Case Note & Summary
The appellants, legal heirs of deceased workman Shaikh Abrar, filed an appeal against the judgment and order dated 17.09.2013 passed by the Commissioner under Workmen's Compensation Act, Labour Court, Akola. The Labour Court had awarded compensation of Rs.3,36,245 with interest at 6% per annum. The appellants did not challenge the compensation amount or penalty but sought enhancement of interest from 6% to 12% per annum, which they claimed was the statutory rate under Section 4A(3) of the Employee's Compensation Act, 1923. The respondents, New India Assurance Company Ltd. and the transporter, were served but did not appear. The appellants' counsel relied on the Supreme Court decision in Pravinbhai S. Khambhayata v. United India Insurance Company Limited (2015) SCC 417, where it was held that the statutory interest under Section 4A(3) is 12% per annum. The High Court allowed the appeal, modifying the Labour Court's order to award interest at 12% per annum on the compensation amount from the date of accident until realization, and directed the Insurance Company to deposit the differential amount within six weeks.
Headnote
A) Workmen's Compensation - Interest on Compensation - Section 4A(3) Employee's Compensation Act, 1923 - Statutory Interest Rate - The Labour Court awarded compensation of Rs.3,36,245 with interest at 6% per annum. The appellants sought enhancement to 12% per annum as per Section 4A(3). The High Court, relying on Supreme Court precedent, held that the statutory interest rate is 12% per annum and directed the Insurance Company to deposit the differential interest amount. (Paras 2-4)
Issue of Consideration
Whether the appellants are entitled to interest at the rate of 12% per annum on the compensation amount under Section 4A(3) of the Employee's Compensation Act, 1923 instead of 6% per annum as awarded by the Labour Court.
Final Decision
Appeal allowed. The impugned judgment and order of the Labour Court is modified to the extent that the appellants are entitled to interest at 12% per annum on the compensation amount of Rs.3,36,245 from the date of accident until realization. The respondent-Insurance Company is directed to deposit the differential amount of interest within six weeks.
Law Points
- Statutory interest under Section 4A(3) of Employee's Compensation Act
- 1923 is 12% per annum
- not 6% as awarded by Labour Court
- Interest on compensation is mandatory and cannot be reduced by the Commissioner
- Precedent from Supreme Court in Pravinbhai S. Khambhayata v. United India Insurance Company Limited (2015) SCC 417 applied
Case Details
2017 LawText (BOM) (11) 185
First Appeal No. 338 of 2015
S.A. Mohta for the appellants
Aliya Parveen Wd/o Shaikh Abrar, Salma Parveen D/o Shaikh Abrar, Mohammed Irshad S/o Shaikh Abrar, Mohammed Naushad S/o Shaikh Abrar, Mohammed Israr S/o Shaikh Abrar
New India Assurance Company Ltd., Gulam Sagir Gulam Dastagir
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Nature of Litigation
Appeal against judgment and order of Labour Court under Workmen's Compensation Act seeking enhancement of interest rate on compensation.
Remedy Sought
Appellants sought interest at 12% per annum on compensation amount instead of 6% awarded by Labour Court.
Filing Reason
Labour Court awarded interest at 6% per annum on compensation, whereas appellants claimed statutory interest at 12% per annum under Section 4A(3) of Employee's Compensation Act, 1923.
Previous Decisions
Labour Court, Akola, by judgment dated 17.09.2013 awarded compensation of Rs.3,36,245 with interest at 6% per annum.
Issues
Whether the appellants are entitled to interest at 12% per annum under Section 4A(3) of the Employee's Compensation Act, 1923 instead of 6% per annum awarded by the Labour Court.
Submissions/Arguments
Appellants' counsel submitted that the appeal is limited to seeking enhancement of interest from 6% to 12% per annum, which is the statutory rate under Section 4A(3) of the Employee's Compensation Act, 1923.
Appellants relied on Supreme Court decision in Pravinbhai S. Khambhayata v. United India Insurance Company Limited (2015) SCC 417.
Ratio Decidendi
Under Section 4A(3) of the Employee's Compensation Act, 1923, the statutory rate of interest on compensation is 12% per annum, and the Labour Court cannot award a lower rate. The Supreme Court in Pravinbhai S. Khambhayata v. United India Insurance Company Limited (2015) SCC 417 has held that the interest payable under Section 4A(3) is 12% per annum.
Judgment Excerpts
appeal is preferred against the Judgment and order dated 17.09.2013 passed by Commissioner under Workmen’s Compensation Act, Labour Court, Akola, on the limited aspect, seeking interest @ 12% per annum on the amount of compensation of Rs.3,36,245/ awarded under impugned Judgment and order instead of interest @ 6% per annum as has been awarded
learned Counsel for the appellant relied on the case of Pravinbhai S. Khambhayata Versus United India Insurance Company Limited (2015) Supreme Court Cases 417
Procedural History
The Labour Court, Akola, passed judgment and order on 17.09.2013 awarding compensation of Rs.3,36,245 with interest at 6% per annum. The appellants filed First Appeal No. 338 of 2015 before the Bombay High Court, Nagpur Bench, challenging only the rate of interest. The appeal was heard on 06.11.2017, and the High Court allowed the appeal, enhancing interest to 12% per annum.
Acts & Sections
- Employee's Compensation Act, 1923: Section 4A(3)
