerned is 100%, but that is  

not the measure of loss of his earning capacity.  

The Commissioner, Workmen’s Compensation, seems to  

have  confused  the  issue  by  combining  both  

functional disability and permanent disability in  

arriving at the figure of 85% by way of loss of  

earning capacity and has, therefore, arrived at a  

sum  of  Rs.1,75,970/-  towards  compensation.   The  

High  Court,  on  the  other  hand,  realizing  the  

mistake committed by the Commissioner, assessed the  

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loss of earning capacity as 20% instead of 85% and  

reduced the compensation payable from Rs.1,75,970/-  

to  Rs.41,404.80p.  and  awarded  interest  on  the  

compensation amount only after 30 days of passing  

of the Award.   

12. Section  4  of  the  1923  Act  which  had  been  

referred to by Mr. Basava Prabhu S. Patil, learned  

Senior Counsel for the Appellant, provides for the  

amount  of  compensation  payable  to  a  workman  in  

different  contingencies.   Section  4(1)(c)(ii)  

provides as follows :

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

(a) ……………………

(b) ……………………

(c)  Where  permanent  partial  disablement  result from the injury

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(i)  in  the  case  of  an  injury  specified in Part II of Schedule  I, such percentage of the compen- sation  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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13. The  aforesaid  provision  would  indicate  that  

where  a  workman  suffers  injury  which  is  not  

specified in Schedule I to the Act, compensation is  

to  be  assessed  on  such  percentage  of  the  

compensation payable in the case of permanent total  

disablement  as  is  proportionate  to  the  loss  of  

earning capacity, permanently caused by the injury  

as assessed by a qualified medical practitioner.  

Since in the instant case, the nature of injury  

suffered  by  the  Appellant  is  not  specified  in  

Schedule I, the compensation has necessarily to be  

assessed  on  the  basis  of  the  loss  of  earning  

capacity caused by the injury which could amount to  

100% disablement in a given case.  In the instant  

case, however, although the Appellant has lost the  

use  of  his  legs  for  the  purpose  of  driving  a  

vehicle,  which  could  be  said  to  be  total  

disablement  so  far  as  driving  of  a  vehicle  is  

concerned, he is in a position to earn a living  

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other than by functioning as a driver, which, in  

fact, he is currently doing, having been posted as  

a Peon by the Respondent.

14. Accordingly,  apart  from  the  fact  that  the  

Commissioner, Workmen’s Compensation, had confused  

the  concept  of  functional  disablement  with  

permanent disablement in arriving at the figure of  

85% loss of earning capacity, we also have to take  

into  consideration  the  fact  that  the  injury  

suffered  by  the  Appellant  did  not  disable  him  

permanently from earning his living other than as a  

driver.  We, therefore, are of the view that the  

percentage  of  functional  disablement  has  to  be  

modified,  since  the  Appellant  is  permanently  

disabled as far as earning a livelihood as a driver  

is concerned.

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15. As far as the question of payment of interest  

is concerned, reference may be made to Section 4-A  

of the 1923 Act, which is reproduced hereinbelow :

“4A. Compensation to be paid when due and  penalty  for  default.-  (1)  Compensation  under section 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  extent 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 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  

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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).  

(3A)  The  interest  and  the  penalty  payable  under  sub-section  (3)  shall  be  paid to the workman or his dependant, as  the case may be.”

16. It will be evident that compensation assessed  

under Section 4 is to be paid as soon as it falls  

due  and  in  case  of  default  in  payment  of  the  

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compensation  due  under  the  Act  within  one  month  

from the date when it falls due, the Commissioner  

would  be  entitled  to  direct  payment  of  simple  

interest  on  the  amount  of  the  arrears  @12%  per  

annum or at such higher rates which do not exceed  

the maximum lending rates of any scheduled Bank as  

may be specified by the Central Government.  Both  

the Commissioner, Workmen’s Compensation, as also  

the  High  Court,  therefore,  rightly  held  that  

interest under the 1923 Act cannot be claimed from  

the date of the filing of the application, but only  

after  a  default  is  committed  in  respect  of  the  

payment  of  compensation  within  30  days  from  the  

date on which the payment becomes due.      

17. We are satisfied that the impugned order of the  

High  Court  was  only  an  attempt  to  correct  the  

erroneous interpretation of Part II of Schedule I  

of  the  Workmen’s  Compensation  Act,  1923,  by  the  

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Commissioner, Workmen’s Compensation.  The loss of  

earning capacity has to be computed keeping in mind  

the alternate employment given to the Appellant on  

the same salary as he was enjoying while performing  

the  duty  of  a  bus  driver.   The  same  cannot  be  

ignored  in  computing  the  amount  of  compensation  

which the Appellant was entitled to.   

18. In that view of the matter, we are in agreement  

with the order passed by the High Court, but we are  

of  the  view  that  the  percentage  of  functional  

disablement has to be modified from 20% to at least  

35%, having regard to the Appellant’s mobility on  

account of the medical treatment received after the  

accident and also because of the Appellant’s loss  

of future earnings and also promotion.

19. We, therefore, maintain the order of the High  

Court  and  direct  that  the  Appellant  be  provided  

with  compensation  on  the  basis  of  functional  

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disability to the extent of 35% and not 20% as  

indicated by the High Court.

20. The appeal is, accordingly, disposed of.  There  

will be no order as to costs.   

     …………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (A.K. PATNAIK)

New Delhi Dated: 07.09.2010

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