The Bombay High Court affirmed the compensation awarded under the Employees Compensation Act, 1923 (EC Act). The Court dealt with significant issues, including the calculation of compensation in foreign currency, the exchange rate's application, and the liability of the principal employer. The Court held that the compensation must be based on the salary actually paid to the deceased, rejecting inflated salary estimates.

1. Factual Background:

• Captain Zlatko Glusica, a Serbian national, was employed through a contract with Sigmar Aviation Ltd. He died in an air crash on May 22, 2010, while working for Air India Charters Ltd.
• The legal heirs of the deceased filed for compensation under the EC Act, seeking compensation of USD 745,580, with a 50% penalty and 12% interest per annum.

2. Legal Issues Raised:

• Whether compensation could be based on a higher salary than the deceased's actual earnings.
• The application of foreign exchange rates for compensation payable in foreign currency.
• Liability of the principal employer (Air India Charters Ltd) for interest and penalty under the EC Act.

3. Substantial Questions of Law: The Court framed seven substantial questions of law, including:

• Salary Basis: Should compensation be calculated based on an agreement the deceased was not privy to?
• Foreign Exchange Rate: Which date should the exchange rate be applied for calculating compensation?
• Employer's Liability: Is the employer liable for penalties and interest if compensation is adjudicated after an inquiry by the Labour Commissioner?

4. Judgment Overview:

• The Court upheld the decision that compensation must be calculated based on the actual salary remitted to the deceased, which was USD 9,170 per month, not the higher figure of USD 11,000 claimed by the respondents.
• The Court found that the Employees Compensation Commissioner had misconstrued the evidence related to the salary of the deceased, including emails and salary breakdowns from Sigmar Aviation Ltd.
• The Court rejected the argument that compensation could be based on amounts paid to the contractor, which were unrelated to the deceased’s actual salary.

Acts and Sections Discussed:

Employees Compensation Act, 1923:

• Section 4-A: Deals with payment timelines, interest, and penalty for defaulting employers.
• Section 12: Establishes the liability of the principal employer for employees provided by a contractor.
• Section 8: Governs the distribution of compensation and mandates that compensation be deposited with the Commissioner.

Ratio Decidendi:

• The compensation payable to the legal heirs of the deceased employee must be based on the actual salary received by the employee, not the higher contractual amounts between third parties like manpower suppliers.
• The applicable foreign exchange rate should be the one prevailing on the date when the compensation fell due or when the obligation was discharged, whichever is more beneficial for the dependents.
• Interest and penalties under Section 4-A apply if the employer fails to deposit compensation within the statutory period, irrespective of bona fide disputes regarding the amount.

Subjects:

Employees Compensation, Principal Employer Liability, Foreign Exchange Rates in Compensation.

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