[Employees Compensation Act] Interest on compensation payable from date of death and not date of order: Supreme Court

The Supreme Court on Friday held that the liability under the Employees Compensation Act of 1923 to pay the compensation and the interest on the same would arise from the date on which the deceased died and not from the date of the order of compensation by Commissioner [Shobha v. The Chairman, Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd]..The bench of Justices MR Shah and BV Nagarathna held that as per Section 4A(1) of the Act, compensation under Section 4 has to be paid as soon as it falls due. "Therefore, on the death of the employee/deceased immediately, the amount of compensation can be said to be falling due. Therefore, the liability to pay the compensation would arise immediately on the death of the deceased," the Court held.Since the interest liability as per Section 4A(3)(a) of the Act is on the amount of compensation due, interest would also be payable from the date of accident and not date of order. "Therefore, the liability to pay the compensation would arise from the date on which the deceased died for which he is entitled to the compensation and therefore, the liability to pay the interest on the amount of arrears/compensation shall be from the date of accident and not from the date of the order passed by the Commissioner," the order emphasised..The deceased, a sugarcane cutting labourer, was engaged by labour contractor. One day while cutting sugarcane, he died of a snake bite. The deceased’s heir (appellant) was not paid compensation and she approached the Commissioner Workmen’s Compensation, Beed and claimed ₹5 lakh. Her claim was allowed and the Commissioner directed the respondents jointly and severally to pay compensation along with simple interest at 12 percent per annum from the date of the accident. Further, the Commissioner imposed a penalty of 50 percent on the compensation amount as per Section 4A(3)(b) of of the Act..Dissatisfied with the order of the Commissioner, the respondents approached the Bombay High Court. The High Court dismissed the appeal, but set aside the penalty and modified the interest awarded, to be made payable from a month after expiry of the Commissioner's order instead of date of accident.Aggrieved by the order, heir of the deceased approached the Supreme Court..The apex court held that as per Section 4A(1) of the Act, the liability to pay the compensation would arise immediately on the death of the deceased.The interest would, therefore, be payable from the date of death of deceased. The Court also sought to distinguish between interest and penalty payable under the Act."The provision for levy of interest would be under Section 4A(3)(a) and the provision for levy of penalty would be under Section 4A(3)(b)," the Court noted.It said that the High Court while directing the employer to pay the interest from the date of the order passed by the Commissioner, has not at all considered Section 4A(3)(a) and has considered Section 4A(3)(b) only, which is the penalty provision..In view of the above, the Supreme Court set aside the High Court judgment and directed that interest on compensation be paid from the date of death of the deceased. .Advocates Shivaji M Jadhav and Qurratulain appeared for the appellant. Advocates Samrat Krishnarao Shinde and Sarang Aaradhya represented the respondents..[Read Judgment]