Case Note & Summary
The appellants, parents of deceased Suresh Tiwade, filed an application under Section 22(2) of the Employees Compensation Act, 1923 before the Labour Court, Wardha, seeking compensation for the death of their son who died on 17 November 2010 while employed as a driver on a truck owned by respondent no. 2 and insured with respondent no. 1. The Labour Court, by judgment and order dated 21 February 2013 in WCA No. 1/2011, held that the death occurred during the course of employment and awarded compensation of Rs. 7,15,761 with interest at 12% per annum from the date of award till realization. The appellants appealed only against the period of interest, contending that interest should run from the date of accident (17 November 2010) as per Section 4A(3)(a) of the Act. The High Court admitted the appeal on the substantial question of law regarding the point from which interest should be awarded. After hearing counsel for both sides, the court examined Section 4A of the Act, which requires the employer to pay compensation within one month of falling due, and if not paid, interest becomes payable from the date it fell due. The court noted that the compensation falls due on the date of accident, and since the employer failed to pay within one month, interest must run from the date of accident. The court distinguished the case of Oriental Insurance Co. Ltd. v. Mohd. Nasir, where interest was awarded from the date of application, as that case involved a different context. The court held that the Labour Court erred in awarding interest only from the date of award and modified the order to direct that interest at 12% per annum be paid from the date of accident (17 November 2010) until realization. The appeal was allowed accordingly.
Headnote
A) Employees Compensation - Interest on Compensation - Section 4A(3)(a) Employees Compensation Act, 1923 - The issue was whether interest on compensation should run from the date of accident or from the date of the award when compensation is not paid within one month of falling due - The court held that interest must be awarded from the date of accident, as the compensation falls due on that date and the employer's failure to pay within one month triggers interest from the due date - Held that the Labour Court erred in awarding interest only from the date of award (Paras 8-14).
Issue of Consideration
What should be the point from which interest should be awarded on the amount of compensation under Section 4(A)(3)(a) of the Employees Compensation Act, 1923?
Final Decision
The appeal is allowed. The impugned judgment and order dated 21 February 2013 passed by the Labour Court, Wardha in WCA No. 1/2011 is modified to the extent that the appellants shall be entitled to interest at the rate of 12% per annum on the amount of compensation from the date of accident i.e. 17 November 2010 till its realization. No order as to costs.
Law Points
- Interest on compensation under Section 4A(3)(a) of the Employees Compensation Act
- 1923 must be awarded from the date of accident
- not from the date of award
- when compensation is not paid within one month of falling due
