In Jugal Kishor Ray v. Ashok Prasad Yadav & Anr., M.A. No. 227 of 2020 (Order dated 05.09.2023), the Jharkhand High Court, while deciding an appeal under Section 30 of the Employee’s Compensation Act, 1923, which challenged an award by the Labor Court of not including interest, which is mandatory under Section 4(A) of the Act, held that compensation is due from the date of the accident, and interest calculations begin from that date. Insurers of motor vehicles involved in accidents resulting in death or injuries to employees cannot evade the responsibility of paying interest on the principal award.
A bench of Justice Pradeep Kumar Srivastava held, “Award of compensation fells due on the date of occurrence/ accident and computation of compensation and interest begins from the date, it fell due, i.e., the date of accident and not the date of award till its realization. In case of accident out of use motor vehicle causing death or injuries to employee, the insurer of vehicle can’t escape liability to pay the interest on principal award.”
The case involved the death of an employee in a work-related accident, and a case was filed since compensation was not paid within the statutory timeframe. The appellant claimed compensation, cremation expenses, and interest. The trial court had computed compensation based on the minimum wage rate and awarded it without interest, leading to the appeal.
Advocate Arvind Kr. Lall appeared for the Appellant and Advocate Manish Kumar appeared for the Respondents.
The issue dealt with by the Court was, “Whether the Commissioner, Employee’s Compensation has committed perversity by not awarding any interest to the claimant on the amount of compensation awarded under of Employee’s Compensation Act (Workmen Compensation Act).” The Court cited Section 4A (3) of the Employee’s Compensation Act, outlining the provision for interest and penalties.
The Court referenced a recent Supreme Court case, Shobha v. The Chairman, Vitthal Rao Shinde, stating that compensation and interest are due from the date of the accident. The Court then mentioned the case of Kamla Chaturvedi v. National Insurance Co. Ltd., emphasizing the insurer’s liability for interest on the principal award. It then reiterated that compensation is due from the date of the accident, and interest starts accruing from that date for accidents involving motor vehicles.
The Court said that the findings of the Presiding Officer-cum-Commissioner under the Employee’s Compensation Act indicate a failure to award interest despite the statutory requirement of Section 4A(3)(a). This omission is illegal and constitutes a mistake. The Court added, “After analysing the law, I must revert back to the findings recorded by Ld. Presiding Officer-cum-Commissioner under Employee’s Compensation Act, which categorically show that no amount of interest component has been awarded in spite of statutory mandate of Section 4A(3)(a) and no reason has been attributed for not granting the interest component in the award which is quite illegal and suffers from perversity.”
The appeal was allowed, and the order was modified to include simple interest at 12% per annum from the date of the employee’s death until the actual payment on the original award. The respondent No. 2, the Insurance Company, was directed to deposit the interest amount within two months, or it will be collected through court procedures.
The Court highlighted the order’s significance, and the Registry was instructed to circulate the order to all Labor Court Presiding Officers in the state of Jharkhand.
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